art licensing contracts
I recently got this question in my inbox:
Usually an artist would license their art to be used on physical products, but what if a Licensee wants to sell it as digital files?
I design printable party decoration kits and was approached by a website owner who wants to sell them on her site – in this case the digital art is the product itself. Does this work differently than other licensing deals?
This isn’t the first time it’s come up so I thought a quick post about it would be helpful.
Licensing is licensing – whether it’s for physical products, digital products, games, apps and more. Some things will vary by industry – royalty rates often vary both by industry and by distribution channel – where the products are being sold. Art Licensing includes the word “licensing” because it is done through the use of contracts. The artist grants a license, or permission, to another person or company to do a specific thing. Just like states grant licenses to drive cars, we grant licenses to use our art.
It’s true that most discussions of art licensing relate to physical products but the same basic rules apply to digital products or media (games, apps, etc) as well.
Through the contract, both parties decide the rules of the agreement:
- What is being licensed.
- How can it be used (what products – again, physical or digital)
- How long?
- Where? Worldwide or in a certain country, region or store?
- Is it exclusive (they are the only co that can use this art for this purpose) or non-exclusive?
- How and when do you get paid and how much?
- What happens if things don’t go as planned? ALWAYS have termination – or “out” – clauses in your contracts.
Those are the basics and they apply in any situation where you are licensing your art. You may decide on a set amount of money to be paid up front (a flat-fee license) or a royalty based agreement where you are paid a percentage based on sales.
In the specific example asked – I would assume the artist would want to negotiate a non-exclusive license since she is already designing and selling the printable party decoration kits. If the website wanted an exclusive – the artist would need to make sure the contract had some terms that would ensure she would make more than she is by selling on her own – stopping selling will mean lost profits – make sure they are recouped! That could be in the form of an advance that is more than she usually makes on a kit or a guarantee – the website owner could guarantee she would get a certain level of royalties regardless of sales but be paid more if the sales merited it. This is where negotiation comes in and keeping the best interest of your business and profitability in mind. Sometimes people get flattered and make bad business decisions. No matter who the company or website is, be willing to walk away if it isn’t going to be good for you.
Another thing to consider with the many new digital and print-on-demand opportunities popping up is the expected sales volume. If a website is new and unproven, your sales won’t likely be the same as if your art is in a more traditional or known location (be that a store or website). Because the risk is higher and the volume of sales will likely be lower, it’s more important to get an advance (non-refundable) and a higher royalty rate so it is worth your time and effort.
Hope that helps!
Here’s to your creative success.
– Tara Reed
Contracts – the back bone of an art licensing business. If you understand the implications of how the contracts are written and are able to negotiate a win-win deal, you can do well. If you don’t and just sign whatever is put in front of you, you could create a bad situation for yourself.
So where do you go to learn the basics and where do you go for help with specific situations? Here are some resources to get your started:
eBook: How to Understand Art Licensing Contracts by Maria Brophy and Tara Reed
This eBook is a great guide to understanding how the contracts work, what each section means and why you may or may not care. It’s like a mini-course in contracts – specific to art licensing. In my opinion it’s an invaluable resource for any artist serious about art licensing.
Here is what others say about it…
“I’ve signed hundreds of licensing agreements over the last 10 years and was astonished at some very important clauses that aren’t included in my contract or didn’t take notice of in theirs that were covered in How to Understand Art Licensing Contracts.”
Barb Tourtillotte, Artist, Designer, Licensor, Barb Tourtillotte Illustration www.TurtleCrossings.com
“I purchased your eBook ‘How to Understand Art Licensing Contracts’ and I wanted to say how incredibly helpful it’s been!!! I am a new-to-the-scene surface designer and I was putting off learning about the ins-and-outs of licensing and then the moment I’ve been waiting for happened, and I was offered my first art licensing contract!
I had attended one of Tara’s seminars on licensing at Surtex this past May and knew she knew her stuff so I bough the e-book, grabbed a cup of coffee and settled in to face my contract fears.
