posted this on March 10, 2011 04:12
On March 10, 2011, TurboSquid announced that we had joined forces with competing stock 3D sites Falling Pixel and Exchange3D.
What is the relationship of Falling Pixel, Exchange3D, and TurboSquid? Falling Pixel, Exchange3D, and TurboSquid are now all part of the same entity.
Did TurboSquid buy Falling Pixel / Exchange3D, or did they merge? In business terms, TurboSquid now owns the collective assets of the companies. We look at it as joining forces because of the nature of the partnership—Falling Pixel and TurboSquid are working together to meet the challenges of evolving and transforming the 3D industry.
What challenges made all of you want to take this step? Our industry is young and there are still several important things we have to do to reach the next level of success for all of us. Two concerns in particular are creating quality standards for content that raise the bar for 3D models, and helping international customers purchase and use stock 3D in their own languages with their own currency. Both are significant undertakings that are difficult to do with relatively small companies. In addition, Greg Solovyev, the CEO of Exchange3D, was ready to move out of the 3D industry, but still wanted Exchange3D to be part of the future of the stock 3D industry. By allowing Exchange3D to join up with Falling Pixel and TurboSquid, Greg was able to achieve that goal.
I'm a stock 3D customer. What does this partnership mean for me? You will see feature improvements on all sites over time. The main impact will be an improvement in product quality across the board as we implement standards and certification. For customers outside the USA, you will see more options for purchasing in other languages and currencies.
I'm an artist. What will happen to my royalty rates on all three sites? We will unify all royalty rates on June 1, 2011. Royalty rates across all sites will be set to match the current TurboSquid rates of 40% for non-exclusive artists and 50-60% for exclusive artists.
I am a SquidGuild member. What does the partnership mean to me? You may now publish your models at TurboSquid, Falling Pixel, and Exchange3D and remain in the SquidGuild. Please note that we will soon add features to do this for you automatically, but if you like you can do it on your own now. Falling Pixel accepts Euros from customers, and Exchange3D caters to Eastern European and Russian markets, so you will be getting more exposure for your 3D models. Content certification standards, which are currently in the beta phase at TurboSquid, will also be applied across all three sites as they are implemented.
I am not a SquidGuild member. What does the partnership mean to me? It means that some new technology and a unified accounting system will be available to you, among other benefits. It does mean that Falling Pixel and Exchange3D will offer lower royalty rates for artists that aren't members of the SquidGuild. The other point of view is that the SquidGuild will now offer more financial incentive to join, as well as make it easier to manage your catalog through the SquidGuild syndication engine. We hope you'll consider taking advantage of these opportunities.
I'm in the SquidGuild. How can I publish my content across all sites? SquidGuild members will be able to syndicate (duplicate) their products across all sites automatically in the near future. In the meantime, you can manually publish content on these other sites. You will need to open an account at Falling Pixel and at Exchange3D in order to do this. We ask that you use the same member name as your TurboSquid account if possible, to aid our future efforts in unifying accounts.
How will my lifetime earnings be calculated for SquidLevels like Diamond? The lifetime sales across all sites will be added together when we unify the accounting and payment systems, which should push everyone up the ranks faster. Will you ever close down Falling Pixel / Exchange3D? We don’t have any plans to close these sites down. It is hard to say what the future will bring, but we can’t foresee any time when closing these sites would be good for either artists or customers. Also, it gives us the freedom to try out different things on the different sites and see what works best.
Can you tell me about the financial transaction between the companies? Sorry, we can't share those details.
Are you going to stay focused on 3D models? Absolutely. Our business is delivering 3D models. You won't find us losing focus and diverting our resources to other areas like music or stock photography.
Is this change part of an evil plot to get a monopoly and then reduce royalty rates for everyone? [Answer by Matt Wisdom, TurboSquid CEO]
No. Since TurboSquid opened its doors more than 10 years ago, we have only raised royalty payouts to artists. As the "pie" has gotten bigger, artists have gotten both more money and an increasingly larger percentage of the pie. We increased the royalty structure in 2002, and then again in 2009 to favor artist loyalty, which was part of our plan to introduce quality certification. This resulted in TurboSquid's own percentage going down while artist payout percentages went up. This blog post from 2009 talks about the SquidGuild and its relationship to certification. Note: as of March 2011, our quality certification program is in beta with many top artists progressing through the process.
Regarding the term "monopoly," which means "a market condition where there is only one seller" -- a monopoly isn't possible in this business. There are dozens of competitors, the barriers to entry are very low (anyone with a website can join in). Any customer could choose not to purchase stock 3D and build the model themselves instead, or hire a 3D modeler to build models for them. Ask any attorney and they'll tell you the same.
But here's the real challenge with our business: stock 3D is only supplying a very small amount of the 3D created in the world, maybe 4%. As a whole, TurboSquid is competing against customers who are artists wasting their time building 3D models they could have bought as stock. TurboSquid is making moves towards converting that group of customers to using TurboSquid's artists to supply as many of their 3D models as possible. To do this, we need certified model quality, among other requirements we've learned. This is challenging stuff, and expensive stuff. Reviewing an image for quality is simple by comparison.
I know we have some competing websites that come up with outrageous accusations, so I wanted to spend some time on this question. There will also be some artists who legitimately are worried. If we wanted to lower royalty rates across the board to favor TurboSquid, wouldn't we have done it already in the last decade? And since when has anybody ever gotten a monopoly on an internet business then radically changed their rates? It would destroy their business.
Conspiracy buffs will always favor some wild story over the obvious. In this case, there's no stronger proof than the payouts themselves (this was shared recently with the SquidGuild):