Features
JupiterImages responds to allegations of shaving commissions in Europe
Recently Stefan Hartmann, a journalist with years of experience covering the stock photo industry, published an article entitled ”JupiterImages accused of shaving commissions in Europe” a piece that was excerpted from an original story published in the German trade publication Visuell. In this story the author highlighted the matter of Service Fees charged clients licensing rights-managed (RM) images from Jupiter’s German and French offices, and whether such fees have been legitimately charged over and above the license fees, resulting in unfairly reducing the commissions owed to the contributors. Since publishing this article on December 18 many readers have responded with follow-up comments including two comments from Jupiter management. In fairness to Jupiter, and to allow our readers a complete and unbiased view, we have published their original comments in their entirety and subsequent follow-up questions and answers from Jupiter Management.
Maria Kessler’s January 6th, 2009, comments in response to the article posted on abouttheimage:
The story in Visuell, and its subsequent reprinting here, contains several serious inaccuracies. “About the Image” did not seek comment or clarification from Jupiterimages prior to reprinting the story. The following Q&A;was provided to “About the Image” on Monday, December 22nd, with a request for a clarification to the original article. As no clarification has been forthcoming, we are providing this information here. If you are a contributor to Jupiterimages or an agency distributing content through us and have any questions or concerns related to this issue, please contact Maria Kessler or your editor. Jupiterimages always seeks to operate with the highest level of ethics and professionalism.
1. What is the Jupiterimages service fee and does it pertain to all images?
Various Jupiterimages’ offices around the world charge service fees, but the article questioned our practices in Europe. In Germany and France, Jupiterimages charges a service fee only on rights-managed images because rights-managed image sales are more service-oriented using dedicated personnel. They require added administrative time for customer-requested image searches through analog and digital archives, obtaining model and property releases, confirming editorial uses, researching sensitive subject issues and obtaining clearance in consideration of our growing worldwide distribution.
2. When did the service fee go into effect?
In France, charging a service fee for rights-managed images has been an industry-wide practice for many years. Jupiterimages Germany implemented this particular fee on April 21, 2008 as part of a new finance-based system that shared the rights-managed pricing matrix and mechanisms of our French office.
The IFA Bildagentur division of the Jupiterimages business in Germany has had a long practice of charging service fees. The Jupiterimages.de business had dropped this practice for several months before this new service fee was put back into effect.
3. Do Jupiterimages’ customers know they are being charged a service fee?
Yes, the service fee appears clearly and prominently as a separate line item on both the original sales quote and the final invoice so it is not mistakenly confused with the usage fee. It is also stated in the general sales terms that are binding to the quote. In addition, service fees are explained in the general terms and conditions of any site that charges them.
4. Are Jupiterimages contributors aware that Jupiterimages pays royalties on usage fees only?
Yes, we are clear about contributor payments in our agreements. It is Jupiterimages’ worldwide practice to separate service fees from usage fees. Contributor and supplier royalties are paid on usage fees, not service fees, which is stated explicitly in our agreements.
5. When Jupiterimages Germany implemented service fees in April 2008, were usage fees reduced?
No, for all pre-existing rights-managed contracts in Germany, usage fees (and therefore contributor royalties) remained unchanged. New rights-managed sales after April 21, 2008 were quoted using the new finance system which clearly showed the service fees. Usage fees are routinely reviewed to be competitive in the marketplace. As a result they rise and fall with the market over time.
For more information, please contact:
Maria Kessler
VP, Creative Business Affairs
Chris Ferrone’s comments and questions in response to Ms. Kessler’s comments (above) and Ms. Kessler’s responses:
Chris Ferrone (CF): Did you all see the print version of Stefan’s complete article in Visuell? You’ll notice that before writing the article, Stefan interviewed Alexander Thon about the matter. That qualifies as having sought comment from Jupiter management on the issue.
Maria Kessler (MK): We have an English translation of the article and we know that Alexander Thon answered questions from the author. That does not, however, excuse About the Image from having to seek clarification from Jupiterimages before reprinting what could be easily construed as a defamatory story.
