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A Licensing Primer - The Basics

What is Licensing, and How Can It Apply to Your Artwork?

As an artist, you create and own works of art, which you can do with as you please (provided you have not violated anyone’s copyrights in creating them). If you decide to commercialize your art, one traditional method is to sell the actual piece of art through a gallery or art show (an important aside here is that the sale of the work does not by itself give the buyer the ownership of copyright to that piece of work). An excellent resource on ways to sell pieces of art is "The Artist's Guide To New Markets", by Peggy Hadden.

You could also sell rights to reproduce and use a work of art you own to a company that thinks the work will help them sell their products, while you retain overall rights to that work. In licensing lingo, the works you create and your ownership of copyrights in them comprises an art property.

Through licensing, you sell limited rights to use the specific work, yet still retain overall rights to that work. The rights negotiated between you, the licensor or property owner, and the company wishing to use the property to promote their products (the licensee) establish the basis of a licensing agreement.

As another important aside, in some cases you can own copyrights to art created by someone else. In many of these instances, you still have the ability to license the rights to others, allowing them to use this art commercially. A common example would be the heir to an artist's estate. In this site we will use the creator/owner (or “artist”) example, but you should know that one could simply be an owner of a property and possibly enjoy the same licensing rights as the creator of an original work.

Well-known examples of licensing are most prevalent in the entertainment industry, where rights to popular licensed properties are highly sought by manufacturers of video games, t-shirts, and a myriad of other items. You needn’t look far to see successful licensing programs, from Mickey Mouse to Michael Jackson, and from Pokemon to Powerpuff Girls. Although the entertainment industry generates the lion's share of sales in the licensing world, there are many other segments of licensing that also generate billions of dollars annually, including sports, celebrities, music, fashion, publishing and several others, including of course, art.

Why License Your Art?

Licensing your artwork can be a rewarding means of obtaining recognition for your work from a much broader audience than most artists can gain through traditional venues, say art fairs, galleries and the like.

With a well-crafted licensing program, an artist could realize a substantial and continuing income stream through a royalty that is generated, usually, from every impression of your image that a licensee uses on a product they sell. Indeed, licensing generates many millions of dollars in royalties for artists every year!

In short, selling a piece of art on a transactional basis (for instance to an individual art enthusiast) normally severs your relationship with that piece of art (but not necessarily your ownership of copyrights in it). By licensing that same piece of art for use with a product, added value can be realized through licensees paying you for the right to have their product bear your artwork.

Is Licensing for You?

You may be exploring means of gaining more recognition, both artistic and commercial, for your art. Certain types of licensed art and media are known to sell merchandise better than others, and companies are always on the lookout for the genres and styles of artwork that will boost their sales. The quest of the artist seeking licensing exposure becomes one of first determining if he or she has interest and fortitude in the development of artwork suitable for licensing, then specifically focusing on and targeting those companies and industries. In short, it takes talent as well as business savvy, combined with a plan.

Licensable art may, or may not differ significantly in its content from “art for art’s sake”, and this is why licensing is not for every artist. Your artistic style may or may not be conducive to the types of art that work with most licensees. Abstract art, for example, may be very rewarding for an artist to create, yet is very difficult to market to most licensees. On the other hand, works of children have become home runs many, many times.

One useful exercise is to keep an eye open for goods for sale bearing art similar to your own. As you browse, do you continually see styles, subject matter and quality of art gracing these goods that is similar to artwork you already produce? This is a sign that you might want to pursue art licensing further.

Some artists may have qualms with giving a “mass market” spin to their art. If the thought of thousands of each of your images appearing on a product is to you synonymous with “selling out”, then you should probably relegate your works to art galleries as one-of-a-kind originals.

Once an artist has decided his or her art is appropriate for the licensing industry, the real challenge in deciding whether to pursue art licensing is to first define your objectives, and how licensing might help to further these objectives. One objective might be “to achieve financial gain”. Write several of these objectives down and then prioritize them. Once you’ve prioritized your long-term goals and objectives from a hypothetical licensing program, establish milestones by which you want to attain quantifiable measures of success.

Recognize the pitfalls of licensing – For one thing, greater exposure means unauthorized companies are highly likely to try to infringe on or counterfeit your work without your authorization. If you are uncomfortable with this likelihood, consider not getting involved in licensing. If you are game for the risks, prepare yourself by reading up on how you can protect yourself from counterfeiters – we list several excellent resources that speak to this important topic.

