PetaPixel

SmugMug Pulls a Netflix, Raises Fees for Some Customers by 67%

Back in July of 2011, Netflix announced that it would be separating its movie streaming and DVD rental services into two separate subscriptions, increasing the cost for customers who wanted both by about 60%. The news was met with a massive customer backlash online, and over the next three months, more than 800,000 customers canceled their subscriptions and the stock price took a huge hit. The story became a lesson for corporate executives on how not to do price increases. Apparently SmugMug didn’t get the memo.

The subscription-based photo sharing service sent out an email to “Pro” customers tonight informing them of a major service change and price increase. The details are eerily similar to the Netflix case.

Here’s a snippet from the email,

For the first time in 7 years, we’re raising the price of SmugMug Pro subscriptions, something we tried hard not to do.

We know $100/year is a lot and personally, if I were asked to pay more for a service, I’d want to hear from the person responsible for the decision. That’s me, so I placed my dSLR on a tripod, and looked it right in the lens, imagining it was you. I tried to offer a peek inside SmugMug and our thinking:

Because storage, engineering and support costs are so much higher for pros who sell at a markup, we split pro accounts in two: Portfolio and Business.

1. Portfolio is still $150/year (or $20/month) and still provides access to our pro labs for both you and your visitors, plus pro features like watermarking.

2. Business lets you set prices and earn profit. It will be $300/year (or $35/month) for new customers, but existing subscribers who set prices will be asked to renew at $250/year (or $30/month) beginning October 15, 2012.

More details about the change were published to this blog post.

Wanting to put a human face on the bad news to soften the blow, company CEO Chris MacAskill posted a video to YouTube explaining the “what, why, and how” of the price hike:

So basically, like in the Netflix case, paying customers who want to retain the full range of features they enjoyed before (e.g. make money by selling their photos) will be asked to pay roughly 60% more.

Interestingly enough, Netflix’s CEO also uploaded a YouTube video at the time of his announcement explaining the change. Understandably, both videos have few “likes” and a boatload of “dislikes”.

Customers are turning to social media channels to express their displeasure. One of the popular (and humorous) hashtags being used is #smugmugged:

SmugMug was wise in dropping the bad news on the Friday night before Labor Day weekend, as many customers may not hear the news until next week.

The company has long been known for its friendly employees and excellent customer service. Given how similar the details of this case are with the Netflix one, it will be interesting to see whether SmugMug has accumulated enough customer loyalty to avoid the painful backlash that Netflix experienced.


Thanks for sending in the tip, David!


Image credit: 11.EndTheFed.March.EStreet.NW.WDC.9October2011 by Elvert Barnes


 
 
  • http://www.facebook.com/benmcentire Ben Mcentire

    Am I to understand they raised the prices only for the Business portion of SmugMug… you know a $300 a year plus (small percentage) for someone to handle your orders, take care client photos with passwords, plus all the other benefits they offer and give, is not that much money… IF your a professional you simply pass this on to your clients or absorb the extra as cost of business…. Are the ones complaining actually holding professional business accounts or just complaining for the sake of complaining … If and when we are ready to make the move to SmugMug price is the least of my concern when dealing with my clients, service and reputation to protect my clients, products and branding…. Get with it guys, business is business… I will still gladly use SmugMug…

  • http://www.facebook.com/benmcentire Ben Mcentire

    I agree

  • http://www.facebook.com/benmcentire Ben Mcentire

    If the lack of telling them the new features run them off then they where never committed to SmugMug in the first place ….

    did you see any cost analysis before you signed up with SmugMug… I’ve personally seen where a Business logo and sign package worth over $180,000 was sold on just a napkin no analysis, no market research…

  • http://www.facebook.com/benmcentire Ben Mcentire

    So Brandon what your saying is that you really do not need the business account… and that you can do this all on your own with your own website, you can handle the 1-10 prints a year good, then this website is not the model your business needs, and your argument is not valid, your complaining about something that does not pertain to you or your business… people tend to say people like you complain for the sake of complaining ..

