Licensing

Licensing can be a useful way to earn extra income by permitting other uses of your work in exchange for money

What is licensing?

When you license your work, you are giving permission to someone else to use your artwork in a specific way, over a specific period of time, for a specific purpose. Purposes could include using it on prints, greetings cards, posters, clothing, or even marketing materials and souvenirs. With a license, you get to choose exactly what your work can be used for, where in the world it can be used, and for how long, while getting an income from the licensee – the person or company asking for the license – for that use. Licenses also control the use of artists images in books, magazines, newspapers, online, in video, advertising and other media.

A license allows you the flexibility of working with other organisations, companies or individuals who can help your work access a new market for sales without giving up your copyright or other rights. Licensees will have access to different markets than you – for example, greetings card stockists – so can help you find different forms of income.

As the artist, you are still credited as the originator of the image in licensed works, increasing your audience while generating income from your work.

Licenses are useful if you are not used to finding different uses for your work that can make you money.

Since licenses tend to operate outside of the art market, they can be a useful way to fill gaps in income outside of other commercial or freelance activity, but make sure that the work you license doesn’t negatively impact any of your other markets. Someone who purchases your photograph at a gallery, for example, may not be pleased to see the same image on a mug.

Managing licenses

Although you can manage your own licensing directly with individual companies, this is be time consuming and complicated, with careful negotiation and some legal knowledge required.

Some artists choose to use a licensing agency like DACS, which allows complete control over how your images are used without needing to administer individual requests for licenses. DACS releases payments four times a year for any licenses granted on your work. There is no charge to use DACS services: instead, they will promote your work and receive a percentage from the income generated by the licensing agreement.

DACS also runs the Payback service, pursuing copyright infringers who have used your images without permission on your behalf, and negotiating a fee to be paid to you by the infringer. Each year, Payback generates around £4m for artists in the UK from successful negotiation.

Artquest recommends DACS as a licensing agent: we receive no financial benefits for this recommendation.

Specific considerations apply to uploading your work on social networks.

If you would prefer to manage your own licenses, you can negotiate individual agreements with licensees for each of the works they are interested in licensing.

Creative Commons licenses were created in order to allow limited automatic rights that are looser for artists who want to encourage use of their work. You can choose between commercial and non-commercial agreements, with or without attribution to you are the creator, and a number of other factors. Again, you still own the copyright of your work, and can withdraw this license when you wish.

Payments

There are a few different ways that a license might operate in terms of income:

  • Flat fee licenses will provide you a one-off payment for a specific use of your work. They are useful because they are simpler, but if licensing for a mass multiple product you may miss out on income if it sells better than expected.
  • Royalty payments can be negotiated on a per-unit-sales basis, such as use on clothing or other high-volume editions. They should always be calculated on gross income (i.e. before expenses are paid) since ‘deductions’ before payments could be almost anything, and may leave you with a very tiny income from a very successful product.
  • Advances are sometimes paid, usually for commissions, where some money is provided to you up-front and then deducted from future royalty payments. If future royalties do not cover the advance, you may be required to pay some or all of this back. This is one of the predominant models for writers and designers.
  • You may also try to negotiate a guaranteed minimum payment for the contract so you know the least amount you will be paid.

When negotiating, consider:

  • the type of product or purpose the licensee wants to use your product for
  • the quantities they expect to make, or sell
  • your own popularity in helping those sales – if you or your work are well known, people will want to buy a product because of its association with you

Royalty and flat fee payments generally need to be individually negotiated, but the DACS rate card could act as a rough guide for different uses. This rate card is based on DACS knowledge and expertise in the sector, so you may not be able to negotiate these levels of payment on your own.

Exclusivity

There are two main types of license: exclusive and non-exclusive. With a non-exclusive license, you will be free to create other licensing agreements – perhaps in different territories, or for different works, or for different purposes for your work to be used in.  Exclusive licenses only allow you to work within one agreement for that specific and defined purpose – and therefore are not recommended unless part of a specific commission that you do not intend to use again for another purpose. If you have an exclusive license, it restricts the other ways in which you can use your own work.

Never, under any circumstances, assign your copyright to anyone else. Doing this allows the person assigned to use your work as though they had made it, and entitles them to all income made from its exploitation.

Common mistakes

  • Assigning artwork instead of licensing – an assignment means effectively you sell your copyright and all interests in the work, meaning for a single fee the purchaser can do anything they want with it, without your permission.
  • Exclusive rights – an exclusive agreement means that, if the licensee does a bad job with your work, you are unable to work with anyone else until that agreement lapses.
  • Time limits – every agreement should have a time limit imposed, after which the license expires. This means that if they do a bad job with your work, you are under no obligation to continue: and if they do a good job, you may be able to negotiate a higher royalty for the next agreement period. Time limits can build trust between partners.
  • Contracts – get any agreement in writing. Although a verbal contract is still a contract, there are many more details in a licensing agreement than can be readily remembered by either party, and verbal agreements are almost impossible to enforce should something go wrong.
  • Read your contract – if you don’t like something, or don’t understand it, have a lawyer specialist in art licensing look over it and ask your licensee to explain it. And renegotiate – even if it’s their ‘standard terms and conditions’ – until you are happy with the agreement. Remember you’re under no obligation until you have signed, and once you have you are legally bound to whatever contract you have agreed.
  • Not walking away – when a company wants too many of your rights, prices your license too low, wants the right to sublicense (i.e. license other people to use your work, without your knowledge) or own the reproduction rights to your work. If they want to work with you so much, they’ll find a way to agree to your conditions and negotiate the others.

Licensing frequently asked questions

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This article is from the Artlaw Archive of Henry Lydiate's columns published in Art Monthly since 1976, and may contain out of date material. The article is for information only, and not for the purpose of providing legal advice. Readers should consult a solicitor for legal advice on specific matters. Artists can get free online legal information from Artquest.