art licensing contracts
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!
We had yet another home-run from Paul Brent. As I told him on the line last night, it is now his DUTY to do the Ask Call right after SURTEX because he does such a wonderful job with sharing his impressions of trends coming, trends going, new things, new artists and more.
We had 150 people listen live and now the replay is available for purchase. In addition to the hour-long mp3 audio file, you will also get Paul’s notes about the show – I can assure you I wasn’t able to be taking notes as fast as he was sharing info!
- SURTEX 2013 trend report – written notes from Paul are included with the purchase of the mp3 replay
- Do you have to go to Surtex to get Licensing deals or can you contact individual companies directly?
- The news reports that retail is picking up. Do you feel that was reflected in Surtex 2013?
- How many new, unveiled collections, above and beyond your existing portfolio, do you show at SURTEX each year?
- What is one barrier you have had to overcome in the licensing industry?
- How does an artist judge that their portfolio is ready to take to Surtex, or to an agent?
- How do you know you are ready to go to Surtex?
- Is there any one type of style that MOST manufacturers are looking for?
The audio is on sale for $20 thru Thursday, June 13, 2013 and will then go to the regular replay price of $30 so order your copy now for the best deal.
Agent Lilla Rogers will be making her “Ask Call Debut” -after visting wtih her at SURTEX I’m extra excited! Please submit quesitons asap – we don’t have a lot of turn-around time for this one!
NEW Contract Templates from Maria Brophy and distributed by ArtLicensingInfo.com
One other thing I mentioned on the call is a new resource for artists – The Artist’s Short License Agreement Template Package by Maria Brophy. It’s a great compliment to the eBook, How to Understand Art Licensing Contracts and will save you time and money putting your own contracts, deal memos and amendments together. See all the options for becoming a master at contracts at www.ArtLicensingInfo.com/contracts.html
… and how not to have your life consumed by this concern.
I’ve been licensing my art for 10 years now and I’d like to share a little secret – I’m still not always sure if I’m getting “a good deal”. Royalty rates and the ways companies work can vary by industry, by company and even by the artist a company is working with. I’m pretty sure Mary Engelbreit gets a better royalty rate than I do…
The way I see it, “A good deal” all depends on who you are and what you want for yourself, your lifestyle and your business.
A good deal for one artist will look like a horrible deal to another. But there have to be ways to quantify what “a good deal” is.
Attorney Kyle-Beth Hilfer just did a post entitled: Evaluating Art Licenses: How to Tell if You Have a Good Deal. She gives some great advice about what to look at and look for from a legal / contract perspective.
Maria Brophy blogs a lot about lifestyle – her recent post: How Taking an Adventure can grow your Business is a great example of what a “good deal” looks like to them. A job where they got 2 weeks of vacation a year and were expected to report to a cubicle the rest of the time would be a horrible deal for both Drew and Maria. But for others – it gives them the structure and consistency they need and they have no desire to go on 5 month adventures and work out of a black box.
A friend of mine – Steve Strauss, attorney turned entrepreneur and owner of TheSelfEmployed.com - recently went to Istanbul for a week with his wife. He was hired to speak and MC for 2 days at an event for entrepreneurs. In return, he and his wife were able to take an amazing trip! To me that’s a great deal (anyone want to fly me somewhere interesting???) but when I told another friend about it, she cringed and said the flight alone would make it pure torture.
Basically – there are parts of each deal that are subjective. At the same time, it’s important that you fully UNDERSTAND any deal you do – in terms of what it will mean to your business financially and from an art copyright standpoint, if nothing else.
Just some food for thought about deals. Back to your creative work!
– Tara Reed