I said this months ago and it’s still true, it’s a money saving exercise, by using the reseller system Envato would receive all payments and then send out commissions to the authors (which they do) but they would have to pay tax on all money coming in, by moving to the “current system” then they only receive the buyer and author fees (so only a max of 50% of the item price), so Envato have basically reduced their tax bill by 50%. Working it out could mean millions saved for Envato.
Thats the thing: I also think that envato does this mostly for tax reasons but I cant figure out why exactly. I dont think that it works the way you describe.
In my book it makes no difference if you
- Earn 100$
- Subtract author commission of 70$ as business expense
- Pay tax for the remaining 30$
- Earn 20$ from user (buyers fee)
- Earn 10$ from author (authors fee)
- Pay tax for 30$
But I agree with your conclusion: If its for tax reasons I think it would be easier for everyone to accept if envato would tell us why exactly they are doing this. Reducing taxes is a reason I can understand. Something like “empowering and celebrating authors” makes no sense to me… (especially when you could easily empower authors by following their suggestions)
Kriesi saidI think the English version can be found here on page 24 point 3.4.2
... It unfortunately seems to be only available in german but its easy enough for me to offer a sufficient translation. ...
Nice one, I think thats pretty much it.
Also I got one more question. Maybe I should have started with this one.
3.) In your announcement under “Why Envato Market will stay a Platform” you tell us that you don’t consider switching to another business model because you want to “empower and celebrate authors”.
However I don’t think any author here would feel less empowered if you change the system to the way we always thought it works (namely a comission based system).
Truth to be told, I actually feel less empowered by the way everything is handled currently. For the first time on this marketplace I don’t feel that you tell us the whole story. There are hundreds of authors who WANT that you officially acknowledge the commision based system. It would instantly solve pretty much any tax problems we are having. Yet you go trough all this trouble, thousands of posts and hundreds of complains to implement a complicated solution that obviously no one but you favors.
Why is that?
Ok, got a few questions, and I figured since the answers might be interesting for everyone here I ask in the forum instead of sending a mail to firstname.lastname@example.org:
1.) You tell us Envato Marketplaces are a platform and you are not the seller. Yet I have a legal document issued by the Austrian Federal Ministry of Finance that basically says you are the seller, based on the way you operate.
It unfortunately seems to be only available in german but its easy enough for me to offer a sufficient translation.
Under section 3a.13.1 it says that it is assumed that an appstore (or similar service) is not the seller if you only process the payments and do nothing else. Otherwise it is assumed that you are the ones getting the full revenue of a transaction and then pay others a commission. Since Envato offers a lot more than simply being a payment provider you would need to qualify for each of the following statements in order to not be the seller:
- All invoices to customers need to contain my name (check I suppose, with the new invoices)
- We got a contractual agreement that says you are not the seller (check, its now in your TOS)
- You neither authorize the service I offer, nor do you dictate the terms on which they are offered (not even close to check)
Last one is key here: Since Envato reviews all items I upload and also sets the price you dont qualify for the last item on the list. And because of that austria considers you the seller.
Austria is a small country and maybe we are the only ones managing appstore laws this way but since the EU shares a lot of their regulations by now I would assume that there are several other countries with a similar specification of appstores and platforms.
Am I supposed to ignore austrian law just because you consider yourself a platform and not the seller?
2.) If I would accept that you are not the seller I would also accept that I now owe Austria a 6 figure amount of VAT. Since I could not prove which of my previous customers are EU based and which are not I would need to pay VAT for each of them. So 20% of my lifetime earnings would now be due in taxes. Not gonna happen if I can prevent it…
You already said once that you will try to solve historic tax problem but at this point and with your current announcement I think its time that you lay out that solution, otherwise there are thousands of authors who would need to pay millions in taxes retroactively…
after reading through all of this, I consulted my tax advisor and a lawyer, both specializing in international taxation laws and the selling of (digital) products on marketplaces, such as envato. The consensus was that this business model obviously is and always has been a commission based model. We never interact directly with the buyers (we don’t even know who buys our items, which I would have to know for VAT taxation purposes, if I really were the seller, creating a HUGE mess), we don’t receive the money directly and never pay a “fee” to envato, instead we get a COMMISSION at the end of the month, which is paid out 15 days later. This commission is the taxable income coming from envato, not the buyers.
