Licensing 101: What You Need to Know as a Creative Entrepreneur - 49

Law and Wit Episode 49: Licensing 101 and the 4 Must-Know Contract Terms for Creatives. Welcome to Law and Wit, Creative Counsel for Entrepreneurs. I'm your host, Brittany Rettell, mother of 4, entrepreneur, naptime lawyer, and attorney for creative entrepreneurs. I'm here to share inspiration and action so that you can tackle your business blocks and confidently own your business in every sense of the word. Thank you so much for being here. Welcome back to Lon Whit. I'm excited to be here and to talk about licensing. Okay, now on the surface, I know licensing does not sound that sexy, but you know what is sexy, guys? Making a whole bunch of money. Okay, fill in those cash coffers. And seeing your work, your beautiful work, whatever it is that you do, get out there into the world. Okay. And that's what we're going to be talking about today is how to make that happen and to try to kind of lift the COVID of secrecy off the world of licensing and what that's all about. So let's get into it. Okay, I have to share my standard disclaimer that while I am a licensed attorney, I am licensed to practice in Utah and Idaho, I am not your attorney unless you want me to be, okay? And we have that kind of relationship. And that's not what this is right here. Okay? This is not an attorney-client relationship. This is just for informational purposes only. So if you have any questions after listening to what we talked about today, or rather what I'm talking about, but you're listening, I'm going to just, you know, do the assumptive sale that you're an engaged, interested student, then please reach out and consult with an attorney that's licensed to practice in your jurisdiction, whether that's me or someone else that you connect with. Okay. Okay. So let's get into it. Licensing. First, the reason why this is so important, as I alluded to, is that I am not a huge fan of the, the kind of the assumption that if you are an artist, you are a starving artist, or that to be like a true person in touch with their talent and their skills, that there's no way for you to be making money, or that it's always going to be kind of a tortured existence, whatnot, you know, just surviving paycheck to paycheck, you know, insert Moulin Rouge clip of you in a bohemian ghetto surviving on poetry and love but on scraps of bread. Um, no, I reject that. We, we reject that whole wholesale. Um, I know plenty of artists, you know, there are hundreds, there are thousands of artists who are succeeding, who are using their skills, who are creating good work, and who are happy and fulfilled in their work. And they have boundaries, and they have balance, and they have space, and they have health insurance, and they have a retirement plan. And it's all possible. It all is. And a big part of why that is for a lot of people— I'm not going to say it's the only road to Oz, but for a lot of people, to lead to success is the power of licensing. And here's why. Licensing allows you to expand and multiply yourself and expand your revenue streams as far and as wide as the universe is. Okay, so what does that mean? How do you get into it? What are, what are the way things you should be looking out for? That's what we're here to talk about today. Okay, so the first thing we want to talk about is that what is a licensor versus a licensee? Because people get these terms confused all the time, and I get a lot of questions on which is which. And so here's— I'm going to teach you a little trick. Anytime you see any kind of these legal words that have like the -or versus -ee, the -or is the person who is usually doing the action. Okay, so in this instance, this example, the licensor, I want you to think of as Thor. Okay, it almost sounds like it, and they're like the big strong one who is giving stuff. Okay, I want you to think of Chris Hemsworth with his mighty hammer, and he is like handing over like, here is my— this is my design. I am giving it to you because I'm the hero of the story. Okay, the licensee is the person who's receiving something and is like, oh, this is really heavy what you gave to me. That's why they're the licensee. Okay, just go with me on this, guys. Okay, I'm doing my best to make it fun. Okay, So that's how you know the licensor is the one who is giving the license. They own the license and they are giving it to somebody. The licensee is the one who's receiving it. Okay, now they have the license. They didn't have it before. They're the ones, the recipient. Okay, that's how you can remember that. And when we talk about licenses and we're like, yeah, but what is the it? What is it that we're actually giving? Because last I checked, nobody— this was not a white elephant party— nobody was actually exchanging anything. It's all stuff on paper. It's all this made-up stuff. And you're right, what we are talking about, it all comes back to the copyright cake. Okay, so copyright is this idea that when you create something, there are certain rights that you get as the creator of those things. Okay, and in law school, we talk about a bundle of sticks, but bundle of sticks is kind of boring. So I've turned it into you get— you have a copyright cake. And when you create something, You have the whole cake and it's yours. And there's— but what's cool about it is that you, because you created it, you have all these different options of how you can slice the cake. And not only can you slice the cake in those— in that cake slice, imagine like it's a beautiful, like those rainbow-colored, you know, really cool cakes you see on Pinterest, um, that's, you know, cascading with all different kinds of things, layered ombre cake. You