Techniques and Tips

The Perils of Art Licensing, and Other Legal Matters: 5 Tips on Art Business

The Perils of Art Licensing, and Other Legal Matters: 5 Tips on Art Business

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I’ve been in the business of “art” for so many years, and I’ve learned a lot of things–some good, some not so good–along the way. They say that you must pay for an education, and I’ve paid dearly. And if the outgo of finances equals the level of education, I am clearly a PHD in the world of art.

While I have to admit, I make a fairly decent income being an artist, the term starving artist exists for a reason. This isn’t an easy field in which to make a consistent income and to make a living simply selling my artwork is unrealistic. When I was doing a lot of commissioned work, it was either feast or famine, and few buyers wanted to pay what the art was really worth. An artist could never charge by the hour for a project, for we are our own worst critics, and we will put in hundreds of extra hours just to perfect an eye. I’ve had to be as creative with my money-making ideas as I have with my artwork, and supplement my income by also teaching art classes, writing books, and owning an art supply retail business in my studio. Like any other entrepreneur, I’ve had some losses. It just goes with the territory.

Others often ask me about the legalities regarding the business of being an artist. Believe me, there are a bunch! While I can’t give out professional legal advice for obvious reasons, I can tell you some of the things I’ve learned along the way. Once you’ve read this, my biggest recommendation is that you find a business attorney and a tax consultant to take it from there.

There are five big things you should understand if you do art for a business. Ignore any one of these, and you may end up in some legal hot water.

1. Tax Tips for Artists

You must pay taxes on the income you receive from selling your work. This means keeping good records and having receipts. I also recommend having a professional accountant and tax specialist do your taxes. A professional will advise you about the many deductions for artists.

2. Contracts for Artists

I recommend always using a contract when agreeing to create commissioned pieces. To be blunt, it’s easy to get screwed without one. It’s so important to have everything your client expects from the work clearly spelled out in black and white, and a contract is the place for these important details:

  • Artwork description (Portrait, landscape, pet portrait, etc.)
  • Medium (Graphite, oil painting, pastel, etc.)
  • Size and dimensions (24×30, vertical format, etc.)
  • Type of material (Stretched canvas, suede board, 100% cotton bristol, etc.)
  • Special effects (Changing clothing color, adding a different background, combining photos, etc… Be specific!)
  • Purchase price (Don’t undersell yourself. People place value on something by the amount they pay. A $50 drawing will end up in a closet or worse. A $500 drawing gets framed and becomes an heirloom!)
  • Amount of deposit (Most artists will take 50% up front, but that’s negotiable.)
  • Amount due at completion.
  • Completion date (Give yourself time to do your best work. Many clients will want it overnight.)
  • Revision clause (This is where you give your client the chance to make changes or corrections in the piece. I only give them one chance, then they take it or leave it. If they don’t want the piece upon completion, I keep the art and the deposit. I also then can use the art any way I want.)
  • Signatures (Two signatures over the age of 18 constitutes a legally binding contract.)

Make three copies of your signed contract. One for your client, one for you, and one for your taxes. Many people ask what they should charge for their art, and I won’t answer this question. I have no right to tell others what their time investment is worth, or what their talent is worth. I suggest looking at what other artists charge, and find a price that suits you. It’s a wide range.

3. Copyright for Artists

This is a broad subject and I’m not an attorney, but I know that you must adhere to the copyright laws. When you create a piece of “original art” you automatically own the piece. But it must be original. You can’t reproduce another artist’s work and call it your own. I see many people copying the artwork out of my books, and then posting them for sale on a web site or Facebook. This isn’t legal, and I contact them when I see it happen. If they don’t stop, they receive a “Cease and Desist” letter from my attorney. The artwork in my books is actually double copyrighted. I own all of the original artwork, and North Light Books owns the rights to the printed versions in the books they publish for me. Only the drawings created as step-by-step exercises in the books should be reproduced, and this is for educational purposes only. All of the other artwork in the books are for example only. Think about it. How would you like it if I recreated drawings you did of your family that I saw on your Facebook page, and started selling them as my own? You can see that ethically it’s just not right.

You also can’t sell drawings of famous people and celebrities without their (or their estates’) written permission. This can get you into a whole lot of trouble. People own their own likeness, and public figures are protective of their looks and images. You must be given legal permission to make money off of them. I will go into more in detail on that in a minute.

You can’t copy another author’s writing and publish it as your own. Credit must be given to the original writer. Using my quotes from my books, for instance, is infringing on copyright. When things are copyrighted, they are legally entered into the Library of Congress. You will see a symbol like this, ©, attached to the works. (Look at the copyright page of any book.)

4. Understanding Trademarks

These are legal names/logos that represent a product, company, or entity. You’ll always see a ® or ™ attached to these. This means that a corporation owns that character, and it can’t be used or represented without legal permission and contracts. Once something is protected by trademark, you can’t reproduce it or represent it in any way without special permission.

