Art licensing is a way for artists to make money from their artwork without doing too much extra work.
As an artist, you're always looking for ways to make more money, right?
Well, art licensing is a great way to do just that – and it's one of the most passive ways to earn income from your illustrations.
Most artists don't know how lucrative art licensing can be, but with the right information, you can start earning residual income from images you created long ago.
In this post, you'll learn everything you need to know about how to license artwork and start making more money today.
Also check out my list of great art licensing companies.
How to license artwork 101
Art licensing can be a great way to make more money from your artwork.
By allowing other companies and brands to use your images, you can create a passive income stream that continually brings in revenue.
It's a great way to monetize your art, and there are a few things you need to know to get started.
First, you'll need to understand how much to charge for the use of your images.
This will vary depending on how popular your work is, and how exclusive the license is.
Generally, you'll want to charge more for exclusive licenses, as they give the company more rights to use your images.
You'll also need to protect your copyright.
This means registering your work with the United States Copyright Office, and including a copyright notice on all of your images.
This will help ensure that you retain control over how your work is used.
Finally, you'll need to familiarize yourself with the art licensing process.
This includes understanding the different types of licenses available, and how to negotiate a contract with a potential licensee.
By following these steps, you can start licensing your artwork and earning some extra income.
Here are a few out-of-this-world examples of art licensing:
- Disney doesn’t make a majority of its money from movies or theme parks. The majority of their money is earned from licensing out the use of their characters on thousands of products.
- Art licensing is how the Peanuts make $80 million a year.
- Art licensing is how marine wildlife artist, Wyland, makes millions a year.
- At 26, Lisa Frank got her first licensing deal when Spencer’s gift shops placed $1 million for images to use as stickers. She’s since built a $100 million art licensing empire.
But these artists are the tip of the iceberg.
Alternatively, there are thousands of other artists out there who are quietly making great incomes through knowing how to license artwork.
Also check out my guide on making a business plan for artists.
Why I discovered how to license my artwork
I started out licensing my artwork by accident.
I had done some illustrations for a zoo and they liked them so much that they asked me to renew the rights for another year.
I didn't understand what they were talking about.
They paid me to make these drawings a year ago, and I thought they would just use them again and again.
But after I did some research, I realized how lucky I was to have such a great client.
I did more research and then created a contract for them.
I also get a residual check every quarter from them, as well as an extra fee for setting up my work on printable templates.
This was how I got into the art licensing business.
I thought it was only for pattern designers and children's illustrators, but I've been able to create a whole new income stream with licensing.
When artists first learn about the subject of art licensing, they are frequently perplexed.
They want to know what it is, how it works, and whether they're qualified for it.
I'm sure you have similar concerns, so here's a rundown of the fundamentals of art licensing to help you understand what art licensing is all about.
Who licenses art?
Art and “properties” are used on goods by manufacturers and merchants as an additional approach to encourage consumers to buy.
They understand that if a customer is a fan of a brand or property (style of art, narrative, movie, television show, etc.) and artwork from the brand or property appears on a product, the chance for purchase is higher.
So, how do manufacturers and retailers acquire art for their items?
There are four primary ways:
- They use their in-house art departments
- The outright purchase of art from artists (copyrights and all!)
- The use of stock art from studios and factories that create their products
- The licensing of art (either a traditional royalty-based Agreement, or a flat fee Agreement – both Agreements 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 – When a company licenses art, it can negotiate exclusive use of an artist's design for its products. This way, its competitors won't be able to bring the same thing to market.
- Flexibility – When manufacturers license art, it gives them access to a variety of styles that they might not be able to create with their in-house artists.
- Savings – When a company licenses art, the artist's earnings are based on how well the product sells. This means that the artist gets paid more for products that sell better. So while the cost can vary, it is always related to how much money the product makes.
- Support – Many artists license their work together with the manufacturer to get the art just right. They often set it up to templates for production, which saves the manufacturer money because they don't need to have their own graphics team do the work.
- Brand Recognition – Manufacturers always want to reduce their risks when making products. They can do this by using art from an artist who is well-known and popular. This will ensure that they sell at least some of the products they make.
