3 years into Art Licensing - Things are starting to grab hold.

Hey Everyone!

Can you believe I started blogging 3 years ago last March?! Time flies when you are having fun ;-)

I thought I would chat a bit about where I am 3 years in. This isn't a gauge of where you should be, but from what I have heard and read, I look to be about 'average' ;-) Some say it takes 3-5 years to get going in this business.

 

Art

My art and patterns are SO MUCH better than 3 years ago thanks to the input of my agent ArtsDG.com and manufacturers. Art Licensing really is a wonderful community of support! Creating art almost every day really has done the trick too ;-) Practice makes perfect.

Licensing

I will rattle off a few licenses. Halloween figurines coming out this fall, Patriotic Notepads and note cards on Amazon and other sites. Flags and soft goods (to be announced soon) through a manufacturer that also sells through Wayfair, Amazon and Walmart. Thankful for a handful of manufacturers shopping some of my art around. - Things are starting to grab hold! :-D I need to take a minute and give a shout out to ArtLicensingShow.com - 3 exciting opportunities have come my way through this site - Cool Beans! Thankful for all the hard work my agent ArtsDG.com has done and continues to do <3

Blogging/Social Media 

Social media and blogging has been great for me and hopefully good information for all of you too. I get a front row seat and learn new things with each post. Nothing is better than when a manufacturer recognizes you at a trade show and raves about you & the blog! I am really blessed. It has been a fabulous way to connect with you. I appreciate all of you who have sent money to support the blog & newsletter. I could use more support. (Tip jar and PayPal link, top of right-hand column).

My "2nd Thursdays" group on ArtLicensingShow.com is a monthly text chat group. We put our heads together and great ideas and information come from it! Recently Susan January, VP Leanin' Tree was in the hot seat while the group asked her questions. If you are a paid member of ArtlicensingShow.com, you can get the PDF of the chat on the 2nd Thursdays group wall.

I recently decided to put the Pattern Parade on hold. I hope to pick it back up when I can afford an intern. Over the last 3 years I have added more to my social media plate and it was time to trim back a bit.

If you haven't already, I would LOVE to connect with you on social media sites. I enjoy seeing what all of you are up to :-D Go to my website and scroll to the bottom for the list/links of social media sites I am on http://www.annietroe.com. If you like, sign up for my newsletter so you don't miss any of the action here on the blog.

Advice?

While I haven't been in the licensing business that many years AND this is what I have to remind myself of once in awhile –– If you want it, you will get there. Stick to it, and one step at a time works beautifully. It won't be a straight path. Go where the opportunities pop up.

Any of you have advice you would like to share in the comments below? That would be great! Looking forward to hearing about your journey. Hugs!

Bo's bLAWg - Licensing Agents

 

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org  Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!

 

Recently I was asked to sign a non-compete for an image broker who wanted to help me license my work. Is it standard to ask for this sort of exclusive? In what scenario would a non-compete be necessary? Thank you, in advance, for your guidance!

The short answer is that people in business as ‘image brokers” or professionally as Licensing Agents may reasonably expect to represent the Artist exclusively.  Whether or not the exclusive representation will apply to specific illustrations or specific goods is subject to negotiation.  However, once the scope of exclusivity is mutually agreed upon, it would reasonably be expected that the Artist would not compete with the Agent of licensing opportunities within that scope.

I should mention, there is a legal difference between licensing exclusively through an Agent, and giving an Agent an exclusive right to license your works.  With the former the Agent would expect that the Artist would use the Agent for all licensing deals.  The Artist would be expected to accept a non-compete provision in the Representation Agreement.  The Agent does not want her pursuing licensing opportunities that might interfere with the Agent’s own efforts.

Sometimes, it is possible for an Artist to obtain express permission from her exclusive Agent to pursue a lead or contact a person with a given company whose name has been given to her for possible interest in her work.  However, I would recommend that it is simply good professional manners to get the express permission of the Agent before she does make such a call.  To pursue such a lead without the knowledge of the exclusive Agent could have various negative ramifications.  It may be that the Agent has a planned pitch meeting with the same company, or knows who really has the power to license at that entity.  To pursue such a lead without the intent to pay the Agent her expected commission would be directly adverse to the Agent’s interest in representing the Artist in the first place.

