Over the last while we’ve been been discussing the SquidGuild exclusivity program with individuals as much as we could. Now that it is formally announced, I wanted to give some more color about what we’re thinking and how we came to this conclusion.
First off, we did a lot of homework and “market research”. TurboSquid spends a significant amount of time trying to understand our business, and 3D in general. From all this research, the number one request from sellers is to earn higher royalties. The reality of the situation is that we couldn’t just give up a significantly higher share of the royalties without cutting staff, and in particular during this economic period. To give more money, we needed to get a commitment from our sellers, and compete more vigorously with the copycat sites out there.
Through our research and doing some test programs, dozens of sellers (with millions of dollars of sales among them) gave us their actual sales information on other sites they had tried. One thing we learned was that TurboSquid’s sales were at least 10 times the next biggest site for products sold on both, and as a whole significantly more than that because of the size of our catalog.
One of the all-time top sellers commented recently to us that “we did our homework on the rates”. We picked 60% as the top rate for just that reason — it was enough to immediately increase the earnings of the people that had aggressively published their product catalogs. And of course, any new customers you bring to TurboSquid will make the increase larger.
Something worth noting is that there’s some randomness to the way this shakes out for sellers with lower sales amounts. For some people, for some products, and in some months, they will see different trends than TurboSquid as a whole marketplace. Every month somebody writes in and says that they had a terrible month, and somebody says they did incredibly well. We picked a rate that we thought would help the most people, but we know we could never set a rate that help everyone because of the nature of statistical distributions. The top sellers have less of this variation, and that’s why the biggest sellers have signed up.
Another part of our calculus is that 60% of products on TurboSquid are de facto exclusive and not published elsewhere, so for these sellers it’s a great deal. Overall, the vast majority of the 18,000+ sellers are going to improve their earnings, reduce their publishing workload, and get better information about what to sell and how to sell stuff. We expect to have a high sign up rate for the SquidGuild, which will cost us money. Some of that will come back from business we take from other sites, but we have still projected a decrease in our commissions from sales.
The exclusivity does have several important other effects for us, though. One is that we can assemble a group of sellers that are truly dedicated to us, have a vested interest in our success, and with whom we can share a lot more information. Something that happened to us when competitors brazenly copied our site is that we became more secretive about sharing things. I can’t tell you how unnatural this feels. For example, we have the new designs for the product manager UI basically done. I want to present them to the sellers so they can see the actual design work and give us feedback before we code the UI (the API underneath is almost done, too). Right now, there’s some small number of people who would forward that on to our competitors which would give them a head start on copying us, or at least taking anything they think is interesting and releasing it. With exclusivity, it’s less of a threat that the information will be shared, and even if it is, I’m less concerned because our defenses against copycat sites are stronger.
The second effect helps us deal with what I think is the major barrier for the growth of our industry — standardized quality for the models. This is part of what allowed the microstock photography to take off. The 3d industry is poised for huge growth, with direct rendering in browsers (started by Google Chrome), and the general proliferation of 3d hardware. Although we review models published now by eye for quality and other aspects for the search engine, that needs to change. We need to directly certify sellers and their work, and make sure that the quality is there for every model and reject the ones that don’t meet the standard, and also focus on open standard file formats and make sure models are converted properly and render correctly.
This is costly, though. I’ve done a lot of research, and even made friends at some of the stock photography sites to discuss their review policies and what worked and didn’t work. For example, one of the top sites pays a couple dollars per image for review and 3d models are obviously more complex than the images. The bottom line is that the economics for direct review of models don’t work if a model is published a dozen times at a dozen sites and needs to be reviewed a dozen times. There isn’t enough profit to go around the industry to do that review, and there’s no doubt it’ll be expensive. Also, what is most likely to happen is that when TurboSquid certifies a model, other sites will automatically give it a certification if it isn’t exclusive.
Our vision is that TurboSquid will evolve into a much higher quality content site. People just starting in 3D whose work is of lower quality will be refused and they will be mad at us, but there will be sites that cater to these people and they will have their part of the market, which is fine with us. This is what we wanted to do originally starting in the year 2000, but there were legal issues preventing us. Our team (called “editors”) are already removing stuff from the site and major features of the new publisher include a way to suspend that content from the site in an orderly way, and an integrated certification process.
Another aspect of this focus on quality you’ll see on the August 13th launch is that all sellers now get a ranking on how well they’ve done selling on TurboSquid, from Clear through Gold and ultimately to Diamond (this is outside of the SquidGuild). The new search interface has a specific filter so that customers can choose only the highly ranked sellers. This alone will place a significant emphasis on quality products and high quality artists selling on our site.
Hopefully this helps you understand our thinking, and there’s a lot more information I’ll share in the future as the discussion progresses. Having personally joined the 3D industry in 1993 on a 100 MHz Silicon Graphics computer, I can’t believe how far we’ve come. The best part of course, is how much farther it’s going to go.
Matt Wisdom, CEO