Authors: Darren & Morgan Di Lieto · Illustrator: Imogen Fancourt · 26th April 2022
Illustration by Imogen Fancourt
Although we often come across licensing in our daily lives, it doesn’t usually get talked about, especially among illustrators. But, licensing is the cornerstone of the creative industry. It allows copyright or IP owners to tap into the exponential value of their artistic property – be it music, artwork, film or literature – and exploit it for all its worth.
Understand the basics
To understand licensing, you first need to understand the basics of copyright.
Let’s start with the difference between copyright and trademarks. Both copyright and trademarks are intellectual property (IP) but work differently.
Trademarks protect items and other assets unique to a brand or business that identify that brand or business and its services and products, such as a logo. You have to apply for a trademark (in the UK, you would apply through the Intellectual Property Office). A trademark is only protected once accepted onto the trademark register.
Copyright relates to original creative and intellectual works and is automatically applied. It belongs to the creator unless the creator passes it to someone else.
We will look at copyright in more depth in another blog post, but for now, here are some of the most important points you need to know about copyright:
- Creations must be tangible, real things, for copyright to apply – an illustration, a piece of music, written words, an animation, a photograph, etc.
- You cannot copyright an idea.
- You automatically own the copyright to the original work you create unless you agree to pass the copyright to someone else.
- The work must be original for the creator to have copyright; however, it can (to a degree) be influenced or inspired by other pieces. “Original” can be open to some interpretation, but you cannot directly copy other works.
- If you copy someone else’s work, whether it’s an illustration, photograph, writing or any other original creation, that is copyright infringement.
- ‘Derivative work’ is what you create when someone else’s existing work or IP heavily influences a piece of your work.
- ‘Fan art’ is when you create something based entirely on an existing IP, for example, a comic book, movie or novel character. You are not allowed to sell it or otherwise create income; it is for your enjoyment and personal use only.
- Copyright eventually expires. The related work then enters the public domain and is no longer protected by IP laws, meaning it becomes free for anyone to use. Public domain is a legal term and not to be confused with the internet or even Google.
- In some countries, you can register your copyright for extra peace of mind.
Note that copyright law can vary in different countries, so always check what the rules (laws) are where you live.
Licensing is all around us
Now we can take a look at licensing. As we mentioned at the start, licensing is in action all around us. An excellent example to look at is music.
- Apple is provided with licenses by music companies and artists to sell their music to Apple customers. Whenever you buy music from iTunes, Apple grants you a sub-license to listen to the music on designated devices without you owning the music.
- If you buy a CD, you are allowed to play the music on the CD at home and for your own personal enjoyment. However, if you wanted to play the music from the CD at a public event or in a shop, you would need to pay for an additional license.
In all these scenarios, the artists and music companies still own the copyright to the music. If they don’t receive their royalty payments, or Apple or Spotify break the terms of the license, the copyright owners can remove their music from those platforms. If a customer (be that Apple, Spotify or you) needs to use the music for something different from what the license states, you have to pay for another license that lets you do that.
Licensing as an illustrator works in essentially the same way. When you license your work, you retain control over usage rights, and the licensee pays for specific usages. If they want to extend their use of your work or use it for something different from what was agreed, they must gain your permission and, on most occasions, pay extra.
Licensing your work is possible because you own the copyright to the original work; you own the right to copy your creation. If you pass your copyright to a client, you lose that right, and the client can do what they want with the work, even license it themselves to third parties.
There may be occasions when you need to agree to a client having the copyright, but in these situations you must make sure they pay a suitable amount. A full copyright buy-out fee should compensate you for your loss of licensing rights and should definitely cost a lot more than a license would.
A license will be part of a contract between you and the client. When you set out the terms of any contract with a client, one of the most important parts is the stipulated use (the license), as this tells the client what they can do with your work. You can look at this as specifying the restrictions you place on using your work. Deciding what you are willing to offer a client against what they want or need is where the negotiations happen. Generally, the more the client wants, the more it should cost, although this isn’t always the case.
Here are a couple of examples:
- Buy-out: An agency working for a Fortune 500 company with a big budget approaches you. They need a few small images for their client’s social media campaign and want a complete copyright transfer. This is a fairly typical arrangement, and you might agree to £1,500 per image. Once you transfer the copyright, the client can use your artwork in whatever way they wish, but you have charged a suitable amount to make up for no longer being the copyright owner. It is a straightforward agreement, with no need to negotiate a license.
- License: Now, suppose you are working with a smaller company with more limited funds and a tighter budget, and therefore, they want to get as much “value for money” as possible. This is where a clever licensing agreement comes in. You negotiate with the client to balance what usage you are happy to allow with what the client wants and can afford. Starting with your base rate (the minimum you need to cover your time and overheads), you then add the cost of licensing the usage rights that the client needs. The more they want, the more it will cost them.
The four main elements of a license
There are four main elements you should focus on when putting a license agreement together: time, geographical area, usage and exclusivity. You can apply exclusivity to the other three elements, and examples of this are given below. In some situations, you may need to consider additional aspects, but these four are usually the most relevant. Remember that there are no set rules for what you can and can’t offer a client, but you must make sure your contract is airtight.
