Licensing From The Buyer's Perspective

In business it often helps to try to walk in your customer’s shoes. The following is a situation that developed when a busy designer was trying to give his customer a quality product on a tight deadline (aren’t all deadlines tight these days), and keep the cost of the project reasonable and within the customer’s budget.

Back in September 2009, a graphic designer with 20 years experience was asked by a client to produce a short video for use on the client’s web site. The designer determined that he needed 17 still images for his project. He went to Getty Images, found some excellent images that exactly fit his needs and paid $1,717 for their use.  

He used Getty’s online pricing module to determine the license fee. It turned out that the fees paid for 5 of the images covered all future use, but the fees for 12 of the images were not sufficient to cover all the use that eventually occurred.  



The designer found a use category in the Getty RM pricing template called “Editorial – Electronic (web or app).” He priced the use of each of the 12 images on the basis of a 500,000 circulation and a 3-month license. The total for these uses was $1,116.

He ignored, or skipped over, part of the explanation of “Editorial – Electronic (web or app)” that reads as follows: “For editorial web and/or app use only. No advertising, promotional or commercial use of any kind. Coverage includes the right to archive the image in context of the original scope of use for up to 5 years.”



Believing that the images would only be used in one product – the video – he also ignored the statement that said “Do you want to license this image for multiple uses? Call or email to ask about: All advertising pack."

Since his client was a corporate user, instead of Editorial use the designer should have used the pricing schedule entitled “Web – Corporate and promotional site.” The definition for this use says, “Commercial or promotional use on a website, including as a design element on a corporate website. (Includes use in flash or video on a corporate website. Does not include paid advertising; for example, ‘Web-Advertisement’)”

If he had used this schedule the price for the images in question for 3 months commercial web use on a secondary page would have ranged from $336 to $396 depending on the image. Thus, the total cost to use these 12 images for 3 months would have been somewhere between $4,032 and $4,752 rather than $1,116.



However, given the possibility that the video might remain on the client’s site for a long time he probably should have licensed the use for 5 years, the longest time allowed on Getty’s online pricing schedule. The price for 5 years, with everything else the same, would have driven up the cost for the project to something in the range of $8,400 to $9,780 for posting on one site.

Had the designer recognized the likely real cost of these RM images, he might have looked harder for Royalty Free (RF) images that could remain on the web site indefinitely at no additional cost above the base price for the image. At Getty the base price for RF images ranges from $21 to $618 depending on the file size needed. On other sites you can get RF images for much less.

I searched the major RF sources for images similar to the RM ones the designeer used. In my opinion he could have found as good or better RF images to replace 10 of the 12 shots he used. (This is based on what can be found today. The same images may not have been available in 2009.) There were probably no good substitutes for a couple of the images he chose. To produce a quality product he might have been forced to license those at the higher RM price, but if 10 of the 12 had been RF he could have saved a lot of money.
 
The designer delivered the video. The client was very happy.

Fast-forward four years, to a few weeks ago. The end user client on whose web site the video appears received a bill from Getty for $30,675 for unauthorized use and lost licensing. Getty agreed to apply the $1,116 already paid reducing the total amount due to $29,559 and to allow continued use of the video through September 4, 2014 (a total of 5 years).

Of course, the end user called the designer and said, “What is going on? Fix this!”

The really big problem was that the client had posted the video on 6 web sites. Getty treats each site as a separate use. All these belonged to the client’s affiliates, but that didn’t make any difference. Each was counted as a different site. This video was also posted on YouTube and that was counted as an additional site.

In their pricing system Getty offers an “All Advertising Pack” that allows customers to use each image on as many sites as they wish. Pack prices range from $2,150 to $2,735 per-image getting Getty to the $30,675 figure.

It is important to note that the Getty price did not include any penalty for unauthorized use. They simply asked for what they would have normally charged if all the images had been properly licensed before the initial use.

Area Of Confusion

Nowhere on Getty’s site does it make clear that use of the same promotion on multiple web sites is considered “multiple use.” Many in the industry might believe that multiple use relates to using the same image in a variety of different ways in multiple promotions. It might also relate to using an image multiple times in the same promotion. However, there are not Getty’s interpretation.

During negotiations Getty would not budge on the multiple use issue. However, they did drop their demand to $20,000 as an expression of good faith.

The designer also faces another problem. It seems likely that his client will want to continue using the video on all its various sites after the five years. That means the designer will have to negotiate a new $30,000 license fee with Getty after September 2014.

What Will The Designer Do In The Future?

Certainly he will be much more cautious about using RM images. He will probably start his searches with RF and Subscription.

If he has to use RM he will certainly try to negotiate a deal upfront that would take into account every conceivable way the video might eventually be used. Getty regularly drops prices dramatically when it is necessary to hang onto a customer and a sale. If they know the customer can either design around the particular image, or has other choices somewhere else they will probably be flexible.

He will try to pin his customer down as to whether the project is likely to be posted on multiple sites and remain online forever. That’s tricky because most customers want flexibility to do whatever they want. It is hard to explain why they should pay more depending on how much they use the image. If he can’t get a good answer he will certainly attempt to license all rights forever.

The designer might decide that it would be more cost effective to hire a photographer for an assignment rather than license stock.

In the long run RM licensing may no longer be good for photographers who continue to insist on licensing each use separately.