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Understanding Image Licensing

There’s no denying the business of photography is a complicated one as photographers would be the first to agree. There’s the hourly rate, the daily rate, rates for editing, rates for renting, but most confusing of all, licensing. Why in the world would a photographer want to license an image instead of simply selling the photo and calling it a day? How could this possibly be customer-friendly?

The concept of licensing is actually quite simple, “To provide as much versatility to the customer in the most cost efficient way”. So yes, licensing is customer-friendly so long as both the photographer and customer properly understand the concept.

Being on the photographer’s side of things, I’ll confess my appreciation of the licensing model may be a bit biased, but I hope for you non-photographers reading along, you’ll bear with me and have an open mind.

To understand the reasoning behind the licensing model, let’s first discuss the value of an image. According to legal precedence, an average image not cataloged through the Library of Congress has an estimated value of $5,000 (*1) over the image’s lifetime. That legal precedence also recognizes the lifetime of an image lasting about five years. The U.S. Federal Court devised these figures in order to create a level playing field concerning image theft cases. Of course, this is legal logic and not real world logic. Some images, depending on their branding ability, distribution and creativity can run well into the tens of thousands of dollars.

That being the case, the photographer simply can not charge a customer for the total worth of the image should it be used editorially or as a thumbnail on a website. This is where licensing comes in.

A customer who has hired a photographer may think they own whatever that photographer produces. On the contrary, unless the photographer is employed, the photographer maintains ownership and copyright of the image. The next thing typically heard from the customer is, “Well, how much would it cost me to buy the all the rights?” Considering the photographer will no longer have the ability to license the image(s), it will cost $5,000 or more for each image, as an example. Once the customer is helped off the floor, the licensing model can begin to show its appeal.

Say the customer wants to use an image on the aforementioned website for six months. The photographer licensing that image will run the usage through a licensing calculator that spits out an appropriate price depending on market fluctuations, say $60. The customer then finds that the image fits perfectly within the context of a brochure they’re developing. Again, the licensing calculator spits out another price based on image size, circulation, placement, etc., say $180. And finally the customer chooses to place a half-page ad in a trade magazine featuring that image. Again, the licensing model quotes a figure of let’s say, $240.

In total, the customer has paid $480 plus whatever the actual photoshoot may have cost instead of potentially thousands of dollars. Clearly a big savings to the customer.

Of course every situation is different and licensing totals can soar depending on the customer’s use. So how does one explain the difference between an image being used in a magazine for $200 and the same image in a different magazine for $800?

There really is no good analogy to the licensing model when it comes to photography applications. The licensing of software is only applicable to a point, but the rental car industry seems to hold the best comparison for ease of understanding.

Just like an image has a lifetime, so does a rental car. First there’s the type of car or quality. Photographs are marketed the same way. The cheapest and most mass produced images are those in the microstock industry available to license for as little as $1. These images are intended to be sold often to whomever wants them making a customer’s uniqueness and originality impossible. The higher quality cars, or images, are tailored to the customer and provide a better experience, or overall ‘image’, but they tend to cost a bit more.

Suppose the customer wants to use one image for 90 days and another for 6 months. Back to the rental car theory, if you want to rent a car for one day as compared to a week, there will be a price difference even if the customer plans on driving the car on the same freeway, or use the images in the same place.

Most rental car companies even have varying price scales depending on how far one plans on driving. Similarly, image licensing has a variable scale based on the circulation of the item with which the image will be used. The more miles, or higher quantity of printings, the higher the licensing price will be.

And finally, say the customer chooses to buy the car outright similar to how one would want to purchase an image outright. Renting a car, or licensing an image, for the amount of time and purpose the car or image is to be used, would prove to be much more economical in the long run.

Essentially the goal of the rental car company and that of the photographer are one in the same. Both are trying to fulfill the total worth of their product before the end of its useful life. The more a car is used, the lesser it’s market value, however they’ve succeeded in potentially paying off their investment. Just the same, the more an image is used, the lesser it’s value and such are the hopes that the photographer has managed to recoup their investment in the creation of that image.

Licensing has never been an easy model to explain, but I do hope I’ve laid out enough of the basics to make it easier to grasp.

1. Unfortunately placing a price on an image isn’t that simple. For example a copyright owner undergoing copyright infringement litigation may elect to receive an award of statutory damages of up to $30,000 per infringed work—and up to $150,000 per work in cases of willful infringement—in lieu of actual damages and profits.

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2 responses to “Understanding Image Licensing

  1. Albert Zablit April 18, 2010 at 4:23 AM

    Very clearly written. Licensing is something we got to educate clients about more and more, especially in the (digital) age of excessive abundance. Thanks for breaking it down so that all (one can hope) can easily grasp its meaning and scope.
    I’ll link it up for others to read as well.

    Some stunning images in your portfolio, by the way. Bravo!

    Albert

  2. A.J. Leitch October 21, 2010 at 9:40 AM

    Thanks for this… very clearly laid out and a definite help to understanding the whole licensing issue.

    Great photography too. My dad was (retired) a helicopter pilot and he’ll dig your work.

    Cheers,

    A.J.

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