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Shutterstock is ripping off all contributors


Dimitris Stasinos

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They are just screwing their contributors, like they did many times in the past without any consequence. Their portfolio is soaring. Why would they stop milking the digital slaves?  Between Q1 2019 and Q1 2020:

"Image collection expanded 27% to approximately 330 million images."
"Video collection expanded 29% to approximately 18 million clips."


30% portfolio increase in a year! It's going to take more than a few grumpy folks on forums and quickly forgotten headlines to change their policy. As long as shareholders are happy, it's all good. After the 2020 Q1 release, the CFO explains that "we expect to produce significant earnings and free cash flow in 2020, allowing us to continue paying a quarterly dividend and reinvesting in our business." So most likely, the precious shareholders position is secured, perhaps with the shares taken from the contributors to offset the effects of the Covid-19.

And by the way, this company is financially healthy.  They have a good amount of cash and no debt "We are well positioned financially with $296 million in cash and no debt" according to their CFO. As mentioned before, net income alone is not a good way to assess a company situation. Their EBITDA is solid and increasing over the years, especially considering that they have no debt (the I part of EBITDA). The ratio are not amazing but not bad. See their annual reports.

There is no surge in operating expenses over the year despite massive portfolio increase which clearly contradicts the possibility of booming hosting and content review cost. The 2019 report says " Depreciation and amortization expense increased by $4.7 million as compared to 2018, to $40.4 million in 2019, driven primarily by the depreciation of our capitalized internal-use software. We expect that our cost of revenue will increase in absolute dollars in the foreseeable future to the extent our revenue grows". In other word, hosting fee is no hurting the EBITDA. Which explains why Shutterstock never tried to seriously limit or remove unsold assets as they don't represent a big cost.

 

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22 hours ago, OliKMIA said:

They are just screwing their contributors, like they did many times in the past without any consequence. Their portfolio is soaring. Why would they stop milking the digital slaves?  Between Q1 2019 and Q1 2020:

"Image collection expanded 27% to approximately 330 million images."
"Video collection expanded 29% to approximately 18 million clips."


30% portfolio increase in a year! It's going to take more than a few grumpy folks on forums and quickly forgotten headlines to change their policy. As long as shareholders are happy, it's all good. After the 2020 Q1 release, the CFO explains that "we expect to produce significant earnings and free cash flow in 2020, allowing us to continue paying a quarterly dividend and reinvesting in our business." So most likely, the precious shareholders position is secured, perhaps with the shares taken from the contributors to offset the effects of the Covid-19.

And by the way, this company is financially healthy.  They have a good amount of cash and no debt "We are well positioned financially with $296 million in cash and no debt" according to their CFO. As mentioned before, net income alone is not a good way to assess a company situation. Their EBITDA is solid and increasing over the years, especially considering that they have no debt (the I part of EBITDA). The ratio are not amazing but not bad. See their annual reports.

There is no surge in operating expenses over the year despite massive portfolio increase which clearly contradicts the possibility of booming hosting and content review cost. The 2019 report says " Depreciation and amortization expense increased by $4.7 million as compared to 2018, to $40.4 million in 2019, driven primarily by the depreciation of our capitalized internal-use software. We expect that our cost of revenue will increase in absolute dollars in the foreseeable future to the extent our revenue grows". In other word, hosting fee is no hurting the EBITDA. Which explains why Shutterstock never tried to seriously limit or remove unsold assets as they don't represent a big cost.

 

The decision was made not on the basis of contributions, but because demand for images was falling while at the same time retained earnings was plummeting.

That is just the nature of the business nowdays, as more and more competitors come in they have to reduce costs in order to remain viable, and the only way to do that is to decrease the royalty paid to contributors. If they don't do that then competition will drive image price down and that will hammer their margins since their slice of the pie after operational costs is quite small (you can see this effect in their quarterly report where a 1% reduction in gross revenue resulted in a 47% reduction in retained earnings). All the competing companies will have to do the same thing in the end as well, or they will eventually go out of business.

Btw, they are attempting to limit contributions, it is being done by reducing the royalty to low sales contributors. That will drive them away. The contributors they want to keep are those whose images sell well, they don't want those who submit stuff that sells poorly.

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