Today's Featured Artist: Michael Godard

Instaprints has expanded to 14 fulfillment centers in 5 countries!

Now shipping framed prints from Canada!   Need your order in time for Christmas? Check out our Holiday Shipping Deadlines.

Live from New York... it's Anne Geddes!   Watch Anne create one of her iconic holiday images live from her studio in NYC at 10:00 AM EST today.

Need your order in time for Christmas? Check out our Holiday Shipping Deadlines.

Now shipping framed prints from Australia!   Need your order in time for Christmas? Check out our Holiday Shipping Deadlines.

Wrap your gifts with a reusable holiday tote bag!   Need your order in time for Christmas? Check out our Holiday Shipping Deadlines.

 

Image Licensing: What does it mean to license your image?

You're an artist.   You're a photographer.   You've created a beautiful image.

More specifically - you've created a beautiful piece of artwork (e.g. a painting, a charcoal drawing, etc.) and then turned it into a digital image by taking a picture of the artwork with your digital camera or by having it professionally scanned on a flatbed scanner.

If you're a photographer, then your artwork is the image, by default, as soon as you created it.

The important point is - you've created a beautiful image... you are the sole owner of the image... and...

No one can use your image without your permission.

The "image licensing" industry exists because of that simple fact.   You own the copyrights to your own images, and no one else can use your images without your permission.

For example, if a t-shirt company wants to use one of your images on their t-shirts, that company has to contact you and license the image from you.

Here comes the big question... what does it mean to "license the image from you"?

Licensing an image means that you are giving someone permission to use your image to create a certain number of products during a certain time period and, most important, compensate you accordingly.

What does an image licensing agreement look like?

An image licensing agreement is simply a legal document that answers the following seven questions:

1.   Who is licensing the image (i.e. who is the buyer)?

2.   Which image is being licensed?

3.   What product is the buyer going to create using the image?

4.   How many of those products is the buyer allowed to create?

5.   During what time period is the buyer allowed to create those products?

6.   Where is the buyer allowed to sell those products?

7.   How much money is image owner (i.e. the seller) going receive as compensation for agreeing to this license?

For example, let's say that I'm the owner of a jigsaw puzzle company named ABC Puzzles, Inc.   We make jigsaw puzzles and sell them at Target and Walmart all over the world.   I want to use the image Stillwater Lift Bridge by Adam Mateo (shown above) to create a new puzzle.

In order to use Adam's image, I need to get Adam to agree to license the image to me.   The license might look like this:

1.   ABC Puzzles, Inc. is licensing an image from Adam Mateo.

2.   The image to be licensed is a 3600 pixel x 2400 pixel version of Stillwater Lift Bridge.

3.   ABC Puzzles, Inc. will use the image to create jigsaw puzzles that are 36" x 24" in size.

4.   ABC Puzzles, Inc. may create up to 100,000 puzzles using the specified image.

5.   This license expires after one year (i.e. ABC Puzzles must create all of the puzzles within one year of signing the licensing agreement).

6.   ABC Puzzles, Inc. will be selling the puzzles exclusively at Target and Walmart stores worldwide.

7.   Adam Mateo will be paid $5,000 for this license.

The agreement, above, answers all seven of the basic questions.   The buyer and the seller now know exactly what to expect when they sign this agreement.   ABC Puzzles is going to gain access to Adam's image for the purpose of creating up to 100,000 puzzles which they can then sell at Target stores and Walmart stores all over the world.   In return, Adam is going to receive $5,000 as compensation for agreeing to let ABC Puzzles use his image in this way.

All seven of the basic questions would need to be formally written into a contract (i.e. the licensing agreement) that would then be signed by both parties (i.e. ABC Puzzles and Adam Fierro).

Although the concept of a licensing agreement is fairly simple to understand, the final document that both parties end up signing is fairly complex because lawyers get involved and every little contractual detail needs to be addressed in writing.   For example, how and when will Adam get paid? Will he get paid the full $5,000 when he signs the agreement? Will he get half of the money up front with the other half at the end of the agreement? What rights does Adam have to audit the financial statements of ABC Company to ensure that they don't produce more than 100,000 puzzles using his image? What happens if the puzzles sell very well and ABC Puzzles wants to extend the license so that they can produce 500,000 puzzles?