Taking your own initiative to pursue licensing can also ‘muddy the water’ as to whether the Artist is or is not represented by a given Agent, this damaging the reputations of one or both.

However, the main reason I suspect that an Agent would not want her represented Artist to pursue such leads with or without her permission, even if the Artist were prepared to pay her Agent’s commission anyway, is that such initiatives undermine the Artist’s interests as well.  It is the Agent’s job to know what the particular company is looking for by way of new imagery.  S/he should know what trends are hot and which of her clients’ illustrations might best fill the needs of  one or another company given the strengths (and weaknesses) of their existing product lines.  S/he has likely spent years building up a professional relationship with that company that she expects to lead to greater confidence in her recommendations to those clients.  

Were the Artist to pursue her own licensing with such a company, she may very well undercut or destroy the Agent’s business plan to sell that Artist’s line with a more profitable competing company and at better royalty rates than the Artist might be willing to settle for! 

Even where an Agent is the Artist’s exclusive representative only for a particular line of illustrations or for a specific limited line of Licensed Products (i.e. greeting cards and paper products as distinguished from magnets, plastics and fabrics), the Artist can cause an Agent havoc by pursuing the same corporate Licensees for their interest in a different group of her illustrations or for use of her illustrations in ‘other’ product lines also handled by the company. 

Just last week I had a client call who had been ‘balled out’ by her Agent who took exception to her independent efforts to license her imagery for product lines not handled by the Agent.  It was clear to me that per her Agency contract, she had a legal right to pursue personally such licensing opportunities, but I could well understand the Agent’s resentment.  How was he supposed to pitch her illustrations as fresh, new and particularly appropriate to this regular company client of his, if his own Artist has already pitched them for other products.  It was very clear that the Agent would sooner pitch another Artist’s imagery than risk that scenario.

Accordingly, it is simply good business politics to be clear on the front end of an Agency relationship what if any independent marketing the Artist can look to do on her own behalf  -- if any.  One solution is for the parties to give each other a list of prospective licensees they would like to pitch, and for what illustrations and product lines, and determine if it is in the best interest of the Artist to make any such marketing forays on her own account.  If it is, she should not do anything to undercut her Agent’s expectations as to Licensee royalty rates payable, and may offer to pay the Agent a discounted commission on Licenses she obtains – at least from company clients of the Agent if not from others.

Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com

Have a legal question? email it to info@AnnGraphics.com. I will forward it to Bo. It might be a blog post! You can search "Bo's bLAWg" to read more posts. I am looking forward to your comments and thanks for sharing this great information on social media.

Make my day! and Buy me a cup of coffee (PayPal Link in right side bar, you don't need a PayPal acct.), follow this blog, and/or click an ad (you don't need to buy ;-)

 Don't want to miss the good stuff? Sign up for my newsletter ;-)

 

 

Artist Spotlight - Barbara O'Brien

 

 

Tell us a bit about yourself: Did you go to school for art? Are you self taught?  
I guess I would say that I am self taught but that is really a misnomer as I have been blessed with wonderful mentors who taught me how to use my camera and other kind folks, like my agent, Joanne Olds of the Buffalo Works and her in house designer, Nicole Fadden, who took a chance on me and have guided me in turning my photos into art to make them more  appealing to manufactures.   I used to do watercolor, sketches and pastels but took 20+ years off to raise a family of four sons and a daughter while running an animal actors agency. I did not start shooting until around 2008 when my advertising clients took a big hit like everyone else and I needed to expand my income base. With the help of some excellent photographers  who were gracious enough to show me the ropes I was able to start shooting professionally right off the bat. I still work with ad agencies and editorial clients but am now focused on creating more imagery that I can turn into licensable art.
 
Do you work in just one medium? Several? 
I principally work in digital photography. I like to use my own images to create my art as I never have to worry about copyright or attribution issues. I do license photographs but am now mostly working in digital art.

What inspires you / where do you get inspiration from?
As you can see from my work, I tend to be pretty animal focused. To be inspired I need to look no farther than out my window as I live on a small farm in rural Wisconsin and am surrounded by beauty everywhere.