All famous characters are protected by trademark. Disney for example, is very protective. I couldn’t even paint Disney characters on the wall of a children’s hospital without written consent because it was going to be viewed by the public, and the company couldn’t be sure that I would accurately depict the characters to their critical expectations. I can understand that.

Avoid using well-known characters in your work if you’re going to display and sell them: you can end up in a legal bind. To create or sell artwork that has well known, trademarked characters, you must have legal permission from the company that holds that trademark. This leads me to the last legal item; one that swallowed me whole!

5. Art Licensing

Licensing is when you obtain all of the contracts necessary to do business with a corporation, and they then give you permission to do so. With licensing, you can represent a business, and use trademarked characters in your work. All trademarks must be clearly visible. Legal lines and exclaimers are also often required to be visibly printed somewhere on the work (this can be on the back) and also on any packaging. Each piece you do must be approved by the company’s licensing team and attorneys.

Licensing isn’t cheap! Associated costs can include: a licensing fee; a legal representative that they can contact abut contract negotiations; key business insurance (plus additional insurance of one to two million to cover any liabilities); payment for a good attorney specializing in this field (unless you do exceptionally well, he/she will be the one making the most money in your business adventure).

With licensing, you pay a percentage of your sales to the corporation you’re licensed with. You’re required to pay an advance, which will be based on an estimated expected sales figure. If you don’t make that amount of sales, oh well. They keep the advance.

How do I know all of this stuff, you may wonder? I learned it all the hard way when I was an illustrator for NASCAR®. (Notice I still include the register mark?) I was once licensed to draw more than 20 NASCAR® drivers and teams. I created commemorative prints for the championships and created the “Rookie of the Year” poster. I did framed pieces for QVC and I even wrote a book about how to draw NASCAR®. While I had a wonderful time and great adventures, the investment of money to run that business is one that I’m still paying off, 10 years later! In one year alone, my attorney fee’s exceeded $48,000, just to oversee all of my contracts! As I said before, you have to pay for an education, and being in that business literally put me through one. I now can negotiate a contract, keep good records, speak to large groups, rub elbows with any CEO, and run a business. To me, it was worth it. I should have “Dr.” before my name!

Just the word NASCAR® reeks of success, so why didn’t it reward me as I thought it would? It was the industry. NASCAR® is a fast-paced world, both on the track and the conference room. Things that were hot one week were forgotten the next. A drawing of a winner’s circle driver sold great for a few days, and then was quickly replaced the following week when someone else crossed the finish line. Promotions that I put a months of work into and thought would do great were cancelled at the last minute by the corporations and sponsors. I then couldn’t sell the drawing.

I once did a promotion where I had to get double licensing. I was doing a drawing of Dale Jarrett with the Muppet characters. I already had the licensing with Dale, which also covered me on the UPS sponsorship he carried. But, I had to get licensed with the Jim Henson corporation, and draw the characters according to their explicit guidelines. I even had to exactly color match the characters and have it all pre-approved. I had to pay an advance and a high licensing fee to the Henson company. “No problem,” I thought. “This will be a huge money making promotion!” It should have been! WRONG! At the last minute, something went wrong at the Chicago Speedway regarding the entire promotion and they cancelled the event. Yep, you guessed it. I became the proud owner of a drawing of a Dale Jarrett with Kermit the Frog and Miss Piggy. I wasn’t allowed to sell it for more than a week. Say goodbye to almost $8,000 worth of fees and advertising! (Not to mention two months of work…)

This type of disaster happened over and over again, simply due to the nature of the sport. My losses were no one’s fault, not even my own. But, I simply could no longer take the financial hits. If I had been more financially secure, eventually I could have hit the jackpot and made it all back. But, being that I was just a small business, I had to pull the plug. It was heartbreaking, but I still have no regrets. After all, a lot of people would’ve paid ten times the amount I lost just to experience some of the things I got to do within that world.

So, if you want to be a professional artist, do the research first. Get professional guidance. Every state has different laws, so seek an attorney in your own area.

I know all of this sounds scary, and it is, but it’s a healthy fear to have! It’ll keep you out of legal trouble. Art is a wonderfully rewarding talent to have, and is an enjoyable pastime. But, when you make it a business, what sounds like fun suddenly becomes very difficult. Be careful of what you wish for!

I tell my students: If it were easy, everyone would be doing it. That’s why they call it art-WORK!” (Like this? Tweet it!)

Until next time,

Lee Hammond has been called the Queen of Drawing. That may not be fair these days, since in addition to providing the best drawing lessons, she has also created fantastic books and videos filled with the same easy to follow acrylic painting techniques, colored pencil techniques and more. Click here to see all of the instructional books and DVDs that Lee Hammond has to offer!

Free download! Easy Acrylic Painting Techniques by Lee Hammond

Watch the video: 3,5 tips for selling art. art business advice for artists starting out (August 2022).