All of those questions need to be answered in the licensing agreement, and as a result, the agreement ends up being fairly lengthy, full of legal language, and overwhelming for most people to understand.

This sounds complex.   Can I do this on my own?

Yes.   Absolutely.

Here's our royalty-free license: http://licensing.pixels.com/pdfdocuments/imagelicense.php?examplelicenseid=0

Open that document... copy all of the language... put it into your own document... and you're all set.

Now... when a buyer contacts you to inquire about licensing one of your images, all you have to do is send the buyer your document... ask him to sign it... ask him to send you payment in full... e-mail him your image... and you're done.

That's the entire business.   You're just selling your image with a licensing document to go along with it.   You can definitely do it on your own.

So - why don't most artists and photographers do this on their own?

Very few artists and photographers have the name recognition, sales and marketing expertise, and financial resources to handle their own image licensing.   You have to be honest with yourself and answer the following questions:

1. How are you going to find buyers who want to license your images? Do you have relationships with corporate buyers at companies such as Target, Victoria's Secret, Macy's, and Toys 'R Us who may want to use your images on physical products (i.e. puzzles, clothing, etc.)? Do you have relationships with webmasters and programmers who may want to use your images on their websites and in their mobile apps?

2. If you don't have relationships with buyers or potential buyers, do you have the resources to find them and market your images to them? Do you have a sales staff? Do you have a marketing strategy?

3. If you find an interested buyer, do you have the legal resources to draft your own licensing agreement?

4. Are you comfortable handling the price negotations on your own? How much should you charge to license your image for use on a t-shirt? How much should you charge to license your iamge for use in a video game?

If you don't know any buyers, don't have a realistic plan to reach any buyers, or aren't comfortable with your ability to negotiate and finalize a licensing agreement, then the answer is right in front of you - you should not handle your own image licensing.

You should outsource your licensing to a company that has expertise in finding buyers for you.

Very few artists and photographers handle their own image licensing - think of well-known names such as Anne Geddes, Thomas Kinkade, Andy Warhol, etc.   Those "artists" are actually companies unto themselves with sales staff, marketing experts, lawyers, etc.

For most artists and photographers, you are better off starting out with a licensing company such as Pixels.com to handle all of your licensing issues for you.   If, at some time, your career reaches a point where you think it's financially beneficial for you to handle image licensing on your own, then you can simply stop working with your image licensing partner and start handling everything on your own.

What is an image licensing company, and what are the benefits of working with one?

An image licensing company is a company that takes possession of your images, finds buyers for those images, and negotiates the terms of licensing agreement for you.

All that you have to do is provide the company with your images, agree in advance to the terms of their licensing agreements (e.g. $100 to allow a puzzle manufacturer to product 100,000 puzzles using your iamge), and then sit back and collect payments when they successfully license your images for you.

The most famous image licensing company is Getty Images - founded in 1995.

Let's walk through what a licensing company does for you, step by step.   We're going to use Getty Images as an example:

1.   The licensing company takes possession of your images and displays them to potential buyers.   Getty Images does that through their website, GettyImages.com.   Keep in mind - you're not transfering ownership of your images to the licensing company.   You still own the copyrights to all of your images.   You're just transferring your images to the licensing company so that they can display them to potential buyers and then, when a buyer makes a purchase, transfer the purchased images to the buyer.

One of the biggest benefits of working with a licensing company is that the licensing company, ideally, will have existing relationships with a huge audience of buyers.

Getty Images, for example, has been in business since 1995.   For many, many years - they were the "go to" source for licensing images.   Let's say that you were a writer for the Wall Street Journal and that you were writing an article about a tornado in Oklahoma.   If you wanted to include an image of a tornado along with the article, you would contact Getty Images, browse through their collection of tornado images, and then pay to license one of images for publication in your article.

Over the years, Getty built up a large audience of buyers.   Newspapers and magazines would license images from Getty to use in their publications.   Webmasters would license images from Getty to use on their websites, etc.

