I want to share with you how stock photo provider, Fotolia, let me down this week with their expiry policy. If you've read a few of my blogs, you'll be aware that I talk about breakage models all the time. This is the first time I've mentioned Fotolia, a service I've been a big fan of up until now.

Breakage happens when the business gains something at the loss of the customer.

First some quick positives. Fotolia is an excellent royalty free stock photo site. About a year ago, I was checking out all kinds of similar sites. Most were annoying to use and had too many confusing licensing options, etc. I settled on Fotolia and purchased a credit package. I was looking for images for a video project that I later scrapped.

I paid $60 for 50 credits. As of right now, I'm about to have those credits taken away by Fotolia, but I won't be getting a refund! =(

I'll explain why that is much more unfair than you might realize... maybe even a little "evil". After all, it costs Fotolia nothing to just keep your credits on account indefinitely.

Fotolia apparently has a 1 year expiry policy. If you don't use your credits in one year, they take them away. Although I don't recall noticing it at the time I bought my credits, I'm quite sure it was probably in their terms and conditions or declared up front. It is clearly listed on their current buy page.

Note: They also did a very good job of sending me multiple advanced warnings letting me know my credits are set to expire this month. That is a positive for giving me a heads up to deal with it, but not enough.

An expiry policy for digital credits is unfair. It costs Fotolia absolutely nothing to keep a record of a few credits sitting in a database for any customer that has some left. They collected (but didn't earn) that revenue a year ago, but I did not get any value for my money yet. Well... ironically... I used 2 credits last night for my Evil Marketing: Breakage Models article. Go figure...

There are two ways Fotolia can increase profits by robbing us of our credits.

We are baited to purchase more credits in a bundle to get a better cost per credit.

If you plan to use Fotolia for multiple images, it makes sense to buy a package. That's more up front earnings for Fotolia. Purchasing a large number of credits, also helps lock the customer in with Fotolia instead of letting them slip away to competitors.

If you do not use all of your credits, you'll lose the remaining ones after 1 year. The result? When you lose credits, you're losing the discount you had by buying the credit package in the first place.

If you lose enough credits, the cost per credit may even be higher than just buying them one by one. Fotolia earns more per credit.

In my case, if I use only 2 before mine expire, that's an effective cost of $30 per credit!

When you choose to forgive Fotolia for expiring your credits and then need more images, you have to spend more money with them. That's right, even though you had unused credits, you now have to give Fotolia more money to download stock photos you already paid for!

If people use all their credits in time, this is a non-issue. However, you have to remember that not everyone will do that. It's the percentage of people who don't, that is priced into breakage models.

Rushed consumption = increased consumption

1 year is a long time, yes it is, but I'm not renting a storage unit from Fotolia. As I said, my credits equal a couple of bytes of data sitting in their database. That's it. It costs them nothing to keep me happy as a customer and keep my credits on file for many years if I'm that slow in using them up.

Since I have 49 credits set to expire on Feb. 20th, my instinct now is to go and find a bunch of images that I might be able to use somewhere so that my credit purchase is not a total loss. I'm essentially forced to rush... and that's unnecessary.

So let's say I download a bunch of images and use up my credits. Then next week, I write a blog that needs a photo, but none of the images I already downloaded are suitable. I have to go back to Fotolia or a competitor to purchase one.

I have to spend more money with Fotolia because I was rushed into using the credits I've already purchased.

What is the ultimate result of creating an expiry policy on "digital credits" for Fotolia?

I've gone from a big fan to someone upset and blogging about the negatives of my experience with them. I feel like Fotolia has taken $60 of my income and given me nothing for it so far. I know that I'll want to give my future business to someone other than Fotolia because I do not think they deserve mine anymore, and I can forsee them coming up as an example in my future musings about breakage models.

Is that a good strategy?

No. The startup industry is hard at work towards building a generation of great companies intent on building long lasting, happy relationships with their customers. An unnecessary expiry policy is inconsistent with that directive.

There are plenty of ways Fotolia could have used the expiry date to make me an even stronger, more active, more spending fan!

Imagine how awesome I'd think they were if they had emailed me a notice saying the following:

Hey Joe - We noticed you have 50 unused credits with Fotolia! What's up with that? =)

FYI - In the last year, we added lots of great new photos for you to choose from. While your expiry date is set for February 20th, we don't want you to lose your credits.

So, as of right now, the Fotolia team just added 1 more year to credits expiry date. They are good until February 20th, 2013... unless the world ends... which is entirely out of our control.

Happy photo hunting!

or

Hey Joe - You have 50 Fotolia credits set to expire. We don't want you to miss out on using your credits, so we came up with a couple of offers for you.

If you no longer need any photos, we're sad to see you go, but we'd like to offer you a $10 Amazon gift certificate when your account expires as a thank you for your business.

But if you do plan on using Fotolia (and we really hope you do), we're going to extend your expiry by 3 months to give you more time to use your credits. We'll do that automatically unless you prefer to claim your gift certificate here.

Happy photo hunting!

Do you see the difference in approaches? If you had a costly credit package about to expire, would you prefer to (a) lose them, (b) rush to download stuff, or (c) get an email like one of the suggested options above?

The choice is clear for me. I dig you Fotolia, but you let me down this time.

Note: I asked Fotolia for an extension via a support ticket. They declined. While other competitors likely have similar policies, my article focuses on Fotolia for the simple reason that I am both a fan and a customer.