I urge you to go back to your simple and transparent commission system, which correctly displays what is actually taking place.
Got pretty much the same information from my tax advisor. According to him my only business partner is Envato. Envato sets the price, collects the payment from its own customers for the license and then pays me a monthly commission. And I have declared my taxes based on this since the beginning of themeforest. It worked out well and its sooo much easier to manage than anything Envato is currently proposing.
According to any professional I have asked, neither your old nor your new system reflect the reality, which I have attached to your image ;D
So my question: why not set the financial system up in a way that actually reflects reality and is understandable.
PS: I live in the EU so this maybe wont affect me right now, but I guess Envato has similar plans for all countries? To say that I am very concerned about this development would be an understatement…
Actually Enfold does already support WordPress 4.0. We have released a updated version a few days prior to the 4.0 release. all you need to do is update your theme and you should be fine
If that does not help feel free opening up a thread in our support forum:http://www.kriesi.at/support/
Is this a good time to bring back this very first post from Kriesi? http://themeforest.net/forums/thread/how-long-do-items-sell/7257#59549
I guess your doubts / worries have been cleared by now, and reading this will give you a good trip back memory lane..
I literally JUST found out that you could see an author’s history of posts by hovering on their avatar and clicking on “recent posts” – this is awesome as you can really see how some people have had their life completely changed over a small stretch of time!
Well in Kriesi’s case it’s 8 years of hard work, so it definitely did not happen overnight – but finding this feature just gave me a chance to read my posts from only 1 year ago where i am about to give up, struggling with repeat hard rejections..Have a read at some of your old own posts – it’s a pretty cool trip!
Haha, nice one! Cant believe I have already been 6 years on themeforest. Time flies so fast if you do something you like ;D
Thanks a lot everyone! Great to come back from vacation and have such a nice surprise waiting
The original concept of selling microstock on Envato is being distorted now. How it did and should work is authors are creating the stock – it is our work, Envato provides the platform to sell on, and Envato takes commission per sale. We don’t work for Envato, we don’t work for the customers – we are creating ready-to-use templates, that are reviewed as working / completed items with all the necessary support documentation at relatively cheap (microstock) prices. Customers get what they paid for. We don’t make profit on a single sale, we only make profit after multiple sales over time.
Individual customer support is only something done at authors discretion – as long as a small percentage of customers ask for support, then it’s still worth while to provide support. But as long as support is not mandatory, authors do not owe customers anything after purchase – they already have got their monies worth. Authors are always protected because support is not part of the purchase, and will prevent any sales reversals based on lack of support.If support is mandatory, authors now owe customers their time, because it appears they have now paid for it. Customers now have more leverage to make demands if their support requirements have not been met. With the addition of support packs, – customers can now buy more of the authors time, and Envato takes 30% commission. Authors are now legally locked into an agreement with Envato and customers and we now work for them – and there will be penalties if this agreement is not met. We will no longer be selling microstock, we will be working as contractors, and our own work is being used as collateral.
Never thought this day would come but for once I totally agree with DS ;D +1
I can pretty much guarantee that a lot of authors (myself included) will simply not charge for requests after the 6 month period. Why? Because no request that is made after the theme running fine for 6 months will take me more than a few minutes to answer. Most of the time its a simple: “Please update Wordpress/Plugin/Theme to the latest version”.
I would feel silly and greedy to ask anyone to pay for that. In addition (and I have no data on that, just a feeling) I don’t think that it happens that often.
There will be authors that feel the same as I do, there will be others that don’t charge out of fear of bad ratings or because of the competitive disadvantage, there will be a few that feel its necessary but already got their own systems in place.
In short: I am not sure how much money there is to be made for Envato with this, and if its really worth the effort.
If they really want to improve the experience: Instead of trying to force this, I would suggest to make it easier for authors to support their items. I am not talking about a full fledged support solution on the marketplace, I actually prefer my own support forums where I can add features as I see fit, but an oAuth login for example is long overdue.
This was the most brutal one I’ve seen so far… Collis, you should be a rock star
Scott Wills and Kriesi ?We are still waiting
Nice one Collis ;D
I decided to take the easy way out and just donated. At least for now.
My vacation starts next week and if I tell my friends that I have been nominated I probably end up with a tub of ice water in my face anyways. If that happens I will post it here of course…