If you're an artist or photographer who wants to earn income by licensing your images, you have to put your images where the buyers go to buy.   Let's say that you captured the greatest image of a tornado that the world has ever seen.   If the image is just sitting on your personal website, what are the odds that the senior editor from the Wall Street Journal is going to find the image on your website... and then take it upon himself to contact you and spend his time and resources trying to negotiate a licensing contract with you?

That will never happen.   The senior editor is just going to go to Getty Images (or his favorite licensing company) and pick an image from there.   Why? It's easy.   There are lots of images to choose from.   He knows exactly what he's getting when he makes a purchase, and he doesn't have to spend his time negotiating with individual artists and photographers and signing a myriad of licensing agreements with different individuals.

It's the same reason that art buyers prefer to purchase their prints from Instaprints instead of buying them from individual artists and photographers.

2.   When you sign up to sell your images through an image licensing company, all you have to do is upload your images and then wait for them to sell your images and pay you.

The big benefit is that you don't have to handle any of the legal issues involved in licensing your images.   The licensing company takes care of everything for you.

The downside is that you don't have any say in how much you earn when your images are licensed.   The image licensing company tells you exactly how much you're going to earn when they license your images to buyers.   You have no say, at all.   If the licensing company tells you that you have to sell your images for use on jigsaw puzzles at a price of $0.01 per puzzle, then that's it.   You have to accept that price.   You have no control.   If you don't want to accept $0.01 per puzzle, then your only option is to not work with that particular licensing company.

Note - If you're reading this article, then you probably already know that Pixels.com is different.   We don't dictate prices to you.   You get to set your own prices.

3.   The licensing company collects payments from their buyers immediately (as soon as your image is purchased) and then sends your portion of the proceeds to you immediately, as well.   It's a nice arrangement.   The licensing company takes care of processing the buyer's credit card and then pays you immediately.

What are the downsides of working with an image licensing company?

There's one huge downside:

When you sign up to sell your images through an image licensing company, the licensing company is going to tell you exactly how much you'll earn on each each particular type of sale.   You have absolutely no control over your earnings, at all.

This is, without a doubt, the most important information you need to consider before agreeing to sell your images through an image licensing company.

Image licensing companies are run like dictatorships.   The licensing company sets the price for each image license, and the licensing company sets the percentage of that sale price that they'll pay to you.   You are not involved in any price negotations, at all.   The licensing company sets all prices - take them, or leave them.

If the licensing company tells you that you have to sell your images for use on jigsaw puzzles at a price of $0.01 per puzzle, then that's it.   You have to accept that price.   You have no control.   If you don't want to accept $0.01 per puzzle, then your only option is to not work with that particular licensing company.

The terms of the licensing agreements vary wildly from one company to the next.   In the next sections, we're going to analyze these terms of these agreements, in detail, for some of the most prominent image licensing companies.

Royalty-Free Images Vs. Rights-Managed Images

You'll see these two terms all the time when you're browsing the websites of various image licensing companies: "royalty free" and "rights managed".

Each company defines these terms slightly different, but in general, here is what they mean:

Royalty Free Images

If you purchase a royalty free image, you pay one price for unlimited use of the image with very few restrictions.   This means that you can put the image on the cover of 5 million books, if you want to.   You just pay that one price, up front, and the image is yours for virtually unlimited use until the end of time.

Here's the exact language from Getty Images' website regarding royalty free images:

"Section #2.1 - Getty Images grants to Licensee (i.e the buyer) a perpetual, non-exclusive, non-transferable, non-sublicensable, worldwide right to Reproduce the Licensed Material (i.e. the purchase image) an unlimited number of times in any and all media for all purposes other than those uses prohibited under Section 3 of this Agreement."

Source: http://www.gettyimages.com/Corporate/LicenseAgreements.aspx#RF

What does that mean? The buyer pays a one-time fee for the image (e.g. $100), and the buyer can then use the image to produce an unlimited number of products and sell them worldwide until the end of time.

That may be hard to believe for many artists and photographers, but that's exactly what it means.

Now - the Getty Images' language does make reference to "prohibited uses".   Here are those prohibited uses:

1.   The buyer can not attempt to resell the image, itself (i.e. upload it to another image licensing website).

2.   The buyer can not attempt to resell the image as "print on demand" products via websites such as FineArtAmerica.com, Cafepress.com, etc.

