I was thinking about going, so maybe see some of you guys there!
@Digitalscience, +1! Very well said.
The new system, though a bit in a grey area in terms of “invoicing” quality, claims that you have to get 80% out of item price as INCOME from the buyer and that you have to pay 10% out of item price as COSTS to Envato. The difference is the profit that you get and that you have to pay income tax on. Issue is only with proving that you HAD A COST to Envato. Proving those 10%. In some countries it’s easier and doable, other authorities might be more pedantic and bureaucratic about it and you might have some issues.
I updated my comment a bit to try to be clearer, but that is exactly what I don’t really understand about it all. Why does Envato need or want us to declare an extra cost to them? If we don’t see that money, it doesn’t make sense and complicates things so much.
The only thing I can think of is that are trying to “prove” they are a platform, and simply ignoring that they may be putting authors in a grey situation by doing so. After all the “speak to your accountant on how to manage your account with Envato” replies that’s the feeling I get.
So, there are no legal/tax reasons for splitting the fee, other than not being able to justify a variable fee to buyers? In other words, are you saying the only reason why I now have an added step in figuring my taxes is because of the variable author fee?
If that’s the case, we have to get rid of the variable fee. It’s not an incentive to anyone. Becoming an Elite author (hitting the sales threshold) is incentive enough, but forcing authors to deduct the author fee during tax time isn’t worth it.Collis, can you clarify that I read that right and that you’re saying there are no legal reasons for separating the author/buyer fee.
The new added author fee (extra 10%) has nothing to do with the amount of money authors receive. Starting at 50%, once an author reaches elite status, they should get 70%, and the buyer pay the remaining percentage as a “buyer fee”, that should also be a variable fee.
Examples: If author gets 55% from sale, buyer fee = 45%. If author gets 70% sale, buyer fee = 30%.
One of the biggest gripes with this new system is that if you reach Elite status, Envato is claiming the author earned 80% with 10% being an “author fee”, but the truth is the author’s bank only received 70%. We can’t declare money we never saw, do you guys not get that that makes no sense in any country in the world? As far as I am aware, it is illegal and problematic at worst, and extremely grey and problematic at best.
The final set of differences is more specific to Envato itself. What would our authors want? What would our buyers want? How does the app work and how are transactions modelled already? What’s the cost of change? In other words – what is the overall best balance for both authors and buyers?
It is painfully obvious and easy to grasp that authors passionately want a reseller/commission marketplace, and buyers simply want good products from authors. The reason we can’t have that is because Envato wants to have their cake and eat it to. Cherry-pick the benefits of different business models to make it easy for Envato, and to be able to control authors, I.e exclusive authors on a platform business model? Are you kidding me?
There are literally zero cons for having a reseller/commission business model for authors and buyers. If your marketplace doesn’t provide the environment authors want to sell on, we will move and future authors will simply sign up elsewhere from the start, and when we do that, buyers will follow us, because they are loyal to our products, not Envato.
One of your biggest and fastest-growing competitors recently confirmed to me that their business model is a “reseller/commission” and the commission is always 70%, even if you just started selling or have sold $1 million worth of products, and there is no “exclusivity” monopoly-like rules over there.
Despite repeating myself – Authors made Envato what it is today, and authors can and will make another marketplace grow even bigger.
I implore you to reconsider it all, I loved it here and what I thought Envato stood for. It is painful to realise I was wrong, and that you are forcing authors like me out.
@Collis, your biggest regret will eventually be the way your company has handled this and the route you have chosen. I really am baffled at all this. You essentially have your entire companies profit-makers (authors) uprising against your companies decisions, top-selling authors saying the trust is broken with Envato, hundreds of replies (99% passionately against your decisions) and you are still choosing to plow ahead, as if we didn’t have a say in all this.
As I mentioned elsewhere, I would never have signed up to Envato had I not been “confused” and believed it was a commission system. And many authors would have done the same. How much money/products/etc would you not have today had you been “clear”? How much money/products/etc will you not have in the future because you are now becoming “clear”? Your company didn’t become successful based on a platform business model, don’t ignore that fact.
Authors are not dumb and we will not blindly accept everything you dictate, as some things can dramatically influence our lives, like this.
Authors will look for alternatives. And the real truth is that just like authors made Envato grow from nothing to what it is today, they will grow another marketplace and community. And growing/realistic competitors with the business model we want do already exist.
Today is a very sad day. It’s hard to put into words.
Seeing that authors from different levels are not happy about the way Envato handle these things makes me afraid to go in the full-time Envato author model! (which i just recently decided to do).
This is yet another reason to be extremely shocked. You could be the next best selling author, but they will never ever see that money because of this.
I would have never signed up in the first place if I hadn’t been “confused” into believing it was a commission based system. That means Envato would have never made any of the money my products have made so far. I would have looked for another marketplace where the business model is what I am looking for and my products would be available for sale somewhere else right now.
This is just one of so many potential consequences (will be apparent mid/long term) that Envato are seemingly not acknowledging or understanding.
Unfortunately Envato are now a “corporate” company turning over millions per year, and they have a duty to reduce their tax bill (Google, Amazon, Starbucks also do it). Authors are still receiving the same amount but due to trickery of the money Envato actually are receiving 50% less tax wise.
The key difference between Envato and Amazon/Google/Starbucks, is that those companies generate their big profits from their own products. Envato generates all of its profits thanks to authors’ work. Buyers are only here because of authors’ work, not Envato. If all the best authors left, buyers will follow 100% to wherever they go.
Which is why I am so confused and baffled by Envato’s continued ways of ignoring authors.
I read “The Platform” blog post, and I am absolutely stone cold shocked.
@Collis, one of the main reasons 99% of authors are even here is because we understood this marketplace to be a reseller with commission system, which allows us focus on the “be creative” part, does Envato not acknowledge this?
And after hundreds of authors (mostly from experienced, top-selling authors too) stating this and saying this is what they want, and many professional accountants from different countries confirming the entire business model is that of a reseller model, you insist on the contrary.
You are not “sticking” to your business model, you are effectively changing it now to be that way, as it has never been that way (otherwise you wouldn’t be forced to implement such dramatic changes).
A competitor recently confirmed to me that their marketplace is a reseller/commission system and will also be dealing with VAT, as expected. Does that not worry Envato at all?
I am so shocked at all this. And add to that, that you are silent for months to then announce something 2 days before implementing dramatic changes to the marketplace. Wow.
+1 to Jonathan01, and buying a premium plugin would also allow you to ask for any support the author may provide + report bugs in the plugin straight to the plugin author.
@EricSchwartz From the Australian Consumer Law link you provided:
What you should not do in advertising
- omit relevant information
Authors are explicitly omitting that buyers will not receive a valid license for each plugin, that they will not be able to ask for support from the plugin author and that they will not be able to update the plugin themselves, even in an emergency, such as the huge security bug discovered in one of the more popular bundled plugins.
This all makes no sense to me, especially now that Envato has a shopping basket on the marketplace, it should be easy to simply allows authors to select a couple of premium plugins the theme is compatible with, and when a buyer wants to buy the theme, they have the option to easily add/buy a license for the plugins at the same time.