Aha, yes - correct - and the example is broken!
So what happens in the backend is that the service use will asynchronously encode the media. When that is done the new component will be added to the server location. When the example was written it was possible to set a component as thumbnail even though it did not exist in server location. That has changed and we're now verifying this.
We will discuss here and see what the best approach is and then update the example. Thank you for making us aware of this!