3.   The buyer can not imply that he/she is the owner of the image.

4.   The buyer can not use the image in a corporate logo.

5.   The buyer can not use the image in a way that would be unflattering to the seller (i.e. pornographic uses, etc.).

Source: http://www.gettyimages.com/Corporate/LicenseAgreements.aspx#RF

Those prohibited uses are definitely important.   As a result of those restrictions, the buyer can't take your image and use it to compete against you by reselling it on other image licensing websites or print-on-demand websites.   However, nothing stops the buyer from producing 100,000+ canvas prints, in bulk, and selling them at Walmart, for example.

However, just to be clear, when a buyer purchases a "royalty free" image from Getty Images, nothing stops the buyer from producing 1,000+ canvas prints via his local frame shop and installing them at a Las Vegas hotel... or producing 500,000+ greeting cards and selling them a gift shops around the world.

The buyer has (almost) unrestricted rights to use your image until the end of time.

How much will you get paid by Getty Images in exchange for allowing someone to use your image to produce unlimited products until the end of time?

$120

Most of the larger royalty-free images (i.e. larger than 2400 pixels x 3600 pixels) sell for about $600 on Getty Images, and Getty pays their artists 20% of that.   Here is a screen capture from Getty Images for a royalty free image (Silhoutte of Family on Beach by Yasuhide Fumoto):

So - when your image sells for $600, you get 20% of that, which is $120.

Is that a fair price to allow someone to use your image to produce unlimited products until the end of time? Getty Images thinks so, and that's all that matters.   Obviously, many artists and photographers think so, too - that's why they sell their images through Getty Images.

The difficult part about working with Getty Images (and most image licensing companies) is that you have no control over that price.   It's take it or leave it.

Before we go too far down into the rabbit hole of "who should control prices?... what's right?... what's wrong?", let's discuss rights-managed images.   Don't worry - we'll go into the rabbit hole a little further down this page.

Rights Managed Images

Now that we've discussed royalty-free images in great detail, we'll move a little quicker through rights-managed images.   As the name implies, rights managed images are images in which the seller restricts how, when, and where the buyer can use the purchased image.   The buyer's rights to the image are being managed by the seller.   With a royalty-free image, the buyer can use the image almost anywhere until the end of time.   With a rights-managed image, the licensing agreement specifically states how, when, and where the buyer can use the image.

Let's jump right into another example.   Take a look at this rights-managed image on Getty Images:

http://www.gettyimages.com/detail/photo/costa-del-sol-sunset-high-res-stock-photography/158461456

As you can see from the two arrows, this is a rights-managed image, and you (the buyer) can't see a price for the image until you specify how you intend to use it.

Let's go ahead and walk through the steps of specifying how you intend to use the image.   The first step is to identify the type of product that you'll be creating with the image:

Step #1: Select the General Product Category

There are several broad categories to choose from to get started.   Once you make your selection, you'll then filter down to more specific categories as seen in Step #2, below:

Step #2: Select the Specific Product

In this example, we've chosen to use the image on the cover of a calendar that we intended to sell as a commercial product.   We could sell the calendars via our own website, through retail channels such as Walmart, etc.   It's completely up to us (the buyer).

At this point, Getty Images starts getting really specific.   They want to know more information about exactly how you intend to use the image.

Step #3: Enter Additional Information About the Product

In the screen capture, above, we've specified that we intend to use the image as a full-page on the cover of the calendar, that we intend to produce up to 50,000 calendars, and that we intend to produce the calendars during a one-year period starting on 02/23/2014.

Step #4: Select Where You Intend to Sell the Products

In the screen capture, above, we've indicated that we intend to sell the products worldwide.   At this point, we click on the green "Get Price" button, and here's what we get:

Step #5: Purchase The License

After all that, you're ready to purchase the image license.   The total price is $1,140.

Remember - the photographer only gets 20% of that.   In this case, that's $228.

So - the photographer (i.e. the seller) received $228 in exchange for signing a licensing agreement that allows the buyer to use the purchased image as the cover photo on up to 50,000 calendars which will be resold worldwide.

