Art licensing is a great way for artists, designers, and other creators to earn passive income, expand their visibility via brand partnerships, and expose their name and brand to new audiences.
In this art licensing guide, we’ll cover:
- What is art licensing?
- How does art licensing work: From design usage terms to calculating licensing fees
- How to license your art: From licensing portfolio to licensing agents
What is art licensing?
Art licensing is when an artist permits a company, organization, or brand to use their artwork for commercial purposes in exchange for a fee.
When you license your art to a third party, you sign a contract (a licensing agreement) as a licensor that covers what type of control you pass on to them as the licensee when it comes to using your artwork.
How does art licensing work?
There are many ways to license your artwork, but first and foremost, you need to agree on the following questions with the company that will use your licensed design.
Copyright: Who will hold the copyright?
With art licensing, you retain the copyright to your artwork, but the licensee has usage rights on the agreed terms. As opposed to that, a buyout is when you sell the copyright of your design as well, and so you cannot sell it again for other third parties to use.
| 💡Tip: If a brand asks for a buyout and you’re not comfortable with that, don’t let go of the proposal. You can (and should) always negotiate. Instead of a buyout, it’s very typical to compromise on an exclusive licensing deal with a fixed term of one or two years. The brand is happy because no one else, especially none of their competitors, can use that design in that time period, and you’re happy too, because you didn’t sign away your copyright forever. |
Type of products: On what product will your artwork appear?
You may license your design to IKEA, and they can put it in their picture frames in stores. Target may use your pattern design on pillows. Before licensing, you need to be aware of what those products will be and how many of those products will be made, because that will influence the licensing rate.
Thousands of picture frames with your design is definitely a different scope than 500, and so the potential profit that the company can earn with that product using your design. Consequently, calculate the potential reach and sales into your licensing fee (more on that below).
We’ll talk about exclusivity in a second, but it’s important to mention here that you make sure that the company will only, or exclusively, use your designs on the products that you agreed on, for instance, picture frames, and not on pillows, too. They can expand the product or category scope, but that will mean a higher licensing fee.
In addition, there’s always the option to sign a new licensing agreement, adding new products that would feature your design for a new licensing period after the current period and agreement expires.
Distribution: Where can they use your artwork?
You can limit the geographical, offline, and online scope of where they can sell the products that use your artwork.
It’s also a question of whether the distribution will be local, regional, national, continental, international, or worldwide.
There can be platform-based limits too, not only regarding digital versus print use, but going more specific, like agreeing that they can showcase the products using your design on their website and social media, but not in paid advertising, or maybe it’s an entirely different case if it appears on billboards all over the country.
The wider distribution they ask for, the more money you can potentially ask for, too.
With that said, you also need to consider other factors, such as how well-known you are as an artist and figuring out the value of the partnership in the long term, which doesn’t always come in the form of money.
Remember that sometimes it’s not specifically about the payment you receive, but the added value you gain from such a partnership, like seeing your work on those billboards and that success elevating your brand, opening doors to future success.
Licensing period: How long can they use your artwork?
You need to agree with the licensee on how long you allow them to use your artwork. The longer they’re allowed to use it, the more they should pay.
If they can use the licensed artwork “in perpetuity”, it means that they can use it indefinitely, with no expiration date, which also means you grant them exclusive usage rights that we’ll cover in the next point.
If you agreed only to let them use your design for a specified period of time, but the products with your design are very successful, the company may want to renew the licensing agreement for a second period, so you should know there’s always a possibility for extending these kinds of partnerships.
| Rights-managed license A “rights-managed” license means that a new agreement should be put in place for any additional use of the artwork. This is very common for editorial use of designs when they feature your artwork in a magazine once, and if the publisher wants to use it again in the future, that means another licensing deal. |
Exclusivity: Can they use your artwork exclusively?
When the license is exclusive, they are the only ones allowed to use your artwork for the agreed-upon purposes, locations, and timeframe. Naturally, you’ll be paid more for an exclusive license because, for the amount of time they’ll exclusively use your design, you won’t have any other means to monetize it, like allowing another company to use it as well.
If it’s a non-exclusive license, several parties can use the same design at the same time, but you can still set different usage terms for each party if you can. Sometimes it’s a matter of how much they can pay you, and you limiting usage time according to that.
Payment terms: How much will they pay you, and how?
Licensing fees can be flat fees, royalties, or both.
Royalties 👇
When it comes to royalties, the amount of money you’ll receive is after each item sold that has your licensed design on it. The amount will be a percentage of the final sale of that item, which is usually between 3 and 10%, but there are always exceptions.
If you’re new to art licensing, you can try to aim for an industry-average percentage, and after collecting a few projects under your belt, you’ll get more experience in what prices you can ask for.
“I do try to stick to 10% as much as possible. It is kind of a judgment call, and what you are willing to accept. I think if everybody starts accepting lower and lower and lower royalty rates, then in general, artists’ work will continue to be devalued and obviously that’s not something we want to see in the industry as a whole, so it is definitely benefitial for everyone to not accept a licensing rate that is too low.”
Elyse Breanne from Elyse Breanne Design
Example:
When discussing royalties, always lean on the information on how your partner company will price the product. This will help you calculate how much money you’ll potentially receive in the end, too. If the wholesale price of a product is 15 USD, and they’ll manufacture 1000 items and all will be sold, that’s 15,000 USD for the company. If you agree on a 10% royalty rate, you’ll get 1500 USD.
Flat fee 👇
The other common way to do art licensing is to pay a flat fee, which is a one-time payout for licensing. It’s really common in those cases when an artist is asked to create a new design and sell the usage rights of that to a third party.
