As Fotolia Buys Wilogo, Does Spec Work Beat Microstock?

Since Getty bought iStock in 2006 for $50 million, we’ve been used to seeing stock giants snapping up their smaller rivals. At least one of those smaller rivals, though, is also expanding through acquisition. Fotolia, one of the leading microstock sites, has now paid an undisclosed sum for Wilogo, a crowdsourced design firm.

Fotolia isn’t short of money. In 2009, private equity firm TA Associates injected $75 million into the company. The firm also generates more than $100 million in revenue each year from its 3 million users and 16 million files, giving Fotolia a solid foundation on which to expand. Nor is Wilogo the site’s first acquisition. Fotolia also owns stock site and, a site that lets users create videos from their photos.

For Fotolia, Wilogo makes a natural addition to its stable. Like microstock sites, the design market is open to anyone who wishes to sell, not just professionals who design for a living, and it serves a similar client base: publishers and developers who need images and branding for their websites and companies. It was those two complementary aspects that most attracted Fotolia to the company:

 “First, we strongly believe in the democratization of photography,” explained Jessica Hughes, a spokesperson for the company. “It’s photography and art for the people, by the people. So, when we came across Wilogo, it was the perfect match — it was design for the people, by the people. From there, adding logos to our product line was a logical business choice to expand our services.”

One Winner for Every 167 Designs

But while Wilogo sells logo designs, Web pages themes, banner ads and business cards to the same kind of people who search Fotolia for royalty-free stock photos, the design company’s process differs in important ways to the model used on microstock sites.

Rather than search for appropriate designs that they can use — in the way that stock buyers purchase images — Wilogo’s clients upload a description of the design they need, state their price and invite designers to submit work on spec. The client gets to choose from up to 80 designs, ask three designers to refine their work and then chooses a winner.

The prices paid are relatively high — and much higher than those on Fotolia. A logo design costs $295, a business card $195 and a Web page costs $895. Wilogo advertises that it’s paid out a little over $1.52 million for the 2,068 designs sold through the site. While that works out at a handsome $736 for each sale of a commissioned work, those sales are only being won by one out of the scores of designers who put effort into taking part in the contest. Wilogo declares that it’s able to produce an average of 167 designs for each “contest” so a great deal of work is being done for nothing. (The other two candidates selected in a shortlist are also paid a fee but none of the other rejected participants receive a dime.)

A designer who has to enter ten contests to win just one sale will, in effect, be working for a tenth of what the site considers a fair fee. That makes Wilogo’s contests exactly the kind of spec-based competition that professionals most hate: clients expect them to work in the small hope that they might get paid.

But at least it wasn’t the process that attracted Fotolia to Wilogo. The stock company sees common ground in the opportunity the site gives to independent talent but it has no desire to import Wilogo’s spec competitions to the microstock market.

“We believe the compensation model for Fotolia and the stock photo industry is proven, tried, and true,” said Jessica Hughes, “so no changes are planned.”

Wilogo, in fact, will continue independently under Fotolia’s umbrella. The service has plans to expand into new territories and accept payments in more currencies but Fotolia’s management intends to sit back and the let firm continue doing what has brought it success in the past while benefiting from the two companies’ overlapping client base.

Microstock Versus Spec Work

It’s tempting then to look at Wilogo’s purchase as a near-miss for photographers. However low the rates might be for microstock photographers, at least they aren’t being asked to work on spec. Sites that have tried similar models by offering bounties for specific images have wasted away as photographers quickly worked out the costs and effort involved in producing the pictures and realized that shooting them just didn’t pay.

But it’s also worth noting that the differences between the two processes aren’t as big as they look. Just as Wilogo’s designers will produce lots of spec designs, of which only a small number will sell, so microstock photographers produce large numbers of images of which only a small number will generate downloads. Each image will cost less to produce and take less time to shoot than the hours involved in creating Web pages (although business cards might be a little faster) but unless your photo becomes a hot seller, the payments are going to be much smaller too. Photographers also have to try guess trends and spot gaps in a market that’s increasingly suffering from saturation. At least Wilogo’s freelance designers know what they’re aiming for, even if they can’t be sure that hitting the target will be enough to land the sale.

For Fotolia, the purchase of Wilogo will be seen as investment. The company will have crunched the figures and decided that future revenues make the outlay worthwhile. But the purchase also provides an opportunity for Fotolia’s photographers to make their own return-on-investment calculations. As they look at the piles of unsold work piling up on Wilogo, they should be reviewing their own portfolios and calculating their return per image. Some photographers might well discover that they could be earning more money if they were working on spec for a publisher who told them what to shoot.

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