A Quick Overview of Royalty Free, Rights Managed and Extended Licenses

Stock photo licenses can be confusing. In the early days, Rights Managed reigned, but over time, new models emerged to better fit buyers and creators needs. Today, the most common licenses are Rights Managed, Royalty Free and Extended Licenses. While licenses have become simpler, more liberal and easier to understand, they can still seem unclear and complicated for some.

We put together this quick overview to help clear the air.

Rights Managed (RM):

Rights Managed license is a system in which stock photo agencies negotiate specific rates based on how long, how large and how frequently an image is used. Want to use an image on a single billboard in a specific location for one year? Pay a specific rate. Want to continue its usage for another month, years, or expand to include five more billboards? Pay an additional royalty. This model, which is used today but less frequently, gives creators more control over how their images are used. Often times Rights Managed licenses are exclusive for a given period of time. This means that a client won’t have to worry about a competitor using the same image for a competing campaign.

Royalty Free (RF):

Today, the most common — and often most misunderstood — stock photo license is the “Royalty Free” license. Contrary to popular belief, these licenses are not “free” at all. Buyers pay a flat, predetermined rate and photographers and agencies get paid for the use of the image.

So where does “free” come in?

Under the Rights Managed model, a licenser pays a “royalty” every time an image is used. A magazine publisher, for example, pays a royalty for any usage beyond the first, negotiated rate. But the Royalty Free model allows them to use it indefinitely for a flat rate as long as the viewership falls under a predetermined circulation — generally 500,000.

Outside of stock photography, the easiest analogy is a musician licensing their work. Let’s hypothetically say an independent commercial producer approached Beyoncé or Kendrick Lamar to use a song in a commercial. Under the RM model, the artist might license a song for a set period of time and would specify how exactly the song could be used. With a Royalty Free license, they’d get a flat rate, and the producer could use the song more freely, or for different projects as long as the total viewership did not exceed the circulation cap.

For buyers, Royalty Free licenses avoid headaches. They can feel the security of being able to use an image multiple times without major restrictions. Some popular uses of the standard Royalty Free license include printed and digital marketing materials, blogs, editorials, or professional presentations. The standard license also covers personal use, like screensavers, prints as artwork for home use, and school presentations. But there are some limitations — mainly around distribution size and use on merchandise — and that’s where extended, aka enhanced licenses come in.

Extended licenses:

As we mentioned above, contrary to popular perception, Royalty Free licenses are not without limits. US Weekly, with a print circulation in the millions, can’t just pay a few dollars to publish your images en masse, and an RF license won’t cover a major Hollywood studio using your image in the next sequel to Mission Impossible. Like a Rights Managed license, the extended license assures that business requiring images for commercial use are paying what they should. These can be big publishers, brands, studios and even restaurants licensing images to exhibit as framed artwork. Extended licenses allow buyers to literally “extend” the viewership of material to a larger audience and under a larger selection of uses.

Typical extended uses include major motion pictures, television commercials and use on merchandise like t-shirts, mugs, and other materials that are resold.

As mentioned earlier, all license types come with some restrictions. Under no circumstance can a buyer resell an image, and, in most cases, a buyer cannot use images for problematic uses, for example, in pornography, to promote violence, alcohol or tobacco usage, or hate speech.

Regardless of whether it’s an RM, RF or extended license, it’s important to understand that unless a client specifically asks to buy the image’ rights for an exorbitant fee, the artist retains the copyright.