And thankfully the book was so well done and thorough that within a few hours I had all the information I needed and felt fully confident about the process. I took your advice, sent my revisions through to the licensee and they worked in my additions without protest!
I don’t know that I would have had the confidence to negotiate if I hadn’t read the book. The book was a life-saver! Thank you so much — it was worth every penny.“
Elizabeth Olwen, Surface Designer, www.ElizabethOlwen.com
“Tara and Maria’s e-book, How To Understand Art Licensing Contracts, is a must read for any artist involved in Art Licensing, whether they are just beginning or have been in the game for awhile. Written from the point of view of two seasoned art licensing veterans who learned the ropes by doing the work themselves. It’ s clear concise style, incredible organization, and well thought out format, make it impossible not to find needed factual information. If you’re working with art licensing contracts and don’t have this on your desktop, you’re just making things harder for yourself than they need to be.”
Marty Qatani, Artist martytoons.com
Learn more about the eBook and get your copy today at ArtLicensingInfo.com/contract-ebook.html
Contract Templates: Short License Agreement for Artists Template Pack by Maria Brophy
Maria has put together a template that you can edit and adapt for your own licensing agreements. It explains when it would be enough and when you would need a more comprehensive contract. This is a great companion to the eBook!
Learn more about the Templates and get yours today at ArtLicensingInfo.com/contract-templates.html
Contract Reviews and Support
While I do negotiate my own contracts and co-authored the eBook, I don’t do contract reviews. I can do the work but don’t love the work… Maria Brophy? She lives and breathes this stuff! She LOVES it! And she has a lot more experience from helping artists with a wide variety of contracts. Maria isn’t an attorney but I have hired her myself and was really happy with the help and advice she gave me. (Because she isn’t an attorney her fees are a bit less as well)
Learn more about Maria Brophy’s contract consulting services at MariaBrophy.com/consulting
But maybe you have a situation where you want or need an actual attorney. There is a tab on this blog that has a list of attorneys who work in the art licensing industry and have requested to be included on the list. This doesn’t mean I have worked with and endorse them or that the list should be used as an “approved attorney” list as it is by no means complete. It means these attorneys have experience in our industry and they have provided information so you have a good place to start your search.
It is really important that whoever you use have experience IN ART LICENSING. You will be wasting your time and money hiring the guy down the street who is a divorce or real estate attorney – he won’t have the insights, expertise and knowledge you need. Find an attorney you like, that has good references (ask for and check them!) and that has experience in our industry.
Here’s to your creative success!
– Tara Reed
Contracts are not the fun, sexy, creative side of the art licensing business… well, Maria Brophy and some attorneys might disagree because they let out their creativity in this arena. But to the average artist, it is more of a necessary evil.
I created a video about three things to consider before signing any art licensing agreement. In my mind – I mean ANY – not just “Your First”. With each new deal that comes my way I look at these three key points.
The 3 things to consider before signing an art licensing contract include:
1. Basic Terms.
Are they there and are they well defined. The absolute basics include:
- what ART is being licensed
- PRODUCT(s) the art will be on
- TERRITORY – where will the products be sold
- TERM – how long the contract lasts
- PAYMENT – how and when you will be paid
These are the basics, most contracts have more and what you need will depend on your business, the deal and many other personal factors.
2. Termination Clause
How can you get out of a contract BEFORE the end of the contract term, if things aren’t working. This is REALLY important! What if the product is never made? If you have no way out, your art is tied up for 2-3 years and unable to make you money. Not good!
3. How much will the contract effect your business – especially if you miss some key points?
My rule of thumb is this: the broader the impact on your ability to make money with your art, the more you should consider paying for outside help before signing a contract. Two examples of contracts I would always have reviewed include an agreement with an Agent to fully represent my work or an agreement with a manufacturer that is exclusive for an entire industry (rather than by design). Both of these could really hurt my business if they weren’t performing and I had no way out…
Watch the video and learn more details of my thought process on this…
The good news is, you CAN learn to understand art licensing contracts and also understand when to bring in outside help.