can even slice it each way going that way, you know. You can slice it not only like vertically but also horizontally, okay. So the main way that you can slice your copyrights after you've created something in a tangible and fixed it in a tangible form— that means it's gone out of your head, you had the image in your head or something, you got it out of your head and onto something— and that means you put it in a literary work, a musical work, a dramatic work, an architectural work, a pantomime, choreography, pictures, graphic, a sculpture, motion picture, sound recordings. Those are all our most common things that we copyright in the American system of law. After you made it into one of those, Now you get to decide, how do I want to hand out my pieces of cake? Or a better idea, how do I want to sell my pieces of cake? Because selling is always more fun because making money is really fun. Okay, that's, that's the thought we want to get. This is fun. Making money is fun. Business is fun. So here are the most common rights that people want to sell when they have their full copyright cake. They want to sell and license. The right to perform their work, if it's a work that can be performed. Okay, and I'm thinking of those ones that are obviously like in, you know, that lend themselves to an in-person performance. The right to display a work— this is almost, almost universal one. This is a very popular one and a very big deal of who gets to display it. And now obviously with the internet, that means put it on something on the internet— a website, an Instagram feed, a YouTube channel, Facebook, you know, Twitter. That's the right to display. We want to talk about the right to reproduce, okay, or to make copies or allow others to make copies, okay. So this used to be a bigger deal in the print world. Now since we have the internet, it's kind of usually part and parcel of the right to display is the right to make copies on whatever it is your technology is supporting it, okay. But if you're still working in the print or analog, you know, if you sell— if you have a record and you record it, you are— in your record deal is going to be language about that you are giving someone the right to have and make multiple copies of that record. Okay. And that's what they're selling. And the other one that's kind of big, that's sometimes hard for people to wrap their head around is the right to make derivative works. Okay. So this is— so the right to do derivative works is going to be the right to be able to take basically what you have and put it on in a different format. Okay. And the most popular way to kind of explain this is like the Harry Potter books. Okay. So So Harry Potter was released, and originally it was written as a series of books. A derivative work of the Harry Potter books that was owned by J.K. Rowling that she then negotiated for was the right to make movies from those. There were other works that came out of it in terms of the right to use her licensing and her imagery and the names of her characters for merchandise and apparel. But a derivative work would be because there's no way that you could have made those movies without getting the rights from the books. You see what I mean? Because they're so related, they were building on top of the subject matter material, that they— that obviously there was, there was a link between them. Okay. Another way that you can see this is, if you are giving the right to someone to make it into a different language, sometimes a translation can be seen as a derivative work or otherwise change kind of the format of what you're doing. But it's very similar in terms of the content. So, um, so those are the, um, so those are the main rights, okay? Those are your main slices of cake. And remember that automatically when you create something, you have all the cake slices, you have all the power, you have this beautiful giant cake and it's all yours. Um, so if you want to separate it and to start selling these pieces off, you have to do that in writing. United States copyright law says that if you are going to be licensing and giving away some of those slices of your cake, it has to be in writing, okay, which is good for you because you want to make sure that you're not doing this accidentally, okay. It's bad news for those of you out there who are using other people's work that you shouldn't have, okay. People who are doing Google image searches and thinking that that's the public domain and you're using other people's photographs— stop doing that, A. And B, because that's someone else's work and they did not give you permission to use that, okay. And like I talked about, the different ways that you can then slice these cakes. So say you have the right to display something, You have created a piece of art, it's beautiful, it's getting a lot of traction, people want it. You get to decide how you're then even going to more narrow down and slice that cake slice even further. And you could say, well, I'm going to slice it by the amount of time people get to have. I'm going to be maybe to slice it in terms of the type of item they can make with this. And we'll go into that in a little bit. I'm going to limit it by geography. Maybe I care who releases it in the United States. Or in English-speaking countries, but then I want to talk to someone else and sell the rights to Asia or sell the rights to Europe. So when you hear people talking about like, oh, selling rights to this, selling rights to that, they are talking about licensing. They're maybe not using that word, but this is all part of the same scheme. The reason why you sell your rights is because you are licensing those rights and what you have to someone