How did you start licensing your art?
My oldest son was watching me edit a photo shoot of a really sweet puppy and he said “Why isn’t this on the cover of every fourth grade girl’s notebook?” That was a lightbulb moment for me. Yeah why isn’t it? Those pictures get there somehow and so began my journey learning about this world. I was also lucky enough to have a good friend who managed to get my work in front of an editor at Penguin Random House and am proud to say that my little photo book DOGFACE has done quite well.

What are you working on now?
I have created 10+ new collections in the past few months  ranging from farm animals to humorous themes and strive to create new art every week. I shoot almost continuously adding to my library of assets. For example, I shot a series of farmer’s markets last year to give me the vegetables images I needed to create my farm to table series.

Anything else you would like to share with us?
I am blessed to be working in the digital age, where photography and digital art is even possible. Thank goodness for all the kind people on YouTube and the like who take the time to create tutorials. I learn something new about pattern making and Photoshop everyday.
  
Any great advice for our readers? 
Create what you love. It’s true as a writer, a photographer, a composer, - for anyone in the arts. I am much happier shooting a field of lambs then I am shooting a pile of towels for advertising. Try to develop your own look. Nothing pleases me more than when someone recognizes my work before they see my name with it.

Are you an early riser? or night owl?
Both, ask my poor husband, I love to work and will work on projects for hours on end if I can. I still run my animals actor agency and my commercial photography business so creating art from my images is my happy place where I get to decide how things look and how they go together.

What is your favorite food?
I eat fresh pineapple almost every morning and I make the best triple chocolate, real Wisconsin butter, and eggs from my very own hens, brownies. Usually when a photographer tries to get a portfolio showing with a new client, they will send a photo of their work.  I send a photo of my brownies with the promise to bring them if they agree to meet with me. No one has turned me down yet.

 

You can find Barbara
612-812-8788
www.barbaraobriencreative.com
www.barbaraobrienphoto.com
barbara@barbaraobrienphoto.com
Represented by The Buffalo Works
DOGFACE BOOK

Make my day! and Buy me a cup of coffee (PayPal Link in right side bar, you don't need a PayPal acct.), follow this blog, and/or click an ad (you don't need to buy ;-)

 Don't want to miss the good stuff? Sign up for my newsletter ;-)

 

Chat with Leanin' Tree - Susan January

Hi Everyone!

Quick post letting you know Susan January, VP of Product Management with Leanin' Tree will be at the next "2nd Thursday" text chat. This is open to anyone interested in Art Licensing: Manufacturers, Art Directors, Retailers, Agents, and Artists :-D . 6:30 pm CST USA/Chicago time.

http://www.worldtimebuddy.com/

This is for any paid member on ArtLicensingShow.com.

QUESTIONS that you all sent in for this Thursday's Chat:

1. What is the best way to submit to you? And how often do you want to see new art? Do you want the art mocked up as a card?
   
2. Does the artist  need to come up with the copy/text for a greeting card along with the art?

3. What makes up a best selling greeting card.

4. What is Leanin’ Tree’s best selling cards (sympathy, Christmas…)?

5. When looking for new greeting cards to manufacturer - what stands out to you?

6. How can an artist best support Leanin’ Tree?

7. The greeting card industry has changed a lot. If you can, talk about that a bit. Are most of your sales online?

8. What sort of gifts do you manufacture? Do you license art for your gift line?

9. Where does Leanin’ Tree see themselves in 5 years?

From Susan's bio on ArtlicensingShow.com and Leanin' Tree's website:

Susan - I am the current Vice President of Product Management at Leanin' Tree, a greeting card and gift product manufacturer based in Boulder, Colorado. I have more than 25 years of experience in art licensing and greeting card development. I am a former President of the Greeting Card Association, and am still a current member of the Association's Executive Committee. Leanin' Tree currently works with more than 700 artists across our 6,000 product skus, and we add an average of 1500 to 2000 new products annually.

Leanin Tree - Beautifully crafted greeting cards that feature original artwork by outstanding independent artists from across the country and around the world. All our cards are created, produced and shipped from our facility in beautiful Boulder, Colorado. We strongly believe in supporting our community, our neighbors, and our customers. As for the people behind the products, Leanin’ Tree’s heritage and workforce is truly special. Please take a moment to watch our video, "Behind the Scenes at Leanin' Tree". To see how this family-owned, "made-in-America" business has thrived for over half a century, please visit our History and Goals section.

