Art Leasing &

Commercial LicensingSpecial Thanks to our Presenters:

Michele LaRocco, 360 Degrees of ArtBlakely Bering, Bering Art Collective

Hosted by Spacetaker on July 13, 2011

Art LeasingWhat is it?• Renting a single piece or body of artwork to a business

for a pre-determined length of time at a pre-determined rate

What businesses are interested in leasing art?• Hospitals and other medical facilities, corporate offices,

restaurants, city or government offices, and more

What type of artwork are they looking for?• Photography & mixed media does well; work that doesn’t

look like any Joe Shmoe could have done it • What doesn’t work: anything erotic, overtly political, or

anything that could be potentially offensive

How to enter the world of art leasing as the artist

The process:• Be honest about your work ethic,

production level, and your boundaries as an artist

• Determine whether you want to approach an art lease independently or with the help of a consultant– Agent commission is typically 10-20% of lease

agreement

If you choose to work with a consultant…

• Responsibilities of an art consultant for art leasing– Creates the proposals and conducts the presentation to

perspective clients– Project manages every aspect of the art lease program

• Sources all works of art• Contracts and insurance• Delivery and installation of works• Point of contact for client• Responsible for taking payment from clients and issuing rental

payment to artists

• Responsibilities of an artist when working with an art consultant– Understand what your art consultant is doing for you– Be patient– Be able to follow a production timeline– Look presentable when delivering your work to a client

Understanding the difference between the types of Art Lease

programs:Standard – Straight Lease Lease with Option to

Purchase• Lease term: 6 – 12 months

• Rental Rate: 3.88 – 5% retail purchase price

• Security Deposit: typically 2 months rent

• Payment terms: monthly or annually (annual due at install)

• Lease term: fixed 32 months

• Rental Rate: 5.5%

• Security Deposit: typically 2 months rent

• Payment terms: monthly or annually (annual due at install)

The 3 C’s:Care, Custody, Control

• An exclusion common to several forms of liability insurance, which eliminates coverage with respect to damage to property in the insured's care, custody, or control.

• In some cases, CCC has been determined to entail physical possession of the property.

• In others, any party with a legal obligation to exercise care with respect to property has been deemed to have that property in its CCC.

Understanding the difference between Retail Purchase Price & Rental

Retail Purchase Price Rental PriceRetail purchase price can be established by knowing your square inch price:

• To calculate square inch price: width x height x price per inch

EX: 36x36 = 1296x$1.25 = $1,620Note: You should round your retail purchase price to an even number, in this case either $1,600 or $1,650 instead of $1,620.

Rental price will vary depending on the art lease program you choose:

• Lease to Purchase: take the retail purchase price x 5.5%

EX: $1,650x5.5% = $90.75

• Straight Lease: take the retail purchase price x 3.88 – 5%

EX: $1,650x3.88% = $64.02

What to include in the Lease Agreement

• Lease terms– Straight Lease 6 – 12 months– Lease to Purchase fixed 32 months

• Payment terms– Monthly rent; date due and payment method– Annual rent; date due and payment method– Penalties if payment received late

What to include in the Lease Agreement (cont’d)

• Security Deposit– How much and the conditions for its return

• Ownership and Use– The rights you grant to the Lessee

• Repairs– Should damage occur, the process for repairs and

costs

• Insurance– Care, Custody & Control (the 3 C’s)

Commercial LicensingWhat is it?• Licensing is a way of generating income from your

art. Instead of selling originals or selling your designs outright, many artists will grant the right (license) to use their art on a specific product, for a set time period in exchange for a percentage of sales. This percentage is called a royalty. By licensing your art, you have the potential to earn income on the same art piece or collection several times. (definition from ArtLicensingInfo.com)

What businesses are interested in licensing art?• Big box chains and corporate stores

What is the process of Licensing?

