Art Licensing Editorial: The Truth About Art Licensing Agencies

WARNING! This is not an upbeat article and is depressing because the art licensing industry is like other industries where people sometimes take advantage of others. The purpose of this article is to warn artists that they need to make sure that they are signing a fair contract or at least know the repercussions in signing an unfair one when they agree to have an art licensing agency represent them.

The truth about art licensing agencies is that there are MANY agencies that are honest, professional, have a fair artist/agency agreement (contract)* and work hard to represent their artists. BUT, there are SOME that are unethical, and/or are not professional in dealing with their artists, and/or have unfair contracts, and/or have poor business practices. Sounds alarming, huh? Well, it is! And, that is why an artist needs to do her/his homework before signing with an art licensing agency. Read the following so that you do not make a bad decision and sign a contract that negatively impacts your income and even worse allows an agency to have control of all your art so that you lose your rights to it.

In the fifteen or so years that I have been in the art licensing industry, I have heard many complaints and some horror stories from artists about the agencies that represent them. Unfortunately, those artists with the horror stores were so pleased that an agency wanted to represent them that they did not read the contract closely enough, understand all the terms, or realize that some terms that should be in the contract were missing. The artist’s big mistake was not to acquire information about the agency's reputation and business practices by asking other artists and not having an attorney that is an expert on art licensing contracts look the contract over before the artist signed it.

* The artist/agency agreement is a contract and is referred to as a contract or artist/agency contract in this article.

Common Artist Complaints about Agents
Most of the complaints I've heard about agencies are not as drastic as unethical agencies and unfair clauses in the artist/agency contract but about the lack of communication between the agent and artist, poor business practices, not getting enough or any licensing contracts with manufacturers, and not receiving enough money from the contracts. Some of these complaints were because the artist had unrealistic expectations such as earning a lot of money from each licensee contract. Read below for more information about agency complaints.

• Lack of communication
Lack of communication and not being on the "same wavelength" between persons is a common human foible. It often results in frustration and may be intolerable when working together. Some artists want to be in constant communication with their agent and feel adrift and slighted if the agent does not immediately answer their questions or respond when new art is sent. Other artists realize that agents are busy and will respond as soon as they have time and are not upset when they do not get a quick response. Although, it does not go over very well if the agent does not respond at all. No one like their emails or art to "drop into a black hole" and not know if the agent received it. Note: Some artists find that if they phone the agent they will get a faster response than if they email her/him. Agents may not have the time in their busy day to sit down and write an email but find the time to chat if their artists phone them.

Some artists expect agents to provide art direction, to send them the latest in art trends, and give feedback from the licensee when art is submitted. Or, there are personality clashes where communication between the artist and agent does not work because they are not on the same wavelength. Not all agencies provide art direction and some depends on the artist to keep up with trends. That is why it is important for the artist to talk with the agent before signing with the agency to see if there are any communication problems, if the agency provide the services the artist expects, and how the agent envisions the artists work will be used on products.

Artist Jill Meyer describes the process she went through in selecting an agency in her very informative article "Finding a New Agent." An important part of Jill's process in selecting an agency was talking and asking lots of questions of the agent before considering hiring the agency to represent her. Also important was talking to other artists about the agency and having an attorney familiar with art licensing agree that the artist/agent contract was fair.

• Poor Business Practices
SOME agencies do not have the best business practices. They are negligent in submitting art, do not make adequate follow-ups, do not keep track of art already submitted or licensed to manufacturers, and do not respond to emails from licensees or send signed contracts back to them in a timely manner. Any of these will damage the creditability of the agency. The following are some complaints I have heard from other artists and licensees.

1. Poor method in tracking art
– Some agencies do not keep track of the art they submit to licensees and thus submit the same art time and time again. Licensees are looking for new art; not art that they already have seen.

– Some agencies book keeping abilities are not very good and they do not keep track of the art that have already been licensed. Thus, they are at risk in licensing the same art for the same product to different licensees and breaching the terms of the contract granted to the first licensee.

2. Poor response to queries and return of contracts
Some agencies do not reply to licensee emails or return signed contracts in a timely manner. Art directors appreciate quick responses and it shows that the agent is professional which helps in promoting future business. Also, a slow reply to a query can mean missed opportunities to license and promote art.

3. Poor follow-up
– Some agencies do not follow-up frequently when licensees show interest in art and thus they may lose the opportunity to license it.

– Also, some are poor in following up when payment of licensing fees are late or contracts do not arrive when expected.

4. Poor method in submitting art
Some agencies submit their artist’s work to their entire client list in what I call a "shot gun method" in the hopes the licensee will be interested in some of them. Instead they should be submitting only the appropriate art for each manufacturer. Licensees do not appreciate getting a ton of art that is not suitable to be put on their products and will eventually not open emails from agencies that submit art that way.

