2019 Envato Annual Public Impact Statement

[collis]

Hey all! Back again with more answers to questions – thank you for your patience, and for all the questions!

First of all though, thank you for the kind words - my favourite was GODZILLA SIZE CONGRATS I’ve never gotten those before!

@collis my question to you is that are there any plans to improve the reviews system to detect users trying to abuse the system. It really takes a lot of resources. Also what are we doing to fight people selling our products on other sites?

Great question Cridio - we do some automated checks in review for some of the types of content where it’s straight forward, and of course our review team are devilishly good at spotting things, so that if you see users abusing the system - that’s after we’ve weeded out a lot. That said we can do more, and are on the lookout for ways to get better at what we internally call “Integrity”. It’s a constant battle, which is one of the reasons why Envato has a fraud team, an integrity team, and a legal team.

Ultimately while we persistently push against people redistributing products elsewhere fraudulently, primarily with takedown notices and legal letters, it’s important to balance how much resources we put on it. While you can slow them down a bit, it’s more or less impossible to completely stop illegal file distribution, this is what the music industry learned when they put millions of dollars and some epic legal battles trying to do so, before eventually embracing lower cost models of distribution. It’s pretty tough to see, and I know a lot of our team finds it epicly frustrating to see people blatantly ripping off authors I wish I had a better answer, but it’s a big world, and files are very easy to replicate and store and pass around.

@collis this place is growing so fast! Sometimes I dont understand many of the decisions of envato team but I hope that it is for the good of authors and Envato I think that you could explain the strategy about the new sites like Elements, where it is going, what are the plans for the future. That could help us to adjust too!

Thanks videologio - great question. Internally we have a model of three horizons. It’s a common system companies use to think about mature products (like Envato Market), growing products (like Envato Elements) and innovation tests (like the WP Plugin, Mixkit, Milkshake). I know these days Facebook hasn’t exactly got the best reputation anymore, but it’s still helpful to see Mark Zuckerberg presenting with the same model to understand it:

As Envato Market is a thirteen and a half year old business now, it’s really matured in its space. Internally this has been clear for a few years now because where it used to be that growth initiatives had high returns, these days it’s smaller return even on large investments we make. So we push hard on the pieces that matter to keep customers coming back (SEO, paid marketing, operations and discovery), but it’s also clear that if we want to grow overall earnings and stay relevant, it’s not necessarily in single purchase marketplaces.

Because we’re in the space of digital assets, it’s good to look at other similar neighbouring spaces with the same characteristics to see how their markets move. Generally speaking, because the cost of file hosting, replication and distribution is very low and getting cheaper, these markets all trend towards global subscriptions. So think iTunes → Spotify type models. Hence a couple years ago we launched Envato Elements to lean into this trend. With three years hindsight I’m very glad we did, because the space of unlimited subscriptions is getting very heated and moving quickly and its very easy to get left behind. I believe Elements is the largest on revenue already, but there’s a couple not far behind, and new ones popping up (for example the other day I heard Pond5 is launching a subscription called Hyperstock).

While Elements is growing, we’re still planting seeds for the even more distant future. We do this because seeds take a long time to grow into trees that bear fruit. And in the world of online business, there’s also a high failure rate. So our third horizon has things like – a WordPress plugin to sell ‘template kits’, a free site called Mixkit that is helping pick up traffic in asia, a website maker for mobile, and of course Placeit which is quickly growing to the size that maybe it’s not really an innovation product any more, but just a fast growing business.

So what does that mean for authors? Well, there’s still a lot of money to be made on Envato Market, but these days it’s a competitive market and one that needs innovation and ingenuity to bust into as a new author. There’s growth in Elements and revenue, and it’s no longer an experimental product, so we are working to open the doors to more authors. And I’d keep an eye on experimental products like our “Template Kits” for WordPress and other opportunities.

I’m just curious what is the purpose of Audiojungle when Elements exists on the market?

What is the purpose of these two products being on the market at the same time? If the Audiojungle disappears soon, we would like to know this in advance from Envato to take according actions, because for many authors this market is the only income.

Hey PrestoSound, it’s a great question! There are always customers who prefer single purchases, and right now AudioJungle has the greater library and more licensing mechanics for customers (and is much much larger in sales). But we’re also seeing a strong trend towards customers wanting subscriptions, which is why we have Elements (as you no doubt know, there’s a lot of other audio subscriptions out there too).

If I could wave a wand, I would put the two things (subscription and single purchase pricing) in the same product. But there’s a lot more complexity behind the scenes that means we keep it separate. Consequently AudioJungle is not going to disappear at all anytime soon!!

Are there any plans regarding attracting buyers with bigger wallets seeking for higher quality and less repetitive, more unique items on the Market?

Let me explain this on the AudioJungle example. Before ADP AudioJungle has been treated in the industry like a cheap, good quality but repetitive music source. Since ADP came here (which btw was a great move in general), more unique artists can spend more time on creating high class tracks and sold them with higher price. And yes, we sell such items, we sell some expensive broadcast licenses but it’s more like side effect of current system, numbers are still relatively low and AudioJungle reputation is getting even worse year after year. Unfortunately I have a feeling that without good reputation, clients will run away to a competition.