1. Submit Art to Art Director/Publishing House (enter into a written contractual agreement)

2. Wait, wait, sometimes more waiting3. Have work selected4. Have work shown to buyers5. Wait for buyer to purchase work after samples have

been sent to their headquarters6. Finally your work is purchased and put into

production7. Orders take anywhere from 1 week to 8 months to

confirm and ship8. What happens when it gets to a store…

What is the process of Licensing? (cont’d)

• How do Art Directors choose images?– They study the fashion and design industry closely to be on top of the color &

style trends of fashion; last season’s fashion tells you the colors for art the next season

• What is a Line?– A selection of artwork that an Art Director pieces together from a variety of

artists to create the best options to take to Market and/or to send to big box stores (after research on what is “hot” at each store)

• Where do images go once they have been selected for a line?– They are sent to reps at various big box/corporate stores

• What is a Furniture Market?– Annual buying opportunity; art lines the walls completely; there are 5 major

Markets; High Point is the biggest (10-mile radius of showrooms)

• Who comes to Market?– Buyers from chain and corporate stores

What is the process of Licensing? (cont’d)

• What do buyers look for in art?– Follow current fashion/color/style/texture trends; mass appeal; fresh/new

• Why has the market changed so dramatically in the past 2 years and how does it affect American artists?– It has become increasingly difficult to work with China as quality control

has declined (and takes longer to ship); This has benefited American artists

• How should artists think about color and style trends?– Pay attention to trends in fashion & furniture industry, what colors are hot

in paint stores, etc.

• What is regionalization?– Being able to adapt your work to “look” like different regions; i.e. They

want their stores in Texas to have Texas-theme (cowboys/boots); stores in New Jersey to have North Shore theme, etc.

Selling Publishing Rights vs. Royalties

• What is the difference?– You sell your work (means you sell your copyright) which guarantees a

lump sum payment (regardless of whether the company ever sells your piece or not)

– Royalties offer a % of sales on a monthly or quarterly basis for the lifetime of the licensing terms

• What are the pros and cons of each?– Pros and cons vary depending on what type of artist you are, how

regularly you produce/re-produce, and whether you want money up front or are willing to wait for royalties.• Example: Person who designed Nike swoosh sold publishing rights for $800 instead of

choosing to take royalties; if she had taken royalties she could be making mega $

• What is the industry standard commission structure?– 5-12% royalties for giclees; lowest is 3%– Purchasing outright price varies depending on what it is and who is

buying it

Artist Checklist:Self-Representation

Contract, Contract, Contract; Question, Question, Question

• If you are going to be representing yourself in the commercial licensing world it is VITAL that you get everything in writing!

• If you send samples for review or are asked to send samples, be sure they understand what you are granting them permission to do with those samples (EX: are they for "review purposes only", can they show them to clients, etc)

Artist Checklist:Self-Representation (cont’d)

• If the publishing/licensing house wants to move forward with you, make sure you understand the terms of use, payment/royalty schedule, commission structure, what they can and can not do with your image. Understand your rights (Intellectual and Copyrights) and if confused, ask questions or ask someone to review the contract for you.

• Ask who they typically do business with and what type of work moves the best

• See if the structure for royalty differs based on the medium used in production (EX: giclees will be more expensive to produce and therefore typically have a lower commission percentage than posters/prints)

Artist Checklist:Working with an Agent

Ask Questions!• How long have they been in business? Is this all

they do? If not, what else are they involved in?

• Get references. If they have happy artists, they shouldn't worry about giving you some people to contact. In some cases, artist and agent sign a confidentiality clause to ensure names are not released. Ask about this.

Artist Checklist:Working with an Agent (cont’d)• How many artists do they work with? What

medium and style do they work in? How long have they had their clients?

• How many publishing/licensing houses do they work with and why?

• What is their commission structure?

Artist Checklist:Working with an Agent (cont’d)• What if I don’t want certain companies to have access to

my work?– If you are working with a publishing house, your work could be

seen by any company; if you are choosy you should not enter the licensing industry

• How long will my work be licensed for?– Standard licensing term is 3 years

• What does copyright really mean?– Educate yourself. Good resource is Texas Accountants & Lawyers

for the Arts - http://www.talarts.org/publications

• Ask for an agent agreement from them and make sure you understand it!

THANK YOU!

Visit www.spacetaker.org for more information about Spacetaker’s professional development workshops for artists and other opportunities

and resources for artists.