Another Reason Why Designers Need to Know Who Third Parties Are

[Jadendreamer13]

When Zazzle is the third party, they are taking up to three chunks out of designer’s royalties:

• A 5% third-party royalty fee
• An excess royalty fee
• A 30-50% marketing fee

When Zazzle is the third party, then either the marketing fee or the third-party cut out of designers’ royalties needs to be eliminated on that sale.

This is why Zazzle needs to be fully transparent when they are one of the ambiguous third-parties listed on designers’ royalty reports. I don’t care if other third parties remain anonymous, I want to know if/when Zazzle is the third party, and if they are receiving three fees from one sale. Designers need to know the total amount of money that Zazzle is taking out of their royalties.

If I’m incorrect that Zazzle can also be a third party, please correct me. 

[Van]

Exactly.  I may be confused, but I thought a Z affiliate got 15%, though?  IF that's the case I think I'd rather pay the 15% than the 35%-50% and I don't think they should get both.....

[Jadendreamer13]

You might be right about the third-party fee. Hopefully some folks who are better with numbers and analytics than me will chime in and clear that up.

[tiffjamaica]

This is one of the problems - the math is really hard to understand.  As I understand it there are two fees: 

1. an excessive royalty fee of 5% if your rate goes over 10%. (In the old system this fee was 5% if your rate was 15% or over).  Honestly, this fee is not excessive and I'm fine with it. 

2. the Marketing Fee of 35% - 50%. This one is complicated and where the source of all the confusion lies. Prior to the changes, there was a 20% fee for third party sales. This "carve out" offset the cost of the referral payment (15%) to the third party affiliate.  The Marketing Fee is doing the same thing - it's just called a "Marketing Fee" now and is much more in our faces because of the fee hike. Affiliates/Ambassadors still only ever get 15% percent. They are not earning more now. 

Maybe showing the math will help: (I'm going to use a recent sale of my own so I can easily check my math with the new earnings report breakdown)... 
Customer paid 115.20 - this is the Net Royalty. 
My royalty rate was 18.2%, so MY earnings should've been 20.97. [18.2% x 115.20 = 20.97]
But now the fees kick in, so let's take away 5% for the excessive royalty. [5% x 20.97 = 1.05] and 50% for the Marketing Fee [50% x 20.97 = 10.48].  
This leaves my royalty at 9.43.  [20.97 - (1.05 + 10.48) = 9.43]
The third party who referred my product earned 15% of the sale. [15% x 115.20 = 17.28] which Z has to pay them and is offset by the Marketing fee of 10.48. You can see in this example why you don't want to just pay the referral to the third party because then you'd lose 17.28 instead of 10.48.  The Marketing fee is an offset. Z wants to bring in more traffic without paying more in referrals, so more of it is coming from our earnings now (It was always offset slightly at 20%, now it's 35-50%).  

Does that help? 
And you are correct that Zazzle can be the third party. Lucky them.

[SORS]

Thank you for explaining this so clearly. You’re right, the math is really hard to follow now and that’s part of what makes this so frustrating. I appreciate you walking through a real example. Seeing how a $20.97 royalty turns into $9.43 really puts things into perspective.

I agree with you. The 5 percent excessive royalty fee isn’t the problem. It’s the marketing fee that’s taking the biggest toll. It used to be more hidden in the background as a 20 percent carve out for third party referrals. Now it’s right there in the earnings breakdown and it hits a lot harder. Even though affiliates are still only getting 15 percent, we’re the ones paying more of that cost.

And yes, the fact that Zazzle can be the third party referrer makes it feel even more complicated. It’s hard not to feel like designers are being asked to carry more of the load while getting less in return.

To the Zazzle team, please reconsider the structure of this marketing fee. So many of us care deeply about our work and the platform, but it’s getting harder to make sense of these earnings. We want to keep creating here, but it needs to be fair. Please hear us.

[NigelSutherland]

When I started on Zazzle most of my sales were “none”. This has changed now and it is clear that since the changes at the start of April, Zazzle has engineered the system to limit sales that are direct, and turn them into 3rd Party. To me it is so obvious. We know from reading the news online that Zazzle had a class action against them that they had to satisfy, at cost. I wonder if the actions against us is to help them cover the costs of their inaptitude. 

[LMGildersleeve]

The 3rd party 14.9% AND the marketing fees are virtually the same thing. We are being charged twice for marketing. 

[Blooming]

99% of my sales are third-party. I’ve honestly forgotten what it’s like to earn more than $3 per sale. This is unfair

[Windy]

What if this mysterious third party is not Zazzle, but rather, a partner company set up by Zazzle?

[Van]

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@Windy wrote:

"What if this mysterious third party is not Zazzle, but rather, a partner company set up by Zazzle?"
That has crossed my mind as well.

Speaking for myself, the trust I once held for Z has really been damaged by all of this and I hate feeling that way. Just my opinion but I'm feeling that we are competing with Z instead of designers and Z working together and many designers are on the losing team at this point. 😞

---

[SORS]

I understand what you’re saying, Van, and I’ve had similar thoughts. It’s hard not to wonder about the nature of some of these third parties when we don’t have any visibility into who they are. I think a lot of us are just looking for a little more clarity, especially now that fees and earnings are changing so much.

I really value the opportunity to create here, and I know Zazzle has provided a platform for so many of us to grow our work. I just hope there’s a way forward where designers can feel more informed and supported…like we’re working with the platform, not trying to keep up with it. Open communication would go a long way in restoring that sense of trust and partnership.

Thank you to everyone who continues to ask questions and speak up respectfully. These conversations matter.

[Sea-Change]

I've been wondering that as well, or at least whether or not affiliates are seeing any gain from this "opportunity" for promotors. I haven't seen any affiliates suggesting positive results from this program, but I have seen anecdotal reports of affiliates seeing fewer referrals.

I've been pouring tons of effort into Pinterest, and I've quadrupled my daily impressions and other statistics in the past 5 months. I haven't received a single referral since April, however, although I used to receive one or two every couple of months or so. It might just be my particular circumstances, but having more details about the source of the referral would help provide clarity.

[whimsywhim]

How do you know when you get a referral from Pinterest?

[Jadendreamer13]

Anything is possible, I guess. Why do third-party sales have to be so ambiguous?

[whimsywhim]

Plus the origin of self-referrals.  I wish Zazzle would tell us where the customer found the product.  That way, we can see what is working.

[NigelSutherland]

I imagine that Zazzle is paying Google for AdWords advertising, which can be expensive. However you would hope that for very niche products, such items would be found organically. If you produced a hat for a man who has a three-legged horse called Stanley, you'd expect that item to naturally show up if a guy who owned such a horse did a search.

[Jadendreamer13]

Designers shouldn’t have to ponder, imagine, or guess who or what is chipping away at their royalties. They should know precisely who and what are doing it.