Why should you license your artwork?
As an artist, you are the one who licenses your work.
A “licensor” is a term used to describe someone who does so.
The “licensee” is the organization that licenses work from you.
You have a greater earning potential as a result of this.
When you license your art, you are paid a royalty based on the sales price of a product and how many items were sold.
For those artists who are prepared to work hard to gather the needed art supplies for manufacturers, draw up a contract, and are willing to continue promoting themselves — licensing artwork is an excellent method to supplement your income.
What styles of art work well in licensing?
The art that is relevant and relatable to both the manufacturer and the end-use consumer who is willing to pay for products displaying that art works best for licensing.
In other words, the artwork on that product's goal is to sell it.
Take a look around your home and see if you have any products that you bought without thinking about them.
Maybe they have artwork on them, such as:
- kitchen towels
- sports gear
- cookie jars
- wall art
Art on licensed products may vary a lot. But it will have some factors in common such as being a series as well as attractive and appealing to the eye.
There are likely art collections that would not be a good fit for licensing:
- overly political pieces
- art based around current events
- multimedia or 3-dimensional art
Getting started learning how to license artwork
Art licensing is a business, in the end.
Art licensing is handled through legal contracts between the maker (Licensee) and the artist (Licensor).
An art licensing contract contains information on what art is being licensed for use on what products in which territory for how long, as well as 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.).
Artists can and should do their marketing, and can choose to work directly with potential licensees.
How much do you make licensing artwork?
The common inquiry of most artists is, “How much money can I make and how long will it take after I learn how to license my artwork?”
Unfortunately, this question is unanswerable.
There are several elements to consider when it comes to art licensing, including, but not limited to:
- How much art does an artist need to create for consideration for licensing?
- How many “eyes” can you get to see your artwork – the relationship an artist develops with licensees?
- How well your art will fit the market, the product, the manufacturer’s needs, etc. Are you relevant and relatable to the consumer?
- How well the product sells, where it sells, and at what price point.
- How much do you make in royalties or flat fees?
Making money from art licensing can vary a lot. Some artists make $500 per year and some make more than $100,000.
This is good and bad news – it means that there is a lot of potential money to be made, but you can't expect to become successful right away.
It takes a lot of hard work to start making money from art licensing, but if you're patient and keep at it, you can see great results.
Diversify your illustration business by learning how to license your artwork
On top of selling art, working on commissions, and teaching.
Art licensing, once you build it up, can be a stable source of income from your art.
One that happens automatically in the background.
I always know my art licensing revenue to appear in my bank account.
Start learning how to license your artwork
After my lucky introduction to art licensing, I began integrating art licensing into all of my future illustration commissions.
Negotiating “usage rights” on top of creating the actual illustrations for a client.
Oftentimes, renewing the usage rights with my clients year after year.
Based on art I made a long time ago.
Essentially, “usage rights” are terms inside your contract where you identify how a company can use an image.
Defining for how long, where, on what, and for how much. More on this in a later lesson.
For the longest time, I only pursued licensing from this perspective.
Where I was integrating it into my business AFTER getting hired for a commission.
Then I began developing collections of more and more work. Collections I could direct new possible licensees to.
Eventually, rounding out my process so I know exactly what to do, say, negotiate, and price for art licensing.
Your illustrations have value
Think about it, it’s hard enough to make prints and manage an inventory of original art.
Alternatively, think of the amount of time you would lose if you start making different products on your own.
Products such as t-shirts, greeting cards, puzzles, etc.
You’ll be spending more of your time managing inventory, shipping art orders, returns, quality control, and manufacturing.
You'll be left with zero time for making art.
Art licensing lets you focus on what you do best, making art.
Letting your clients do what they do best, manufacture and sell goods.
Understand the value your art has for manufacturers and companies:
- Your images have a lot of selling power. The only reason brands can manufacture and sell products is because they have awesome images on them.
- You're the expert in making your work, coming up with ideas, and making them look great. So as long as a company or brand is profiting off of your images, so should you!
- You determine your prices and what's required of who you're partnering with so you feel great working with them at the end of the day.