Thank you all for your interest and support - BIG thanks to Susan for stopping me at Surtex and offering to chat with us! 

Artist Spotlight - Nicole Tamarin

 

Tell us a bit about yourself: Did you go to school for art? Are you self taught? 
I didn't start taking art until I was a Junior in HS after my French teacher suggested not taking her class again (I was terrible at it, even after 5 years) and maybe try an art class instead!  I’m not sure why I had never thought to do this but art wasn’t really something I saw a possible career in so it seemed odd to spend time on it.  I’m kind of practical in that way but I was always drawing in a sketch book and doing projects at home so I thought it might be fun.  Who knew I’d be completely switching gears from that point on!  I remember a Senior at the time telling me that I HAD to go to Mass College of Art, and again, I’m not sure I had actually thought about going to school for art as a possibility but hearing it from someone else was a weird kind of permission I’m not sure I would have allowed myself on my own.  I did end up attending Mass Art, where  I was an Industrial Design major before switching to Illustration where I graduated with departmental honors. 

Do you work in just one medium? Several? 
As far as my traditionally painted work, it’s almost always watercolor and sometimes a little white gouache.  I know I don’t use it right but I have never liked the colors I mix  so I tend to just tint it with my watercolors.  For brands I like Winsor Newton but that might also be because I still am using my original set from college!  As I’ve gotten more into Licensing and have a need to get brighter, bolder color I started to mix a bit of Dr Martin’s in with my regular pallet for a bit of a color boost. For the digital side of what I do, all my paintings are brought into Photoshop.  I am no expert by any means but it is comical to me that it was only five years ago when all I’d use PS for was scanning and sizing for email.   

How did you start licensing your art?
In all honesty it took me forever to find my niche.  I found out about licensing after losing an illustration job due to the fact that I didn't want to sell my full rights.  Since I really only had freelanced here and there since college I wasn’t sure what was realistic in the "real world" as far as keeping your rights were concerned so I reached out to an artist who had done a previous product for the same company.  That artist happened to be Bee Sturgis and she encouraged me to look at the licensing industry thinking it was a good fit for my work.  She also directed me to Tara Reed’s site who at the time was doing "Ask" calls talking to different experts about the industry.  The very first one I listened to was about Surtex, which of course I had never heard of and as soon as I found out that it was in NYC I decided to walk that spring and exhibit the following year.  This is of course before I knew anything about licensing or had a portfolio to speak of but it was just one of those lightbulb moments. 

From that point on I  read every book and blog I could get my hands on, I was listening to webinars, teleseminars, and podcasts.  Everything from freelancing to marketing, from entrepreneurship to small business strategies and of course if someone was sharing about art licensing in any form I was open ears.  I taught myself to make patterns from a silly “how to make a polk a dot” tutorial and started entering all the weekly Spoonflower challenges to help me learn how to make patterns.  A few months went by and when May rolled around, as soon as I stepped on to the Surtex floor I knew it was where I wanted to be.  I am a total introvert but forced myself to introduce myself to as many artists as I could find that I followed online.  It was one of the best and most terrifying things to do but everyone was very encouraging.  I also made a point to tell everyone I spoke to that I’d be back the next year as an exhibitor. 

I had never shown my work to anyone in the industry before unrolling my banners the following Spring when I arrived for my first show (this is not something I’d suggest!) but it all turned out for the best.  I was able to see that my art was indeed a fit for several industries and it wasn’t just a hunch.  Best thing I ever did, both for my business as well as for myself.

What are you working on now?
Right now I’m working on new art for my card and gift line “Sienna’s Garden” for Pictura USA.  It’s a project close to my heart, not only because it is named after my daughter but also because it is the first project I’ve worked on that truly represents me as an artist.  The line just launched in March with 60 card designs and 9 gift collections but I’ve already completed 20 new card designs and am currently at the sketch stage for the next 20.  It’s been challenging to come up with that amount of art but I’ve been working with Pictura for the past 4 years and it’s been nice to have a company who is willing to stick with you.  In all honesty they don’t like everything I send but it only pushes me to dig a bit deeper and in the end they’re usually right! 
 
