Artsy Shark interviews art licensing expert and author Maria Brophy on how artists can protect themselves when negotiating art licensing contracts.
AS: What has changed in the licensing world in the past few years?
MB: Wow, so much has changed in just a few years! When the economy crashed in 2008, licensing took a big hit. Many retailers went out of business, and the effect trickled down to the licensors and artists.
My husband and I felt the pinch of that directly. It was early 2008 when we had developed a line of Drew Brophy boys clothing for the 175 store chain called Mervyns. We were very excited and expected nice, fat royalty checks! But then, in December of 2008, Mervyns went out of business and closed all of their stores.
These days, buyers are very careful about what they will place in their stores. It used to be that retailers would see something they liked, and even if it was a new artist or a new brand, they would give it a try.
Now, they play it safe and stick with what’s proven. This doesn’t leave much room for innovation or creativity, when the buyers are afraid to try something new!
AS: How are artists losing out on licensing contracts?
MB: There can be many red flags in contracts that artists miss.
The biggest problem I see, over and over again, is an artist getting trapped in an exclusive contract that isn’t earning them any money.
One artist that I consulted with had signed a five year contract for all of her art, for all products in the world. (Never do that, please!) It was an exclusive, so she wasn’t able to license or sell her art anywhere else. This created a serious income problem for her, because two years into the contract the licensee still hadn’t paid her a dime! Essentially, she wasn’t able to make money from her business, because of signing this terrible contract.
An easy fix to that contract, in the beginning before signing, would have been for her to ask the licensee to include termination language that allowed her to terminate the contract should it not earn her a certain amount in royalties. That way, after a year of not earning money, she could have cancelled it and moved on.
Another remedy would have been to choose only some images to be a part of the contract, and only for the specific products that the manufacturer is producing.
The happy ending to this artist’s problem is that we were able to work with the licensee and get them to let her out of the contract. She got lucky. And she vowed to never sign such a deal again!
AS: Do artists need an attorney to create a licensing contract?
MB: It’s not always necessary. For many deals, a simple contract will work. But, for artists who are ready to fully invest in an art licensing career, it is prudent to hire an attorney to draw up an agreement that can be used over and over again, and then hire that attorney to spend time explaining every part of the contract so you understand it. The cost can range from $500 to $1,500.
For many simple or straightforward deals, you can get by without an attorney; you can use standard art licensing contract language. Just make sure that your contract is artist-friendly and includes protections for the artist, such as a way to terminate should the contract not earn enough money, copyright protections and a limit on what rights the licensee is being granted.
AS: What results do you see artists getting when they use smart contract strategies?
MB: Many artists don’t realize that the contract they sign is a direct reflection of their own business strategy and long term vision for their art.
The artists’ vision should dictate what they will agree to and what they will say “no” to. The contract language that follows is a written agreement of the understanding and deal that was made with the licensee.
For example, an artist who creates “fine art” and sells to upscale galleries might have a vision for their art that includes licensing for top quality products sold in fine department stores. In this case, the contract would allow the licensee to sell only top quality products to upper-tier department stores, such as Saks or Nordstrom, but not Wal-Mart.
A different example would be an artist who focuses entirely on creating art for the mass market. They might want their products in Wal-Mart, because that’s their target market and it fits their business strategy to sell high volume of lower cost items. In this case, the contract would reflect those wishes.
The worst thing an artist can do is sign a contract that would put their art on products or for sale in places that would hurt their business plan or strategy, or in the case of a fine artist, their relationship with existing collectors.
Unfortunately, many artists will agree to things they don’t want to do, either because they feel pressured, or because they don’t realize what they are signing on for.
It’s important to say “no” to the things that are not right for you or your art, so that you have room to say “yes” to things that are!
AS: How can the “Artist’s Short License Agreement Template Package” you developed help artists?
MB: I have consulted with numerous artists who needed a template for licensing contracts. So I created a package that is easy to understand and can be used over and over again. I use this contract myself for a majority of Drew Brophy deals.
It has a simple art licensing template with instructions on how to use the template and how to close a deal from start to finish. There’s also a template for a “Deal Memo” and an “Amendment” to the contract, both items that will come in handy for every artist.
This package is great for:
- Artists who want to be sure that they are protected in a licensing deal
- Artists who aren’t ready to invest in having an attorney draw up a contract, and need something easy and ready-to-go
- One-time payment license deals
- Royalty deals
- Illustration packages
- T-shirt designs, Sticker Designs, most deals in which you want to license your art for a temporary use
I don’t recommend using this package, however, for everything. There are times when you should get legal counsel. Here’s a few examples:
- Deals where there is a large sum of money involved;
- Complicated deals that require a long form contract, and
- Any deal involving licensing rights outside of product manufacturing, including TV shows, live media, or book publishing (these deals have their own specific concerns and standards; you should work with an attorney who specializes in that area).
If someone is interested but not sure if this package will help, they are welcome to email me at Consulting(at)MariaBrophy.com and I’ll be happy to let you know if I think it will be a solution to your situation.
AS: Do you have any closing thoughts on licensing contracts?
MB: Though we tend to focus on things that can go wrong in business, I want to stress that there are many great companies out there that care about the artist and that are willing to sign a fair contract.
Artists should always ask for what they want in a contract. I have found that most companies are willing to work with you and to make the changes you ask for.
Often we look at negotiating as a contest, but I see it differently; negotiating is simply a conversation between two parties where they try to understand each other’s needs and come to a mutual agreement based on meeting those needs. The best deals are the ones where everyone wins!