Ask Greg: What's the Difference Between Selling and Licensing Your Work?
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Recently I held a webinar on contracts during which I made passing reference to the difference between selling and licensing one's work. Afterwards, one of the attendees emailed me asking "so what actually IS the difference between selling your work and licensing it?" It's one of those questions that on the surface feels like it should have an obvious answer but the more I thought about it, the more I realized it's kind of like home equity or taxes (or really anything to do with money)... it's something that as an adult you vaguely understand, but you're honestly not sure and you've gone too long to admit it.
So what is the difference between selling your work and licensing it? Well it's all about who owns the works and how the owner exercises his or her rights. Selling your work means that you are relinquishing all rights and title to the work: you cannot use it again and you cannot profit from it again. It's out of your hands. You are no longer the owner. Conversely, licensing means that you still retain ownership as well as most of your rights, but you are granting (hopefully in exchange for money or other valuable goods/services) another party the right to use your work in a limited capacity for a limited time.
What are the rights of ownership? For works of art, the U.S. Copyright Act (17. U.S.C. Section 106) conveys six rights on a copyright owner. Those rights are:
The right to reproduce or make copies of a work
The right to make derivative works based on the work
The right to sell, lend, or rent the work
The right to publicly display the work
The right to publicly perform the work (if appropriate)
The right to publicly perform sound recordings of the work (if appropriate)
Selling the work means that while you are still the creator and can be credited as such (make sure that every time you sell your work, the contract affirmatively states that you are to be credited), you cannot exercise any of those rights. Licensing the work means you can because you're still the owner. What does that look like in real life?
Here's an example: Let's say you're an illustrator and a client hires you to design a new illustration for her business website.
Selling the Work
If you were to sell the copyright of the illustration to the client, it means that you can use the illustration in your portfolio and show the world "hey I did this and I can do something similar for you!" But you can't use, copy, resell, or license that particular piece. You can't alter it or make derivatives of it. It's a one and done kind of deal. Meanwhile, the client, as the copyright holder, can now exercise any of those six rights mentioned above. She can make copies of the illustration, hire another designer to monkey with it and alter it. She can resell the illustration or use it for projects other than her business. She can even repurpose it to be her business logo. She can do anything she wants with it. It's hers.
Licensing the Work
On the other hand, if you were to license the illustration, as the owner you would only give up the rights you want and you could place restrictions on how the client could use it. Not only could you deny her the right to resell, reuse, or alter the work, depending on specifics of the job and the power dynamics at play (which you should always consider), the work might not even be granted to her on an exclusive basis... in other words, you could license the illustration simultaneously to other parties. You could prevent each party from using the illustration in ways or for projects you don't approve of. In short, you have a lot more authority to dictate how a party can use your work.
Complications?
All of that above seems pretty cut and dried, and for the most part it is. But sometimes complications arise, particularly around works of art where there’s a physical product at the end of all that work, like paintings or furniture. You can sell the physical items to a buyer while still retaining the copyright, but a lot of artists aren’t aware of that. For example, if a client hires you to paint a portrait of his family, he’s not just paying for the right to pose for hours on end, he wants the physical painting to hang in his foyer that he’ll use to impress his friends and valuable business clients. But just because you’re parting with the product doesn’t mean you’re allowing the buyer to take possession over the intellectual property.
Remember always that copyright doesn’t usually deal with physical products. It is an intangible asset that carries monetary value separate and apart from the physical product it may be attached to. You are not obligated to sell your copyright just because you’re also parting from the product.
Choosing whether to sell or license the copyright to your work will depend significantly on the type of work you do, the kind of business you operate, the clients you deal with, the norms and customs of your industry, and the amount of authority you have to make those decisions. You can also sometimes run into issues with contract construction and work-for-hire that muddy the water regarding copyright ownership, so whenever you start working for a client, make sure you specify clearly in writing whether the work is being sold or licensed. And if you do license your work, be as thorough as possible about what rights you are relinquishing and which you are retaining: things like length of use, purpose of use, the amount of your work that can be used, any fees or royalties you are owed, credit, exclusivity, modifications that are allowed should be addressed.
And as always, if you have a question, no matter how simple you think it is, you can always call me. I'd rather you ask what you think is a dumb question (it almost always isn't) than get into trouble down the road.