It appears that there are subtle but important language translation gaps (especially in remarks about the charge being applied in Mr. Thon’s answers). For instance, Mr. Thon is quoted as saying, “The (service) charge is only applied to our RM material and is not passed on to our clients.” The latter half of this statement was obviously misquoted as clients see this fee in their pricing estimates and in their final invoices. In fact, an image of an invoice was printed along side the story and clearly showed the fee. Even if Mr. Thon did say this, an impartial journalist should have seen the discrepancy and asked for further clarification.
The author’s argument for the newsworthiness of this story was built on the premise that Jupiterimages is engaged in company-wide clandestine behavior. As both image contributors and buyers are well aware of our pricing and sales practices, which also conform to industry norms, there is not anything subversive going on. The author’s argument and the resulting story do not hold together.
CF: Regarding your comment that “The Jupiterimages.de business had dropped this [service fee] practice for several months before this new service fee was put back into effect,” why was it dropped for several months?
MK: Jupiterimages never intended to stop charging service fees in Germany. As stated previously, we have managed two websites/businesses in Germany which historically charged service fees. The intent was to consolidate these sites in early 2008 into the new Jupiterimages.de website (based on the French platform). As part of the migration plan, we suspended charging service fees on the older business in anticipation of a seamless cutover to the new site, which would continue charging the service fees. For various reasons the roll out of the new site was delayed several months but we had already suspended charging the fees. We decided not to reinstitute the fees while we finished work on Jupiterimages.de, expecting that that work to be done far more quickly than it was. In hindsight, we should have never suspended the practice until the new site was ready to cutover.
CF: Stefan also went so far as to have a “straw man” license a rights-managed image from Jupiter Images - Germany. A copy of the invoice showing the service fee broken out of the total appeared with Stefan’s article in the print version. That service fee was never mentioned when the buyer negotiated the licensing fee with the Jupiter sales rep. Is it fair to say, then, that the client only becomes aware of the service fee upon receiving the invoice?
MK: No, clients are normally made aware of the service fee in their written quote prior to licensing an image. We don’t know who the secret shopper is so we don’t know how the estimate was presented or how the shopper introduced his/her request. As a business practice, when a quote is generated through the customer application on the new system, it always shows the RM image service fee and usage fee separately. It is of course possible that the sales representative did not provide a quote prior to purchase but this would be counter to regular practices at Jupiterimages.
CF: You say the Jupiter Contributor Agreement states Jupiter may charge a Service Fee apart from the licensing fee and that the contributor gets no share of that fee. Can you send me that exact wording from the contract and can you verify that every Jupiter contributor has that wording in their agreement? If this entire matter is simply a result of contributors not knowing the terms of their agreement, I’m more than glad to point that out in the follow-up article.
MK: When working with any contributor and/or supplier, we encourage them to thoroughly review all terms of their agreement. We will also answer any questions they may have regarding any clauses. We do believe that our agreements are quite clear on this matter.
The legacy Contributor agreements for IFA Bildagentur (our German-based content) specifically describe license fees based on image usages. Clearly excluded from license fees are “Mehrwertsteuer (value added tax), artists’ social security payments, and refunds of processing costs or other expenses (service fees)”. All of the active Contributors with Jupiterimages Germany whose images are distributed worldwide are on the new Jupiterimages agreement. This was a pre-requisite to continuing with us. Below is the actual language from our standard Jupiterimages Contributor agreement:
“Net Receipts” means the revenue actually received by Company for sublicensing Images to Third Parties. Net Receipts shall not include any Service Fees, sales tax, freight charges, late charges, interest, or collection fees.
“Service Fees” includes all revenue other than license fees received by Company for services relating to Company’s delivery of Contributor’s Images to Third Parties, including but not limited to search, retrieval, fulfillment, billing, administrative, reporting, data collection, image processing, image management, image transmission, digital delivery via CD ROM or other media, fees for obtaining supplemental releases, and other support and/or customized services.