The advantage of a flat fee is that you’ll receive a larger amount of money right away. The disadvantage is that if you agree on a flat fee, you won’t get royalty payments after the products are sold, and if they’re really popular, you won’t be compensated for that later on.
This is why it’s important that you secure a flat fee that you are comfortable with and think will truly compensate you for your work and will reflect your input in the future sales of the given product.
👉 What to charge for art licensing flat fee?
To calculate a flat fee, you essentially need to calculate how much you would ask for creating that piece of artwork or design, regardless of licensing. It depends on your medium, size of the artwork, the resources you need to make it, and so on—all the usual factors you consider when pricing your art in general.
It’s a good idea to opt for a flat fee when your partner is a smaller company that doesn’t manufacture a large batch of products, or if it’s a company that doesn’t have a big track record of sales yet.
You can also choose to have a shorter licensing term for your design and re-negotiate fees if both parties agree on continuing the partnership. This will give you the chance to test the waters and then potentially ask for more in a new or extended licensing agreement, including switching to a royalty fee-based payment structure.
| 💡Tip: Whether you agree on a royalty or a flat fee, you can always ask for an advance. |
Hybrid payment 👇
The third option is a hybrid payment for licensing that combines a flat fee and royalties.
It’s a common best practice for many artists to agree on a flat fee that will work as an advance, plus a smaller royalty fee that will ensure they’ll receive money after the product sales, too.
In that case, understandably, you have to incorporate the costs of creating new artwork into the flat fee they will pay to you, as well as the part that will cover licensing the art to them in the form of royalties.
| 💡Tip: Here’s an art licensing fee calculator by MoMAA that you can try. It considers many factors from usage details and terms, artwork specifications, and license terms as well. |
Attribution: Will you be attributed as the artist or designer?
It’s worth discussing if your name and perhaps artist bio will appear on the products where your design will appear. For instance, the licensee can be legally obligated to display your artist name on the given products, but in some cases it’s unreasonable to do that, like on small objects such as a pen.
In general, it’s a good idea to fight for artist attribution because it will help with your visibility as an artist, allowing new audiences and further partnership and sales opportunities to find you.
How to license your art?
There are different paths you can take if you’re thinking about licensing your art, from you taking care of every step to outsourcing the process entirely to a licensing agent. Let’s take a look at these options, while we also give you some tips to consider.
1. Consider trademarking your brand and registering the copyright for the work that you want to license.
Copyright of your artwork by default belongs to you as the artist, but registering it is an extra layer of protection, legally speaking. These are the types of things that become even more important once you start working with companies, organizations, and brands of a larger size.
There are many artists out there involved in art licensing projects who haven’t taken these steps, though, so know that skipping this part doesn’t necessarily lower your chances of a good partnership, but if you wish to be legally safe, it’s highly recommended to do the trademark and copyright registration.
Regardless of art licensing, copyright registration is also important for artists in case their design gets stolen, plus, in the US, for instance, copyright law doesn’t grant (full) protection for functional items. For those types of artworks, it’s a highly recommended route to take.
In addition, trademarking your brand protects it against name theft and unauthorized sales.
2. Create a large catalog or portfolio of your works suitable for licensing if you want to reach out to potential licensees.
This will help you both when you want to reach out to companies and when potential partners are searching for artists whose works they can use on their products. This catalog or portfolio can be presented on your website or as an attachable file, like a presentation, that you can send to brand representatives when you reach out to them or when they contact you to look at licensing opportunities.
Art licensing agent Julie Newman shared that a portfolio with 50 images might be on the low side here. You need to have a broad catalog and a variety of images that are suitable to be “attached to” themes like seasons and holidays. In the end, you also have to think about what designs are commercially viable for different types of products.
It’s a good idea to browse around stores and check the types of products that seem to have licensed designs. For instance, you can figure out if your style would be more sellable and popular on pillows versus mugs. You can also see what themes are trending and whether you wish to and can bring your art closer to it. This way, you can make research-based, well-informed decisions about what you’ll put in your licensing catalog.
| 💡Tip: It’s best practice to showcase your designs in your licensing portfolio with product mockups that will show how the design would look on a final product, from a notebook cover to a wallpaper. |
3. Have a print-on-demand (POD) store to help you land a licensing deal with a brand without active outreach.
A POD store is specifically about featuring products that use your artwork, from mugs to shower curtains. By offering these functional design pieces, you can showcase to potential licensing partners how your art can be a great choice. Many artists have found their way to licensing this way.
Artist and designer Cat Coquillette made her first licensing deal because the art liaison and agent of Urban Outfitters found her Society6 store (which is not your best platform option anymore, though, and if you want to have a substitute, check this article about POD alternatives).
A POD store is a good path to take if you don’t want to actively reach out to brands to partner with, but want to have a digital presence where they can still find you and see how your art would look on functional products.
| 💡Tip: Besides having a POD store, any kind of digital presence will be beneficial for you if you wish to look into art licensing. It’s quite common for brands these days to directly reach out to artists on social media, proposing licensing partnerships. Any platform where you showcase your work can be a step to a licensing deal if you put in the work to maintain a solid visibility online (or offline, via local art sales or professional networking). |
4. Hire an art licensing agent or manager to help you land licensing deals while you can focus on your art.
This might be one of the pricier tips on this list. Art licensing agents take a percentage of your licensing deal, ranging from 25% to 50% of the revenue.
As always, it comes down to what counts as expensive for you and what it is that you can and want to invest in.
Some artists definitely don’t want to spend time researching companies and contact information to reach out to them, or deal with the legalities, for that matter, while others will put their resources into that because they’re not ready yet to work with an agent who will do that work for them.
Pick the route that works best for you. And, in the meantime, learn more about creator business and check out our creator interviews to learn from other artists, makers, and crafters.
Featured image by Jason An
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