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How do you properly value your content when negotiating licensing fees

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Leo Ramirez
How do you properly value your content when negotiating licensing fees
on May 14, 2020 at 2:33:21 am

To keep a long story short, I made a video a few years ago, it went viral, and I licensed it for a TV commercial. Now I've been contacted by another agency for a new commercial for a very (VERY) large company, but the details are different.

My first agreement was for around 1xxx dollars and it was only for a TV commercial in one country for a set period of time and the final commercial only used about 1-3 seconds of my video. That price was their first offer and I took it without negotiating since I knew almost nothing about video licensing.

This new agency is contacting me about creating a commercial except the details are totally different. This will be broadcast on TV as well as transit stations, all their social media pages, their official website and on internet ads. The description also suggests that it will feature much more prominently in the commercial than the last one and the licensing period is longer. Also, the target country has a much higher GDP than the last one, the company is much larger and the Ad industry has grown significantly since the last contract was signed.

I should mention that they asked me for the licensing fee, so I don't even have a ballpark estimate to negotiate.

All of the details I've mentioned seem like they would be relevant to coming up with a first offer, but the fact that I have no idea if I got ripped off on my first contract complicates things.

Since I didn't negotiate, if the first price was really far below fair market value, then any price adjustments I make based off of it would be lower than they should. If it was a fair price, then my first offer could be way too high, and the agency might opt for another video (Based on the description, it seems like my video's content isn't specifically related to the commercial). I want my first offer to be as close as possible to whatever price would prompt them to seek an alternative, but I have no idea what too high is.


So my question is how would someone with more experience than me handle this? Would you ask friends, colleagues, and other content creators what they normally charge for licensing? Would you base it off your previous experience creating commercial-like content? Like what would a similar video cost to produce, or how much would you be willing to pay based on what you know about advertising budgets. The more I try to come up with ways to estimate the value of my video, the more complicated the situation starts to seem.

I'm considering either asking them for an offer, or just adding an extra digit to my last price and calling it a day.


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Mark Suszko
Re: How do you properly value your content when negotiating licensing fees
on May 14, 2020 at 9:33:23 pm

The snarky answer is: you already know:

"...ask friends, colleagues, and other content creators what they normally charge for licensing? Would you base it off your previous experience creating commercial-like content? Like what would a similar video cost to produce, or how much would you be willing to pay based on what you know about advertising budgets...."

Benchmarking is what you call it when you look around to see what others charge for a similar product. You'll want to do that research checking sources like Getty, Adobe stock ,etc.

You don't say how unique your clip is. If it is truly one of a kind, you can ask anything you like, within reason. If not unique, then yes the next question becomes how much would it cost to replicate it, then aim for maybe ...20 percent...? less than that.

Another way to go would be to not worry about maximizing the profit, as if this was some kind of blood sport contest, and just picking a number that represents the value of the time and trouble and money you initially spent to get the shot, then adding some reasonable markup to that. Those numbers, you probably do have a good grasp of. But also consider that if the usage is exclusive, you won't be making any more off of it, until the exclusionary period is over. If you think you'll be able to re-sell this shot over and over in a stock footage library service, you'd want to charge a little less and make it up on overall volume. If this one usage is going to basically "burn up" the demand for the shot in the long term, so you won't get many more sales out of it after the campaign, you can raise the price a bit more.

So I didn't really give you a hard number; I gave you principles that could lead to computing the number, based on what you yourself want to do and how you value the product.

Some viral campaigns might come and go and lose control of the stock footage they used, only to find after some time that parody-makers now can get the same shot and use it to make their parodies more effective. Not likely, but also a non-zero chance. I suppose.


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