$228 divided by 50,000 calendars is $0.005 / per calendar (1/2 of a penny per calendar).

Royalty Free vs. Rights Managed

So there you have it.   If you sell an image royalty-free, you're allowing the buyer to use the image forever with almost no restrictions.   If you sell an image rights-managed, then you get to control how, when, and where the image is used.

Which option is better?

There is no answer to that question.

That's like asking, what's the right price for a given license? There is no right answer to that question, either.   If the buyer is willing to pay a certain price and you're happy to sell at that price, then that's the right price.   Some sellers might want $5,000 to license an image royalty free.   Others might be happy to get $0.50.

If you're comfortable selling someone a license to use your image forever with very little restrictions, then royalty-free will work just fine for you.

If the thought of giving someone a royalty-free license freaks you out, then you'll be much happier selling rights-managed licenses.

There is no right answer, in general.   There is only a right answer for individual buyers and sellers.

Are royalty-free and rights-managed the only types of licenses available?

No.   The company (or person) who drafts the licensing agreement can create any sort of licensing terms that they want to.

For example, you could create a licensing agreement that says:

"The buyer can create as many products as desired using the purchased image for up to one year."

Is that a royalty free license? Sort of.   The products are unrestricted, but the time limit is not.   The agreement has a one-year time restriction on it.   This isn't a pure royalty-free license, and it's not really a rights-managed license, either.   It's more of a hybrid.

You could put together a licensing agreement that allows the buyer to produce two different products using the same license (e.g. baseball hats and bed sheets).

You could put together a licensing agreement that allows the buyer to produce a certain number of products in a given year and, if the buyers chooses to, automatically extend the license for a second year at a lower price.

The point is - a licensing agreement is a contract.   It's just a piece of paper with a lot of rules on it for the buyer and the seller.

Whomever writes the licensing agreement can put in whatever language they want to.   Royalty-free and rights-managed are just very broad terms to describe whether or not the buyer has unrestricted use of the image once he makes his purchase.

The two terms (royalty-free and rights-managed) are used very loosely by lots of image licensing companies.   In the sections, below, we're going to look at some of the most promiment licensing companies to see exactly how they do business and how they pay their artists and photographers.

GettyImages.com and Shutterstock.com

GettyImages.com and Shutterstock.com represent two extremes of the image licensing world.

Getty Images

We've already discussed Getty Images pretty extensively, above.   They have two types of licenses: royalty-free and rights-managed.   For a royalty-free image at a fairly large size (e.g. 3600 pixels x 2400 pixels), the price is roughtly $600.   The seller receives 20% of that.   So, for the sale of a fairly large royalty-free image, the seller receives about $120.

For a rights-managed image, the price varies based on the various parameters of the licensing agreement (i.e. what product is being created, where will it be sold, etc.) However, in general, the price per product is roughly $0.02 - $0.05 per product.

If you'd like to verify that statement, you can play around with the following page on GettyImages.com:

http://www.gettyimages.com/detail/photo/costa-del-sol-sunset-high-res-stock-photography/158461456#

Go ahead and change the product and quantity, and then watch how the price changes.

When you see the final price, divide that by the quantity, and that's your price per product.

Again - in general, the price per product is about $0.02 - $0.05 depending on the product.

The seller keeps 20% of that.   So - the seller earns about $0.004 - $0.01 per product.

ShutterStock.com

Getty Images was the king of image licensing until ShutterStock came along... and then the whole world changed.

Shutterstock.com was started by a single photographer in New York City who uploaded 30,000 of his images to launch the site and then offered them for sale at extremely low prices.

How low?

The average image on Shutterstock sells for $2.43.

Source: Shutterstock 2013 Financial Results

For years, Getty Images had been selling royalty-free images for $600+ each, and then along came Shutterstock with a new price point: $2.43.

That was a game changer.   Take a look at Shutterstock's pricing structure, below.

Shutterstock has two different ways to pay for images on their site: pay-as-you-go and subscription.   With pay-as-you-go, you'll end up paying about $9.16 per image ($229 / 25 images).   With a subscription, you could pay as low as $0.28 per image ($2,559 / 9,125 images).   The 9,125 comes from multiplying 25 images (the daily subscription limit) x 365 days.

