Since long before I became a lawyer, I advocated for two things when it came to photographers’ fees: raise them (particularly the license fee) and separate the creative fee from the license fee. Since becoming a lawyer, I’ve found that was good advice on both fronts.
I bring this up because I’ve seen it repeatedly in my practice and have been hit with it a bunch lately. That is, where a photographer comes to us with a possible infringement and, not having timely registered the copyright in the work (grrr!), leaves us no option but to see if there are sufficient actual damages in the form of lost licensing fees to make the case worth our efforts. When asked what her/his usual and customary license rate is for a use the photographer will respond with something like, “I would have asked $2000.” When we ask the necessary follow-up question, “Do you have invoices to back up this rate” the response is either, (1) “No, but that is what I would have charged,” or (2) I am presented with an invoice for the creation of the work that also included a license and the combined fee cited is $2000, or, (3) worse of all, I get the invoice for the creation and licensing of the work where the photographer only charged $500 on some sort of mega-discount.
None of these are good answers.
In the first case, no history of licenses, I can at least argue for the “fair market value” of a license and then, using common metrics like Fotoquote and online calculators for stock license rates, get a number. Sadly, as we all know, those numbers are likely to be low, particularly since there are more and more cheap stock sites out there. But still, at least I’ve got nothing against me.
In the last case, you’ve just set the price for all time. You are never going to get anyone to believe that a license similar to the original one is worth anything more than a few dollars because you have told the word that you’ll make and license it for so little. If you are going to offer a super-mega-discount, make sure that you spell it out on the invoice like:
Creative fee: $2500
One-time Discount: -$2300
License Fee: $4500
One-time Discount: -$4200
Total Fees: $500
That way you are saying “my usual price for this license is $4500” and that can be used as evidence later of your actual fees. That is great! But if you just list the discounted price, you’ve only got your word that you normally would have charged more. That won’t hold up.
In case #2 above, all bets are off. The other side can argue that $500 was the license fee and $1500 was the creative fee, or worse. It is almost impossible to argue successfully that the majority of a combined fee is for the license not the creation of the work unless it is spelled out in the paperwork. I’m good, but I can’t make butter with a toothpick and there are plenty of good attorneys on the other side who can present evidence that the Fair Market Value of the license is only $200. If you’ve got nothing in your records to show otherwise, then it is quite possible that all you can get for actual damages will be that $200. At the very least, in court, it would cost a hell of a lot more in expert testimony to try and prove up your damages, and the other side knows it, so they can stonewall in pre-suit negotiations. You got no bat, as they say.
The best business practice now and to protect your values in the future is to separate out your fees on your paperwork and to make your license fee the higher portion of those fees. Later on, you can use those numbers to support getting higher actual damages. Also, if you do timely register your work, the courts will often look to the actual damages in setting statutory ones (like doing a multiple of actual damages). If you can prove up substantial actual damages, you are more likely to get higher statutory ones. Proof of higher numbers will make it easier for your attorney to argue for higher pre-suit settlements as well.
As for the argument that your clients want combined fees, you have to run your business your way, not how they want it. Besides, as in the example above, you can give a final number that is combined, just make sure that the line items are separate. If they argue for a higher creative fee and lower licensing one, know they are thinking of the future when they want to re-license; so should you (higher license fee now means higher re-license fee later). Run your business like a business–think about future value and long term effects.
It’s not hard, it just takes some guts. You can do this.