Anything else you would like to share with us?
I’m going through a HUGE transition in my business at the moment having just signed with an agent.  It’s honestly not something I had any plans of doing when I entered Art Licensing so I’m still in a bit in shock that it’s happening.  I do, however, think it’s important to know when you may not be the best person to wear all the hats.  I know this is going to be a scary transition since I’m a classic Virgo (aka total control freak) and  I’m really proud of what I have learned and achieved on my own but I’m also looking forward to working with people who I honestly do believe will do a better job helping me achieve my long-term goals.

Any great advice for our readers? 
Creating an income from Licensing can take some time so having other income sources is a must.  Some artists teach, have etsy shops, or regular freelance work which always amazes me but sometimes it might just be a non creative source of regular income that gets you through. 

Are you an early riser? or night owl?
Definitely a night owl!  If I didn't have to get my daughter up for school I'm sure I'd work into the wee hours and sleep in.  Maybe when she's older!

What is your favorite food?
I love Indian and Thai but my favorite is Mango Curry.  My college roommate is such a good sport and gets it with me every time I come to see her, she must be sick of me getting the same thing for the past 18 years but some things never change.

You can find Nicole:
www.NicoleTamarin.com
https://www.instagram.com/nicoletamarin/
https://www.facebook.com/Nicole-Tamarin-Illustration-and-Licensing-118589348198161/

Make my day! and Buy me a cup of coffee (PayPal Link in right side bar, you don't need a PayPal acct.), follow this blog, and/or click an ad (you don't need to buy ;-)

 Don't want to miss the good stuff? Sign up for my newsletter ;-)

 

Surtex 30+ Photo Review!

Annie with her art in rep.'s booth ArtsDG.com

Hey Everyone :-)

I made sure to get more photos this year! It is dependent on if I can catch people in their booths with a minute of free time and they agree to have the photo taken. These are in the order I took them, which is random because of the people I would bump into an speak with etc. Last year's post has that year's floor plan to give you a bit of an idea of the size of the 3 shows: Surtex/NSS/ICFF  click here

I attended Surtex on Monday only. The day Started with a meet up organized by http://artoflicensing.com. People come and go between 8:15 am - 10:00 am. There was a lot of great swag given away at this event! There was a short talk given by a publisher Judith McCabe, from Fox Chapel Publishing and by Melissa Schulz, ArtLicensingInfo.com.
This is a great meet up for anyone in the art licensing business to meet other people and get information.

My Agent Julie in Red and her partner Mary Ann behind her - No, They didn't know I took this pic ;-)

Part of the Art of Licensing Meet up, Level 1 Jacob Javits Food Court area

I barely walked the National Stationery Show (NSS) - I did catch a talk Joanne Fink gave to store owners about having coloring book parties, contests Etc. - It was great info that can apply to artist with coloring books.

Partial view of NSS entrance

Jennifer Speer, Artist, coloring on Joanne Fink's Coloring wall just outside of the NSS entrance

Before I post all the Surtex photos - Note that my '2nd Thursdays' group on Artlicensingshow.com will be text chatting about Surtex, trends and all things related and I hear there are some surprises! Spread the word and see you at 6:30 pm CST.  TOMORROW Thurs. May 19th, 2016 Link to group

We postponed this month to the 3rd Thursday for Surtex

SURTEX PHOTOS ;-) - Exhibitors, let me know if you would like to link to a different link. Click images to view larger - click link to each artists' work - this is on the fly photography :)

Kris Ruff

Lucinda Wei

Dinah, Western Illustration

PI Creative Art

Danielle Kroll

Cherian Design

Pamela Hamilton Designs - Gracefull Arts - This is a Design Next booth :-D

Dot & Flow

Tatyana Starikova

equinox art & design - Marsha Rollinger

My Favorite Designs!

Kate Mawdsley

Ella Bella Rose, England

Lilla Rogers Studio

Painted Planet Licensing Group

Wild Wings

Kitty Keller Designs

Nicole Tamarin - She also was a speaker/panelist for a Surtex Conference that was great!

