Illustration Licensing 101
Fellow illustrators often ask me to speak on the subject of licensing. I’ve spoken about it at conferences, on podcasts and Instagram lives, and I am always met with wide eyes, thankful emails and (pre-covid) hugs.
I’ve summated the bulk of my talks below.
Please note: I am not an attorney, this is all researched and learned experience after 10 years in the field. Laws differ by country, so it’s best to double-check laws in your own domicile when applicable. Additionally, this does not speak to Graphic Design, and is only applicable to illustrations, which are legally considered bespoke artwork.
Leave me a comment below if you find this information useful. <3
What is Licensing, exactly?
Licensing, sometimes referred to as Usage or Rights, is an agreement between the Illustrator (Licensor) and their client (Licensee). The agreement allows the Licensee to use the illustrated work (the Art) in a commercial capacity.
In plain English: You allow your client to use your illustration in exchange for payment.
The terms of the License (The Terms) are negotiable between both parties and may include many factors, which I’ll go into below.
Who licenses illustrations?
You may choose to license your Art for a wide variety of purposes. Companies license illustrations to be used on packaging, in advertisements (print and/or digital), for textiles, website graphics, clothing, homewares, paper goods like invitations and stationery, etc.
Ok, but is there an actual “license”?
Well, yes and no. A license is a document both the Licensor and Licensee sign that clearly states the terms of the agreement. Sometimes this is a very formal, legal document drafted by an attorney (usually provided by the client), but it may also be a signed contract or Statement of Work (SOW) clearly stating the terms of the agreement.
Do I need to register my illustrations?
Again, yes and no. Your illustrations are inherently copyrighted to you the moment you create them. You own the intellectual property and you own all rights to the art without having to register them anywhere.
How to protect yourself:
Keep screenshots / records / dated files + examples of your original works.
You may choose to watermark your designs
In the case of patterns: consider warping the versions you put on the internet, making the repeat much harder to edit / copy.
In a case of copyright infringement, registering / copywriting your work can make the whole nasty process a lot easier to defend, and typically you cannot file a claim against someone else until your copyright is registered.
The easiest / cheapest way to register your artwork is after you have created it, but BEFORE you have published it. Copyright.gov allows you to register up to 10 pieces of like-kind, unpublished works at a time with a shared fee (this saves you some serious cash). You can still register single pieces after they are published, but it only allows one image at a time, for a flat fee of $65, which can really add up.
Factors that impact the cost of licensing illustrations:
Duration / Time
Geographic / Region
Type
Exclusivity
When you’re coming to terms on a licensing agreement, it is important to consider all of the following:
Duration / Time - How long will the Art be in use?
Is the Licensee a new company / start-up? Is this a holiday or limited-edition packaging project? Consider that each case is unique in the duration the Licensee may need to use your Art.
Here are some of the Licensing Terms I offer:
12 or 18 month:
The shortest license available. This is a great option for many start-ups or new brands who need to limit overhead spending as they launch their brand.
2 year:
Ideal for limited edition / special edition projects. Because, if it’s Holiday 2022, the Licensee likely doesn’t need to use the artwork after the holiday season ends. This term length allows time for the artwork to be produced, printed, sold, and to ensure no competitive products with the same design will be in the market for the duration of the licensing term.
3-5 year:
Will your Art be used prominently, as the core aesthetic of the brand? In this case, a longer licensing term is most appropriate.
Perpetuity:
Forever. And ever. And ever. Candidly, most packaging clients request ownership / exclusive* use in perpetuity. Remember, this takes away any rights you have to re-license the work at a later time, and thus it should be priced accordingly.
*I’ll go more into exclusivity below.
Geography / Region - Where will the Art be used?
Assess whether the Licensee will need to use the Art globally, nationally, regionally or locally (limited)
For example:
Let’s say your client is a small, artisanal coffee shop in Boise. You charge them a low, flat-fee for licensing your artwork because, hey, it’s a local business!
2 years later, they pick up a distribution deal through Whole Foods, yay! Suddenly, packaging with your artwork on it is being sold in 500 stores across the country. Your work is valuable: it’s appealing to customers! Unfortunately, you would have no claim to limiting the artwork distribution or charging more.
Instead: offer a regional license to your smaller clients that applies to everywhere they currently distribute. Include very clear language and/or a price list so your client knows what to expect should their distribution ever substantially scale up.
Same goes for national clients: do they distribute only in North America, do they anticipate distributing globally at any point? Have an honest conversation and structure your deal accordingly.
Type of License - What is being produced?