else for money, and you're making money from it. Because you might be great at creating artwork, you might not be so great at creating wallpaper. That's someone else's gig. So it doesn't make sense for you to get into the wallpaper business. It makes a whole hell of a lot more sense for you to license your artwork in for someone who makes wallpaper, and then you get a cut of that every time they ship it. Okay, so let's talk about that, about when you look at and get started in thinking about licensing and whether licensing might be a good strategy for you to monetize your work or to grow or scale some of your revenue streams with your content. What other things that you can license. And you could license anything that's protected by copyright, like we talked about. You can also protect and license anything that's protected by trademark. Okay. And now a trademark would cover things like your brand name. This is where white labeling comes from. You know, if there's— if you've heard of businesses that do that, it means that they are basically giving someone else the right to put their name on something else, even though they didn't create it, but their, their brand name has such power that they want that. You can license a product name, so a specific line of things, not just the name of your maybe parent company or brand, but a specific line of your products or product name. You could license your slogan if you wanted to. You could license your logo or a smell or a trade dress. Of course, for a lot of people, this is what makes their brand them, and they don't, they don't enter into these licensing deals lightly, and they certainly don't enter them without someone who knows that they're going to be up to their quality standards. Okay. So, but it's important to know that without— if you have not taken the steps to protect your work, either through copyright or trademark, then when you get to the step that you want to license, it's, it's going to be a little tricky. And honestly, it's going to be— you're going to be in a weaker bargaining position, because whoever your counterpart is on the other side, your licensee, who's looking to receive and pay for the right to use your things, If you have not taken steps to protect what you have, then why, frankly, do they have to pay you? Sometimes they don't, you know, it's only the ethics or, you know, a gentleman's handshake that's protecting you. And frankly, I don't think that's a good position to be in. You can do better, you should do better, you know, you know more, you do better. And so always, when we're looking at licensing, the first step that you want to make sure is do an intellectual property audit and make sure you're working with an IP attorney like me, Hair Flip Hair Flip, or someone else who knows how to take a look at your portfolio, at your brand and your business, and what should we be doing to protect your assets right now so that you are in a position where you can advocate and grow and license your things and you can protect them. It's the same thing that goes for franchising. You don't have anything to franchise unless you've protected your name, because that's what you are literally selling is, is your, is your brand name. So you got to make sure that that brand is locked down. Protected. Okay, so what can you— what can your license— if you decide that you're going to go license, what kind of stuff can you license? Um, you— your licensed work content can be on literally freaking everything, okay? I'm talking about home goods, um, surface pattern textiles. If you get into this game, it's wallpaper, wrapping paper, rugs, um, stickers. It's, you know, textiles that go in the kitchen, in the bathroom, in the home, and linens. There's paper goods and toys and games and clothing and fabric and, you know, and then a whole lot more. You can go really niche down in all different kinds of areas of goods and, and product of soft goods and hard goods. And, you know, seasonal goods and what you could be selling. So depending on what your interest level is, obviously, the more, you know, broad and maybe commercial appeal is how someone would say your content is or your art is. Then maybe the more options you have and who you'd want to work with with licensing. If yours is a more niche or narrow market or focus, or that's kind of what your design aesthetic is, then you're going to be looking for more narrow. And that's fine too, because you could just be speaking to those people directly. It also probably means that you might just have less options. And so you're gonna have to do more research and know that, that, that price point might be different because of that. So some things you want to think about always, in terms of looking when you're looking to diversify and go into licensing is that anytime time that you are going to be approaching someone and working with them, um, it's— you're going to want to have a collection of items. It's very rare that someone is going to work with you for a one-off design because it's simply that usually the juice isn't worth the squeeze in terms of the setup of the contract and the royalty structure and sending you the payments. And, you know, they're going to have to do the samples and then send it back to you and, and approve payment and all that. Um, it's usually just not worth it for just one thing that they like from you.. So if you're getting into this game, make sure that you've developed a portfolio, that you have some collections that all coordinate, and that go together. And that that's what you are offering to whoever it is that you want to work with, is things that go together and coordinate. Some other practical tips are make sure that you're