• Not enough deals or pay enough
Artists may not get licensing contracts because the agency does not have a list of licensees that is suitable for the artists work. Of course, the agency should never have signed the artist for representation if they did not think they could license her/his work. Or, it could be due to the impact on the licensing industry with the change in consumer spending and also the increase in competition of artists vying for licensing deals. The change in consumer spending has drastically changed the way retailers sell products. Retailers now order lesser products from manufacturers and the shelf life is shorter. Thus, licensing revenue per image is less than it was before the recession struck in 2008. Consequently it is not the fault of the agency to now get fewer and not as lucrative licensing deals for their artists.

Artists and art licensing agencies are struggling to get contracts and bring in revenue. In the article "You Are Not Going to Make It in Art Licensing" art licensing agent Jim Marcotte of Two Town Studios wrote, "Art licensing today is an industry in search of a workable model. The scramble is on - agents and artists who used to make their money by licensing art are now finding ways to collect from (mostly newbie) artists in ways that run the gamut from coaching to holding contests. Some agencies are accumulating artists, hoping that more people earning less money can make up for the reduced sku counts and short market runs. Branding agencies are taking on artists and art agencies are promoting brands, and both are consulting for manufacturers who are buying art worldwide and licensing art only when they have to. It’s a wild time in the biz." Jim's article is a very "tough pill to swallow" but his aim is not to discourage artists so they quit trying to license their art but to energize them by trying new ways to license it. To get Jim’s perceptive on licensing art in today's market, read his article.

Note: I recommend that you read Belgium surface designer Ine Beerten's article "The Big Contest Dilemma" if you are interested in entering a design contest. Ine wrote a really thought-provoking article about contests. She ended her post with "So what do I hope you take away from this post? I hope you think careful when you enter a contest next time, think whether it’s just an easy way for the company to get free artwork and cheap marketing and whether the prizes are truly fair, or if you can really gain something that is actually worth something to you. By entering these bad contests you only help them devaluating your own and other artists’ work!"

Artist/ Agent Contracts
In "16 Art Licensing Agent Agreement Essentials" by licensing consultant J'net Smith, she states that "It’s easy to get excited about the prospect of finally signing with an agent and forget to make sure that the contract is not only fair to both of you, but includes everything you need. . . Don’t accept the first contract you are given without understanding all the obligations and ramifications of each clause. It may be your first and the most important contract you will ever sign."

Artists may interpret the terminology and meaning of legal terms or poorly written clauses in a contract incorrectly. And, if clauses that should be in the contract are missing such as the date and terms specifying termination, the artist may be obligated that the agency continues to represent her/him forever. That is why it is recommended that an attorney experienced in art licensed legislation look over the contract before the artist signs it. It is less expensive to pay an attorney to make sure the contract is fair to the artist than to pay him/her to try to free the artist from a bad contract even if it is possible.

• Unethical business practices and contract terms
What I deem unethical is when an agency does not pay monies due to artists for licensing their art or taking advantage of artists by having clauses in their artist/agency contract that takes control of the artists work and denies the artist usage of their own work.

Several years ago two artists told me that their agencies were not paying them revenue for their art being licensed. Their agents insisted that the art had not been licensed and yet the artists saw their art on products in stores. In one case, the artist was able to get monies owed by hiring an attorney. In the other case, the artist found out that her copyright was infringed upon and the art was illegally used. It is important that artists be constantly looking for their art on products in stores and on the Internet. And, getting their friends to help. That may be the only way that an artist finds out that their copyright has been infringed upon.

In the article "Hot Words to look out for in contracts" art licensing agent Lance Klass of Porterfield's Fine Art Licensing discusses the word "assign" and the consequence when used in any art/agency or licensee contract. He wrote ". . . when you see the hot word "assignment", make certain that you're not assigning the copyright or all reproduction rights to your artwork as a part of the agreement. If you do, it's lost to you forever. Other people will control the reproduction rights to your art, and you'll actually have to ask their permission to reproduce the art that you created."

Lance relates a couple of horror stories that artists endured by signing bad contracts in his article "How to Avoid the Most Common Mistakes in Licensing Your Art". In one example, Lance said ". . . This agency, which just happened to be owned and operated by the same people who owned and operated the publishing company, gave itself the exclusive right to publish any or all of the artist's work for the next five years and to sublicense his art to anyone they wished, whenever they wished". He stated, "If there's any one piece of advice I could give an artist about to enter a legal agreement, it is to read every single line in the contract and make sure that you totally understand it. I know that isn't easy for most people, but don't get in the water if you don't want to get wet. If you find that there are sections or sentences that aren't written clearly, don't say what you want, take away a bit more of your rights than you feel you want to give, or if any of it seems confusing or contradictory, have the company rewrite it in plain English. . . . But don't let this stop you from promoting your art for license. Most companies are quite reputable and many contracts are completely understandable by the average human. Just make sure you read every word, and know what it means".

