Pricing & Negotiating: Licensing Extension

Jess Dudley, Wonderful Machine

Concept: Licensing extension

Licensing: Unlimited use of 36 images for two additional years

Photographer: Lifestyle and portrait specialist

Agency: Mid-sized agency based in the Midwest

Client: One of the largest manufacturers you’ve probably never heard of

Here is the estimate:

I wanted to take this opportunity to make the case, yet again, for limiting licensing. As many of you have surely experienced, clients are increasingly expecting unlimited use, by default, regardless of the intended use. Nevertheless, it is important to press against that default request whenever you face it.

A lot of times, you’ll get the canned, CYA response – “it’s going to end up in a lawless, Wild West of an asset library and our people can’t be trusted to read the metadata or attached restrictions.”

I don’t blame clients for taking this protective stance. If an intern inadvertently pulls an image for a use beyond the scope of its licensing restrictions, the client could get dinged with an unexpected licensing fee, talent fee and/or infringement claim. However, acceptance of an unlimited usage agreement eliminates the opportunity to generate future revenue for a given image or set of images, which is crucial to sustaining and growing any photography business.

Unfortunately, the request/expectation/demand for unlimited use has become so ubiquitous that we have defined the term in our standard terms and conditions. In some cases, when the client asks for a buyout or unlimited use, they mean it and plan to fully utilize the extensive license (price at-will in those cases). But in many cases, they don’t, so it is important to do your due diligence to find out exactly what the client means by “unlimited.”  “Unlimited,” like “Buyout,” means different things to different people, so it’s important to run through the gamut of potential uses and mediums with the client to figure out exactly how they plan to use the images. Do they really need international use? Are they really planning to put billboards up in El Paso? Do they really plan to use the images after 2024? It could be that they mean an “unlimited” or unknown quantity of emailers, postcards or brochures. “Unlimited” collateral use is far less valuable for most clients than “unlimited” advertising use. Or they may be referring to the duration of use or the number of images from the shoot, expecting a “library” of content instead of a set number.

The point is, it is important to press for more info so that you can create the opportunity to generate licensing fees down the road. Once you narrow the scope to precisely what the need is, push hard to cap the duration for as brief a window as tolerable, even if that means giving up imagery. In many cases, there’s real potential for the client to extend the duration of use, even by a few months, while they wind down a particular placement.

Last year I wrote a post about a project I negotiated for a Trade Ad campaign. The client came to us with a broad scope of use (Unlimited), but was willing to limit the duration of use, and also requested pricing options for licensing extensions. This allowed us the opportunity to create the potential for future revenue. Just as the license was set to expire at the end of last year, I followed up with the client to find out if they were still using the images, and/or if they planned on extending the licensing through 2017 or 2018. (side note – get in the habit of adding license expirations to your calendar or using license tracking software like Blinkbid to remind you when licenses are set to expire so you can follow up about continued use).

The client was still using the images and planned to continue doing so through 2018. On the approved shoot estimate, we’d quoted the 2018 duration extension at $26,750.00 That represented the minimum licensing fee we would be proposing. I say minimum because our standard terms note that any licensing options presented are only valid for 15 days from original file delivery. It’s written this way because the leverage shifts dramatically after the images are created and as time wears on. In a perfect world, the expiration of the licensing option pricing would be the day before the shoot, but that may be a little too aggressive. The value of the imagery changes (generally increasing) as you move from estimating to delivery to first use.

If a client comes back to extend usage, it could simply mean that they now have funds that they didn’t initially, or that something that was unknown and unproven is now known and proven, essentially giving us leverage to push for higher fees based on the new perceived value. Of course, that’s easier said than done. Once those numbers hit the page on the initial estimate, in normal circumstances, you’ll be hard pressed to increase the fees in any substantial way without potentially impacting your relationship with the client (particularly if there is additional work on the horizon, which in this case there was… more on that in a future post). Also, in this instance, we felt like the fees were healthy enough, to begin with, so there wasn’t much need to even consider higher fees. Accordingly, we sent the above quote, which was quickly approved by the client to allow for the uninterrupted use of the imagery.

If you have any questions, or if you need help estimating or producing a project, please give us a call at (610) 260-0200. We’re available to help with any and all pricing and negotiating needs—from small stock sales to large ad campaigns.