PACA And Cengage Develop New Licensing Strategy For Educational Use

Posted on 9/30/2013 by Jim Pickerell | Printable Version | Comments (0)

Given the changing and growing demands publishers are facing when developing an educational program, PACA’s Editorial Relations Committee and Cengage Learning have worked together to create a new “Preferred Provider” Insert License Agreement that helps meet the publisher’s needs while providing image vendors of a better understanding of how their images are being used.

The new streamlined license model removes the complexities of print run, language, size and location of use and transitions to a flat fee structure that grants World, All Media, Print and Electronic Rights for an Insert Use (of any image) in a Product Family or Discipline (see definitions below). This will provide the publisher with the necessary flexibility to quickly produce a wider variety of components in a Product Family.

The intent is that once an image is licensed for use in a Product Family it can be used in any way in a Print Edition (including covers), Split Editions, Bundles, Ancillary Works, Alternate Editions, DVD discs, Custom Editions and all types of electronic use without the need for additional clearance or licensing.  Images licensed in this manner may also be used in-context in marketing, advertising, publicity or promotion of the Publisher’s work including samples, desk copies and other gratis uses.

In asking for this broader usage Cengage has made two major concessions.
  • They will report annually to each vendor the total usage of each product family including both print and electronic uses. In the electronic environment it is Cengage’s intent to supply information down to the number of students who are using each product. This will provide vendors with a better understand how their images are being used that should help them when negotiating future agreements.
  • The agreement may be terminated and re-negotiated at any time by either party with 60 days written notice.
It is important to understand that even after an agreement is terminated the publisher has “the right to continue distributing such Licensed Material as incorporated within a Publisher work created during the Agreement Term for the life of the product” Thus, once a Preferred Provider agrees to allow one of its images to be used in a Product Family that image can be used as long as that product is being produced.

Ken Carson, General Counsel for Cengage Learning points out that most products have a 3 or 4-year life cycle, before a new edition is created. The new edition is a new product and a new Insert Fee would need to be paid. Thus, moving forward there may be increased opportunity for licensing in new products.  

Digital products are likely to need more images and to be updated more frequently. Vendors and image creators will need to decide whether volume increases are -- or will be -- enough to offset relatively low fees for those few products that become wildly successful or where the image is used in a major way.

Nancy Carrizales, President of PACA said, “In the past we have been very hesitant to suggest granting rights for the "Life of the Product" as we could never anticipate the actual use.  In working through this from a image provider's perspective we saw a major difference in that Life of Product is limited to one edition - and edition is defined by edition number.  Other agreements we have seen in the past defined a Product by name and included all editions. If a single edition, often it was not defined by copyright date, ISBN or edition number, but instead by a percent of image content change. So, we are working with a clearer definition.”

If an image is licensed for use within a Discipline then as long as Cengage is producing materials in that discipline the image can continue to be used without further compensation.

It should be noted that the current agreement also states that after a termination the Publisher has no obligation to pay any supplemental charges outlined in Item 3, but may continue to use licensed images within the Product Family where they were licensed to be used.

Brief Definitions of Product Family and Discipline

A “Product Family” is defined as a particular title like Cultural Anthropology 8th edition and all ancillary or derivative Publisher works, including all digital uses, that are created in connection with the title (including non-U.S. versions) published by any Publisher affiliate or division, wherever located. (A fuller and more complete definition is included in the agreement.)

A “Discipline” means an area of study with common thematic content, as is generally understood in the education marketplace integrating a body of knowledge, skills or values (e.g. nutrition is a Discipline, and the following is a sampling of courses that fall within that Discipline: introductory nutrition, clinical nutrition, personal nutrition and community nutrition), together with all Product Family uses related thereto.

Pricing Options

The pricing options under the new agreement are very simple (see below). They allow for an annual “surcharge” for excess use.

1.    Insert Fee:  $____ per Insert Use for Product Family use, No limits on or additional fees for print run or language, except if indicated below in item 3.

2.     $ ___ for Discipline use. No limits on or additional fees for print run or language, except if indicated below in item 3.

3.     Per Insert Use; Plus annual “surcharges” for excess uses:
    a.    $ ____ per Insert Use with print run over ______,
    b.    $____ per Insert Use with languages in excess of three (3),
In theory, the vendor could put a dollar amount in (3a) and a print run of say 100,000. Then when the “use” runs over 100,000 Cengage would owe the vendor more money. However, Carson says the intent of the new model is that the Insert Fee will cover all uses forever of a given image in a Product Family. Cengage hopes vendors will leave the spaces in item 3 blank, or insert $0.00 for the dollar amount and a print run of at least one million.

Carson says Item 3 was added toward the end of the negotiations because it was recognized that some vendors might not be willing to “take the leap” to such a radical new licensing model and will want a little more control. It is unclear how putting restrictions in Item 3 might affect a vendor’s position as a Preferred Provider.

Preferred Provider Rankings

About 75% of the images Cengage licenses are from Preferred Providers. Carson says there will be three criteria for ranking Preferred Providers. They are: (1) quality of the images, (2) ability to meet the needs of Cengage and (3) price. The vendor with the lowest price will not automatically be the vendor of choice. If a provider has a unique collection or unusual depth in a particular subject matter that provider may be the researcher’s first choice even if the price is a little higher.

Usage Notification

Those who have entered into an agreement with Cengage will be notified at least once every quarter of any Licensed Material that the Publisher wants to use in a different Product Family or convert to a Discipline usage. The vendor will invoice within (30) days or notify the Publisher immediately if the vendor is unable to license the rights for any reason.   

Nancy Carrizales made these further comments:

1. We recognize that this is a drastic change for many, so options were built in allowing a provider to grant the rights they are comfortable with.  As Ken mentioned, the hope is to move toward the flat insert use with a discipline option.  But that can be worked toward as relationships are built.

2. The agreement is a suggested agreement.  As with any agreement, if you have questions or need additional clarification, talk to Cengage.

3. As we know, as soon as we think we know where technology is headed and what the demands of the future will be - things change.  We will continue talking and working together through the changes.

For background readers might want to review these two stories:

Copyright © 2013 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to:  


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