The Shutterstock 2020 Q2 Financial Report is set to reveal the success of its controversial new contributor earnings structure, and whether the contributor boycott protesting the pay cut has had an impact on Shutterstock’s financial performance.
On July 26 Shutterstock will report its 2020 Second Quarter Earnings Results, ending on June 30. The Q2 financial report will highlight Shutterstock’s year-on-year growth – comparisons with the 2019 Q2 report – and will cover revenue growth, the number of paid downloads, average cost per download, the image and video library size, the numbers of contributors, and more.
The pertinent information in the upcoming report will be the revenue gained by the new earnings system, and whether the contributor backlash had a noteworthy impact on the image and video library size, or even the number of paid downloads.
On June 1 Shutterstock rolled out the new earnings system, determining the percentage paid to contributors based on the number of image licenses sold in a calendar year. Contributors began reporting payments as low as US$0.10. This fee replaced typical payments of around US$0.20 – 0.38, resulting in significant overall drops in income. When the earnings system was launched, contributors were allocated a tiered payment level based on the numbers of image licenses sold in the last six months. From January 1, 2020, payment levels are reset, effectively downgrading all contributors to the lowest level.
The new earnings system significantly alters Shutterstock’s business model, allowing the microstock agency to claw back revenue otherwise paid to contributors. The savings are expected to be impressive, as the new management would be foolish to not anticipate some fallout from the contributor community. Pay cuts don’t tend to go down all that well.
The ‘Boycott Shutterstock’ campaign led to numerous groups and individual contributors deactivating accounts and removing content, either on their own accord or in coordination. An unforeseen outcome was the formation of the Stock Coalition, now consisting of a website, online forums, an administration team and over 5200 members in a Facebook group. The Coalition launched a campaign entitled Shutterstock Deactivation Day, an offshoot of Boycott Shutterstock, with the goal of impacting Shutterstock’s image library size – a key operating metric after financial performance.
While the official Q2 information won’t be available until July 26, disaffected contributors have taken unofficial daily measurements of the image collection size to determine the campaign’s impact. As of June 30, the image collection – photos, vectors, and illustrations – consisted of 322.7 million files. Compared with Shutterstock’s 2019 Q2 report, the image collection grew by roughly 15 percent from 280 million files. While 15 percent falls short of Shutterstock’s usual 30 percent year-on-year image collection growth, it’s unlikely to alarm shareholders.
The primary affect of Boycott Shutterstock is on the quarter-to-quarter image size measurements. The 2020 Q1 Report, ending March 31, clocked the image collection at 330 million files. Provided the unofficial measurements are accurate, this suggests the collection shrunk by roughly 7.3 million files. This is the first time in three years Shutterstock will record a quarter-to-quarter collection drop, but unfortunately for disgruntled contributors, it’s the year-on-year growth which counts and this information is glossed over in a graph toward the end of the report.
It’s a formidable effort from thousands of contributors to sacrifice a (diminished) income stream and remove millions of profitable files. But, again, a few million image files lost in a pool of over 330 million is hardly going to trump the revenue saved from the pay cut.
Additionally, Shutterstock’s share price on the New York Stock Exchange has remained steady since June, 2020. No sign of alarm there. Although, it’s worth noting that in just over a month founder and former CEO Jon Oringer dumped 89,162 shares in five separate trades, equalling roughly US$3.3 million.
Shutterstock’s contributor pay cut came at a crushing moment, as the globe swerves toward economic uncertainty due to the pandemic. Boycott Shutterstock aimed to inform management that its poorly-paid contributors, professionals who make content for the platform to sell, were furious. Shutterstock’s stone cold silence to contributors underscored the corporation’s lack of care and empathy for its contributor community.
Although, there were minor signs of concern. Shutterstock attempted to bring deactivated contributors back with a sudden big one-off fee for removed images; and billionaire Jon Oringer lost it on Twitter, telling contributors in a now-deleted Tweet to ‘take their content and go’.
With global corporations more vocal than ever about values, fairness and responsibilities, and public scrutiny threatening to penalise businesses if unfair policies aren’t addressed, there was hope Shutterstock would re-evaluate the pay cut.
But the issue didn’t make the jump from the photo media to the financial pages of general media, where it would have placed more pressure on Shutterstock. While the Stock Coalition issued informative and newsworthy press releases to media, for whatever reason the story didn’t gain mainstream traction. This denied the protesting contributors a larger audience which may have sympathised with their plight and jumped on Twitter to vent their collective outrage.
The most valuable outcome for stock contributors may be the solid unity established, with the formation of the Stock Coalition and other initiatives in forums and Facebook groups. Time will tell how worthwhile the Stock Coalition becomes to the stock content industry, which desperately needs a global body to fight against race-to-the-bottom pricing. The Coalition appears to be moving beyond Shutterstock, and is working on establishing itself as a non-profit organisation.
Here’s a statement from Stock Coalition spokesperson, Dimitar Gorgev:
‘We have already announced we are in active negotiations with (stock agency) Pond5. Both the Coalition and Pond5 are aware that the agency (Pond5) has traditionally been far stronger in the licensing of videos, than photographs or vector illustrations. We are working with the agency to assist them to become a more dominant player in the market overall. Exclusive video artists already earn 60 percent commissions from Pond5, and have the option to set their own pricing. Pond5 has video distribution arrangements for exclusive contributors with both Adobe Stock and Vimeo Stock – so there is more reach there too. While stock photos and vector illustrations are still a relatively slow sellers at Pond5, contributors earn 50 percent commissions and can also set pricing.
It’s important to note that this is only our first strategic partnership with an agency. We are actively reaching out to other agencies too, in order to establish better relationships that should result in improved deals for content creators and more stable agency businesses. We really should be all on the same team, because overall we have similar strategic needs. There are also new threats entering the market that will need cooperation between both agencies and contributors to counter effectively.’