Becoming permissions from an IP right owner

[Madeliefste Oh]

Most of the time I make all elements of my merchandise myself. Sometimes I use a texture that is free from copyright, or comes with a license that allows me to use it. But in some exceptional cases I see a texture somewhere that I would really love to use for a design I have in mind. In those cases I contact the copyright owner to aks for permission.

Recently I have been negotiating with a copyright owner who asked for a percentage of the sales of my object. I agreed with paying him a percentage, but since this person is not active in SL, I cannot pay him automated by using a script. It is too much trouble for me to pay him each time the object sells, and it won't be effective for him either, cause the costs for a paypal transfer are higher then the total amount he gets per sale. So now we agreed on payment twice a year.

For me this is the first time I have to do with a copyright owner outsite SL who wants a percentage. In other cases people just asked for credits or asked a price for an unlimited license.

I'm interested in experiences of other merchants who try to archieve copyright permissions from people outsite SL. Did you ever come in a situation where someone asked for a percentage of your sales? And if, how did you arrange the payment with this person?

And more in general: what situations did you come across that struck you in some way?

[Chelsea Malibu]

I have had to deal with this many times.  In the case of my Club Jenna project, we had to pay Playboy 10% of all branded products which we did a settlement for each month.  What you are referring to is a Royalty.

This obviously is not a great way to do things and given the small value of what most would make, it is not always cost effective.  Therefore, it is best to settle the cost up front.  Most outside SL do not know how little there is usually made here.  They see stats that show millions of dollars being spent and think there is gold here in these pixels so they tend to get a bit greedy.

Since you are reselling their textures, what you have are called Exploitable Rights that allow you to transfer part of those rights to another party.  Since this causes another layer of liability, it is best to define this, the total cost for those rights and settle it before you use their content. A rev share can leave too many uncertainties that could take up too much time if they demand an audit.

In your case, the only obvious problem is in setting the right expectation.  They are not going to make much as you know so they would need to understand that an agreement of this type, is done much easier with a Royalty Free Settlement up front.

Edit: also if you are in the US, which as I recall you are not, you should get a W9 signed from them if the payout is greater than $500 a year.

[Madeliefste Oh]

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Chelsea Malibu wrote:

Edit: also if you are in the US, which as I recall you are not, you should get a W9 signed from them if the payout is greater than $500 a year.

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I'm in Europe, but still it's good to know. What if the receiver is in the US?

 

In this case the payout will never be  $500 a year. Because the agreement includes that as soon as a total amount of $150  is reached in payment by royalty, the rights are mine without further payment. At least that was his condition when I started to inform about permission for use in SL.

I told him I agreed with his conditions but not to expect this amount will be reached soon, if ever. I explained him that SL is an economy that depens on micro payments. And I told him what my business is about and what drives me to run it. That changed his conditions. Now he has set a time limit of one year. During one year I pay a percentage of the sales, to pay in two halves. After that he waves the rest away and can I use the texture as I wish. I'm very pleased with this loyal  gesture.

[Porky Gorky]

Can't you just get their bank details and do a direct bank transfer? This should be free even if the payment is international. 

[jujmental]

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Porky Gorky wrote:

Can't you just get their bank details and do a direct bank transfer? This should be free even if the payment is international. 

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Banks do things for free?

The Judge

/Maybe in your virtual world, but not in the real one.

//Foreign transfers are EXPENSIVE!

///And then you get investigated for money laundering . . .

[Porky Gorky]

jujmental wrote:

Banks do things for free?

 

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 Yes. I regulally transfer small amount directly through online banking to international bank accounts. I also recieve small payments without the payee being charged.

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jujmental wrote:

fMaybe in your virtual world, but not in the real one.

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I don't own a virutal world and banking has been banned by LL in SL so i'm obviously reffering to the real world. Maybe you should consider changing banks if yours is charging you for small funds transfers.

 

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jujmental wrote:

/Foreign transfers are EXPENSIVE!

 

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This is all dependant upon the bank you use. My bank applies charges based on the amount of money being transfered. Small transfers under £250 are free of charge. 

 

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jujmental wrote:

And then you get investigated for money laundering . . .

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The amount that Maddy wants to transfer will be less than  US $150. Who exactly is going to launch an investigation into money laundering? 

[Madeliefste Oh]

My bank charges 5 euro per payment to a US account, regardless the amount I transfer. But anyway, thanks for the idea, Porky.

[Chelsea Malibu]

Madeliefste, I am not sure what the tax laws are in your area but I assume $150 will not require anyone declare it.  US tax law will not apply to you even if the other party is in the US.

It does sound like you made the appropriate discloser and I would just make sure that whatever your discussion with them on this are in writing in the event you ever need to refer back to it.