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Advice Needed on Clip Licensing Fee for National Commercial

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Jd Christie
Advice Needed on Clip Licensing Fee for National Commercial
on Dec 20, 2011 at 2:59:36 pm

So, earlier this year I was contacted by a Content Research company that found some of my footage on Vimeo. They were interested in licensing a 2 second clip of my footage for use in a TV Commercial for broadcast use only in the state of Minnesota, online and in print if they so choose. They originally offered me $500 for the footage and I negotiated it up to $3500. It was a good deal and I was happy with the end result.

They have approached me again to license a different clip, this time for a national commercial campaign for a "major car manufacturer". We will begin negotiations soon and I need some advice on what would be a mutually fair and reasonable fee. These clips include images of my family, they will be broadcast during primetime on major TV networks. Considering the precedent I set on the fee for the last clip, what do you think?

Lets assume the following:

2 second clip (mine)
30 second spot (total commercial length)
National primetime TV plays for several months

Any advice appreciated, even if it's just "you need a lawyer/agent".


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Mark Suszko
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 20, 2011 at 4:51:36 pm

Don't get TOO greedy. They can always find other footage, if you make yourself difficult enough.

Bump it a little higher than the Minnesota-only footage and leave it at that. Don't forget it doesn't hurt to have a portfolio credit for footage used in national spots. Try to get some repeat business.

Also, more than the money for this spot, make it clear when all rights revert back to you... so you can sell it again elsewhere. And if this footage is that good, you should call up one of the stock companies and get yourself on board for a regular payday.


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Jd Christie
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 20, 2011 at 5:24:23 pm

Thanks for the response Mark. This content research company is starting a stock footage library and has asked me if they can add my footage to that as well. My thought process here may be wrong, but I feel like the fee should be some formula of the total production budget for the spot. They have expressed interest in many clips from my portfolio and I don't really want to get into a situation where I sell myself short.

If a commercial has a $500k production budget does it make sense for someone who contributes 10% of the content to be paid 1% of the budget?

I of course recognize the bulk of the creative work being done is by the agency, but there must be an agreed upon middle ground there.

Also these are non-exclusive agreements so I retain the rights to sell again at will.


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Brad Spinoza
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 20, 2011 at 8:07:20 pm

If a commercial has a $500k production budget does it make sense for someone who contributes 10% of the content to be paid 1% of the budget?

No, it doesn't... sorry. The idea of licensing anything based on the budget an agency or sponsor spends on production is so far outside of the mainstream licensing conventions that proposing such a thing may reflect quite poorly on you. Consider this: If there were weather delays or some sort of other factor that caused a cost overrun on the shoot, would that entitle you to even more money? Is that same exact footage worth 10 times less if an agency does a re-version or some other national spot with a $50K production budget?

As one who has bought footage for regional and national commercials, I would strongly urge you to follow Mark's advice above. Take a long look at the rights-managed licensing structure on iStockphoto, Getty, or some of the other major houses. Price in line with them or better and build a long-term relationship.

On the few rare occasions when people priced their footage far beyond the average, we would just call one of the stock houses: They were always willing to find us alternative footage in line with our expectations. BTW, we paid more for some footage that we used on a regional spot with a <$40K budget than we paid for other footage we used on a national with a $150K budget.


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Jd Christie
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 20, 2011 at 8:45:23 pm

Thanks for the response Brad. I am out of my element here so I am totally open to correcting my thinking. I believe you when you say that's not how it works.

[Brad Spinoza] "BTW, we paid more for some footage that we used on a regional spot with a <$40K budget than we paid for other footage we used on a national with a $150K budget."

So what was the determining factor in how much you would pay for a given clip? How much did you pay for a few seconds of footage on average?


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Brad Spinoza
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 20, 2011 at 9:04:26 pm

So what was the determining factor in how much you would pay for a given clip?

No one factor: Sometimes an ad agency would come to us insisting on a particular clip because they did the search themselves. Sometimes, we needed search services. Often, the calculation was the cost of the footage vs. adding a shoot to the production. Generally speaking, the more common the footage/theme, the less we'd pay. For example, beauty shots of Manhattan were easy to find and could be licensed nationally for as little as $100 per second. (probably less now with the proliferation of royalty-free collections). More rare shots such as a particular type of weather in a specific location (i.e. sunrise over Nepal) could command ten times that.


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Jeff Cadge
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 21, 2011 at 12:15:09 pm

Like Brad said I would look into what Getty would charge for a rights managed clip with the exact same usage and then charge them the same minus a discount of up to the 30% which Getty would have taken out had they handled the sale.

Tell the client they're getting a good deal and you know you're getting a fair usage fee.
Being with Getty for years I've done this and it's worked out well with my clients.

Then send the clip to Getty and have them represent your footage on a non-exclusive basis
allowing you to continue to sell it yourself. Sounds like you have a marketable style and Getty
will most likely sell the clip.

Jeff Cadge


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Todd Terry
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 21, 2011 at 4:06:19 pm

Others have pretty much answered this well, but I'll just chime in to second what they said.

