The ethical decay of Turbosquid

Turbosquid launched in October of 2000. Since then it has become a post-household name. While often referred to in a deragatory sense to suggest work of questionable quality it's also been appreciated as a way to grab an asset on a tight timeline or as a cost saving measure. None of us would deny that with some digging you can find production quality assets on there. Being the first marketplace for artists to sell their assets and providing what seemed a reasonable service they quickly grew to become the defacto choice when looking for an asset in a pinch. Otherwise known as a monopoly.

The monopoly survived with support from us, the 3d industry. While there have always been questions of whether it's worth selling assets on Turbosquid the general consensus was that the royalty rates, while not great, were good enough. This is our industry, we know how to create these assets and so we respect the artist's value. It is not about supporting a market. A middle-man. It's about supporting fellow artists from both the client and vendor's end. A mutually beneficial arrangement.

For a long time good enough remained good enough. At least from our side. Unfortunately, that feeling is no longer reciprocated and apathetic support of a monopoly we helped create is soon to shift to being tantamount to endorsement of unethical behaviour.

It started innocently enough. Turbosquid mailed its top sellers asking if they'd be interested in entering an exclusivity agreement. Did this mean that the monopoly was slipping? Customers starting to look to other sites for purchase of 3d assets? They also didn't have numbers in mind for this exclusivity agreement. Not only did they want this discussion under a non-disclosure agreement. They wanted their vendors to reveal their sales statistics from competing sites as a requirement for the discussion.

It'd be a fair guess that this means Turbosquid simply did not know what marketshare they had and whether they were losing marketshare or the entire market was suffering a downturn. While their actions so far were tip-toeing in unethical territory their response to the leaking of these discussions has more than earnt my disrespect.

Competitors warned their vendors about the risks of going exclusive with Turbosquid. Potential loss of income in the short term, and reduced royalty rates in the long term. So rather than shelve the clumsy attempt at a stealthy cutoff of the competition's air supply Turbosquid instead effectively held their vendors' future income hostage. Royalty rates for vendors who do not go exclusive will be dropping from 55% to 40% on September 1st 2009. The reward for supporting their hostile takeover of the remaining industry? A 60% royalty. It seems they've forgotten their original mission statement. "We help computer artists buy and sell their digital assets." They're even further off from their currently stated mission on their linkedin profile which includes the intent to provide "maximum returns to intellectual property owners".

First of all I am baffled that this isn't illegal. My impression of what little I've seen of anti-trust cases was that using a monopoly in furtherance of a monopoly is grounds for investigation. Perhaps it is illegal, I'm no lawyer. Regardless the wheels of justice turn slowly and so it is up to us, the 3d industry, to take control of the situation.

The first stop is the numbers. So I spoke, under the condition of anonimity, to some of Turbosquid's top sellers. I realise there are plenty of other sellers out there, but those selling small quantities or who are already exclusive (even if only because it's the only site they've ever submitted to) are less likely to be negatively effected in the short term. Their impact on Turbosquid's income will also be less.

So here are the stats Turbosquid may have been unable to procure. If they had perhaps they'd not have been foolish enough to make the choices they did. They have a strong monopoly, 70% of sales by value. Unfortunately for them that's not sufficiently strong for this play to work out for anyone who crunches the numbers.

First, let's look at the income impact for going along with the exclusivity. Off the bat you're down to 70% of your previous income. But that 70% will go up a little due to the increase from 55% to 60%. To figure it out it's (60/55) * 70. Which is 76.4%. So going with them you're going to take a hit of 23.6% on your previous income.

Now let's assume you decline their exclusivity terms. You'll still have your 30% from elsewhere, but your 70% will be reduced. (40/55) * 70. This is 50.9%. So add the two together and you've got 80.9% of your previous income. A hit of 19.1%. You're still losing out, but not as much as going along with their exclusivity terms.

So we've covered the vendor's perspective. Now let's look at it from Turbosquid's. Let's assume that, miraculously, everybody went exclusive and the entire world only bought content from Turbosquid. i.e. their absolute best case scenario. For a start the income will increase to (100/70) * 100. That's 142.9%. Nice. Though they'll be paying out a little extra. So let's tone that back 142.9 * (55/60). It's 130%. Still - a 30% increase in business is nothing to be sneezed at.

Now let's look at their worst case scenario. Everybody declines exclusivity and takes the pay hit. Their 100% of before is the same, now it's just boosted by taking the cash out of their vendors' pockets. That is (60/45) * 100. It works out to 133.3%. Interesting, huh? Perhaps they did get these numbers and do their sums.

So it seems whichever way vendors turn Turbosquid can look forward to a 30% increase in revenue from September 1st.

There is only one factor left in this. One which Turbosquid have no power to control. That's us. The 3d industry at large. It's time for us to step up to the plate and support each other. Many of us know good artists who put their work on Turbosquid. Guys just like you and me trying to make a living. They provide a good quality product at a reasonable price and they're getting squeezed either way they turn here. We can change that.

My proposal is do not buy from Turbosquid until they offer all vendors an irrevocable, permanent, contractually guaranteed 80% of gross royalty. Flat. Regardless of sales level, with no exclusivity agreement. They've shown can be industry leaders in terms of dispicable behaviour. If they want our business back they should lead the industry in vendor remuneration.

Once we cross a 25% reduction in sales this move is costing Turbosquid. Even if we don't shift it that much we're increasing vendor's income back towards where it was due to the higher royalty rates on competing sites.

Supporting your fellow artists isn't sufficient reason to purchase elsewhere? Even before the lowering of royalties Turbosquid offered the industry's lowest royalty rate. As a result many vendors would put their assets on another site at a lower price. The higher royalty there meant they got a few extra bucks, we got a cheaper price and they helped support the small players in the industry.

Vendors please refuse the exclusivity agreement. We have your back. To my colleagues and friends you can find a list of alternative suppliers below. CGUpload will soon offer software, CGPublisher, to simplify publishing to multiple marketplaces. Please see the comments for details. Anyone who wants their site added to the list of suppliers please contact me.

3d02.com
3dexport.com
3dexchange.com
altairmodels.com
creativecrash.com
digitalelements.be
exchange3d.com
fallingpixel.com
flatpyramid.com
mediastock.ca
presto3d.com
the-blueprints.com
the123d.com
the3dstudio.com