A good place to start to educate yourself about the many bits and pieces of art licensing contracts is in the eBook, How to Understand Art Licensing Contracts, by myself and Maria Brophy. Learn more and get your copy at ArtLicensingInfo.com/contracts.html. There are also Short License Agreement Templates available by Maria Brophy as well.
Need help with a contract?
Check the “Find an Attorney” tab on this blog (if you are an attorney that works in the art licensing industry and you would like to be included, just let me know!) Maria Brophy also offers contract reviews and consultations as well > MariaBrophy.com/consulting
Here’s to your creative success!
– Tara Reed
Did you notice that there is an FAQ tab on this blog? This is the place to find quick answers and links to more detail about some of the most common questions artists have when they first hear about the concept of licensing their art. I encourage you to take some time to look at that info and read the blog posts.
Here is a brief rundown of the basic WHO, WHAT, WHERE, WHY, HOW and HOW MUCH of art licensing.
Artists who want to share in the “success or failure” of a product vs. being paid for their time for art often choose to license their art. Traditionally they are paid a royalty based on the sale price of a product and based on the quantity sold – similar to a sales person who works on commission.
Art that works well for licensing is art that is pretty mainstream that a wide variety of people would want to have on products. The art’s purpose is to sell product. Extremely abstract art and portrait style art doesn’t usually work well in licensing. Art that is more mainstream will – for example, people always want Santas or Snowmen for Christmas products and look for new options every year.
Manufacturers and retailers from around the world may choose to get their art by licensing it. There really isn’t a geographic boundary. A great place to connect with those manufacturers are at licensing shows where artists exhibit and manufacturers and retailers come. Here are the main shows that I’m aware of and a few I found today while writing this post –
- USA: Surtex - each May in New York
- USA: Licensing Expo – each June in Las Vegas
- EUROPE: Brand Licensing Expo Europe – each October in London
- RUSSIA: Licensing World Russia – was held in March 2014 – not sure how established this is or any other details
- CHINA: China Licensing Expo – October 2014 – again, don’t know much about this, just found it when I searched beyond the US
Manufacturers and retailers can get their art in 4 primary ways:
- in-house artists
- buy art outright (copyrights and all)
- use stock art from factories who create their products
- license art (either traditional royalty based agreement or a flat fee but still based on a contract that defines term, product and territory and the artist retains the copyrights to the art)
Manufacturers often choose licensing for the following reasons:
- Exclusivity. By licensing art they can usually negotiate exclusive use of an artists design for their products – ensuring their competitors won’t bring the same thing to market. This isn’t always the case if they use stock art from factories.
- Flexibility. By licensing art, companies can work with artists with a wide variety of styles that they might not be able to create with a group of in-house artists.
- Cost savings. When a company licenses art, they pay the artist based on how well the product sells. So while their costs can vary, they are always directly related to the income from sales.
- Design support. Many artists who license their work become like a part of the design team – working together to get the art just right and often setting it up to templates for production. This saves the manufacturers labor costs of having their own graphics team or at least lightens the load on the team they have in place.
Art licensing is done through contracts. An agreement is made between the artist and the licensee (manufacturer or retailer) about what art is being licensed, for what products, to be sold in what territory and for what time frame. Payment amounts and time frames are also included as well as many other details – but these are the key points. (Learn all about contracts from the eBook How to Understand Art Licensing Contracts by Tara Reed & Maria Brophy)
Artists can do their own marketing and work directly with licensees or choose to use an art licensing agent for that side of the business. (read the blog post: Agent or Not)
There is a lot to the “HOW” piece of this puzzle – how to create art for licensing, how to connect with people who license art, how to negotiate a win-win contract… More information is available in the FAQ page links, from eBooks or the Art Licensing Academy.