Again, don't get greedy. I'm pretty dumbfounded that you were able to get $3500 for a two-second shot in only a statewide commercial. As someone who produces commercials every day and buys stock footage all the time, I can tell you that's an incredible rate (as a producer, if I were needing that footage myself I would call it "exorbitant"... haha). I'd say you probably couldn't get much more than that for it even for a national commercial unless the footage was absolutely and positively needed for their concept and was impossible (or too costly) to replicate and nothing similar was available from anyone else. Maybe five grand, but I wouldn't push it more than that or they will likely just bail.

And sure, let the content research company rep what you have in their stock footage library, if that's something you'd like to try. You might inquire as to what kind of rates they are expecting for their footage, so you'll know how to price what you have for this job.

I will say though, that people all the time are trying to sell their footage as stock... and I've never really heard of anyone making any money from doing it. Maybe a few bucks, but not much. People think it's going to be a Cash Cow, but it never is.

The situation is, there is much more stock footage available now and much greater resources. Producers like me are much less likely to go to, say, Getty and buy a ten-second clip for $1500 when we can find something just as good and appropriate on iStock now for $150.

Just don't price yourself out of the market.

Oh... and make sure your contract stips that you are granting usage rights one time only for THIS specific project and that the footage cannot be reused in any other.

T2

__________________________________
Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com



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Jonathan Ziegler
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 21, 2011 at 4:32:50 pm

Well if they're coming back they were obviously happy with the first clip. I would use the last price as a jump point. Find out if they think theyll need more clips in the future and negotiate a deal where they agree to buy so many at a discounted price for the year. Negotiating for national rights should be the same as for the MN rights only you have a larger scope. You can always go through places like Getty to find out how they license their stuff and use that as a guide point.

Last, you should have an entertainment attorney (check your state's bar site for a list) read over and/or write up the details for a licensing agreement. For the money it will be worth it and you can reuse the same stuff later.

Jonathan Ziegler
http://www.electrictiger.com/
520-360-8293


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Jd Christie
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 21, 2011 at 5:22:14 pm

Many thanks to everyone for the responses. I hoped for this kind of insight and it is much appreciated.

A little more information. This Content Research (CR) company is what I would call "boutique". They specialize in what they call "archival and/or creative content". In my experience they are also dealing with very large Ad Agencies with nationally or internationally recognizable clients. They are not looking for standard stock footage.

The closest thing I could find on Getty is their "Archive Film: Creative" sub-category. The samples I looked at for Unlimited Advertising usage range from about $3000-$6000 per clip.

My impression is this CR is trying to position themselves as a premium service with unique content. That being said, my footage that they are interested in is very common subject matter (it's mostly of my family and friends). I don't stage shots, it's all very organic and shot in natural light/shallow DOF/attractive locations and I aggressively edit out uninteresting shots.

All that said, I think I probably DID get more than average for the MN clip.

I will definitely take the advice to ask them what they expect to charge for footage on average.

Once I know that, what do you think a fair cut to the CR is? Percentage wise? They have insinuated they will take 60% of license fee and I don't know know how that compares to the other Stock footage houses.

Thanks again. JD


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Richard Herd
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 21, 2011 at 11:10:14 pm

Just to be clear, are these option agreements or license agreements?


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Jd Christie
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 22, 2011 at 2:12:23 pm

Richard, these are license agreements to the best of my understanding.


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Richard Herd
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 22, 2011 at 5:20:45 pm

I am not a lawyer. I hope you consult one before you sign anything. The lawyer is the only person who will represent (for a fee of course) your interest. I'm saying this because it all sounds a bit dubious: not only is the fee a high but also they're 60-40 sounds weird.

Regarding the high fee, okay, I could see that, if your footage is (for example) a crowded kids birthday party, where the cost of producing it would require 15 kids on a day rate, plus 10 adults on a day rate, wow! that's expensive.

Regarding them taking a cut, I could see that if they are aggressively soliciting buyers. In which case, I would think they are more akin to an agent, in need of an option agreement.

Hope that makes sense.


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Jd Christie
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 22, 2011 at 5:38:00 pm

Thanks Richard. I had an Entertainment Lawyer review the license agreement on the last project and he felt it was standard. He did not recommend any changes.

As for the 60/40 split, I did some research and found Getty's contributor agreement online. They actually only give contributors 30% of the license fee. Getty requires an exclusive agreement to market the footage if you place it in their library, and so does this company. So from both of these perspectives I think these guys are pretty well in line with the industry.

The clip they licensed last time was a close up of my wife and daughter, outdoors at a park. They have said that they "did not make a great a profit" on that project. I can see that may be the case. Everyone deserves to get a fair piece of it, but it also seems to me that once they have discovered a videographer that they can market, their expenses to provide the content drop way off. Once you're discovered and they know where to find you, all they need is a project that fits the content. As a "research company" their model seems to be more "go and find X for our production".


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Richard Herd
Re: Advice Needed on Clip Licensing Fee for National Commercial
on Dec 22, 2011 at 6:13:31 pm

[Jd Christie] "They have said that they "did not make a great a profit" on that project."

That made me actually laugh out loud!


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