This article is for readers that want to understand what terms like Copyright, Usage License, work-for-hire, Royalty-free, are meaning in the creative field of photography.
Many especially smaller companies which have not much exposure to the creative industry are confused about what they get when they commission work from a photographer — and the topic can be overwhelming.
Professional art buyers, media and publishing companies, agencies, and large companies are mostly quite aware of all the details and don’t need to read further, since it is nothing new to them.
What is COPYRIGHT?
Under United States law, the images, videos, designs and any work result a photographer creates become automatically the Intellectual Property (IP) of the photographer. The photographer owns all usage rights.
That said, the photographs and videos (and other creative items) produced by a photographer are protected by U.S. Federal Copyright Law (‘all rights reserved’). A copyright is the exclusive legal right assigned to the originator of the work – however, a copyright holder can grant a USAGE LICENSE (USAGE RIGHTS) to clients.
There are many other CREATORS, not only photographers: think about software developer, designers, musicians, writers, and others.
The USAGE LICENSE
– contains definition on how, where, and when the work of the originator, the creator, can be used –
A USAGE LICENSE is a contract between the two parties: creator (licensor) and client (licensee) — like with other contracts, the terms of the license can be freely negotiated.
A creator grants a USAGE LICENSE for a fee — that fee is not a universal number but is tailored to the usage license — the HOW, WHERE, WHEN specifics.
That’s what the word USAGE implies: the client states what the intended usage shall be and depending on that the creator sets the fee — so, the fee is tailored to the stated use.
The client cannot do anything else with the creator’s work other than they agreed on. If so, that is considered an infringement and like with other contracts, that brings trouble for the infringer.
itemize the usage license in the estimate
A professional estimate from a photographer should itemize fees and charges and among the fees is the Usage License Fee according to the stated use scenario which defines what the client can do with its ‘copy’.
Usage License Fee as a line item which clients with less exposure to the creative field often don’t like or understand: ‘I am the one who pays you for the assignment, why do I have to pay for a license?’
In the end it is how the creative industry works — compare the music industry and software industry, it is the same: the buyer gets a copy and can-do certain things with it, e.g., play music on 5 devices but do not open a radio station and play it. Or install that software on 3 computers but do not give it to your friend afterwards.
Mostly a client will need just a simple and therefore cost-effective license for the photography that was commissioned. There are still options that make the license more complex and expensive, like Exclusive Licenses, or IP-buyout.
IP buyout is actually an option, but it is expensive because the creator then has no further right to the creation — for some companies it is worth it, they have reasons. For most clients it is not worth it, they just need a license for their specific purpose.
Some photographers do not itemize the license in their estimate and say ‘included’, just because they (may be rightly so) think that client is upset and will not understand.
If photographers shy away from telling the client what the license costs are then they are hurting the entire industry of professionals. Everybody must understand that pricing a usage license is NOT a crime, it is how the entire business works. Like with the software analogy: if you sell a license for 2 devices you do not want the buyer copying it to all 100 devices in its company, right?
If ALL photographers would itemize the USAGE LICENSE COST there would not be so much confusion among clients! Currently, some small business clients think that photographer A is great because there’s no license fee, everything (seems) free, whereas photographer B seems to be the greedy one because of all the line items and pointing out there is a license and limitations.
If a photographer or any creative does not care about usage rights, then their work seems to be not that important, not even to them. It is just not professional, and seasoned art buyers will not even consider estimates that look like an All-included buffet.
Creatives, think of not only photographers but e.g., designers, musicians, software coders, etc. often create amazing things and lots of creativity and talent goes into the process. Mostly they aren’t the richest people — for clients the visible part is often just the (in their opinion) ‘outrageous’ hourly rate, but creatives need to put time into the idea (creative process), buy their own tools, software, equipment and everything that comes with doing self-employed / freelance work. Keeping track of who does what with your creative work results is important. That why a usage license is important, too.
How much is a license?
All license pricing is usually an adaption to market, use, and the client: yes, it makes a difference if you quote a local mom-and-pop business or Nike.
There are tools that calculate license costs based upon the usage scenario, client type and size, etc..
Sometimes those tools are estimating pretty high, and a photographer knows that it is not a fit for its local market or small client.
So, an option is to look at the client and the market and establish a fair market pricing, like say 30%, 50% or more of the photographer’s fee. Even if a photographer feels that the client wants just ONE NUMBER, then create that estimate and point out that 30% is the license cost.
So why pointing it out? Because of infringement. If a photographer prices a license, it is tailored to the use scenario of the client — the smaller the use, the less expensive the license because the photographer understands that you don’t want to buy the whole store when you just need a chocolate bar. But what happens if the client, let’s assume it is an architect or interior designer or realtor, provides the images to all the sub-contractors who work on the project, from the kitchen manufacturer to the floor company and all of them use the images for their marketing and …because the images are so well done, they acquire new customers? That is not what the photographer wanted; it is an infringement. If the original client would have told the photographer that it is a shoot for 5 companies the pricing for the license would have been higher, of course.