Licenses frequently mention a timescale, a length of time that a client can use the artwork. It can be for any period: six months, a year, five years, ten years. At its simplest, this means you can offer as long or as short a period as you want, and at the end of that time, the client no longer has the right to use the artwork you supplied.
You could also offer the same timeframe and make it an ‘exclusive period’, so the client will be the only one who can use the art. Once the exclusive period has ended, it’s best practice to offer a license extension to the client, generally at a discounted rate. Suppose they don’t want to extend the exclusive license or continue with a non-exclusive one. In that case, you could use the artwork for your own merchandise or license it to other clients (bearing in mind any restrictions that may still be in place with the original client regarding usage).
A particular country, territory or other geographical area can be specified in a license, meaning the client can only use your artwork in those locations – although these days, this comes up less often due to the proliferation of online commerce. However, we still print and distribute books and magazines, have billboard advertising, and in-person events (to name a few examples), so there are plenty of situations where geography is still very relevant.
Generally speaking, the larger the geographical area and number of countries the license covers, the more it will cost the client. You can grant a worldwide license to a client, but they may not need that much coverage. For example, a company may only operate within North America, so they only need a license for that area. They may expand their business into another territory later and ask you to add additional locations to the license to cover other areas – in which case you will earn more income from your original work.
Exclusivity can also come into play here. Say a company has its HQ in Paris, France, you could offer them the right to use the artwork exclusively in Paris, plus non-exclusive rights to use the work in the rest of France. In this situation, you could then also license the artwork to another client for non-exclusive use outside Paris.
Usage refers to what your work is used for, such as on a t-shirt or website. You can specify that the client can only use the artwork in a way that you designate. For example, as part of a contract, a license can tell the client they can only use your work on t-shirts and nothing else. This means that unless the agreement is updated or extended, they can’t decide to use the artwork on a hoodie or jacket. You shouldn’t need to state what the artwork can’t be used for, but sometimes you might want to include a list of examples to make your intentions and the client’s usage clear. Again, you can offer exclusive and non-exclusive licenses.
Exclusivity can be very specific, but doesn’t need to be. Continuing with the previous example, you could offer a license exclusively for t-shirt use or offer exclusivity for the entire apparel market. In the first case, you would also be able to license the artwork to another company to use on, say, canvas bags (but not t-shirts). In the second case, nobody else could use the work on any apparel, but you could sell art prints as these are not part of the apparel market.
All four elements mentioned – time, geography, usage and exclusivity – can be mixed and matched as needed. Please do take the time to work with your clients and offer them a licensing agreement that protects your interests and that both sides feel is fair. It can take some persistence to get it right, but it is worth it. Use your creativity in all areas of your business, not just in making your art.
Breaches of copyright and contract
If a client uses the work in a way not permitted by the license or continues to use it after the license has expired, that is a breach of copyright and the contract. You should contact them to ask them politely to stop, which hopefully will be enough to do the trick. You could also offer them the option to renegotiate or extend the original license to cover what they are now using the artwork for.
If these courses of action don’t work, you can send them a Cease and Desist letter. If they ignore that, you can choose to take them to a small claims court (or the equivalent if available in your country), but hopefully it won’t ever come to that.
Bringing licensing into your business
We often see illustrators and clients struggling with licensing, primarily due to not understanding what it is and how it works. We need to change this. Copyright transfers and work for hire contracts may be the easiest option, but they are usually paid below a reasonable market rate, sometimes almost criminally so.
If you are a freelance illustrator, this is your livelihood, and you need to protect it. There’s no question that other businesses will safeguard their interests regarding their bottom line, and as a freelancer, you are also a business. Protect your business, protect your assets, and protect yourself. Understanding licensing and being able to explain it to your clients is a good start.
Licensing is your friend and should be the cornerstone of your business. It allows you to maximise your earnings from each piece of work you do while also offering clients options to use and pay for your art in a way that works for them. There seems to be a trend of encouraging illustrators and other creatives to pass their copyright to the client. But in most cases, that certainly isn’t in your best interest as the creator, and most clients don’t need to own the copyright. A well-thought-out license will be perfectly suitable in almost all situations and more affordable for the client. And if you make it clear to your clients that there is the option to negotiate an extension or an additional license in the future, they should have no need to feel stifled by not owning the copyright.
Hireillo is a community of freelance illustrators, animators and artists that we promote, advise and connect with clients. We’re always happy to look over members’ contracts or help them negotiate; it’s what we spend a lot of our time doing. If contracts, licensing, or even quoting on jobs are things you struggle with or are new to you, we encourage you to join our community – you can apply for membership at illo.cc/apply
This article was inspired by the Demystifying Licensing Youtube video by Darren Di Lieto.
Darren Di Lieto was born in Central London, but most of his youth was spent by the sea in South Devon. He now resides in Leicester in the Midlands where he lives and works with his other half, Morgan, and a garden full of corvids. darrendilieto.com
Trained traditionally as an illustrator and graphic designer, Darren is the founder and creative director of Hireillo, aka Hire an Illustrator, a community and service for illustrators which was established in 2005. He spends his days (and many evenings too) advising, promoting and helping illustrators find commissions, while guiding them to further their careers and maintain professional standards.