Elizabeth Stirling Designs

Stacy Peterson

Marion Nixon Paintings

Figgy Pudding Designs - Shelley Brant

Suzanne Cruise Creative Services, Inc. - They recently merged with Buffalo Works: Press Release

 Altelier - Surface/Pattern section at Surtex, They do not like booth photos taken :-)

 

Trend Theater - Free seminars

 

Thank you all for giving me permission to take photos of you/your booth!

Make my day! and Buy me a cup of coffee (PayPal Link in right side bar, you don't need a PayPal acct.), follow this blog, and/or click an ad (you don't need to buy ;-)

 Don't want to miss the good stuff? Sign up for my newsletter ;-)

 

Bo's bLAWg - “Flat Fee” and “Royalty” Licensing Fees

 

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org  Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO! 

 

A Reader asks:  What is “flat fee licensing” (for graphic design work or commissions)?

 
I want to use your question to compare and contrast the two common kinds of licensing fees:  Royalties and Flat Fees.  So, hypothetically, let’s assume you have been offered a License that lets you choose between a Royalty and a Flat Fee.  Which are you going to accept?  You need to have a good understanding of both, and the surrounding circumstances, to make the best choice for yourself.
 

“Royalties” are the compensation paid for the Artist illustration use rights based upon the Licensee’s sales of the product on which the licensed illustration is used.  The percentage rate is usually 5-10% of the merchandizer’s gross (or an appropriately-limited “adjusted gross”**).  When considering a Royalty-based License offer, there are a number of factors to weigh.
 

First, what kind of sales might you expect of products with your design under the License? This initial question raises a bunch of others:  Are there many different products on which your illustration will appear, or just one?  Do purchasers of the Licensee’s product have a wide choice of imagery to choose from, or just yours?  Does this manufacturer have lots of competitors with a wide range of competing imagery, or is the product reasonably unique?  Does the Licensee have a dynamic website and generate a large number of retail sales directly, or is it by and large (or entirely) a wholesaler that uses distributors?  If this manufacturer relies on its distributor to generate sales, do its goods (I mean Your goods) get distributed to the largest national chains, Walmart, Costco, Target and/or Sears?  (Greater volume sales at a lower Royalty are better than minimal sales at a higher Royalty rate.  Do the math!)
 

How much of the Licensee’s sales are generated through Amazon and subject to a larger discount on wholesale prices than might otherwise be the case?  What is the quality of this manufacturer’s goods?  Are they well-regarded in the marketplace?  When looking at this merchandizer’s quality and price-lines, how do they compare with those of other manufacturers?  (Are consumers more likely to pay something more for your Licensee’s goods because of the goodwill associated in the brand, or if not, is the price point remarkably less than a better-known brand, but likely to generate a much larger volume of sales due to the lower price?)

I can think of a bunch more such questions, but these are the main ones; the ones you want to do your best to assess to determine whether a Royalty is the best way for you to go on this license, or whether a Flat Rate might be a better prospect.

** “Adjusted Gross” is Gross minus sales tax and delivery costs as applicable instead of the Licensee’s Net proceeds.  Why Gross or Adjusted Gross instead of a high Net percentage?  Because you never know what the Licensee is going to actually spend on production, marketing and distribution.  Terrible business decisions could be made by the Licensee that make the entire undertaking unprofitable.  This need not deprive the Artist of her right to Royalties. 

Of course, if possible, you also want to obtain an Advance on the Royalties you are to earn.  An “Advance” is a pre-payment (made at the time the License is signed) on the Royalties you will be entitled to once the Licensee begins receiving income on sales of products with your imagery.  The amount of the Advance is “recoupable” by the Licensee from the first Royalties you would otherwise be paid.  Even a small Advance is better than none.  Being out-of-pocket on the front end for rights serves as incentive for the Licensee to move forward on the product manufacture so that they can recoup what they have paid out in Advances.  It gives you something for your rights even if for any reason the Licensee decides not to move forward with the product use.