If a photographer has NOT put a price on the license, then it is difficult to proof the value of it and therefore how much damage the infringement does.
What licenses exist?
I mentioned in my post two terms: ASSIGNMENTS and STOCK PHOTOGRAPHY.
With an ASSIGNMENT a photographer is assigned, contracted to work on a specific task with a specific outcome.
With buying STOCK PHOTOGRAPHY, the buyer can only get what is available, there are no custom images (video) they can request.
Whatever the client goes for, it will result in LICENSING the image, either the assignment outcome or a stock photo.
There are 3 categories of licenses:
COMMERCIAL License
Usage for selling, promoting a product, service, idea, etc.
E.g., for use on website, for advertising, product packaging, brochures, PR, social media, marketing, reports, etc.
What information goes into the license, can be seen a little further below.
EDITORIAL License
E.g., use in magazines and newspaper articles, either print or online, books, etc.
Editorial is an important category because it is not just concerning e.g., a photo from a news event, but e.g., imagine an architect who lands an editorial article about its company and projects: with proper images that becomes a valuable article not only for the magazine but also for the architect! It’s probably, in an advertising sense, more worth than placing ads somewhere and … the editorial piece in the magazine is free. That equals free advertising with more reputation value than a 1-page ad!
A magazine will ask for an Editorial License for images before they use it in their piece — therefore, if a client plans to use images for editorial purposes, they will need such license.
RETAIL License
Any photography done for personal use — most notably think about wedding photographers or portraits, but also many others.
What information goes into a license
EXCLUSIVITY; LICENSE PARTIES; LICENSE START DATE; PERIOD / DURATION; WHAT WORK RESULTS ARE INCLUDED; MEDIA USAGE / PERMISSIONS like Marketing, Advertising, etc; MEDIA USAGE PERMISSIONS CONSTRAINTS – what is not allowed; MEDIA TYPES ALLOWED like online, print etc; MEDIA CONSTRAINTS regarding previous Media Types; TRANSFER / RESALE, e.g. 3rd party limitations;
QUANTITY ALLOWED; GEOGRAPHIC REGION / TERRITORY etc.
Limitations and Terms of a license
Any license should spell out in writing what is included and where limitations exist.
Exclusive Usage License vs Non-Exclusive
Exclusive Usage License
The creator guarantees to the licensor that the work results can be exclusively used by the licensor. Not even the photographer may use them UNLESS, the photographer and client agree that the photographer retains the rights to use the images and work results for its own marketing, portfolio etc. — That is then an Exclusive License w/ limitations.
Any license can contain limitations like media restrictions, geographic restrictions, 3rd party restrictions, etc. — as said, a license is a contract and can be negotiated.
Exclusive licenses are commonly more expensive than Non-Exclusive Licenses — however, that to determine is up to the creator.
Non-Exclusive License
The creator may sell the same images or work results to another party.
That is sometimes possible but often it will be impossible to do because the content is just not valuable to anybody else. E.g., if a photographer takes product photos and it shows your product with your label… who else would want to buy that? However, if you take photos for an architect, the photographer could potentially take some extra photos detailing the kitchen and ask the kitchen builder if they are interested in some good photos — here’s a potential for a photographer to extend the original assignment and get an extra client without hurting the original client.
A non-exclusive license is a good fit for many clients.
Brands with high-value products or publishers on the other side might want to cut out any risk of seeing their images anywhere else and aim for an Exclusive License, even if the costs are higher.
Royalty-free License (RF license):
It is by default a non-exclusive license, however, the client gets not asked HOW, WHERE, WHEN they use it — for small clients with not much insight into licensing that is a popular license, just because of the word ‘free’. However, it’s worth to read the details, because it does not automatically mean that it is allowed to resell or freely distribute the images to others. Limitations may exist.
3rd party rights limitation
Why caring for 3rd parties so much? Imagine a client who commissions a photo shoot for a construction site or it is about an architect’s work and of course there were contractors and vendors involved in the project, like Interior design, flooring or kitchen companies — all of them have a potential interest in the photos for their marketing. If there’s no 3rd party transfer limitation present the photos can be given for free, for favors, for money to all the interested parties. They all have a win-win situation and are happy but the photographer lost the opportunity to make some income by selling usage rights to multiple other clients.
If it is known by a client that there are other interested parties involved, I am offering an upfront cost-sharing-option which helps reducing the costs for all participating parties. Otherwise, there’s the option for 3rd parties to license photos later, but for a higher price. Also, 3rd party use is only possible if the original licensor does not opt for an Exclusive License.
Work-for-hire
If a client either hires an employee or contracts a freelancer (under specifically the term ‘work-for-hire’) the work results belong to the client. That includes the IP, so to speak the copyright. A freelancer who accepts ‘work-for-hire- contracts agrees to have no rights in the creation. That is a big topic not only for creatives but also for software developers who might create something valuable but will never be part of it when the work product gets very valuable for the client. If ‘work-for-hire’ is the only option a client is offering then the pay should be a real adequate, fair market value that makes the creator feel happy.