It looks like AudioJungle focuses on the low and medium-low budget clients seeking for a repetitive stuff, which I completely understand and which is completely right, even though it overlaps with Elements client target. But there is such a huge gap besides that target which can be filled simultaneously and independently with a unique high class and expensive music.

For example it would be great if there was better (second and simultaneous with current) purpose categorization like “games”, “meditation”, “stadium”, “cyber punk” etc. Or even update of current categorization with missing genres (like “trap”, “future bass”, “boombap”, “8 bit”) which could inspire both low and high budget clients. Another example idea is to implement a “unique” badge and filter for a high class special items. All those ideas do not interfere low-budget-clients policy, they are simple upgrades of current system, expanding its opportunities.

Great suggestions RedOctopus. I’ll pass them on to the Market team who I know are thinking about discovery options to help sort customers into the right buckets (sending higher end ones to the right places).

Currently our biggest push towards high end customers is that we are trialling Enterprise plans on Elements. This is really early, but it’s part of why we bought Twenty20 (who had experience selling to enterprises). Bringing in sales people and penetrating corporations is new for us, so it may take a while, but I think longer-term it holds a lot of promise. We’ve had a lot of interest already in the audio space, and we’re getting to know what kinds of requirements are important - including both quality, but also legal and copyright protections and product features. My hope is that we can then help those high spend customers to both use a subscription, but also to shop them higher priced, in-demand tracks from AudioJungle as well.

Market <> Elements traffic and cross promotion

Quite a few of you raised questions about the cross promotion of traffic between Market and Elements. Definitely I know that the header bar on Market is up there amongst the most annoying things to authors. But at the same time, it’s important for us to be transparent about the different offerings we have for customers so they can choose what’s best for their needs. While it’s pretty annoying, the traffic diverted from Market item pages is minimal (0.18% of visitors actually click through). That said we’re exploring ways to let customers better know about Elements (and Placeit).

As well as measuring the traffic diversion, we’ve run experiments to see if there’s impact to Market if we remove the banner (eg from checkout) and it’s had negligible impact on sales at a daily level. I do think it has impact over time (which is why we are helping Elements’ growth with Market), but I also think that over time we’re trying to build up the authorbase of Elements to take advantage of that. It’s a tricky balance, and while I know many authors are unhappy with it, I do want everyone to know that it’s something we weigh up very carefully.

It’s totally understandable that Envato sees Elements as upselling because of the recurring revenue. But from an authors perspective it is of course totally opposite, upselling is driving traffic to single item purchases. That’s why it is so hard for me to understand why you block links to Elements authors market profiles, where more premium and unique items could possibly be found. As well as why you won’t prioritise market links to Elements Video templates containing AudioJungle music (or a system for crediting AJ authors). Years go by and there is simply no cross over marketing, it is only 1 way.

The simple solution of providing authors with a direct link to item pages without the banner could fix this as mentioned by several authors before. Maybe then we would not see big affiliate authors as MorningLightMusic jumping ship and driving traffic to his own website instead. Of course this makes sense anyway if you have such a huge YouTube channel, but the current affiliate system did not exactly beg him to stay.

Interesting, I think that must be a consequence of not allowing any links out of Elements (rather than seeking to block market). I’ll go ask the product team what the driver is.

On Affiliates, we have some pretty competitive offers and have a team working around the clock on Affiliate deals (unlike a couple years ago), but of course Affiliates are their own businesses and we respect their decisions if they choose to do their own thing.

On Generally Investing into Market

A few people asked about investing into Market, here’s an answer hooked into Odin’s question (though it’s a similar theme to a few other questions!)

Anyhow to your question on Market sales, they’re holding up better than we’d hoped, though they are down year on year. Internally we look at the combination of Market and Elements both in gross revenue (which is up) and in authors earnings (which is up). But Market itself is down a few percent on this time last year, and that looks like an ongoing trend (though one that’s not as steep as my worst fears at times!)

Hi @collis ! Thanks for the answers! So, the question after this would be: What are you going to do to revert this? or are you abandoning the Market? Because lately, as many pointed out, it seems that there are no changes or upgrades to revitalize the market. No one is saying just focus on the Market, but personally, we can think of a lot of ideas, that if you want we could share with you, to make the Market a great place for authors again!

Definitely not abandoning Market! But the majority of our efforts are in things that while not very visible have high impact - in particular we put a lot of effort into SEO and paid marketing to attract customers, and teams working on uptime, integrity, finance and keeping everything running smoothly to process transactions. The main product work is around tools for authors to merchandise and promote their content better, and continued discovery improvements (the homepages are scheduled next with a refresh!)

The biggest uphill battle we have is that the Market codebase grew without a lot of early planning (back then we didn’t know it was going to be so big) and is a little unwieldy now, so changes are way slower than you’d imagine. That said we have people continually chipping away at bringing Market into the new decade

---

I’ll be back in a couple of days to answer more questions!