doing your research, okay? Don't approach somebody to work with them if, if you were, you know, pitching items that they don't sell. Okay? So just, you know, Basic, do your homework. Go, go use Google, go use LinkedIn, um, you know, know your market. Talk to people who are going to the shows, who are going to the conferences, um, talk to people who are working with licensing. There are licensing agents who work in this field and do this work day in, day out. Um, I have clients that have worked with licensing agents, um, and I also have helped clients and reviewed their contracts and stuff who don't, who just represent themselves. So, um, I, I I think there can be success in both ways. I'm not going to say that you have to have an agent or that you have to go solo and there's not value there, but I think you need to know yourself a little bit and what kind of a— just know yourself. Are you a self-starter? Do you— are you going to be okay putting yourself out there and networking and making phone calls and emails and inquiries and going up to people at cocktail parties, at conferences without knowing anyone and getting to know— or at a trade show and getting to know who you need to know to get it? Or are you a little bit more of the of the reclusive artist. You're a little bit more of the introvert, and you feel way more comfortable behind the sketchbook, behind the screen, looking for inspiration, and not as much going out there and putting yourself out there, your portfolio out there. If that's— if that latter is the case, then a licensing agent may be a good fit for you. And know that the better that you can kind of create a mock-up and a plan of what you want the, you know, the end commercial products to look like, it's going to be easier for someone to kind of visualize working with you and what that looks like. So So make sure that after you've done your research, you know, be able to create some good mockups of stuff and say, this is what we're looking at. Don't feel the need, and it's not normal that you have to send high resolution of your images to start off with. It's okay for people to get a sample of what you have. And hopefully they won't knock off your designs, or send it to their people in China and say, yep, here's what you want it to look like. If that happens, please come talk to me. Make sure that you're following up and that you're using social media, that you're connecting with other people, So you never want to assume that one connection or one touchpoint is going to be enough. It's a busy age and there's a lot of content, there's a lot of noise, so you just really want to be on the offensive here and, you know, keep connecting. You know, not be obnoxious, but be persistent, and there's a difference there and you'll feel that. You know, some other ways that might be less off your radar in terms of connecting are following people on Twitter or Facebook. They're maybe not seem as much as visual platforms, but depending on who you're chasing and what age group they are and what comfortable their platform using, you might find them on them. Also LinkedIn. If you're looking to find who is the person at a company, you need to be on LinkedIn and you need to research because people, um, that's the greatest professional source in looking at what the inside of a company is. And it's pretty easy if you go find someone's name on LinkedIn to figure out what their email address is, okay? You know, find a way of what is the pattern for who works at a company, how do they do their email addresses, and then shoot off a couple of those derivations and see which one goes through that doesn't bounce back. So, um, and then, um, you know, know that there's also a, you know, a practical tip that there's always the option for you to license things yourself. There's some platforms like Zazzle and iStockphoto and Blurb and Artist Rising and whatnot. I'll put some links in the show notes of places that you can license your own work and have kind print on demand or other options for people to put your artwork and your content on their products that they're interested in. So that's another option. So with a disclaimer that sometimes, yes, when you do that, is your work then ripped off? Yep, it sure is. But like we've talked about in some other episodes, I'll just mention briefly here, but like I talked about in episode 10 of copyrights versus trademarks, and then in episode 40 of what you can and can't protect Um, if you have a work of yours that is doing well, that you think has a lot of commercial appeal or starting to get a lot of traction, please, please, please register the copyright to that work. Okay, don't just create it. I know you get some automatic rights from creating it, but where you get the real rights to protect yourself and to protect your revenue is by registering it with the United States Copyright Office. Okay, that's an online '90s ghetto website. If you have not done that, if you have not explored those beautiful pages and paid your $35 fee, then you have not registered the copyright and you are not able to file a lawsuit. Okay, it means if someone takes it, they can go neener neener neener right in front of you, wave it in your face. Some huge company, you know, I'm not going to name names, but Zara, Target, H&M, and Nordstrom— no, they all do it. Alibaba, Amazon. Um, and they don't— and you've got nothing on them. They know that it's going to be too expensive for you to come after it. They know that no attorney, copyright attorney will take the case unless you registered it because there's no statutory damages, there's no money to cover their attorney's fees. Like, your hands are tied, okay? Don't do that to yourself. If