Double your income with usage rights
What if you could make an extra $500-$1,000 every year from one client, without doing any additional work? That would be great.
This is my 2nd secret weapon, and it's negotiating “usage rights”.
This means that you can charge your client more for the right to use your illustrations.
For example, you could charge an extra $500 or $2,000 for the “usage rights” when you first start working with them.
This will give you more control over how they use your illustrations and for how long.
For example, if you are illustrating a product that will be sold, such as books, puzzles, clothing, or anything else, you can negotiate a percentage of the sales as well.
This means that you will get paid every time someone buys the product that you illustrated.
As long as your client is making money from your work, you should be too.
You should have a license that gives your client the right to use your illustrations in a specific way for a certain amount of time.
For example, if an online publication or brand hires you to illustrate 12 illustrations for their website, they should pay for the custom work and the usage rights to use your work on their website for one year.
If you want to keep your illustration on their site after the year is up, you can renegotiate for another year or two.
Usage rights in a proposal and contract can look different.
12 black and white spot illustrations for $500 each
$250 per illustration for one year of exclusive, non-transferable, and non-assignable use of the artwork for application on [URL].
It is important to understand the difference between “usage rights” and copyright.
When you give up your usage rights, you are giving up the right to use your work in certain ways.
However, you always retain copyright ownership of your work.
This means that the person who paid for the usage rights does not automatically own the copyright to your work.
You can only give up copyright ownership if you agree to a “work-for-hire” or “employee” status instead of an “independent contractor” status.
For example, when you work for an animation studio or advertising agency as an “employee”, you will sign an employment agreement categorizing you as a “work-for-hire”.
This means all the copyrights for everything you create at work is owned by your employer.
But even freelance illustration clients will try to give you their contract with the same “employee” and “work for hire” wording.
Instead, you want to classify yourself as an “independent contractor” in your contract. This legally separates you from the company.
You should NEVER sign anything that asks you to adopt a “work-for-hire” or “employee” status if you want to retain your copyrights.
If your potential illustration client requests you change “independent contractor” to “work-for-hire” in your contract… RUN.
How do I figure out how much to charge for usage rights?
When deciding how much to charge for usage rights, start by looking at how much you want to make per year from that client. Then, add on a few hundred dollars as a cushion. This will help ensure that you're making a good amount of money from each client, while still being affordable for them.
What if I don't want to give up my copyright ownership?
If you don't want to give up your copyright ownership, then don't sign a contract that asks you to do so. Instead, classify yourself as an independent contractor in your contract. This will legally separate you from the company and allow you to retain your copyrights.
What if my client wants to use my illustrations for more than one year?
If your client wants to use your illustrations for more than one year, you can renegotiate for another year or two. This will allow you to continue passively earning from your art.
What if my client wants to use my illustrations in different ways?
If your client wants to use your illustrations in different ways, you can charge them for each use. For example, if they want to use your illustrations on their website and in their print newsletter, you can charge them separately for each use.
How do I protect my copyright?
You can protect your copyright by registering your work with the US Copyright Office. This will give you the legal right to sue anyone who infringes on your copyright. You can also include a copyright notice on your illustrations to deter would-be infringers.
How to retain copyright ownership when licensing your artwork
As an artist, you own the copyright to your work by default. However, when you license your artwork to a client, they may request that you sign over your copyright ownership to them. This is a big no-no. If you sign over your copyright ownership, you're giving up all your rights to your work. This means that the client can do whatever they want with your work, without having to pay you any additional fees. Instead of signing over your copyright ownership, retain your copyright ownership by classifying yourself as an independent contractor in your contract. This will legally separate you from the company and allow you to retain your copyrights.
What to do if a potential client requests “work for hire” status.
If a potential client requests “work for hire” status in their contract, this means that they would own the copyright to your work. Instead of signing over your copyright ownership, retain your copyright ownership by classifying yourself as an independent contractor in your contract. This will legally separate you from the company.
How long do my usage rights last?
Usage rights typically last for the duration of the project, one to two years. I recommend not negotiating usage rights for longer than 2 years at a time.