24 Sep 2011 Veer Subscriptions – The Good Bits and the Not-so-Good Bits [Updated]
[Update: Veer have listened and updated their subscription plan. See the bottom of this post for the details]
Veer have just announced their plan to introduce subscriptions with details on the royalties for contributors. While few microstock contributors still like subscriptions, most of us realize they’re a necessary component for microstock agencies. So Veer’s announcement doesn’t come as much of a surprise, and there’s little resistance in principle. However, the devil is in the details.
The contributor royalty ranges from $0.10 to $3 per download for the standard license. An ‘Extended Plan’ subscription includes Unlimited Reproductions and the Extended Protection Plan guarantee, with royalties ranging between $0.13 and $3.75.
The download quota is 30 file per day, but prices have not yet been announced.
If you didn’t receive the email notification, just log into Veer to see the details.
The Good Bits
- Microstock subscribers download an average of around 9 files per day. Depending on who you ask it could range out to 5 or 15.
- Taking that average of 9, the average royalty rate we’re likely to receive will be $0.33. While not great, this is above the rate at some agencies with higher sales volumes than Veer.
- An opt-out has also been provided, with limits, which is a positive step and not common these days.
The Not-so-Good Bits
- Obviously the $0.10 subscription royalty figure features highly on the not-so-good list.
- What’s also quite upsetting is the $0.13 – $3.75 royalty for Unlimited Reproduction rights, which when sold by credits gives us a $35 royalty.
- The opt-out is also only available until October 21.
Why No Minimum
The royalty structure that Veer has chosen – linking royalties to the quantity of downloads of the subscriber – is the iStockphoto model, a variation of which is also in use at PantherMedia.
However, iStockphoto has a minimum royalty which keeps the minimum well above the $0.10 that Veer is offering.
To understand how easy and safe it would be for Veer to do the same, you need to understand the basic concepts of how microstock subscriptions work.
Microstock Subscriptions are All About Averages
If a Shutterstock customer uses their entire quota, downloading files only from contributors on the highest royalty, Shutterstock pays out $294.50 on a $249 subscription. Their revenue is even lower if a customer buys more than one month at a time.
How can Shutterstock – and every other microstock subscription – afford to pay contributors so much?
The answer is because the reality is very different to the theoretical maximum.
Shutterstock customers don’t download their maximum daily quota and many don’t download any files at all on the weekends. The average is much lower, and probably not too far from the average of 9.
Let’s assume Veer won’t price their subscription below the industry standard of $250. It has a higher quota, so one wouldn’t expect it to be cheaper. They could guarantee a minimum $0.26 per download ($250 / 31 days / 30 files) to break even.
And then their profits come from:
- lower average download rates
- paying relatively few royalties on the weekends
- not every month has 31 days
Instead, the current Veer royalty structure guarantees them a minimum monthly profit of $157 per subscriber ($250 – $93) assuming they price at least the industry standard rate. And we contributors bear the cost of enthusiastic subscribers who download a high portion of their quota. Ouch!
Contributors can opt out by sending an email (yes, you read that correctly). Instructions are in the announcement email, or via the announcement when you log into your account.
The opt-out must be received by October 21. After that you will be unable to opt out and new contributors will not be able to opt-out either.
Most contributors I’ve spoken to, and those who’ve posted in MSG thread, are opting out.
Veer have been very generous with me in the past which has created a lot of good will, but I think it’s vital they get the message that this subscription plan doesn’t work for us. For that reason I’ve opted out too.
Veer Before and After Subscriptions
Veer doesn’t have the selling power of other microstock agencies, they’re also very slow to review content, and still have a few quirks in their system. But the average royalty per download, until now, is well above average. Extended License royalties are also well above average. This is what makes Veer a respected and well-liked agency in the microstock industry.
But all that will go away if the current subscription plan is implemented as it is.
It Wouldn’t Take Much
By simply implementing a minimum royalty, which is not an un-safe bet for Veer, and raising the Unlimited Reproductions royalty to a more realistic level, Veer could quite easily maintain their ‘slow but lucrative and friendly’ reputation among microstock contributors. Without changes, this subscription plan will create a new low for the industry with Veer right there at the bottom.
Update 2011-09-30: Veer got the message and it wasn’t what they were expecting. So they’ve updated the subscription plan, raising the minimum royalty to 25 cents and the maximum to $4.95. The unlimited reproductions subscription has been eliminated, and a facility to buy that extended license with credits will be implemented, where contributors earn $35.00 for those rights. Contributors who previously opted-out have the opportunity to opt back in – see the details in the announcement email. The reaction to this update from the microstock community has been overwhelmingly positive. Hats off to Veer for listening and responding, and creating what is possibly the most lucrative subscription royalty in microstock!