All rights clause/buyout question

[erick]

If a major record label hires you to design a poster, and then they decide they want to do a buyout of the art so they can use for stickers, cd promos, etc., how do you come up with a buyout fee? What are some of the things to take into consideration to come up with a fair price? and, (this is kind of a dumb question) can you still use the same image as a portfolio piece?

[Dusty!]

Write in the contract that you maintain the right to use the art in promotional material (also in competitions, books if you enter them)

Really depends on what you where payed. 1/2 - 1/4th of the total.... Did you know there was a possibility of this upfront?

Usually what we do is that if there is an expected buy out, for a book cover lets say, its alot more lucrative for you to charge smaller up front and then higher when they want to buy out for certain countries....

[Dusty!]

What i was trying to say is...

If you get yourself into a situation in the begining where there is a possible buyout down the line, you can stand to make a bit more money by softening the price up front but charging higher for the buyouts.

[erick]

what if they're talking about a buyout from the very beggining?


thanks dusty!

[Dusty!]

have you set any of the prices at all yet?

And are the 100% going to buy everything, or is it just a possability?

[Dusty!]

It sounds like you are anticipating not being able to use it for yourself, as stock or something else, which is fine, but you dont want to give up complete rights to them. You want to include in the contract specifically what they can use it for (stickers, shirts etc). If its a major, i would go 50-75 above what you originally wanted to charge.

[erick]

I set a design fee, and a printing fee.
The buyout is a possibility I guess... depending on the price. If they don't go for it, they still want to use the image for other stuff like stickers, promos, etc.
If that was the case, what's a good formula for a licensing fee?

[erick]

that makes sense... so even if they do a buyout, there's still restrictions as to what they can use the art for?

It sounds like you are anticipating not being able to use it for yourself, as stock or something else, which is fine, but you dont want to give up complete rights to them. You want to include in the contract specifically what they can use it for (stickers, shirts etc). If its a major, i would go 50-75 above what you originally wanted to charge.

[Dusty!]

I would really suggest against just letting them totally buy out the piece. I think it would be smarter to let them buy the rights to use for specific purposes, which should be fine with them, then if they want to they can come back and buy the rights again.

I dont know what the original design fee is but i'll give you an example for book covers.

Design fee: $3000 (us rights only, harcover only)
Canadian rights: $500
UK rights: $500
Paperback: $1000

15% - 25% for each application i would think is fine but again, it really depends on what the original fee was.... If you only charged $500 for the design, you might get away with charging a little higher for the sticker rights for example.

[erick]

I see...
yeah, that's how much I charged. I'll propose $3000 for a buyout fee (they're asking for one), and I'll give the option to do 25% licensing fee for each item.

Thanks so much man... beers are on me!