Licensing vs. Buyouts

This page is intended to help you understand how image licensing and copyrights work, and the options available to you as a client.

There are 2 options for illustration clients to choose from:

  1. Licensing: Pay for the right to use images in certain use cases, or
  2. Full Rights Buyout: Pay for the full rights to the image. Use whenever and however you wish, and create derivative works.

What does all this mean? Click on the different tabs below to learn about each one:

An artist can sell the rights to use the images they create to to their clients via a license. Licensing means you don’t own the original creative rights to the image, but you pay for license to use it in certain instances.

Real life examples:

  • When you buy a song, you have the rights to play that song whenever and wherever you choose. You can often put it on any device you wish. You do NOT have the rights to play that song at a large event, or to give the song away for free to others, or to change it.
  • When you buy a stock photo online, they website will often as what kind of license you need. Most options are personal (using the photo for a personal project that won’t make money), professional (using the photo in certain ways that will help you make money), or commercial (you’re buying the image as a central means to market, earn money, etc.). Based on the uses of the image, the license fees change. (see CreativeMarket.com to see this in real life)

Every time an artist, author, musician, etc. creates something, they automatically own the creative rights to it as the original creator of the work. Sometimes these artists will offer a “full rights buyout” option to the client. A Full Rights Buyout means the creator sells the client their creator’s rights, meaning they don’t own what they created anymore, and have no rights to it. The client purchases the rights to use the artwork whenever, wherever, and also create derivative works from it. Full Rights buyouts may be time-bound, or in perpetuity.

Real life examples:

  • A man with an online business commissions an illustrator to create a series of icons for him. He wants to use these images in a few specific places, but his business is growing and he wants to be able to use them in new ways in the future without purchasing new usage licenses. He opts for the full rights buyout package so he has the freedom to use these illustrations as he pleases as his business grows.
  • A business hires a graphic designer to create brand assets for them (logo, pattern, icons, etc.). The business needs to own and have all creative control over their assets, so the full rights buyout is necessary for them.
    Side note: All of my logo projects are automatically full rights buyout. I think every business needs to hold every right to their brand assets.

A derivative work is a new, original illustration that includes aspects of a preexisting, already copyrighted illustration. Only copyright owners have the exclusive right to produce derivative works based on their original, copyrighted works. Copyright on original works is automatic and immediate when the work is completed. A copyright owner can grant permission to someone else (a client) to make a derivative work based on the original. If permission is granted (in the form of a license or agreement), then creation of the derivative work is not infringement. If the original isn’t yours and you don’t get permission to use the original from its creator, then you’re infringing that creator’s copyright.

Example:

  • Let’s say I created an animated cartoon series for Netflix called Timba, and it was the story about a young lion coming of age, defeating his evil aunt, and getting elected as president of the Jungle. It would be obvious that by looking at my character Timba and the story that I was creating a derivative work from Disney’s The Lion King, and they would sue me for infringing on their copyrighted character and story and making a derivative work, and also for making a profit on it!
  • A man hired a designer to create a microphone icon for his website. Sometime later, the man decides to start a podcast, and he uses the microphone icon in the podcast logo which he makes himself. The designer would have the right to claim copyright infringement because the man did not ask permission to make a derivative work, he didn’t pay for the new use-case license, and he didn’t buy the full rights to the icon in the first place.

Copyright on original works is automatic and immediate when the work is completed. Every time an artist, author, musician, etc. creates something, they automatically own the creative rights to it as the original creator of the work. Ideas are not copyrighted, but their expressions are. The person who is putting that expression into tangible form, the creator, owns that copyright.

In order to make money and serve clients, these artists sell the rights to use the images to to their clients via a license, or the artist can sell the full rights via a buyout. The buyout or license terms may be bound by a length of time or in perpetuity.

Copyright law favors the creator. Laws governing trademark are covered not only on a federal level, but on a state level as well. So be sure to check in with the governing agency within your state. You can learn more at https://www.copyright.gov/

“How do I know which option is right for me?”

90% of my clients choose the licensing scenario because they only use images in certain contexts or for certain lengths of time, and licensing is more budget friendly. Full-Rights Buyout packages are typically 200% to 300% of the invoice price. Check the lists below and the example scenario to see which option would best suit your needs:

Licensing is a great option for you if…

  • You have specific uses for the artwork in mind (i.e. an article image, on a worksheet, in a presentation)
  • You don’t think you’ll use the artwork forever
  • You don’t want to create derivative works

With licensing, you pay the Artwork fee + use fee in one flat rate. License fees are determined based on the number and nature of uses.

Full-Rights Buyout is a great option for you if…

  • You have a logo or branding project
  • You want to freedom to use the artwork whenever and however you wish
  • You want the option to create derivative works from it
  • You anticipate your usage needs frequently changing

With a Full rights buyout, you pay the artwork fee + 200 to 300% of the artwork fee. (ex: a $700 artwork fee + 200% of 700 is $1400 = $2100 total)

If you have any further questions, please reach out to me directly! Consult your lawyer on what rights you need to hold for your project.