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Licensing agreements (a thread)
So. I’ve been doing this a long time, and one of the most important parts of being a freelance creative is understanding licensing agreements. I’ve had some interactions with brands, musicians, etc lately and I’ve realized a lot of people have no idea what a fair deal is.
A licensing agreement is when a person, brand, musician, or other type of business wants your art to use for a specific purpose, and you sell them the rights to use your art for a specific purpose.
Licenses vary widely, from small licenses for personal use on a website or blog, to huge licenses for commercial advertising, print, manufacturing/merchandise.
Another important piece of this is exclusivity. If someone wants exclusive rights to your art, so that nobody else can use it for a period of time, the license becomes extremely expensive.
So, let’s say a person wants to buy your photo or art, to use on a piece of clothing. Without taking into account how many units of that product will sell, here’s what it would cost for a 2 year exclusive license for unlimited commercial use. (source: @StocksyUnited)
Seems expensive? Well that’s what a fair deal looks like. As the creator, you have to be compensated fairly. What if that product sells $1M in revenue? Suddenly $4k seems like a steal right? Of course not everyone can afford $4K for a license. That’s why we have royalties:
Royalties are a great way to ensure both parties feel comfortable in a deal. An artist can agree to a lower initial rate, while adding a section to the contract guaranteeing them a percentage of the profits from the product.
Royalties ensure that even though the licensor is taking a low rate, they’ll be compensated if the product does well. This also potentially allows the licensee access to the media they’re interested in for their product.
I hope this thread helps some of you understand the value your work has. There are going to be a lot of potential clients that don’t understand this business, don’t let it discourage you. Know your worth and don’t take a shitty deal.