On average, Shutterstock gets $2.43 per image.   How do we know that? Shutterstock is a public company.   That means that their stock is traded on the NASDAQ under the stock symbol SSTK, and it also means that, every three months, they have to disclose financial information about how well their business is doing so that investors can make informed decisions about whether to buy or sell the stock.   In their last financial disclosure, they stated that the average price of an image sold on their website was $2.43.   You can read the full report on the following page:

http://www.marketwatch.com/story/shutterstock-reports-fourth-quarter-and-full-year-2013-financial-results-2014-02-20

Now - if you look at the screen capture, above, you'll notice that Shutterstock has two different types of licenses: standard licenses and enhanced licences.

With a standard license, Shutterstock allows buyers to display their purchased images on websites and also use them to produce physical goods that are NOT for resale (i.e. promotional brochures, advertisements, etc.)

If you want to produce physical goods that you intend to resell, then you need to purchase an "enhanced license".

Confused? That's OK.   It's a little confusing.   Essentially - a standard license is for web use and for promotional printed materials (i.e. business cards, brochures, flyers, etc.) An enhanced license is for products that will be sold for profit.

Shutterstock describes the two different types of licenses here:

http://www.shutterstock.com/license_comparison.mhtml?hsb=1

Just like Getty Images, Shutterstock prohibits buyers from reselling their images on other licensing sites and from using their images to produce "print on demand" goods using sites like FineArtAmerica.com, Cafepress.com, etc.

The creation of Shutterstock in 2004 is important for two primary reasons:

1.   Shutterstock dramatically lowered the price point for the image licensing industry, in general.

2.   Shutterstock created a new type of license that is well suited for webmasters and graphic designers.

Regarding #2, Shutterstock recognized that the majority of their buyers weren't actually buying images for the purpose of creating products for resale (i.e. baseball hats, calendars, clocks, etc.) Most buyers were webmasters and graphic designers who were simply using the images for their websites, advertisements, and promotional literature.

Shutterstock created a license (i.e. their "standard license") that is attractive to those types of buyers and set a price point that was irresistibly low.

The result - a huge success story.

http://www.marketwatch.com/investing/stock/sstk

Shutterstock (the company) is now worth $3.5 billion dollars.   That's great news for Shutterstock.   Is it great news for the artists and photographers who upload their images to Shutterstock? Maybe.   Maybe not.   We'll discuss that down below.

Shutterstock dramatically changed the industry.   Now - buying an image for use on the web and in protional materials only costs about $2.43.   Buying an image to produce an unlimited number of products (i.e. Shutterstock's enhanced license) only costs about $68.

Compare those numbers to Getty Images.   It's not even close.   A buyer has to pay $600 to purchase a fairly large image from Getty Images for use on a webiste.   The same buyer can buy a similar image from Shutterstock for $2.43.

A buyer would have to pay $1,500+ to Getty Images in order to use one of their images to create one specific product for resale in a limited quantity and for a specified period of time.   The same buyer could pay $68 to Shutterstock and use the image on an unlimited number of products until the end of time.

Which option would you choose?

What other licensing companies are out there?

There are hundreds of them.

Here are some examples: BigStockPhoto.com, iStockPhoto.com, Fotolia.com, Dreamstime.com, FreeDigitalPhotos.com, etc.

In general, most of these companies are in a race to the bottom in terms of prices.

If you thought that Shutterstock prices were low, take a look at Fotolia.com (see below).   They have 27+ million images, and their royalty-free prices start at only $0.74 per image:

With prices so low, is it even worth it for me to license my images?

That's a great question.   The current state of the image licensing world definitely looks bleak.

There was a time when musicians could earn millions of dollars selling CDs, cassettes, and (back in the day) records.   Those days are gone.   What happened to musicians is exactly what's happening to artists and photographers.   An online marketplace (i.e. iTunes) convinced all of the musicians in the world that their songs were only worth $0.99 and that they only deserved 66% of the sale price as profit.

For artists and photographers, an online marketplace (i.e. Shutterstock) has convinced them that their images are only worth a few dollars each and that, on each sale, they only deserve 20% of the profit.