it's something that's doing well, or if you have any inkling you can even do a whole collection, please register the copyright for it, and then you have the really the guts, the gusto to go after someone and get them to stop, okay? The last thing I want to talk about is arguably the most important, and these are the 4 terms in a licensing contract that I really want you to pay attention to. Okay, obviously, probably my first tip here is if you are dealing— if you— yay, congratulations, you have one of these deals, that's awesome, so excited for you. If you have never seen one of these contracts before, if you are not sure what the contract is saying, or if this matches up to the conversation that you had with somebody in the back and forth that you might have already had, please have someone look over it for you. Okay. I know that it is sometimes painful to spend money on a contract before you've had the chance to actually make money on a contract, but I have unfortunately been in the position to— I see these after the fact when people are a year into the relationship and things are going poorly. That's obviously the case. You know, I'm like the, you know, the ICU nurse. I never see when the trampolines are working. I only see when they're, you know, when the motorcycles go wrong, when the trampolines go wrong, and people are on their deathbed. Um, and so I see when these contracts go wrong, when they were very one-sided, when they were old, when they were outdated, when they were convoluted, when they were asking for crazy terms, and some poor artist who didn't know any better because they weren't taught any of this stuff in art school or in their degree program, which is a crying shame, gets taken advantage of. Okay, so please, please pay for an attorney. Um, you know, get someone to at least review it and, um, and have, you know, have your back. And not someone else's side, because all contracts are drafted with someone in, in their favor, and it's probably not going to be you, okay, if you've received this from your counterpart at the company that you're— that's looking to work with you. Okay, so the 4 terms are: the first is term. I know, very meta, but term in legalese, in lawyer speak, contract speak, means the length of the project, of the contract. This is how long you— what we are agreeing to work with each other, okay? And so for a licensing deal, this is really important because is going to set out how long that we are, we are agreeing that we're going to work. The most common that you see is anywhere between 1 to 3 years. And the reason why this makes such a big deal is that whether the relationship is going great, that's awesome. You want to see what, what happened has to happen for it to renew, or what sometimes what kind of revenue, because frequently, if companies, if you're, this is the first time you've done a deal, they will have language in there that says that they don't have to renew, or even that they can terminate the contract if they don't hit the certain amount of revenue. They're protecting themselves that if like you're a total dud, like we love you but like your stuff's not selling, that we can drop you and that we don't have to be making your stuff and carrying inventory on your stuff anymore. So if that's the case, you want to know that. Um, the next reason this matters, matters so, so, so, so much, is ownership and exclusivity. Okay, and this is a big deal is because if they are asking to have the exclusive rights to your content, to your work, then that means that you can no longer sell. If you are giving them all the pieces of your copyright cake, you don't have any pieces left. Look down at your cake pan, it's empty. Now they have all those pieces, and which means they can, they can make all the money, or, or this is the awful or, they can sit on it, they can do nothing. And that's what you really need to make sure that you're looking at your contract closely to see. Are you giving them exclusive rights, which I'm not saying that that might not be a great deal, but you need to make sure that you're being compensated to that. Don't assume that you have to hand over exclusivity. Remember, every single term can be negotiated in a contract. This is just the opening dance. Okay, it's just the first step. It's not the end-all to be-all. This is not written in granite on a war memorial. Okay, this is all up for debate. And you want to make sure that they— that the exclusivity comes if it is triggered it is triggered by them actually selling and making available a product for sale. Okay, um, I sat at a table once at a conference and I heard from this amazing artist a licensing horror story that she had signed an exclusive deal with the manufacturer for 3 years and they ended up not making anything, and she could not sell the artwork that she had licensed to them. Some really popular stuff that was gaining traction, which is why she got this deal and was so excited, for 3 years. Course, couldn't sell a darn thing. Okay, I was so bummed. And so, um, and she, and she just, as we started talking about this, and she was like, I, I just wish that I would have known about you. I wish that I could have talked to someone like you and had it read over and known. Because obviously by the time the contract was ending, she knew what a giant mistake it was, but she didn't know at the outset. Um, and that's super unfortunate, which leads me into my next point, um, which is like we talked about ownership exclusivity. So apart from exclusivity, which also, which obviously means exclusive, okay, if someone asks for exclusive rights to something, they are there, you are their one and only, okay, you guys are in a committed, stable