Digital Licensing Partnerships

21/3/2023, Clare Painter, of licensing agency Clare Painter Associates

Digital licensing has become a core part of rights activity for many publishers and it can provide valuable revenues, usually with a high margin. It is important not only in academic publishing, where it first took root, but also for those publishing in specialist, educational and broader non-fiction fields. Most licensing centres around libraries and students in one way or another but beyond academic institutions it can also encompass school, corporate and public libraries.

Licensing can take a variety of forms, but there are some key characteristics they often have in common. They will usually be for material in its original language, meaning that there is no overlap with translation rights deals. They will almost always be non-exclusive, which is important because it means you can license the same content to a range of digital products and platforms under a variety of sales models, and those licences can all run concurrently. It contrasts with translation and territorial rights deals, where exclusivity for specific rights is the norm.

Content aggregators create large databases centred around a specialist subject area, featuring content from a range of different sources. Libraries sign up for these under subscription or a range of different sales models, and you receive a share of the revenues based on how frequently your publications are consulted and for how long.

There are also models based on the number of concurrent users, the number of accesses, or flexible models which can trigger a library purchase when usage passes a pre-set threshold. Others again will provide individual copies for a student cohort, or target students directly with monthly subscriptions.

Not all licensing partners are large corporations with lots of different products and sales models. Some will offer a single core product, perhaps focussed on a market sector you might not otherwise easily reach. For most publishers, it is a good idea to sign direct agreements with a mixture of both.

Signing directly allows you to maximise revenues by tweaking your sales multipliers or even opt out of models that aren’t working for you. That’s one of the reasons why our licensing agency pre-negotiates contracts but it is the publishers themselves who sign the final agreements.

Unlike in other areas of rights, licensing agreements are usually supplied by the licensee rather than the rights holder. That’s largely because digital products can be so varied, but it does mean you have to take care. An informed contract review is essential.

What terms should you look for in a digital licensing agreement? Clearly you are looking for a good share of the revenue but, beyond that, you also need to thoroughly understand how the licensee sells to their own customers.

Ask for prompt and regular reports so you can review their sales models and make adjustments if you find some models more profitable than others for your particular list. Look for reassurance about how quickly your publications will made available and check what steps are in place to prevent unauthorised use.

Be careful if you come across a ‘most favoured nation’ clause which talks about the having the same or equivalent terms, unless you understand exactly what that will mean for you in practice. Very broad wording here might cause you problems if, for example, you try to compare sales models from different companies which use different terminology.

It is worth getting advice at the contract stage to make sure you have enough protections in place and will be able to sign plenty more non-exclusive licences in future. That is much better than discovering later that you don’t quite have the flexibility you expected.

The great thing about building licensing partnerships is that many of them will remain in place for many years. Sales models may evolve but usage and revenue can continue to benefit your whole list, as long as you continue to supply new frontlist titles on a regular basis. Keep experimenting, seek advice when you need it, and your digital licensing partnerships can continue to bear fruit for years to come.