It's impossible to turn back the hands of time.   The days of licensing an image for $600+ for use on a website are long, long gone.

It's not all terrible news, though.   There are still lots of ways for musicians to earn income.   Instead of relying on CD sales as primary source of income, musicans are much more likely now to license their music for use in movies, TV shows, video games, and commercials.

Here's a perfect example.   Watch this TV commercial for Pixels.com, and listen to the soft music in the background:

We had to license that music.   We bought the license from a website called KillerTracks.com.   In order to play the music in our video on the web (i.e. YouTube.com), we had to pay a few hundred dollars for a "royalty free" license.   With that license, we're allowed the play the music in the video on the web... forever.

However, we also run this commercial on TV.   In order to play the music in the video on TV, we had to buy an "extended license".   It costs us $1,000 for an extended license that lasts three months.   If we wanted to run the commercial on TV for an entire year, we would have to purchase four licenses and pay a total of $4,000.

What's the point of this discussion? There is a musician somewhere in the world who earns a cut of $1,000 every three months as long as we keep running this commercial on TV.

There are music licensing websites that are much less expensive than KillerTracks.com.   We could have bought the rights to some songs for $5 (literally).   However, KillerTracks.com is known for having "the best of the best" when it comes to music, and as a result, they're able to sell their music at a premium compared to the lower-end sites with lower-quality music.

Who's going to enforce the terms of my licenses?

No one is going to actively do it for you.   Shutterstock.com, for example, sells 8 million licenses per month for $2.46 each - with 70% of those licenses sold outside of the United States.   It's humanly impossible for Shutterstock to actively audit 8 million buyers per month all over the world to make sure that the buyers are using the images correctly.

So - how can you make sure that a buyer from Taiwan isn't using your image to produce millions of t-shirts each year?   The answer: you can't.

Image licensing involves a great deal of trust.   Once you sell your image to a buyer, there is absolutely no way to guarantee that the buyer only uses the image for the purposes that are specified in the license.   For example, if you sell a license that allows a buyer to use one of your images on the cover of 50,000 books, you have to trust that the buyer won't use the image to produce 10 million books... or use it in a TV commercial... or use it in a full-page print ad in a magazine.

You would have no idea that the buyer was doing any of those things unless you happened to catch him red-handed (e.g. by seeing your image in a TV commercial).

If this has you very worried (as it should), keep this in mind.   Per the terms of most licensing agreements (including the Pixels.com licensing agreements), you have the right to audit the buyer if you suspect that the buyer isn't complying with the terms of the licensing agreement.   Keep in mind, though - auditing can be a complex and expensive process.   You have to hire a financial auditor to show up at the buyer's office... go through his financial records... go through his website files... tour his production facility... interview his production managers... interview his third-party fulfillment partners... audit their financials... etc.   If the auditor determines that the buyer was deceiving you and using your image in a way that violate the terms of the licensing agreement, then you are entitled to additional royalties and damages.   If the auditor doesn't find anything dishonest going on, then you just paid a lot of money for an audit and have a very unhappy buyer on your hands.

If you don't trust your buyers to do the right thing, then image licensing probably isn't for you.   However, before you write off the whole licensing industry, consider the following:

1.   There are lots of honest who do the right thing because they WANT to be honest.

2.   There are lots of honest buyers who do the right thing because they NEED to be honest.

The "NEED TOs" are the most interesting to discuss.   Lots of buyers NEED to purchase image licenses and use the images exactly as specified by the licenses because there are huge legal implications if they don't.

For example, let's say that you're a buyer who's putting together a 30-second TV commercial and that you want to use a few sunset images in the commercial.   You could go to Google Images and grab lots of beautiful sunset images for free, so why bother paying to license images from Pixels.com, Getty Images, Shutterstock, or any other image licensing company?   The answer is simple.   If you steal images from Google Images and put them in a TV commercial... and the owners of the images see your commercial... then you're in big trouble.   The image owners will sue you... and win... and then you'll probably lose your job at the ad agency that you're working for.

What about the buyers who WANT TO do the right thing?