  • http://www.facebook.com/benmcentire Ben Mcentire

    Again another fine point…

  • http://www.facebook.com/benmcentire Ben Mcentire

    Then you have become just like them, instead of being smug and arrogant, your attacking and bitter, both the same attitude behind it.. real professionals could care less what you really think…

  • http://www.facebook.com/benmcentire Ben Mcentire

    Because it is unprofessional and complaining about a $100 increase and we give them a bill for $1000 print order…

  • CATFACE T-SHIRT

    If you complain about not being able to afford $100, who knows what else you are cheaping out on. I’d be embarrassed to publicly complain about that amount, but I’d definitely privately express my feelings. Just think about how mad you get when a client unfairly criticizes you on yelp and doesn’t tell the whole story. Professionalism is key.

    The most important part of my business is my client receivables–the quality of my online site and my prints. $100 is nothing to my business, IF it’s an investment that pays back. Life as a low-end (but full-time) photographer means that any slight improvement results in a great deal of sales for me. Simply making my site better bought me 20% more revenue. Even though I am low-end, I make a lot from improving my web site. Paying $1000 a year to improve my site 20%? Easy choice.

  • https://www.facebook.com/iSpyHI SpyHI

    I, for one, am standing by SmugMug. If you can’t sell 20 8×10 luster prints at $20 (around $15 markup), then you’re not really using the eCommerce capabilities and should be fine operating at Portfolio level and self-fulfilling your one or two yearly print sales.

    Perhaps the news could have been handled and/or spun differently, but the fact of the matter is that for the same amount you’ve always been paying, you’re just losing access to something you weren’t using in the first place.

  • CATFACE T-SHIRT

    Your equipment doesn’t make you a professional…using the appropriate tools for your job does. Understanding what makes money makes you a profitable professional. Even if the battery grip is a rip off, I just need a few good vertical shots to pay it off, and if it is slightly more reliable than the third party model then it’s worth it to me. Similarly, I don’t care what my web host costs to run their business–I care about how much money it brings in now and for the future.

    Professional web hosting is a business expense. Pick the best.

    Netflix (and other forms of television) are ways to rot your brain and waste your time. If you’re paying anything for it you’re still wasting money.

  • http://elabua.myopenid.com/ Bua

    Wow. It’s so unlikely that they will get away with this one.

  • Mansgame

    True, but I like “real” professionals and respect what they do, but my target is the other “professionals”..the ones who used to shoot film and don’t like digital and think it’s too easy while their own pictures are average at best. The artsy girl who can draw and thinks by default she’s a professional photographer.

  • Mansgame

    More like damage control ;)

  • Mike Ermilio

    I am hoping that a good number of people DO leave Smugmug over this pricing increase. It’ll mean a decrease in workload for their servers so my site won’t go down once a week anymore.

  • http://twitter.com/ohnostudio Libby Stack

    It will go the way of Digital Railroad. Remember them? Better double up your archives.

  • Mark Dickinson Photography

    I do approximately 10k in smugmug per year. I am not happy about it either, I figured the math on smugmug and I pay them 1500.00+ 150 pr year based on that 15%. HOWEVER they make more from the labs and partners negotiating print prices

  • http://www.facebook.com/deborahdekoff Deb DeKoff

    Hmm. I think after the increase, one might say, “I’ve been mugged!”

  • Frank

    The comparison with Getty Images and their paltry royalty payout to photographers is like comparing bananas to apples, since they are totally different kinds of businesses; the only similarity is that they involve photography.

  • http://thomashawk.com/ Thomas Hawk

    Frank it is. The point is about payout percentage though. 85% is good. 20% is not good. Doesn’t matter what the business and what you’re selling actually.

    This price increase only affects those customers who are actually selling their stuff. There are other plans for hosting content that are cheaper. if someone is seriously selling their work, they are probably making more than $300 off their sales. Unless someone is not doing $350 (.85 x $350 = $297.50) in sales (and these folks may want to reconsider what it means to be Pro) mostly the plan pays for itself.

    SmugMug has always been a fair, family run organization. Their storage costs have gone up and this is just part of being in business.