The “how much can you make and how long will it take” question is pretty much impossible to answer. There are so many factors that go into it – including but not limited to:
- how much art an artist creates for consideration for licensing
- the relationships an artist develops with licensees – how many eyes can you get on your art?
- how well the art fits the market, the product, etc.
- how well the product sells, where it sells and the price point
- how much you make in royalties or a flat fee
I know artists who make $1,000 a year and some who make mid to high six figures. This is both good and bad – the sky is the limit (that’s good!) but when you are beginning it is hard to get a feel for how you will personally do.
You have to take a long-term mindset if you jump into licensing your art. While I can’t guess what you will make, I can pretty much guarantee it won’t be fast money. It can take 2-5 years to get enough in the pipeline to start earning any kind of consistent income, so have a way to pay your bills in the meantime.
SO… where do you go from here? If you are interested in seeing what you can do with your art in the art licensing industry, I recommend you do the following:
- Read through the FAQ page and associated blog posts on this blog. (just click the tab at the top of the blog!)
- Subscribe to my bi-monthly eNewsletter – you will get a free audio about the industry when you sign up and each newsletter has links to blog posts here as well as links to other articles and posts I think are of interest to artists learning about art licensing.
- Participate in the bi-monthly Ask Calls. Every other month I host an expert in the industry for an hour-long teleseminar (a seminar conducted by phone) where we answer questions submitted by artists like you. Send us your questions. Listen to the calls. Check out the replays. There is SO MUCH knowledge to be had through this program! Learn more and bookmark AskAboutArtLicensing.com
- Consider the eBooks and audios available on specific art licensing topics. Learn more at ArtLicensingInfo.com
- Really ready to dig in? The 4 week group coaching program – the Art Licensing Academy – might be a great next step. Visit the website to see when the next session will start. www.ArtLicensingAcademy.com
- Take action every day! Create art. Build collections. Build your portfolio. Get it in front of decision makers. Repeat.
Here’s to your creative success!
– Tara Reed
Kudos to everyone who submitted questions for the legal Ask Call with Attorney Kyle-Beth Hilfer – what a great call – I learned a lot! Tons of food for thought and ideas to grow and protect your business.
Since this was Kyle-Beth’s third call the audio is available to purchase for $20 thru April 3rd and then goes to $30 after that. Well worth the knowledge and it helps compensate regular guests for their time and expertise.
- The importance of “why” and how that might relate to various questions I’ve seen online about licensing negotiations and royalty audits.
- Can an artist learn to do their own contracts and where do they get their first contract?
- When registering copyrights, what is considered “published work”?
- Do you have to copyright every color way of the same pattern?
- Does the number of images in a copyright registration affect compensation if there is an infringement?
- What is involved in registering a trademark and how long does it take?
- Can you use other’s art (cartoons for example, Batman, Minions, etc) if you are only doing individual pieces of art for sale and not mass producing or is that a copyright infringement?
- What is the difference between a brand and a property?
- Will allowing non-profits to use art for t-shirts affect other licensing deals?
- Is it illegal to use images of celebrities in your work for licensing?
Some links Kyle-Beth mentioned on the call to learn more about contracts from her blog:
Getting to Yes [affiliate link]
Where to find Kyle-Beth Hilfer
Note: Attorney Advertising. This call will provide resource information and is not intended to establish an attorney-client relationship. Prior results do not guarantee a similar outcome.
Mark your calendars for Wednesday, May 28, 2014 and submit your questions at www.AskAboutArtLicensing.com
I’ve been practicing saying “NO” recently so I can say “YES” to what I am focused on and so I don’t over-extend myself and stress myself out.
Writing a recent email with the “no” was uncomfortable, but better than all the work, etc if I had said “yes”.
Much of the NO was based on a bad contract… words like “irrevocable” and “unconditional” are huge red flags. You never know what direction you or another company might go moving forward and if you suddenly become very unaligned for one reason or another, there is no way to re-negotiate or change things when the contract has that sort of language.