One last tip -- be flexible! Successful licensing, like any business endeavor, involves some of the same creative aspects that go into composing a piece of art. Your ability to recognize opportunities you were not expecting will set you apart from the mainstream, and put you into a better position to present winning propositions to your licensees!

Why Do Companies Use Licensed Art?

The fact is that manufacturers and publishers of a wide variety of products need artwork to sell their products. They factor this cost into their profit margins. Companies fill this need through one or a combination the following means:

  1. They can keep in-house art departments to develop all the artwork used with their products. Companies that go this route tend to be larger and can afford to have a dedicated art department (examples include publishers such as Hallmark).
  2. They can rely on licensing agents to seek out and find the types of artwork they need.
  3. They can solicit art directly from artists, using a small in-house art direction department that relies largely on submittals from artists who contact these departments directly.

Although certain sizes and types of companies may have a preference for one of the above means of seeking artwork, these days more companies of all sizes use a variety of approaches. One notable trend is that all but the largest companies are shying away from maintaining in-house art departments. These companies still need artwork, however. This is where you, the artist comes in!

Some artists create their art with the express intent of licensing it, rather than for the sake of creating the art itself. These artists may even focus on specific genres (say western art or children), or target certain categories of products (say home décor or wall art). As an artist interested in licensing your work, you need not create art with licensing in mind. However, you should definitely be aware that some artists do just that.

For the bulk of product categories, consumers are drawn to artwork used on a product because they like and are drawn to its appearance, or how it is combined with the product. Keep this in mind, along with your own instinct for what attracts a majority of shoppers, when developing potentially licensable art.

Defining the Terms – The Language of Art Licensing

· Advance – a lump-sum payment made up front by the licensee to the licensor, to be applied toward expected royalties earned during the period of the licensing agreement.

· Copyright – the legal device giving the rights that lie in a work to its creator, which applies automatically from the date of the work’s creation, provided that the work is original, artistic in nature, and fixed in a tangible medium.

· Derivative Work – a secondary work derived from an existing original, for instance a porcelain plate with an image of a painting is a derivative work based on that painting.

· Evergreen – a property holding long-standing popularity and therefore capable of generating a steady income stream, as opposed to a faddish property.

· Guarantee – a minimum payment made by the licensee to the licensor, based on a percentage of sales that a particular license is expected to generate. Anything less in royalties earned would have to be made up to the licensor, normally at the conclusion of the agreement term; payment of a guarantee is often linked to built-in extensions of the basic licensing agreement.

· License Agreement – An agreement between the licensor and the licensee, stipulating the terms over which the licensor grants to the licensee certain rights to utilize certain works owned by the licensor.

· Licensee – in art licensing, this signifies the “grantee” that is the recipient of the rights to use your art. Commonly, the licensee would be the manufacturer or publisher.

· Licensing – the granting of certain rights in an artistic work to a person or company by the owner of those rights, generally for a limited time and for a specific application.

· Licensor, Property Owner– the party holding copyrights to the property (imagery, in the case of art licensing) being licensed; often, but not always the same party as the artist/creator.

· Program, licensing – depending on the context, either your overall program to promote and license your imagery, or a specific program with a particular licensee.

· Property – In the case of art licensing, this signifies your ownership of your creative works, and encompasses your copyrights in these works. As a licensor, you can market several properties, each consisting of several works of art, and distinguish them by name, i.e. “Floral FanciesÓ by Susan Atkins.”

· Rights, Electronic - negotiated rights between the licensor and licensee, allowing the licensee to use the property in electronic media such as the internet.

· Rights, Exclusive – negotiated rights between the licensor and licensee, entitling the licensee exclusive rights to use the property with a specific category of product, either indefinitely or for a stipulated period of time.

· Rights, One-time – negotiated rights between the licensor and licensee, allowing the licensee one-time use of the property with a specific product only.

· Sell-off Rights – The right of a licensee at the end of a term to sell excess licensed products still on-hand; usually stipulated as a timeframe beyond the term of the licensing agreement.

· Royalty - a percentage of the wholesale or retail price of each product, paid to the artist whose property is used for licensing with that product.

· Sublicense – a licensee’s grant of rights for a licensed property to a third-party company, within the terms of a licensing agreement.

· Term – normally, the length of time a licensee is given to commercially use the property of the licensor.

· Trademark – A physical device (i.e. a symbol, name, word, etc.) to demonstrate a licensor’s or manufacturer’s intention of distinguishing its goods or products from those goods manufactured or sold by others.

· Work-for-hire – often found in agreements between an artist and a company, this terminology implies that all rights to the work created will remain with the company for whom the work is developed.

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