CF: Why is the service fee a percentage rather than a set amount? Yes, the service provided may vary from one license to the next, but not in the extremes represented by a percentage fee structure.
MK: Certainly the article highlighted an extreme to make a point. However, a percentage as a service fee is a simple and methodic one when building, updating and negotiating prices (a regular practice for RM licenses).
We have rarely been involved in a highly-priced usages (e.g., a range of 1000€ or 10000€) that does not require a large quantity of internal work from researchers, back and forth with the Account Executive, clearance with the manager, clearance with rights control, etc. Conversely, low-priced licenses such as those for editorial (e.g., a range in the vicinity of 100€) usually do not call for a lot internal work. This percentage service fee means that services are apportioned appropriately to the licensing fee.
While we have different methods of charging services fees around the world, this method was already in practice and was adopted as a fair approach for the new system implementation.
(end)
Web: www.jupiterimages.com - Original story published in Visuell - Original Story posted in abouttheimage - Comments from Maria Kessler - Comments from Alan Meckler
Editor’s Note: In response to comments from Jupiter Management that the publishers of abouttheimage, and the writer of the article, mishandled the publication of this story. The editors of abouttheimage and Mr. Hartmann, are satisfied that we have conducted ourselves within the bounds of integrity required by our business and that the story in question was published after completing a thorough investigation which included conversations with representatives of JupiterImages. As for the ethical issues examined in the story, our readers have been exposed to multiple perspectives and are free to make their own conclusions.
Posted in: Features, Jupiter Media, Photographers, Stock Photo Companies
Comments(11)
post a comment »john, January 14, 2009 [#]
Maria Kessler’s response to the abundant evidence that Jupiter Europe have been cheating contributing agencies and photographers is so weak it is laughable.
Now we are meant to believe that the clients pay the extra 20% on top of the usual usage fee!
Is there another stock agency in the world today that gets away with charging 20% on top of the usage fee for selecting and clearing rights control on RM images?
Are they successful?
Where did this crazy idea come from?
Laurent DiConstanzo?
What was Jupiter thinking when they allowed him to implement this rubbish?
This story just gets crazier!
If this is true then its no surprise that Jupiterimages management especially in Europe was a flop and had to sell for a cheap $96M.
The latest news from Chris ferrone shows a screenshot showing the 20 % service fee.
This 20% is not added onto the usage fee it is deducted from it.
As a result Jupiter Europe uses a loophole in their contract so they don’t have to share this revenue with the contributors.
imagewolf, January 15, 2009 [#]
The response from Maria Kessler is obviously an attempt to cover up the system of creative accounting implemented by Laurent Di constanzo.
I don’t think anyone can seriously believe that Jupiter Europe have been charging a 20% service fee on top of RM usage fees to their clients.
If I understand this latest development correctly and the “straw man” that licensed an image to test the procedure confirms it.
Jupiter Europe quotes a usage fee to their clients and then the client receives an invoice for this quoted price but with a 20% service fee included in the invoice.
When the client asks about this service fee he is probably told that it is only there for Jupiter internally and not to worry about it.
Jupiter Europe then keeps this 20% and shares the remaining 80% with the contributing photographer.
Which results in the contributor being cheated out of a portion of the royalties that are owing to him.
Len, January 15, 2009 [#]
Thanks a lot for this excellent article. Purely from a legal viewpoint Jupiters practices might be ok but this alone does not make them less shady.
Lets hope that Getty will correct this asap.
Nick, January 16, 2009 [#]
What a cunning plan. Sell the image for 100 euro to the client and split the bill into an 80 euro ‘licence fee’ and a 20 euro ‘service’ fee and then pay your commission to the supplier based on just the ‘licence’ fee. Agree with the supplier a 50% commission but don’t mention about how the service fee works (the 50% is against the licence fee part not the licence AND service fees) and hope they don’t notice. So in effect you’re paying the supplier 40% of the total fee charged to the client (excluding taxes of course). Cunning. But not just cunning, devious and underhand. Wonder how many other libraries do the same?