Another piece of the contract issue was the “what happens in case of breach”… I had no rights or recourse, they would be “entitled to whatever injunctive or equitable relief they deemed appropriate” – what does THAT mean? It could mean anything really!
So what do you do in this sort of situation? Do you walk away, discuss, negotiate, stomp your feet at the inequality of it all?
Any of the above really – you can be presented with any kind of contract someone wants to create – it is up to YOU to decide if it is in your best interests to sign it.
In this case, I chose to walk away. The potential up-side for me for going through with the deal wasn’t big and my schedule is tight in the next few months. I have a vacation coming up (YEAH!) and SURTEX is less than 100 days away. My YES’s need to be aligned with me keeping sane and getting ready for my biggest trade show of the year. Reduce distractions.
If the deal had been for something that could have had good long-term benefits in the way of income, exposure and more – a conversation about the contract would have been merited. I thought about it, made a decision, waited 24 hours to make sure I still liked my decision, then sent the email. Done. No more energy distracting me from my focus…
I know I’ve talked about saying NO to things so you can say YES to others before but thought this was a very real and concrete example of it in action!
Think before you say YES. Be deliberate in how you spend your time and energy and you will be amazed at how much more you will accomplish and how much happier and lighter you will feel!
Here’s to your creative success!
– Tara Reed
P.S. Here are two books that I recommend related to this conversation:
The Power of a Positive No by William Ury [affiliate link]
|How to Understand Art Licensing Contracts
By Maria Brophy & Tara Reed
Now that we’ve come down from the after-glow of the Ask Ronnie Walter call, it’s time to look ahead to our next guest. Attorney Kyle-Beth Hilfer will be joining us again to answer your legal questions on Wednesday, March 19, 2014. (Mark your calendar!)
WHAT DO YOU WANT TO KNOW?
Do you have questions about contracts? What to do if you see someone using your art online? How to respond if you are accused of copying someone else? Trademarks? Copyrights?
Please enter your questions as soon as you think of them – either here or at www.AskAboutArtLicensing.com. Getting some in a few weeks in advance lets us get a feel for how much begging and pleading will need to happen later… have to put it in my schedule if need be! Actually I think 2014 is going to be the year of no begging – you all did a great job giving us content for Ronnie so I see no reason for that to change!
If you can’t make it live, the audio replay will be available for sale for $20 for a limited time after the call and then go to the normal replay price of $30. We appreciate your support in buying the replays that are for sale – it helps give experts who return more than once some “Starbucks money” for their time and also helps offset some of the costs of putting these calls on.
Here’s to your creative – and legally protected – success!
– Tara Reed
Maria Brophy and I are thrilled that our eBook and Maria’s templates are making this part of the business more understandable and easier to do.
Here is an email we got the other day about the eBook How to Understand Art Licensing Contracts and The Artist’s Short License Agreement Template Package:
I just sent off my first contract using one of Maria’s templates and I was so glad to have them! Up until this point I had been provided with contracts from the Licensees I’ve worked with, so when I was asked to provide my own, I was able to avoid that deer in headlights feeling! It was comforting to know there was language covering all the major points of a basic agreement and it was so easy to use. It was far less intimidating to go through each of the sections, making sure they fit my needs, than trying to come up with something from the ground up. I loved that all the fields were called out in red, and in some cases, I realized I didn’t have the information to fill them in, prompting me to go back to the manufacturer for clarification. I have found your ebook “How To Understand Art Licensing Contracts” to be an invaluable reference and Maria’s templates are the perfect compliment. Thank you for all you both do to educate artists about this industry; it has helped pursue a career in something I’m not sure I would have had the confidence to do otherwise!
Thank You SO MUCH Again!
Thank YOU Nicole for your feedback!
If you want to better understand art licensing contracts, go to www.ArtLicensingInfo.com/contract.html to learn more about these resources.
Here’s to your creative success!
– Tara Reed
Question: If I have designs that I would like to try and get licensed, is it a good or bad idea to share those on sites like Spoonflower?