• Unfair contract terms and business practices
Not all agencies have unfair terms in their art/agency contracts but some do. Terms that seem unfair to artists are usually in the contract because of the way the agent decides to operate the agency. For instance, a clause in the contract may state that the agent will make all decisions in licensing the art. That means that the artist has no say-so in what company manufacturers her/his art, will not have the opportunity to approve or not approve the licensee contract or even see it, and cannot approve the amount of royalties or flat licensing fee that will be paid for the use of the art. That is unfair to the artist. But, the artist may trust the agent to do a good job and is willing to sign the contract because she/he wishes to be represented by the agency. What is NOT acceptable is if the artist is blindsided and not aware that the terminology in the clause gives the agency that right. And, that is the reason why an art licensing attorney should be hired to point out unfair terms in the contract before it is signed. Note: Yes, there are agencies that have that clause in their contract.

Below are more contract terms and business practices (may not be in the contract) that may be construed as unfair to artists.

1. Artists do not get to see licensee contracts
A variation on the above unfair term is that an artist does not see the licensee contract but gets to approve or not approve the contract. The agent sends a form to the artist with the basic terms of the deal so that the artist can sign it for approval. Just like the above term, the artist must trust the agent that she/he makes sure that the clauses in the licensee contract is fair.

2. Agencies continues to receive commission after termination
Most agree that the termination clause is the most important clause in the artist/agency contract. In his article "The Artist – Agent Relationship" art licensing attorney Joshua Kaufman states, "The greatest issue of tension and dispute between artists and their agents surround post-termination issues. . . . The issue of how long an agent is entitled to keep receiving its commission after the contracts terminates, is one that is strongly negotiated. Agents of course, wish to be compensated for not only the full term of their contract but for the term of the licensing agreement and of all extensions and renewals. The artist wants to limit the payment to the agent after their contract expires. Agents believe that they secured the contract, they work long and hard, had to wait for their money and should be entitled to their receipts throughout the term of the contract. " Note: Most contracts do give the agency the right to continue receiving commissions from the contracts they obtained for the artist until the contract expires and no renewals are requested by the licensee.

3. Agencies continues to represent the artist after termination
Some agencies have clauses in their contract that allows them to continue representing the artist after the termination of the contract. The representation is for an additional several years after termination and is limited to those licensees that the agency obtained contracts for the artist's work during the term of the contract. There are questions on the legality of this clause according to attorney Joshua Kaufman in his article "The Artist - Agent Relationship". He states "One finds in many agreements prohibitions against dealings by an artist, post termination, with the agent’s clients. First of all there is a question (which depends on which state law applies) whether those clauses are enforceable and to what extent. . . If the agent’s client list is very large, and there is a blanket restriction against dealing with the agent’s clients, and this precluded the artist from doing business or greatly hampered their ability, many states will disallow the restriction."

4. Do not allow any interaction between the artist and licensee
There may not be a clause in the artist/agency contract but some agencies do not allow their artists to interact with licensee art directors. All licensee requests for high-resolution art are sent to the agent who forwards it to the art director. And, all requests for editing of the art go through the agent. This is awkward and frustrating to the artist. It is much easier and faster for the artist to make art changes if she/he works directly with the art director.

5. Artists do not get to approve samples
Not all licensing contracts allow the approval of art on the products before they are manufactured. But if it is in the licensee contract, the agent normally approves the samples and not the artist. That restriction may not be in the artist/agency contract but because of licensee time restrictions it is not usually possible for the agent to ship the sample to the artist for approval.

6. Artists are required to pay part of booth and marketing expenses of the agency
Many agencies do not require artists to pay any of the agency expenses. But, if they do required their artists to help with trade show and other agency expenses it should be clearly spelled out in the artist/agent contract according to art licensing consultant J'net Smith in "16 Art Licensing Agent Agreement Essentials".

Summary
There are many good art licensing agencies. But, do not get blindsided and sign a bad contract. Do your homework and ask agents for recommendations of artists in their agency to talk to and/or look at agency websites for the artists the agencies represent. Select a few artists and find out their contact information from their own website, Facebook or LinkedIn. Either phone or email them to ask questions about the agency. Make sure that you fully understand all the terms in the artist/agency contract. And better yet, hire an attorney that knows the ins-and-outs of art licensing to look over the contract and point out any unfair clauses before you sign it.

For a list of agencies, read "List of Over 50 U.S. Art Licensing Agencies". But, you need to research the agencies yourself because I am not familiar with all of them or their artist/agency agreements (contracts).

Resources:
The above post mentions quotes from the following articles. I recommend that you read these articles because they contain a lot of important information you should be aware of.

• "Finding a New Agent" by licensed artist Jill Meyer

• "You Are Not Going to Make It in Art Licensing" by art licensing agent Jim Marcotte of Two Town Studios

• "The Big Contest Dilemma" by Belgium surface designer Ine Beerten

• "16 Art Licensing Agent Agreement Essentials" by art licensing consultant J'net Smith

• "Hot Words to look out for in contracts" by art licensing agent Lance Klass of Porterfield's Fine Art Licensing

• "How to Avoid Mistakes in Licensing Your Art" by art licensing agent Lance Klass of Porterfield's Fine Art Licensing

• "The Artist – Agent Relationship" by attorney Joshua J. Kaufman

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