relationship, it is Facebook official, you are not allowed to sell that piece, that content, that work to anybody else, okay, it's locked in. And always remember that, like we said, everything is negotiable in a contract, and especially the exclusivity of your work and the availability of that to this one person is definitely always negotiable. And so if it makes you uncomfortable, or if you feel like it's inappropriate for the price that they're asking, then take that off the table and say, oh, you know, I'm just looking for a non-exclusive arrangement right, right now. Or make sure that if you need to narrow down the product categories of what they're getting exclusive relationship in, that you're looking at that and make sure that it's super broad in that they get the rights to this content in all consumer goods or in all surface pattern textiles or in all toys, for example. Narrow it down to be like, okay, you can put it on t-shirts, you can put it on, you know, toy figurines, figurines, but luggage and bags and accessories and scarves and bracelets and, you know, all the other things, bath products are off the table. So, you know, really put your thinking hat on and think about, okay, if I were on the other side and was going trying to grab as much property and real estate as I could for this, what would I be thinking? Okay, now push against that. Now go back and think about how you can undermine those efforts. Not that we're assuming people are bad or they're greedy or they're out to get you, but they are looking after their number one. Okay, and whoever it is that's dealing with this contract, that they're just doing their job, and you shouldn't take it personally that you want to, you know, negotiate and have a good deal, a fair deal for both of you. And they shouldn't take it personally either. And if you're dealing with someone who has a hard time and can't separate and isn't willing to work with you and have a reasonable discussion about this, then that's a red flag right there, and you may not want to be working with someone, especially on a longer-term relationship. So, so definitely look at ownership and see what exactly— what kind of ownership are they looking at and do they have in mind. And the next part is last but not least, your money. And this is referred to typically in licensing contracts as your royalties. Okay, yes, Your Majesty, you have come to reign supreme with all the cash around. Now royalties are a percentage of sales that you get, okay? And there's a whole range that we'll get into. And they're typically separate and are only— you only get paid on royalties after you've already recouped any advance that you've made on a product. Now this isn't offered for all categories. And all goods. We usually see advances a lot more. We see this a lot in the book deal arena, which is another type of licensing really when you think about it. Well, that's not maybe frequently what we, we think of. We think of it separate as a book deal. But when you get a book deal and you get an advance, the publisher, whoever it is that's fronting the money to produce the book, will give you a lump of money. And they'll say, hey, when you turn in your manuscript, your final draft, we give you this check.. And then after that, you usually get a royalty on the percentage of the books that are sold. But here's the thing that a lot of people need to understand: you don't start getting your royalty checks, you will not see magic money coming into your, your bank account and to your post office, to your mailbox, until you have paid back or you've earned back all of the percentage that whatever the advance was. So in terms of thinking that this is a magic money tree that will you know, you'll never have to work again, you'll never have to hustle for clients, you know, you're going to be a free-range agent living in Bali with your digital, you know, laptop life with your pool cabana boy. Maybe not. Maybe, you know, hold the phone on buying and just living in sundresses from here on out. So because you want to make sure they have a clear understanding of what that stream of income is and what the, you know, how realistic are going to be our sales projections, especially So a lot of people who are successful in this space think of royalties as kind of an add-on or kind of a backup strategy, or in addition to their other ways that they're making money. And it's especially nice if you can kind of diversify so that in your portfolio you have licensing coming in in different product areas on different works and kind of expanding that in addition to other work that you might be getting for speaking, for teaching, for commission work, one-on-one client work, whatever else that is you do, maybe selling your own prints, what products, whatever, in your own category. Now some people prefer to have the one-off fee. So this is basically a flat fee that you get for doing a project. Now this can be really great if you don't think or not sure if the product is going to sell really well, because you may end up making more money here. Of course, if the product does sell well, then you could end up making less money. This is famously the bad business decision that some of the people originally made in the Star Wars movies is they decided to take a flat fee and not have merchandising rights in terms of having a royalty. Well, you can guess which would have been, you know, because people are still buying Star Wars lunchboxes, what would have been the better deal, which is taking the percentage even though upfront it maybe wasn't that impressive. Over time accruing month after month, year after year, quarter after quarter, those checks really can make a