In my recent article “Who’s Killing the Photography Industry?”, I made the argument that photographers who choose not to charge licensing fees for the commercial use of their work are destroying the viability of photography as a sustainable career.
In the discussion that followed, I was very surprised that many readers viewed licensing as some sort of cash grab at best, with many voicing the sentiment that licensing is a relic that is no longer relevant to the reality of today’s creative industry.
I couldn’t disagree more – so in this article, I am going to expand a little on the value of licensing, and on a wider scale, look at who’s killing freelance as a viable career in the creative industry.
Business 101: Scalable vs. Non-Scalable Income
Before we specifically discuss who’s killing freelance as a viable career in the creative industry, we need to make sure that as creative professionals we understand the concept of scalable vs. non-scalable income.
Professionals that bill clients on an hourly basis are earning non-scalable income.
The example of prostitutes and lawyers immediately comes to mind.
There is a hard cap on the level on income a professional can earn by simply exchanging time for money – there are only 24 hours in a day and no matter how amazing a prostitute or lawyer you are, at some point the market will cap your hourly wage.
The advantage of exchanging time for money is its generally a safe, predictable way to generate income (safe referring to the method of income generation).
Scalable income on the other hand is not tied to the physical tasks that any one person can perform within a certain number of hours in a day.
With scalable income, you can literally make money while you sleep.
The advantages of scalable income should be obvious. The disadvantages are that it can take a ton of work with little to no chance of a return to achieve the level of success necessary for scalable income sources to be profitable.
(By the way, scalable income is often referred to as passive income. I don’t like the term passive income because it implies that you’re making money without doing any work. The reality is that it takes a significant amount of time and work to build the infrastructure necessary to generate passive income – but once that passive income stream is in place, it has the potential to generate income far exceeding what would be possible by simply exchanging time for money.)
Licensing Is the Only Way To Make Freelance Work a Viable Career
In the creative industry, we are very fortunate to have both scalable and non-scalable income sources available to us.
Commissions, day rates, bids based on hourly rates etc. are all examples of payment for time, or in other words non-scalable income.
We’re all familiar with bidding for jobs on a time for money basis. However, licensing is our avenue to scalable income.
Without the ability to license artistic works for commercial use, freelance cannot be a viable career.
Think about it, no creative professional: visual artists, writers, photographers, film makers, musicians etc. can possibly produce creative works on demand from 9 to 5, forty hours a week.
We bid jobs, we manage our business and we exchange our time for money as often as possible – but unless you are in the top echelon of your creative profession and billing top rates – it is practically impossible to earn enough income to sustain a viable career.
This may sound harsh – but if you look at the financial performance data for multiple creative industries, the reality is that only the top earners make anything remotely close to a livable income level.
That is where licensing fits in.
Licensing creative works for commercial use allows us to build a scalable income stream over time. There is a lot of work up front, but over time, licensing creative works is an opportunity to generate income that is not tied to the number of hours you work in a day and fills the gaps between paid gigs.
To those who are still uncomfortable with the concept of licensing, instead of thinking of licensing as a fee you charge your clients to use your work, it might be helpful to think of licensing as a reward for success.
In other words, the more successful your creative work is – ie. the more income it generates for the business that purchased a license – the more you are rewarded for producing something valuable.
And who could argue with artists receiving reward for success!?
(And always license your effing creative work for commercial use!)
Let Us Know What You Think
Are you seeing a trend away from licensing in your creative industry?
Is licensing important to your long term financial goals?
Do you think licensing is a relic from the “good old days” and creative professionals simply need to adapt to the times?
Is licensing simply a cash grab racket?