Preparation
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As an artist, you may be wondering how you can turn your art into an income and reach more customers. One way to create new revenue streams for your business is to license your art, but what does this mean and how do you get started? “Art licensing is when an artist essentially rents their work to another company to reproduce it,” explains Laura C. George, business consultant for fine artists. “Typically, they will print the licensed artwork on products like pillow cases or jigsaw puzzles and sell those products to the public.” Per the licensing agreement, the artist earns a percentage-based royalty every time a product that has their art on it is purchased.
If you’re unsure about art licensing, here’s everything you need to know about the process from start to finish as explained by our financial business expert.
There are several ways that they can license their artwork—oftentimes, these deals present themselves as collaborative opportunities. Small businesses like craft breweries might want to use an artist’s work on their products, or artists can work with manufacturers who can make and sell products with their artwork on it online and in retail stores.
“Artists also can work with print-on-demand companies to have their work printed on products without the obligation that the company helps the artist sell the products,” says George. The benefit of this business model is that artists are not responsible for making and selling physical inventory. All they have to do is create the artwork for the products; manufacturers handle all the rest.
The licensing deal will vary by company, so it’s important that you, as the creator, understand the terms of it. “While one artist may license work they’ve already created, another artist may create artwork to the specifications of the company,” George says. “I’ve seen all sorts of licensing deals out in the world. It doesn’t always look the same and no artist should feel stuck operating in one style of licensing deal if they don’t want to.”
Some of the more well-known and popular sites for licensing your art include CafePress, Fine Art America, and Art.com. Licensing sites like these take care of manufacturing, shipping, sales tax, and customer service for the physical products that are sold and give the artist a commission or royalty for the licensing of their art. Other sites like Gooten serve as an on-demand drop-shipping supplier for your business but you may still be on the hook for things like sales tax. So, when in doubt about your responsibility for taxes and business permits, you’ll want to ask your tax advisor or state small business administration for information.
As a word of caution, artists should also be aware of exclusivity clauses in their licensing deal. Companies may not want you to sell any of your designs that you’ve licensed to them to competitors. “Exclusivity comes in different degrees,” explains George. “A company may want the exclusive right to use this one image on stationery or they’ll want to use it on greeting cards…. but not on notebooks or envelopes.” But, she says, exclusivity is not something to be afraid of—it just determines how many ways you can make money from your art.
Licensing your art makes it easy to gain more customers and generate sales. “Traditional art licensing deals allow artists to receive a royalty payment, typically doled out quarterly, for the products with their art on them that have sold,” George says. “This means an artist can do some upfront work to arrange the licensing deal, and then get recurring income with little to no follow-up work, sometimes, for years.” It’s quite possible to earn thousands of dollars a year from one piece of art with the right licensing deal.
