Licensing is an overwhelming facet of the law. There really is no “boiler plate” agreement for a license, which makes it critical for artists and creators to consult with an attorney prior to signing this type of agreement. As an business and IP attorney, I love these agreements because strategy is absolutely key.
Melcor Moore caught me at a local coffee shop to chat a little about the basics of a licensing agreement for artists.
To summarize, the most critical first point is to understand the parties. This can get tricky when the artist hasn’t yet elected to set-up an entity. I’ve heard many artists tell me their accountant recommends not to set-up an entity, especially in states like California because of the annual $800 franchise tax. The cost of setting up an entity is only one consideration. A much larger benefit, from the legal perspective, is to create a limitation of liability for the work. In other words, when you engage in an agreement as a sole proprietor, in the event there is a litigation, all of one’s personal assets are at stake. In general, this is advised against. At the moment you may not have any personal assets, but as your business and savings grow, please remain mindful of the need to categorize and limit exposure to potential suits. Also, I’ve seen artists write their own agreements and the other party is named incorrectly. When the artist later wants to use their agreement as a basis to commence a claim, this error may preclude such action. This is always a heartbreak to find that the entire agreement is invalid due to the wrong party name.
Next, artists must understand what it is their are licensing. Copyright covers many things — authorship of the underlying work, rights to perform publicly, rights to distribute, and rights to create derivative works, for example. One must think through how this work will be used and be very specific about what is permitted per the license.
The most asked question I receive is about value — “How much do I charge.” I believe this is the most difficult questions, as value will always be a subjective one. This is why it is so valuable (no pun intended) to consult with a qualified attorney, so you can understand who is doing what and how the art will be used. Value can be either: financial or non-financial. If money is limited, explore others ways to obtain value for the exchange, such as publication, marketing, etc.
I hope you enjoy this mini-clip.
Feel free to reach out with additional questions.