  • http://www.facebook.com/kimberly.siebert Kimberly Siebert

    Why the personal attacks on each other?? STOP ALREADY. Or “gasp” band together, collectively, and perhaps smartly ask lurking Smugmug, “hey, would you give few the of us on Petapixel a discount for a year or two, or give those a free pro upgrade that dont have them, especially for all this free publicity”then let smugmug worry about what day to cut off the free upgrade or nice discount. Then have fun reuploading everything, have fun re-designing your sites.. WordPress, Fotomoto, Crashplan, Flickr, West Coast Imaging, or Aspen Creek Photo.

  • http://www.facebook.com/DonBecca Don Sharp

    They did not receive the Iceberg warning from the folks at Nexflix, to bad we are going to have to leave this Smugmug ship.

  • Mike

    Sucks that they did this on a Friday afternoon before a holiday weekend. If they really cared so much about their customers why do that? Oh right because they knew there would be a backlash

  • David Thomas

    I
    am a professional and have been with SmugMug for some time. If you
    are using SmugMug to sell your product, you will have to go with
    their Pro account because the basic account will only allow you and
    your customers to purchase prints at cost. You can’t markup pricing
    to your customers now at that level. You only get at-cost pricing and
    watermarking of your images which is not very useful for someone
    trying to make income with photography.

    Their rationale
    for drastically increased prices, they say, is to provide better
    services in the future for their customers. I think they
    got it wrong. Why should loyal customers, who have made SmugMug the
    successful company that they are pay in advance for “Promised”
    services they may or may not be able to deliver?

    Either
    SmugMug hasn’t done a good job of thinking this through or there
    is more to this then they are telling us. The people that this really
    hurts,( i.e. those doing part-time photography or those really
    struggling to make ends meet) is the smaller customer because they
    will find it difficult to absorb the price increase. And
    frankly, these people don’t use that much of SmugMug’s bandwidth and
    storage anyway. It’s the established pros and video providers who are
    allowed to upload unlimited numbers of high-res images and
    HD video which takes massive bandwidth and storage. Why
    isn’t SmugMug charging those users a premium because they use more
    resources than others who use less resources but still need the
    ability to have the ecommerce use of SmugMug?

    I’m
    one of the lucky ones because my renewal date is in less than two
    weeks, so I can get another year at the existing rates. But I’m
    really annoyed and disturbed how this was thrown on loyal SmugMug
    users so I’m not likely to renew with them. There are plenty of other
    companies that provide similar and even better solutions than SmugMug
    before their outrageous price increase. Several postings
    have said Zenfolio has been more than happy to give new customers a
    20% discount to former SmugMug users. I’m sure SmugMug’s competition
    is having a field day with their recent news.

    In
    the end, you need to determine what level of service you need and do
    you buy into smugMug’s promise of future improvements which
    you are paying for in advance.

    My
    feeling is that for a company to make such as drastic price increase,
    which they must have known would infuriate their
    existing customer base might indicate these possibilities:

    The
    MacAskill

    family wants to steak instead of chicken.

    The
    company is heading for financial trouble.

    They
    don’t want to deal with the small customer because they
    don’t generate enough revenue so they are changing their business
    model to provide a higher revenue stream.

    Whatever
    is going on behind the scenes, if you are using SmugMug now or in the
    future, you might want to make sure you have your original material
    saved somewhere other than on their servers. If you don’t you might
    want to consider downloading to a safe place in case the family-owned
    company becomes a thing of the past as so many others before them.
    From your SmugMug gallery go to Tools drop-down, This Gallery,
    Download All setting to save your pictures to your hard drive.

  • http://twitter.com/richardford Richard Ford

    If staff are expensive then OFF SHORE. It’s just servers and programming… sheesh.

  • PhotoDude

    Thomas Hawk = SM shill

  • Kim Possible

    Dude… those smart cars are deathtraps and voted the worst buy in 2010.

  • Elsy

    The same thing just happened at Fotomoto. Although it is not great news for low sales photographers (just getting started, low traffic, etc.), it is a good opportunity for self-assessment. “Who buys prints anyway?” is a legitimate question and forces us to think about better ways to showcase and sell our work. In fact, the underlying question really is: “If you knew no one would ever look at your work, would you still make photographs?” Feed your face, feed your soul.