Is this for advertising / display only?
Is this going to be produced and sold on for-profit products?
Is this for promotional products only (not for sale?)
Is this being used for 10 t-shirts, or 50,000 t-shirts?
Understand the exact needs of your client / the Licensee, and exactly how and where they intend to use your Art.
Example:
You license a design to a brewery, which they tell you they will use on their 6-pack of cans. Weeks later, they start selling shirts, hats and tote bags with your design on them.
Yes, it’s cool to see your artwork in so many places, but it may not be what you agreed to. Clearly state the type of license your client has. State that—should these desire to produce additional products—they would have to extend their license.
You could structure it in the following way:
($) Packaging only
($$) Packaging + promotional (not for sale items)
($$$) Packaging + retail items
Exclusivity
Exclusive:
While your client / Licensee holds the license, they are the only one that can use the artwork for the agreed-upon length of time.
Non-Exclusive:
Your client / Licensee may use and produce the artwork, but you are free to continue licensing the Art elsewhere during the same time.*
*I offer non-exclusive licenses based on industry. So if I license a non-exclusive design to be used on fabric, I won’t license to another fabric company for that duration, but I could license the artwork to be used on wallpaper, glassware, greeting cards, etc.
EXAMPLES
Here are some examples of licensing agreements, considering all of the above:
3 year, exclusive license for display-only, North America (The Licensee can use the Art in advertisements, not for-profit products, in North America, for 3 years, and they are the only one who can use the Art during that duration.)
18-month non-exclusive fabric license, global (The Licensee can use the Art on fabric that they can sell and produce around the world for 18 months, but you are free to also license the artwork elsewhere)
12-month exclusive product packaging license, US + Europe (The licensee can produce and sell products featuring your Art for a duration of one year, in the United States and Europe, and you may not license the Art elsewhere during that term.)
What is “Full Buy-Out”?
Full buy-out is the whole shebang. Essentially it means World-wide, Exclusive, in Perpetuity. You may not license your Art to anyone else, ever again, anywhere, for forever.
Full Buy-out isn’t necessarily a bad thing (Real Talk: 75% of my clients request it), but it should understandably be priced accordingly.
What is “Work-for-hire”?
Work-for-hire (or Work-made-for-hire) is Full Buy-out, it’s just called something else and is used to justify underpaying artists for their work. Work-for-hire should be priced just as high as Full Buy-out, but is unfortunately one of the lowest-paid categories of work for any designer / illustrator. Be very weary signing a Work-for-hire agreement, as it strips the creator of all rights to their work in perpetuity.
Ok, but how do I price all of this?
I generally price using the following calculations, thought I’m sure that—based on the above—you understand this can vary vastly depending on duration / geography / products being produced, etc.
Artwork Creation + Value (Licensing) = Price
Artwork Creation:
The cost of producing the artwork based on your time, effort and skill level. Consider: research, size, style, sketches, anticipated revisions, final artwork delivery.
Sometimes this is based on your hourly rate, sometimes it may be a flat-fee.
(Understand, for instance, that my illustrations usually take 30 hours minimum, so if I used an hourly rate my fees would be astronomical. For someone who does, say, minimalist line illustrations and has spent a lifetime perfecting that style: should they be punished by using an hourly rate as a base fee? Not on my watch)
Value / Licensing:
The cost for the client to use your artwork commercially. Top-level, this is the value of your artwork to the client: the products they sell and the story they tell. Great design creates brand recognition, sells products and catches the attention of their audience. Concretely, this is a number based on the factors listed above in this blog post.
A small (limited) license may be around 50-100% of the Artwork Creation fee. (So, perhaps a 12 month license, or a very small production run of promotional items, regional use only.)
A non-exclusive or mid-sized license may be around 75-200% of the Artwork Creation fee. (Yes, this is a wide range. Again, SO MANY FACTORS.)
A full buy-out is likely between 200-300% of the Artwork Creation fee. This is industry standard.
Do I need an agent?
I do not have an agent, and never had.
You can do all of the above entirely on your own. In many cases it may be much easier to have an agent advocating for you, registering your copyrighted work and generally being in your corner, but that does not mean it’s the only way to successfully license your illustrations. (Also, they take a cut of the $)
If you found any of this information useful / helpful, drop me a line below and follow me over on Instagram @littlepatterns where I often do Q&As and announce new podcasts + illustration news.
If you’re looking for bespoke illustrations for your brand, please reach out to maggie@littlepatterns.com to discuss further. And thanks for reading! It’s even more exciting to work with clients who understand the business side of illustration.
