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Wherefore Thou Art #32
License Your Roving Artworks, and Let Them Earn

This month we look at the wild & wooly world of licensing the "re-use" of artworks, that is, agreements to somebody other than the owner of the original creation to reproduce the image. It could be in a book, on a website, or on an item of merchandise. For fine artists, sometimes licensing is seen as gravy on top of the sale of original works; for graphic artists and photographers it's often the primary goal. There's a continuum between these extremes, but there's also some universal rules that should be kept in mind for all situations.

The first thing to understand is that artists own the copyrights to their works, even after they've sold off an original work, unless there's something in writing signed by the artist to the contrary. I've talked about this in this column at least half a dozen times before, but I keep meeting creators who don't understand this fundamental principle of intellectual property law, so I'm going to keep repeating it. So bear with me, because it's important. It's what gives creations value.

There's one client I have, a painter, who refuses to allow his works to be photographed before he sells them. He drives me nuts. He sells his paintings and that's that. He's brilliant, and the potential for licensing his works in a variety of ways is enormous. But he retains no images of his works, so he's got nothing to license. He refuses, and he's got his reasons: it feels too commercial, he's afraid of being ripped off, etc. etc. (as you've probably already guessed, his artistic endeavors are not his primary source of income). I beg, I cajole. I asked him if he'd ever heard of the bluesman Robert Johnson. He said "sure." And then I asked him if he knew why he's heard of Robert Johnson, and not the other 5000 or so itinerant blues musicians who roamed the Deep South in the 1920's and who could eat Robert Johnson for breakfast on a rainy day? It's because Johnson allowed himself to be recorded, at a time when many of the blues artists of the day either didn't have the opportunity, or were suspicious of this new-fangled recording technology. These other artists are now forgotten; Johnson's a legend and his heirs are rich. Really rich.

In any event, licensing can exponentially expand the dollar value of a work of art, and that's not a bad thing. Here's some things to think about.

Remember that a license is just a limited transfer of your copyright. You should limit that license as much as you can by defining as clearly as possible what the work is going to be used for. On one extreme, the licensee (the person or company that seeks to use your work) may want to purchase the copyright in its entirety. Avoid this if you can! Once it's gone, it's gone, and the buyer can do whatever he wants with your work, and keep all the dough. It can be a pretty sad situation. Just ask Bo Diddley, or any number of early bluesmen and rock and rollers who sold their songs outright to publishers for, well, a song, then watched their songs top the charts, and get nothing for it.

You can limit a license in an infinite number of ways: by time period, by geographic area, by number of copies, by type of use, or by the quality and size of reproduction, for example. When drafting a license, try to figure out what uses you want to authorize, and define them as clearly as you can in a written agreement. Note that any use by the licensee other than what you've authorized is copyright infringement, just as much as if the work was simply stolen from you.

Many licensees will want an exclusive license, so that no one else can use the work for a similar purpose. Try to avoid these, but often it's not an unreasonable request. If you do grant an exclusive license, try again to limit it as much as possible to a particular type of use, geographic area, etc. Granting an unlimited exclusive license is virtually the same as transferring the entire copyright.

Now for everybody's favorite topic, the money! There are no standard royalty rates for licensing artworks, because every work of art is different, and the different types and intensities of re-uses are, of course, boundless.

I once got a call from guy who had just been offered a deal from a major flatware company (you know, spoons and forks) for a design he'd created. He asked me right off the bat what a good royalty would be for a flatware design. I told him I had no idea, and he seemed agitated at this. "Hey," I said, "I'm not a specialist in flatware law!" He immediately realized what I was talking about, and laughed.

Absolutely, it's good to get as big an upfront payment as possible, because, just like in the publishing or music worlds, that may be the only money you'll ever see. Beware of deals with no upfront money, which could indicate that the licensee does not have much confidence in the ultimate product, or doesn't have much money to begin with, or is generally trying to get something for nothing.

As far as royalty percentages go, you'd do well to do some digging to find what others are getting for similar deals. Sometimes this isn't easy information to get, but there are publications that list standard percentages for categories of licensing deals, or you can try to get through to others in the field with experience. Sometimes the licensee will just offer you a "take it or leave it" percentage, which you can take or leave. Don't be greedy or unreasonable, remember that 100% of zero is zero! If it's your first deal, expect it will be somewhat below the "industry standard" if such a thing exists. Once you have a track record, you'll have the leverage to ratchet the percentages upwards.

Whatever your starting percentage is, you can generally get the licensee to agree to an "escalator clause", where the percentage bumps up after a certain sales goal is attained. Basically you're agreeing that if the product is a success, you'll get a bonus, it's a happy hypothetical, and a licensee will usually agree to a reasonable escalator because it's not costing him anything right then, and possibly it won't cost him anything ever. But if the product is a big hit, a decent escalator clause can mean some serious money.

If the deal is big, or if the licensee throws a complex agreement at you, see a lawyer with some experience in these things. And then sit back and wait for the checks to roll in! And by the way, the flatware deal was for 3% of the wholesale price, with a bump to 5% after something like $500,000 in sales. Which is a heck of a lot of forks.

© 2005 Paul Rapp
This article originally appeared in The Artful Mind and is intended to provide the reader with an awareness of intellectual property law and not legal advice.