Art licensing grants a company rights to use an artist’s work on their products. The artist maintains ownership of the work and earns repeatable, passive income, as the artist is compensated repeatedly without creating additional work. Licensing artists cultivate their income streams over time, as additional products enter agreements. Quarterly earnings in the $1,000-$5,000 range are common for building portfolios.
Royalty Rates Explained
Royalties are earned against successful sales of products that feature your artwork. Royalty rates specify a percentage of revenue earned each time an individual buys a product with your design. Rates are negotiated during contract formation and vary by industry.
Rates are generally based on wholesale price and can range:
Mass market (Target, Walmart): 3-5 percent of wholesale
Specialty retailers: 6-10 percent of wholesale
Luxury goods: 10-15 percent of wholesale
Digital goods: 15-25 percent of revenue
Exclusive licenses: 8-15 percent if sole rights
According to research on industry royalty rates by artists currently earning an income, 3-10 percent is the most common range, with rates for top artists spanning 1.5 percent to 25 percent based on reputation and product category.
Copyright Ownership Is Key
The company’s license agreement grants usage rights to your art while you maintain ownership of your intellectual property. It is critically important to never sign away your ownership through an assignment of copyright. When you sign an assignment, you permanently give up income opportunities and should only do so for an amount which reflects the permanent loss of income. “Grant of Rights” is the language used in licenses to convey that the artist is only granting the licensee a license to use their artwork and will never be assigned the copyright.
Protect Your Work With Registration
Artwork is instantly protected under copyright from the moment it’s created. However, registration with the U.S. Copyright Office provides several key legal benefits.
Benefits of registration include:
Creates public record of your artwork, presumed to be valid in court
Allows lawsuits for infringement in federal court
Opens eligibility for statutory damages, up to $150,000 per work
Allows recovery of attorney’s fees in winning cases
Offers concrete proof of clarity and professionalism to licensing companies
Guidance from the U.S. Copyright Office indicates registration is $65 and can take 6-8 months. Register your commercial art before ever contacting manufacturers or licensees.
Organize Your Portfolio
Portfolio organization is the process of arranging your work into groups, or collections, of 10-12 complementary pieces. Collections should tell a story and demonstrate your range and commercial application. Presentation is important as companies review many portfolios each year.
Your portfolio should include:
Collections of 10-12 cohesive pieces
Hi-res files at 300+ DPI
Artwork is adaptable to multiple product sizes
Organization by intended product type
Professional design showing commercial application
Finding Manufacturers
Look for companies that produce the types of products you create and whose customers are your ideal audience. The more research and planning you do, the higher your acceptance rate will be.
Research methods to find the right manufacturers include:
Shop the stores: Look at tags and packaging in your favorite stores
Online research: Pinterest, Instagram, home design blogs, lifestyle magazines
Google product categories: “stationery manufacturers”, “wall art companies”
Research other artists: See who you love and admire and reach out to them
Print-on-demand services like Society6 provide an instant revenue stream and create a sales history that will help get your work in front of manufacturers. Your POD platforms handle the logistics of production and shipping while you simply upload designs and earn money. Research shows artists who have an established track record of sales on print-on-demand sites will be more easily secured licensing partnerships, as these provide concrete evidence of market demand.
Negotiating Contracts
Don’t accept the first offer you receive. Negotiation is an expected and standard part of the licensing process. Contract guidance indicates negotiating rather than accepting first offers can increase your income by 2-3x over the contract term.
Information you should gather before negotiating includes:
Industry standard rates for your category
Your unique value: your audience, your track record of sales, your unique style
Comparable recent deals from other artists
Sales estimates for your work
Other options in your pipeline
Contract terms to watch for include:
Grant of Rights: state clearly that you are only granting license and not transferring the copyright
Scope of Exclusivity: how and where exactly is the art being exclusively licensed
Term: how long does this agreement last? (1-2 years is standard, never sign longer than 3)
Allowed deductions: Tax, returns, and shipping are all typically allowed
Termination: state what happens if either party stops the agreement
Learn from other artists’ mistakes and avoid making them yourself. Here are some of the most common errors made when licensing:
Signing Exclusive Deals Too Soon
Exclusive deals mean you are preventing your art from being licensed to other companies. These are only appropriate with significantly higher royalty rates, large advances or minimum guaranteed annual payments, neither of which emerging artists have.
Accepting low rates on exclusives when you are new and signing away 75-80 percent of your lifetime income potential from that art should be avoided.
Signing Contracts Without Research
As a first time partner, licensees will generally offer you lower rates. Industry standard rates for your product category and value factors unique to your work will help you understand what is fair.
Audience on social media, your own sales track record, and distinctive style all raise your value. For your most popular, bestselling designs, you will earn more income overall by accepting a lower rate than a higher rate on products which don’t sell.
Overlooking Calculation Method
Artists are generally focused on a percentage without realizing the difference between net and gross sales or other fine print. 5 percent of net sales is less than 3 percent of gross sales. Use contract guidance on how to calculate annual earnings using realistic estimates and the calculation method specified.
Neglecting Approval Rights
Contracts should specify whether you are allowing the company to change your artwork. If you have no approval rights, a manufacturer can change your design in ways you don’t agree with or that could harm your brand. Approval rights are the expected standard by established manufacturers.
License Without Registration
While your work is automatically protected by copyright from the moment you create it, failing to register your artwork provides critical legal protection. Unregistered work means only actual damages in the event of infringement, while registered work is eligible for statutory damages up to $150,000 and attorneys’ fees if you win the case.
Your Action Plan
Register your copyright and organize your portfolio before approaching licensees and building visibility through print-on-demand platforms.
Copyright register the top 5-10 works with commercial appeal
Portfolio create 2-3 cohesive collections
Manufacturers research brands that fit your style
Print-on-demand launch your portfolio on POD sites to gain visibility
Outreach create your portfolio and outreach materials
Target identify 10-15 target manufacturers
Timeline first deals will come in 6-12 months
Income plan for modest initial income of $500-$2,000 per month growing over time
Art licensing can build wealth slowly but sustainably and work extremely well for artists who continue working in the space for 3-5 years.
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