You can go to YouTube right now... listen to "Start Me Up" by the Rolling Stones... and download an MP3 of that song to your computer... for free:

Here's the video: https://www.youtube.com/watch?v=SGyOaCXr8Lw

Here's a website that will convert the video into a free MP3 for your iPod: http://www.youtube-mp3.org/

If anyone can download the MP3 for free, then how does iTunes sell million and millions of MP3s for $0.99 each day?

The answer is simple.   Lots of buyers WANT to do the right thing.   Even though MP3s can be downloaded for free all over the internet, millions of people still choose to pay for them each day because that's the right thing to do.

Now... if you're going to use "Start Me Up" in a TV commercial... it's not a matter of wanting to do the right thing... you NEED to do the right thing.   There is absolutely no way that you're going to try to sneak that song into a TV commercial with proper authorization.   You need to contact the Rolling Stones and get them to sell you a license for the song.

Microsoft did just that when they launched Windows 95 back in 1995:

How much did Microsoft pay the Rolling Stones for a six-month license to use "Start Me Up" in that TV commercial?   Millions.

With image licensing, you can't fixate on the buyers who are going to misuse your images... because if you do, you'll never experience the positive sides of image licensing.   You have to focus on the income that you'll be generating from all of the legitimate buyers who WANT to do the right thing and NEED to do the right thing.

There are lots and lots of buyers who WANT to and NEED to license images for a variety of purposes.

A puzzle manufacturer that's producing 500,000 new puzzles for Walmart NEEDS to do the right thing and purchase an image license from you because Walmart requires it... and because you'll sue him for royalties and damages if he doesn't.

An advertising agency that's producing full-page print ads NEEDS to do the right thing and license the image from you.   A book publisher that wants to use your image on the cover of a book NEEDS to do the right thing and license the image from you.   A production company that wants to use your image in a TV commercial NEEDS to do the right thing and license the image from you.   An interior designer who wants to use your image to produce 500 framed prints for a Las Vegas hotel NEEDS to do the right thing and license the image from you.

If you're interested in generating additional income by working with these types of buyers, then image licensing might be for you.   If not, that's perfectly OK.   This is just an additional sales tool for those artists and photographers who are interested in giving it a shot.

Why am I reading about image licensing on a "print on demand" website?

If you've read this far, this should come as no surprise... we're getting into the image licensing business.

For almost a decade, our sellers have been asking us to do this, and the time is finally here.

Don't worry - the licensing business is being kept separate from the print business.   Here is the URL for the licensing business:

http://licensing.pixels.com

With our licensing business, we're going to do something truly unique.

You, the seller, get to set your own prices for each available license.

If you want to sell a license for one of your images for $10, that's great! If you want to sell it for $1,000, that's great, too!

Our system takes your price and then marks it up by 30%.   So - if your price is $100, we're going to sell it to a buyer for $130.

When the buyer purchases your image for $130, you'll earn your entire $100 that you specified, and we keep the other $30.   The end is result is that you're keeping 77% of every sale.

That's much, much, much better than the low prices and low percentages that you'll receive through GettyImages.com, Shutterstock.com, and others.

We're offering two types of licenses.

Our "royalty free license" is for online use and for promotional products that are NOT offered for resale (i.e. business cards, brochures, flyers, etc.) This license has no time restriction or quantity restriction.   Keep in mind, though, that whatever products are created can not be offered for resale.   Also - this license prevents the buyer from offering the image for sale on other licensing sites or using the image to sell "print on demand" products.   This prevents the buyer from competing against you.

Our "rights managed licenses" are for advertisements (i.e. banner ads, TV commercials) and products that are intended for resale (i.e. baseball hats, blankets, magnets, calendar, CDs, video games, mobile apps, etc.) If a buyer wants to purchase a rights-managed license, he has to specify which product he will be creating with your image and how many products he intendes to create.   Rights-managed licenses have a two year time restriction, by default.   Just like with the royalty free license, the buyer is prohibited from offering the image for sale on other licensing sites or using the image to sell "print on demand" products.

Do you want to give it a try?

If you've hesitated to try image licensing in the past due to the low prices and low commissions that are dicated to you on other image licensing sites, here's your chance to try something new.

Click here to turn on the image licensing features whenever you're ready!