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RF PRODUCERS FORM ISPA
October 24, 2006
A group of RF stock production companies have become concerned with the accounting practices of an increasing number of distributors around the world who are not meeting their contract obligations in terms of reporting and paying commissions.
These production companies have a combined total of over 300,000 images in their collections, are producing at a rate of 100,000 new images per year and have joined together to form the International Stock Producers Alliance (ISPA). They plan to share information on a regular basis and insist on better and more uniform royalty reporting.
In many cases these producers have noticed dramatic fall offs in their monthly royalty payments despite supplying increasing numbers of new images to the distributor. These fall offs do not appear to be part of an industry trend and are not consistent with the trends at other distributors.
When questioned about the decline the distributors usually say something like, "I don't know why your sales are down so much, the sales of everyone else are fine. We're still seeing growth overall."
As these producers have begun sharing with each other before and during the recent PACA International Conference they discovered that, in fact, with many distributors everyone's sales are down significantly and in some cases the distributors seemed to be playing one producer off against the other.
The current members of this group are: Blend Images, Glow Images, Tetra Images, Rubberball, Hola Images, Ron Chapple, Jack Hollingsworth, Red Chopsticks, Photos India, 40260 Images and Golden Pixels. For the time being ISPA is being selective in who they invite to join the organization. Other major producers are being contacted and it is expected that additional large producers will join ISPA shortly.
Distributors report sales and royalties in a variety of ways that often lack sufficient detail. The ISPA intends to develop an approved format for supplying information and insist that all distributors supply royalty reports in that format. The ISPA intends to initiate audits on behalf of all members of the group according to their contracts. Audits will be conducted when the combined monthly results of all members of the group seem to be outside normal expected parameters.
Members have agreed that if it is discovered that they are not being paid in a timely manner for all sales of their imagery all will pull their images from the offending distributor and pursue appropriate legal action to recover the royalties owed.
There are 200 to 250 companies around the world that are engaged in the business of distributing RF imagery, and most major RF production operations have tried to place their images with all of them. Many of these distributors generate relatively few sales for any brand and the administrative cost of supporting them is often more than the revenue generated.
ISPA is considering developing an "ISPA Approved" certification that they would share with their members, and possibly outside producers as well. In order to receive the highest level of ISPA Approval a distributor might be asked to open its record keeping practices to an ISPA representative, to show evidence that all royalties are being properly accounted for and paid promptly and to have no outstanding complaints from producers against them.
Other categories of approval might be set up for those companies that have some issues that need improvement, but in general are trustworthy. Images would be pulled from those companies that are found not to be reporting sales accurately.
It is expected that the ISPA will not only benefit the producer/members, but many of the honest, hard working distributors as well. It is believed that there are some distributors with marginal businesses who are licensing rights to RF images, but not paying the image creators. If these distributors lose the RF content they have been representing it seems likely that customers will go to the remaining distributors with better business practices to get the images they need. In this case both the licensing distributor and the image producer will get their fair share of the revenue.
It seems likely that as a result of this initiative there will end up being fewer distributors of RF imagery around the world, but those that remain will be stronger.
The ISPA may also look for ways to standardize the submission of images and metadata and create efficiencies that will cut costs for both producers and distributors.