In the world of products and art, licensing plays a very significant role. Manufacturers and companies reach out to artists or vice versa to buy their design or pattern under a legal contract which should yield some royalty to the artist. But the question lies that what is art licensing? How big is the industry? How does it work? This article will clear all the doubts one has while thinking about art licensing.
Licensing is a 70-billion-dollar industry and “Art Licensing” makes up 10% of all licensing. Art licensing is growing every day with a variety of products focused on brands, and identifiable artists being collected by name and style
Art licensing involves art which is relevant and relatable to both the manufacturer and the end user consumer who is willing to pay for products displaying that art.
Artists can display their art on websites or on other portals and manufacturers as well as interested companies can contact them for further legalities.
A great place to connect with manufacturers are at the trade show where artists exhibit their works, and manufacturers and retailers attend with the purpose of licensing artwork for their products.
Manufacturers and retailers use art and “properties” on products as an added mechanism to help sell to consumers. They know that if a consumer is a fan of a brand or a property (movie, television show, etc.), and artwork from the brand or property is on a product, the chance for a purchase by that customer is significantly greater.
Manufacturers and retailers get art for their products by four primary ways:
- The use of their own in-house art departments
- The outright purchase of art from artists/designers (copyrights and all!)
- The use of stock art from studios and factories who create their products
- The licensing of art (either traditional royalty based Agreement, or a flat fee Agreement – both Agreements to define the term of use, products in which the art will be used, and the territory of use, where the artist retains the copyrights to the art).
Manufacturers often choose to license for the following reasons:
- Exclusivity – By licensing art, a manufacturer can negotiate exclusive use of an artist’s design for their products; ensuring their competitors won’t bring the same thing to market.
- Flexibility – By licensing art, manufacturers can work with artists with a wide variety of styles that they might not be able to create a group of in-house artists.
- Cost savings – When a manufacturer licenses art, they pay the artist based on how well the product sells. So while their expense can vary, they are always directly related to the income from sales of the product.
- Design Support – Many artists who license their work become a part of the manufacturer’s design team – working together to get the art just right and often setting it up to templates for production. This saves the manufacturer the labor expense of having their own graphics team doing the work, or at least lightens the load on the in-house team.
- Brand Recognition – Manufacturers are always looking to mitigate their risks when making products. Using art from an artist who is well known and has a great following (generally realized by social media statistics) ensures some level of guaranteed sales of a product.
Art licensing is conducted through legal contracts between the manufacturer (Licensee) and the artist (Licensor).
Licensors are “us”— The creative image makers, the holders of Intellectual Property (IP), our licensable images. Our work is our intellectual property, and we alone hold the right to grant the use of our images on products. We may have signed a contract with a licensing agent or rep to act on our behalf and they can negotiate contracts for us, but we still have the end word on accepting the final contract.
Licensees are “them”— The client, the company, the product manufacturer, the entertainment provider, and the middle man between us and the retailer who provides the public with our work on either products or entertainment content.
An agreement is structured around about what art is being licensed, for use on what products, to be sold in what territory and for what time frame (among other legal details – including how you are paid your share of the royalties/fees, duration of the agreement, what happens when a decision is made to terminate the agreement, etc.).
For the artist, the main objective of any licensing agreement is to receive a fair and sizeable advance and a great royalty percentage. A successful partnership of Licensor and Licensee is that the contract is mutually beneficial to both parties.
The royalty rate is usually figured on the wholesale sales of the product unless of course, the company maintains retail locations or a Web presence with retail sales. In those cases, the percent may be calculated with partial wholesale as well as retail sales figures.
The “HOW” part of art licensing is quite extensive, with many parts to make up the puzzle; including how to create art for licensing, how to connect with the people who license art, how to negotiate a win-win agreement with a manufacturer, and how to market yourself properly and effectively.