Why, as a freelancer, you shouldn’t work-for-hire! (And why people do)

Author: Darren Di Lieto · 16th March 2021

Illustration by Richard Dearing

Every time you create a new, original piece of illustration or artwork, you automatically own the copyright. It’s that simple. You don’t need to apply for it; it’s yours.

Working For Hire

The exception to when you don’t automatically own the copyright is when you’re under a work-for-hire contract, meaning the client automatically owns the copyright to your creations. This arrangement is typical for full-time employees (in-house illustrators) or freelancers working on a character or property where permission has been granted to create derivative work, often referred to in retail as officially licensed.

With derivative works based on an intellectual property (IP), the IP owner’s copyright extends to the derivative work, in addition to the illustrator’s copyright protection of the derivative work if the new creation is significantly different from the original work. Still, with a work-for-hire contract, it will always mean that copyright protection is automatically taken from the worker and given to the employer.

As already mentioned, when you’re talking about in-house illustrators, the employer will own the copyright to the employee’s work as part of their employment contract. And as part of their agreement, the employee will be entitled to holidays, sick pay, paternity or maternity leave, maybe a pension, and all the other things needed to do the job, like being supplied with software, hardware and furniture. As long as a person isn’t on a zero-hour contract, they’ll get a regular wage and job security, which makes giving up their copyright by working-for-hire a fair compromise, in our opinion. Another case where using a work-for-hire contract is usually acceptable is logo and branding work, regardless of whether you’re an employee or an independent freelancer.

However, being your own boss means you have to cover all the benefits of being an employee yourself, account for an erratic workload and manage the administrative burden. So, you have to ask yourself, why would you give up something as valuable as copyright? Unless the compensation is generous, we’ve found there’s seldom a good reason to sell the full rights to your work. Selling a usage license to a client instead allows them to compensate you fairly as a freelancer and for the job to proceed within what is usually an inadequate budget for a copyright buyout anyway.

Valuable Assets

The copyright to your work is a valuable asset and you must not forget that. In broad, practical terms, transferring the copyright to a client should add 100-200% to what you would typically charge for an unrestricted eight-year license. There are other more complicated, but often more accurate, ways of working out what it should cost to purchase a work’s copyright. For example, it would roughly be equal to 1-8% of the potential value that the work in question has to the client, reducing the percentage the more prominent the client. When working for a multinational company, you’ll be a smaller cog in the machine and can only expect a minor part of the pie, a lower percentage. A lower proportion doesn’t necessarily mean a lower fee – it depends on the circumstances due to a multinational’s ability to exploit an IP and make exponentially more money out of it, so you could be looking at a handsome payday.

As a side note, you need to be aware that it was a common occurrence for a long time (and this is still ongoing in some businesses) to do what is known as a rights grab, primarily in editorial and periodical markets. Publishers didn’t hide rights grabs maliciously. However, they didn’t advertise the practice either; there would typically be conditions in the contract (supplied by the publisher) that the illustrator’s copyright would be transferred to the client upon completing the job, regardless of the terms discussed between the artist and client beforehand. The contract might not even mention a transfer of the copyright; it might be called a perpetual, exclusive license with no restrictions, including sub-licensing rights, but this is essentially the same as a transfer of copyright ownership. What would make matters worse would be that the publisher wouldn’t just be using the magazine or editorial artwork as was intended. It would be utilised again in later editions, on their websites, in bookazines. They would make additional revenue from the illustration by licensing it to their subsidiaries or even other publishers, acting as a stock image company would do without the illustrator seeing a single penny of this additional revenue. We can say with confidence, the artists who are taken advantage of by rights grab contracts are usually entirely unaware of the scope to which a publisher might utilise their work and what they’re giving away by signing on the dotted line of such contracts. While rights grabs are rarer now, you need to be aware they can still happen.

The Licensing Agreement

If you include the copyright as standard when you sell an image, you’re being very foolish. You’re probably seriously undercharging your clients, and you’re making it difficult for other hard-working illustrators to charge a sustainable rate into the bargain. When you quote on a job, never include the copyright as standard and always give the client licensing options unless they ask specifically for a copyright transfer cost. They may need it, they may want it, but they should be paying for it accordingly if that’s the case.

Some big companies at this stage will tell the artist they want to buy or own all copyrights to the image created. For instance, if Disney commissioned me to do an illustration featuring Mickey Mouse, well, they own Mickey Mouse. They would not want me later on licensing the image to a company that makes toys, because Disney wants to own and control the Mickey Mouse brand. So, they will undoubtedly tell me that working for them means they will purchase the entire copyright from me, leaving me with no secondary streams of revenue. Copyright buyouts cost money, and Big Companies typically expect to pay appropriately.

Learning How to Commission Illustration by Randy Gallegos

When you sell a client a license, it’s either time-limited, usage-limited, geographically-limited, or a mixture of all three. For example, you might sell an editorial license for a newly commissioned illustration to a publisher, permitting them to print the artwork in their magazine or display it on their website as part of a specific article. You’re then free to sell the same illustration to an apparel company, an advertising company that might use it as part of a motion graphic, or you may want to sell prints of the artwork yourself. Exclusivity is another kettle of fish; like a general license, it can be time-limited, usage-limited or geographically-limited. A company could have exclusivity to an image within a region or exclusive use of the work for 18 months, the combinations are endless. Exclusivity means that, unlike a general licensing term, a copyright holder can only grant a specific exclusive license term once. An exclusive license benefits the client as they will not see the same image used by one of their competitors. Exclusivity is something you use to address a client’s needs and concerns, and is an excellent opportunity to upsell a licensing agreement.

Summary

To summarise, we don’t believe that an illustrator should never sell their copyright. However, when sold, they should be paid appropriately for it – and if they don’t sell the copyright, they should be able to bring in a secondary revenue stream from the work they’ve created through additional licensing. Its common sense for a business to exploit its assets for monetary gain. Why shouldn’t a freelance illustrator do likewise? Are they not a business too? (Yes, a freelance illustrator is a business.)

If you ever need advice on any illustration-related issues, including copyright and licensing, join Hire an Illustrator and email us directly for one-to-one help. We advise on pricing too.

If you want to get your two pennies worth in on the subject of working-for-hire, leave a comment.

3 Comments

  1. Great article. Lots of useful advice, straight to the point and easy to read. I think I’ll be sending some clients here to help explain the copyright discussions I regularly need to have 🙂

  2. Very good information. Always work with a contract in place, and negotiate for your rights when you can.

  3. I just had a dispute over rights with a newer client. They had a friend who was a lawyer and wrote a great contract for themselves. But champagne dreams, beer pockets so they came back around and did finally sign my contract. It’s tough when you’re a single person studio. Always have some good people in your corner to help. Cheers to the illustration community!

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