difference. So make sure you understand the difference between the two and what you're arguing with. Another kind of hybrid arrangement that you can do is you can get a one-off fee and then you can say, but for how many? What's the print run or the first, you know, run of production that you're going to have? And then after that, there will be— there they say that there needs to be a different negotiated fee for anything printed after that. And that's a nice way to kind of get your money locked in and test the waters, see how things are running and selling. And then if they're really going gangbusters, then make sure that you can negotiate and advocate for yourself for that higher fee that's fair to depict, you know, the market value of whatever the product is that you've worked on. So royalties can have a huge range. It's really dependent on what industry you're in and what product categories and who you are. Obviously, the bigger name that you have for yourself, the more market share or popular your goods are, or the proven track record that you have that when you sell, you sell this much. Every time you slap your name on something, this is how much you have. If you have a proven track record, then yeah, you're able to command higher margins. Okay. You know, I was once told when I was working on this relationship with somebody that, you know, and this was for a small like figurine accessories that was going in like a Hot Topic type of store. And I was pushing for closer to 10%. And the guy on the other side, my counterpart was like, look, nobody gets 10% unless they're Disney. So yeah, now that may or may not be true, but that was his perspective. So just know that, um, generally royalties can range anywhere from 4% to 30%. Um, prints and posters generally are around 10 to 15% in terms of how much your cut is. Licensed gadget cases or something else can be to more lower a little bit around 4 to 7%. Um, but remember, It's all negotiable. It's all a dance. So what will be most helpful for here is you need to talk to somebody who is selling this specific type of good, or someone who's working in the space that you are and has had a, you know, a recent licensing deal within the last few years in your space. And you want to find out what their royalty rate is. So, and someone should be okay with telling you that piece. They maybe don't have to disclose and won't disclose all the pieces of the contract, and Frankly, most contracts have a confidentiality provision in it, so they wouldn't be, um, but they could at least tell you the range or tell you what the rate is and maybe not disclose who the client was for. So, um, and that should be fine. Okay, um, but yeah, do your homework, ask around, don't accept the opening offer. Okay, um, if you do, if they say yes, okay, sure, um, and they're too eager and happy about it, that means that you lowballed them. It means that you gave too low of a number. You want a little bit of pushback. You want them to be, oh, I don't know, we'll have to check, or I'll I'll have to get approval from the AE or the brand manager or whoever. That's what you're looking for. You're looking for a little bit like, oh, this is making us squeamish. Good. It should be. That means you're probably getting a better and more fair deal. That probably means that on their budget for this project, um, they had a higher number on there and they were just going to see if you were going to be the sucker who would sign off the first, at the first offer they made you. Okay. Don't be that sucker. Okay. Hold out for more. You can do better. You're worth more. Okay, well, we already talked about kind of our practical tips, but I'm gonna just kind of review them real quick, and then we're gonna close her up. Okay, do your research, know your market. Okay, make a good pitch, and this means that when you're approaching someone else to work with, think about again from their perspective. Okay, if you had this job and were trying to secure a licensing deal, what would make your job easier? Recognizing that the person that you're working with and emailing with and corresponding may have a slightly different perspective in a job versus the person who's over the whole brand, or who's the marketing manager, or the media agency, or, um, you know, whoever else's brand. So they, they're, they're probably trying to cover their butt and make sure that they do a good job and bring in a good deal. And so what makes it easier for them? Will it be helpful to have these mock-ups? Will it help? Well, to have good titles underneath? What will make their job easier for them to look at your presentation, your proposal, and for them to be able to visualize and see what it is that you're asking, and then for them to be able to sell it to other superiors and stakeholders, okay? Remember that when you're working with the company, there are always other people, multiple people on the other side, usually that have to say yes. It is very rarely one person's decision. So what can you do to make it easier for them to do their job? Okay, people are lazy. They want the path of least resistance. They're like a river going through. When a river runs into a rock, it wants to go around it. So what can you do to make this an easy path, an easy river for them to flow down and to choose you and to want to partner with you? Okay, not to say that you have to roll over, but in terms of the, of the getting them interested and looking at your piece and looking at your content and getting them that, um, you want to make it easy. Don't send a pitch letter to someone that doesn't have information that's relevant to what they're working on and what they're looking at. That doesn't have links