Question; Why couldn’t they just be up front and honest and say, look we’ll pay you 40% of what we charge the client and scrap the crap about service fees.
Question 2; So what exactly is a service fee for? Admin costs? I thought that was covered by the 50% the library holds back in commission on every sale.
Question3; Erh, why 20%? Why not be real greedy and go for 50%........
So Jupiter are you reading this? Happy with the way you treat your suppliers?
Mae, January 16, 2009 [#]
If the Jupiter philosophy on the reason for chagring a service is or should be valid, then the contributors of RM material to Jupiter shouyld be able to chagre a service fee for being required to supply all of the service fee data to them in the first place. Gee, isn’t that the reason rights manage material exists in the first place? It’s all about value added information behind the image!
Jon, January 16, 2009 [#]
Anyone know if other agencies operate a similar service fee arrangement like this?
imagewolf, January 16, 2009 [#]
Jon,
In the original article it was confirmed by Jupiter images management that Laurent Di Constanzo brought this service fee system to Jupiter Europe when he still had the title as “Director of Continental Europe”.
It also confirms that it was standard practice in his agency “AgenceImage” for several years previous to Jupiter buying his company.
So we can deduce that he always deducted this amount from his contributor’s sales reports.
It could also be a standard procedure for all French agencies, at least the ones that are in any way involved with DiConstanzo.
You will have to dig further.
One important question!
Where is the man that started all this intriege?
Where is DiConstanzo?
Is it not strange that Jupiter management in Germany, USA, including Alan Meckler himself have commented on this Service fee revelation?
If DiConstanzo feels that it was a correct and legal business practice why does he not explain himself here?
Instead he has Maria Kessler try and explain his dubious activities!
Robert, January 17, 2009 [#]
Being a Jupiter contributor I would seek the advice of a lawyer. Don’t know what countries laws apply to this case but at least in Europe there are several countries where such a unilateral disadvantage of contributors would not be legal.
Janet, January 17, 2009 [#]
I guess the lesson for us photographers is check your contracts very carefully in future to see exactly what you’re getting. 50% or 40% of what? Though very few agencies run this kind of scheme, that I know of, I wouldn’t be surprised some introduce it. Its a great way for them to pay you less than it appears they’re paying. And what’s more they could at any time increase the service fee and thereby reduce the licence fee (the bit they have to pay a % to you). So they’d be paying you even less. Here’s how; they charge the customer $1000 dollars and make the licence fee $600 and the service fee $400 and then pay their photographers 50% (or 40% or whatever) of the $600 dollars licence fee, etc, etc. As Nick said, cunning but devious.
So fellow photographers beware.
O by the way has the SAA made any comment on this issue?
john, January 17, 2009 [#]
As a contributor mentioned above, “why doesn’t Laurent Di Constanzo explain himself”?
The person that is responsible is conspicuous by his absence!
Why is Jupiter covering up for him?
It is in the interest of all Jupiter contributors that the Getty deal goes through; at last we will have a serious stock agency distributing our images.
Maria Kessler, Alexander Thon and Mr Meckler have tried to explain the story.
They probably had nothing to do with this 20% service fee. It came from Laurent Di Constanzo himself!
This 20% deduction from the usage fee probably doesn’t happen with contributors to Jupiter Images in the USA and from the article we read that it was was not standard practice in Germany until Laurent Di Constanzo received control of Continental Europe.
Jupiter should accept that they made a mistake in giving him this job.
By their cover up they risk jeopardising their deal with Getty.
Just come clean, it would be better for everyone.
imagewolf, January 28, 2009 [#]
Is it true that a group of Jupiter contributors are seeking legal advice about the hidden deductions?
If so, does anyone know how to get in contact with them?
Its great that there are people who are not willing to take this lying down.
This kind of thing has to be punished, if not then all agencies will start doing it.