Before I get to Flat Fees, two negotiation strategies to offer on Advances:  1) If a Licensee is unable or unwilling to offer a reasonable Advance on Royalties, use that unwillingness to leverage a higher starting Royalty rate; and/or 2) Obtain Stepped-Up Royalty rates.  Find out as possible what the Licensee thinks would be a successful level of sales, and look to obtain an increased Royalty rate for all sales in excess of that reasonable expectation.  If product sales ‘take off,’ both parties will benefit.  If they do not, the increased Royalty rate will never have triggered and the Licensee will not have paid anything for the additional consideration to you.

(See also my October 2015 bLAWg on Minimum Thre$holds for a Licensee to maintain rights over a term of years.  http://annietroe.blogspot.com/2015/10/bos-blawg-get-back-your-rights-royalty.html )
 

The alternative approach for Artist compensation is a Flat Fee.  A “Flat Fee” is just what it sounds like:  A single fee paid for the Licensed rights regardless of sales.  I remember a call from a prospective client who asked if they could get out of a License that provided for a single Flat Fee for a calendar cover image.  It turns out that image was the best-selling calendar ever sold by that large publisher.  The $1,500 Flat Fee looked good at the time that the time the deal was made.  However, compared with 5% of the $5 adjusted gross received by that publisher on 500,000 calendar sales, ($125,000 in Royalties), it was a lousy deal for the Artist!  Of course, if only 5000 calendars had been sold, the $1,500 was better than the 5% royalty. 

If the License is for a term of years and a Flat Fee offered does not meet your minimum expectations, raise the prospect that a larger overall amount be paid in installments:  An Annual Flat Fee for rights.  On occasions when I have obtained Annual Flat Fees through the License Term, the manufacturer Rep has made the reasonable argument that the Annual Fee should reduce after the first few years as product sales decrease.  This refers to what is known in business as the Product Life Cycle. Historically, new product sales numbers will rise for the first couple years, then will usually fall off as the product become ‘old’ and there are new versions and increased competition.   (A good graphic image and further explanation of this can be found at this link:  http://www.tutor2u.net/business/reference/product-life-cycle )

So, going back to our hypothetical choice of Royalty or Flat Fee, how do you know which deal to take?  By finding out what the projected sales are going to be and what the Licensee’s gross receipts are expected to be.  Just ask!  These are reasonable considerations that the prospective Licensee should answer if they want your Rights!  But also do your own market research as best you can.  There is a more sales data available online than there has ever been before.  Consider asking other Licensor Illustrators what kind of sales there have been on their similar product licenses.  Make an “informed decision” on what kind of deal is in your best interest.  Do not feel compelled to take the first offer without doing this ‘due diligence!’  If despite your best efforts, you are uncertain, I suggest that you look to keep the Term shorter than you might otherwise do.  That way, if you are unhappy with the choice, as the end of the Term approaches, you may be in a position to extend the Term on alternative Royalty rates more beneficial to you.

As for the situation where you have been asked to create new graphics or “commissions” for prospective licensing purposes, I recommend that there be a minimum ”service fee” for the preparation of such new imagery.  The fee can be on a ‘per image’ basis or hourly.  All or part of this fee can be attributed as an Advance, and recoupable by the Licensee from your future Royalties.  That’s an appropriate issue for negotiation.  If you are going to incur significant costs in conjunction with the graphics or commission, by all means, look for a right to recoup such costs from the Licensee.  This is the very least they should pay unless you are guaranteed some minimum for the work involved in preparing imagery for prospective licensing that may not be selected for product use or generate meaningful sales.

Finally, do not fail to make sure that you have Reversion Rights.  Whether there is a set Term that will expire sooner or later and revert rights, or if you have minimum thresholds that must be met for the Licensee to continue to maintain exclusive or non-exclusive rights, you want every License to have an ‘expiration date.’  Get your rights back, and perhaps you can find a better deal with a more successful – and ultimately profitable – Licensee. 

Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com
© 2016 mjbogatin

Have a legal question? email it to info@AnnGraphics.com. I will forward it to Bo. It might be a blog post! You can search "Bo's bLAWg" to read more posts. I am looking forward to your comments and thanks for sharing this great information on social media.

Make my day! and Buy me a cup of coffee (PayPal Link in right side bar, you don't need a PayPal acct.), follow this blog, and/or click an ad (you don't need to buy ;-)

 Don't want to miss the good stuff? Sign up for my newsletter ;-)