to your work and what you're talking about. Don't, don't make them ask for that stuff. Obviously, they're gonna want links, they're gonna want samples, they're gonna want other information, you know, your media kit, whatever it is that's applicable to your particular work. Okay, so do all that work, follow up, be persistent, give it 2 weeks and a month, but then ask again and ask if they got your email, ask if they're interested, if they have any more questions. It's good for them to see that you're serious about your proposal and that you have good follow-up. Okay. It doesn't mean that they hate your guts and they think you're awful. They could just be busy, okay? What does your inbox look like? Are you able to keep on top of anything? Okay, comme ci comme ça, they could be in the same boat as you. Make sure that you're connecting again on social media and, you know, and connecting on personal level. Don't excuse or rely on one to the peril of the other. They're both really good tools. And then again, make use of those resources that you can yourself. As I was doing research for this episode, I came across a couple other resources that might be helpful for you to dig into the world of licensing. And some of these are by people who— they're in this field, they've been and had successful licensing and moved into the space. And so I'm going to link some of that in the show notes. I know from personal experience that my friend Natalie, who's a really talented surface pattern designer, has done— has done and had a panel on this. I actually gave her some pointers about this, about some of the contract tech stuff. So I'll link some details to her too if you want to check her out, because she talks about this a fair amount in her work. So best of luck with all of your licensing. And remember that always the first step to getting your stuff licensed and to getting started with this is to make sure that you've locked down what your content is, that you have a good solid method of producing your art, that you have a— that you feel confident in your process, that you are being clean in your content creation, that you're being too close to someone else in terms of your inspiration and your influences. Remember the old adage that if you find yourself getting too close to someone else, you know, shut off the computer, take a step back, pull out the sketchbook, go analog, go look at other stuff, you know. If you're getting too close in the vector art world, then stop looking at vectors. Go look at architecture. Go look at shoe design. Go look at fashion museums. You know, go outside of your medium. To make sure that you're getting a wide range of influences and you're not getting too insular and too, you know, vertical in terms of your influences. So for deeper inspiration there, that's my tip. Um, okay guys, thanks so much for joining me on this episode. Um, if you haven't had a chance to subscribe or leave a rating or review, I would really appreciate that. Um, those help people find the podcast, they help them know that this podcast is legit and that it might have useful information for if they don't see a lot of those, then they think that maybe this is a fly-by-night or there's nothing good here or it's not valuable, which we would hate people to miss out on this valuable information for any of that. So I would really appreciate that. I read every single one of those and they really help me as a content creator who is putting on this podcast for free, which it costs me money every month to produce and to pay people to help me with it. But it's something I really believe in and I want to keep doing. But this, the support from you guys verbally, the verbal support means, means a whole lot. So I really appreciate it. Keep sharing about things. If there's things that touched you, that helped you, that propelled you forward on your business journey and you scaling and getting more legit and growing your business and feeling more confident as an entrepreneur, as a business owner, and not just a— you know how we hate our air quotes of just a— I'm just a shop owner, I'm just a maker, I just own my Etsy shop. Shop. Like, no, you are a business owner, okay? And we can own that language and step forward into that and claim, claim our power, okay? Claim our power, creative entrepreneurs. So if you can, you know, make sure you keep up the sharing, I really appreciate it. Make sure you check me out and connect me on Instagram if you're not. I'm @BrittanyRettell there. Links are in the show notes. And also make sure you're signed up for my email newsletter, okay? That's brittanyrettell.com/newsletter, and you'll get a free legal checklist when you sign up to get on that, okay? That's my one-pager power overview of what you need to do step by step to get your business legit, okay? And it tells you what things you need to be working on, what categories, how it all lines up. It's pretty, it's powerful, it gives you a good kick in the pants to get you get going, okay? If you're like, uh, legal headache, I just want to push it off on the edge of my sheet and keep on kicking that out one quarter at a time, let's, let's not. Let's just do it, get it done, and move on for that, okay? And thanks so much, guys, for being here. I have a sale coming up in my contract shop. So if you're interested in getting some do-it-yourself templates for yourself, make sure you're connected to me on Instagram and I'll be giving you more details about that. But I'm having a sale, a better than Black Friday sale, the first week of November. So stay tuned for more details if you're interested at getting some contracts at creativecontracts.com. Thanks so much, guys, and have a great week.