Don’t just click “accept” on sites where you are showing art you might want to license – READ THE TERMS like they are a contract!
I say that because I am very guilty of doing just that with certain things. Like software that I have purchased and know I need, that has me re-commit to the terms while upgrading… I will admit to not reading all of those. But if you are using a site to show your art – in the hopes of getting sales or getting noticed (it happens! I, too, have read the blog posts about artists being discovered on Etsy or Spoonflower and the like) – read the terms.
You want to make sure you aren’t giving up any rights that could make it impossible to license the art later, or that you wouldn’t get back if you remove the art from the site.
For example (and I’m making this up just to give you an example) – say you upload art to show how it looks on a coffee mug. The mug can even be purchased if someone finds it and loves your design. Now let’s say you connect with a manufacturer who makes and sells mugs on a large scale and they want to license that very same art. You want to be able to do it.
So you want to ensure that there is no language like “XYZ website has the right to sell any art uploaded for a specific product in perpetuity…” In perpetuity means they can ALWAYS AND FOREVER use that art to sell coffee mugs. That would be fine if the manufacturer you are now talking to doesn’t want an exclusive license (meaning they want to be the only people to sell that art on coffee mugs.) 95 times out of a 100 they do… so you want to make sure there is always a way to get the rights back, or later modify any agreement that you have with a company online.
Need help? Check out the resources Maria Brophy and I have put together at www.ArtLicensingInfo.com/contracts.html
Here’s to your creative success – I hope I get to read YOUR story of being found on Spoonflower and the like one day too!
– Tara Reed
Question: Is it normal for a manufacturer to want to “Shop” your art to retailers before doing a contract?
One of the questions that came in a little late for the Ask Lilla Rogers call last week was this…
I recently was asked by an apparel company to let them use my art for a mock-up. They wanted to approach big box stores for a new bedding line they were producing. They only offered me compensation IF the deal went through. Still waiting, although i did see the mock-ups by a legit designer. The process began in March and is still on-going. So far, no licensing deal for my art which was used in the mock-ups by their graphic designer. My question is: Does this sound legitimate?
Different artists have different opinions on letting manufacturers “shop” their art. If that doesn’t make complete sense, it basically means they want to mock-up your art on products (digitally or physically) and show it to their larger clients. They don’t want to commit to the art until they know it will sell.
This is becoming more and more common in the marketplace, especially if your art fits in the mass market channel (selling into large retailers with many, many locations – like Target, Bed, Bath & Beyond, WalMart, department stores and more…)
Personally, I do let manufacturers shop my art. Sometimes it lands me a great license, other times it isn’t selected.
I don’t, however, let companies I have never worked with before shop my art without understanding what the deal will be if the art is selected – this is KEY!
You can use a Deal Memo format that Maria Brophy has been kind enough to blog about (it is also discussed in greater detail in How to Understand Art Licensing Contracts and is included as one of the templates in The Artist’s Short License Agreement Template Package. You can learn more about both of these at www.ArtLicensingInfo.com/contract.html)
Or you can simply ask the questions and keep notes – or preferably have the answers in writing – by email, etc. The key things to know before letting a company “shop” your art include:
- What retailer(s) are they showing the art to and for what products?
- When do they expect to have a decision? (As in, how long will your art be on hold and unavailable for those products for other deals)
- What royalty rate, term, and territory will be on the contract if your art is selected?
- Will there be an advance if your art is selected?
- I also want to review their basic contract – or know that they will work from mine with the above terms – before going forward as well.
It would be horrible to have your art selected and then be unable to agree to the terms of the deal. You won’t win points with the manufacturer and will probably burn the bridge to work with them again in the future. The retailer won’t be pleased and you will have wasted time and energy on the process.
So make sure you know what the terms of the license will look like up front before you let your art get shopped around.
Here’s to your success!
– Tara Reed
P.S. Thank you Gloria for bringing up this issue – it is one many artists wonder about!