Licensing Market… some answers

On this ‘cyber’ Monday, I felt it appropriate for some reason to repost this article I wrote recently for Kathy Temean’s ‘ASK CAT’ blog contribution.  Both she and I feel this might be very helpful for many, so here it is.

I have been asked by our agency artists a few times to look over a contract that is LICENSING…not PUBLISHING.  They are similar, and can overlap, but are also quiet different.  I’m happy to do that for our artists, even though we won’t usually handle that market unless it’s connected to a book project.  About 15 years ago or so, I’d even considered going into this area also as an agent. I joined one of our artists and her booth for the 3 days of Surtex NY Show at the Javits Center! Great fun, but I realized I truly didn’t have another 8 hours a day to put into this Licensing market!

I can, however, offer a few thoughts, issues and things to be careful about with these Licensing deals.  LICENSING, is a contractual agreement to sell rights usage for your images/designs that MIGHT be used for various manufactured uses.  (It can include a published product as part of the deal, of course.) Examples are clothing, home decor, bedding, shower curtains, cards, mugs, toys, prints, other surface printing, etc. First of all,….it’s tricky…. and I do recommend getting a lawyer versed in this area if you are planning a push into the market.  Read up on everything you can as well….various artist ‘how-to’ books are available, but EDUCATE yourself and be careful!

I mentioned your work MIGHT be used.  It’s more of a ‘risk market’ for the artists than publishing as there is usually NO UPFRONT ADVANCE for the work done.  It’s all in  royalty WHEN ad IF the item sells, and you get a percentage of this sell price during certain royalty accounting periods.  (reason I, as an agent used to advances, do not get involved normally.)  The company might be buying an existing image(s) which is great!….expands the market for that image if you own ALL rights to sell.  Be sure of that fact first off so you don’t get sued. (check contracts to see if you retain the right to sell various other rights, and call past publishers if you aren’t certain.) If they want you to design something especially FOR them, in the hopes that they will pick it up and maybe sell it…. well, could be great… or come to nothing with NO compensation at all!  (you’ll have a nice sample to show off maybe?)

So  here are a few things to be watchful for in a Licensing Contract.  There are certainly others which is why I suggested getting a lawyer.

Statement of Rights Purchased:  states client name and yours and what exactly the image(s) is and what the expected sales product is: description, title, etc. and exact rights they are purchasing and for HOW long. This should include Size, number, expected due dates (this is often rather loose which can run havoc on your schedule)  The length of time terms of the rights purchased.  I would encourage limiting this to a year to three years so you can rethink, renegotiate or withdraw their usage rights.  Watch for AUTO-RENEWAL…might be ok, but have a way to get your rights back after the initial time frame should you wish that.  Usually you might have to let them know at least 30 days before the auto-renewal…but CHECK!   There should also be a statement that you RETAIN OWNERSHIP of the art work itself – paintings, design elements etc.  that their product is based on.  You should/might have the right to sell the copyrights (or the orginal) again to another product user as well as the initial one, SO ASK! You also RETAIN COPYRIGHTS....you are merely selling them to clients for a particular item usage and time frame.  This usage needs to be stated in the contract, but in fact, being licensing, they may not know yet.  Require them to TELL you when they do know how the images will be used.  (so you’ll know how you can sell the rights for OTHER image uses.)

Royalty Amounts: they do vary greatly but often 7-10% and could be more or less due to marketability, client name, size and expectations for the range of sales, your name leverage etc.   Know WHAT is the royalty is based on…often NET sales which is what the client actually receives from sales (which might be discounted) less returns, excise and sales tax, US and transcontinental duty fees, freight, transportation and insurance costs etc.  Be sure you understand the normal ‘accounting period’ time frames when you can expect a statement of earnings and a check.  Any deductions for such things as ‘returns’ etc. will show up during the next statement period normally.

Warranties:  you will have to legally swear that the image(s) is yours and yours alone, to grant the rights for the client to use.  Check the jurisdiction of any injunctive relief court information too.  They might mention that they have the right to ‘assign freely’ this agreement to company purchasers or to subsidiaries.  This might be just fine if the client is sold for instance, but you might NOT want to have hour image used in ways the subsidiaries or new buyer might want to use it! watch this…ask for a relief protection should this happen.  Check too if they pay any US and international copyright registrations…are there costs to you?  The client will want the right to crop/change the work to reproduce.  This normally has to do with ‘fitting’ the image to the product, but be sure you are comfortable with it.  You can try to get copies of every piece of licensed product too…as we expect in publishing.

I hope this has been helpful for those who might have the opportunity to get some images licensed.  It can be very lucrative…or nothing at all for a lot of work and waiting!  Read the contracts very carefully and be sure it won’t HURT you or your reputation.  Talk to other artist friends who might have had experience with Licensing too…invaluable! Then have FUN with it and wait for the royalties to roll in! 

CAT Agency Ditty

thank you to Priscilla Burris for allowing me to use her SO CUTE and HAPPY ‘CAT’ agency wee lass and CAT friend!!

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About catugeau

art agent
This entry was posted in artist information, Artists Q&A, Biz issues, business for illustrators, industry tips, SURTEX, Uncategorized and tagged , , . Bookmark the permalink.

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