Freelance Designers and Royalty pay.

[Sidewinder]

Hello again fellow members!

I've been looking online and been reading through things in regards to Royalty payout for graphics designers. A few bloggers have marked Royalty payout for designers as a taboo topic and they have basically told their readers to stay away from it.

What I don't understand is why this is such a big issue, In all honesty I would find this concept a very good idea for both parties? This would be good for the freelance designers who want to get into the market without any form of limits ( They can negotiate their terms AND still have the IP for the design). I see the ball being in their court as they can make the shots and the person who will be paying the Royalty would mostly abide by their conditions since it is them that want the designs.

I would really appreciate if someone can give me some insight about how the IP and Copyright would be worked out? Based on what I've read...The creator owns the IP ( As this wont me mentioned in the contract) BUT... any modifications made to the design by the company will own the copyright since it is them that has made the changes to meet their organisations requirement for whatever purpose?

Thanks again

[AndyJ]

Hi sidewinder,
My understanding of the market suggests that freelance graphic artists and designers are not in a strong position to dictate terms; generally the fact that a big company can decide not to commission them and instead find a more compliant designer, puts the power in the hands of the commissioner.
Royalties pose all sorts of problems for small freelancers. They have no ability to forecast how a product will sell and over what timeframe, so this makes it difficult for them to stipulate the royalty rate (do you hold out for a small royalty - say 0.1% of nett sales based on a huge volume of sales over a long time - or a larger royalty of 1% based on a small volume of sales). Secondly how does the freelancer audit the sales data to ensure they are receiving the correct royalties?
There is the added cost of drawing up a watertight, bespoke contract concerning royalties which the freelancer would have to bear, with each contract being specific to the particular commission. This is in contrast to the normal terms of business which can be the same for all clients.
And in any case most large companies will insist that all IP rights are transferred to them as part of the commission contract, and so royalties become an untidy solution in such circumstances.
Royalties generally work best in situations such as the music business or book publishing where they are the norm, and there are special bodies such as the collecting societies set up to administer the process on behalf of their members (the freelancers etc). There is a collecting society, known as DACS, for designers and artists, but they don't operate a scheme for the sort of royalty system you are referring to.
As for your final point, a company which does not own the IP in something which has been created/designed for them by a freelance, would need permission to alter the design etc. Unlike the implied licence I spoke about earlier, there would probably not be implied permission for the client to change something relating to a copyright work, unless this had clearly been discussed and agreed to beforehand. Obviously if the IP is transferred to the client on delivery of the work, then thay can do what they want thereafter.

[Sidewinder]

Hi Andy,

I think what you had referred mostly too is about maintaining the royalty rate which I believe could easily be done if there is an online platform. This will allow the designer to see live updates of sales of their designs and their payout.

Royalty pay could be an alternative means of income if they are working on projects on the side. I personally don't think they will lose out since they will be promoting themselves for free and being able to gain some income based on designs which they may have done for fun or something which they weren't expecting to sell. This is just another way for them to show their skills and passion instead of them designing things based on a client's needs.