Excerpt from “Is it a Sale or a License” by Ivan Hoffman, B.A., J.D.

Excerpt from “Is it a Sale or a License” by Ivan Hoffman, B.A., J.D.

I recently read this article with great interest. I’m only quoting an excerpt with a link to the article as the material and knowledge certainly was not mine. However, I think it is well worth reading.

Ivan Hoffman’s words:

Here is the situation: you have a written contract for the production and sale of records, books or other creative works.  And now the work is being offered as a download on another site.  Is the download deemed a sale of the work or is it a license of the work?

The difference is very important.  Sales of a work are generally paid to the creator (author, recording artist etc.) at a lower rate (often a percentage of the retail or wholesale price) but licenses of the work, since they generally involve no production or other expenses on the part of the publisher or record company or other distributor, are generally paid to the creator at a percentage of the license fee, perhaps including any advances received by the publisher, record company or other distributor, and usually range anywhere from 25% to 50% or higher of the gross.

This issue has become most prevalent in the record business where often the agreements were drafted long before there was anything like downloading available.  However, it is also quite prevalent in the book publishing business given the fast growing market for downloadable books.

And so the parties and in turn the courts have had to interpret the intent of the parties as expressed in the agreement.  Keep in mind that these matters are very much about the language of the individual agreement and thus the lesson here, as in many of my other articles including those in the series “Precise Contract Language” (click on “Articles for Writers and Publishers” and “Articles for Recording Artists, Songwriters and Actors”) is about clear drafting and not using forms.  A great deal of money can ride on the outcome and trying to “save” money by not having an experienced attorney draft the agreement can turn out to be very “expensive.”  In the case discussed in this article, the decision seemed to turn on one single word!

Copyright © 2010 Ivan Hoffman.  All Rights Reserved.

For the rest of this article, please go to: IvanHoffman.com. Ivan has many articles and a newsletter that many writers and publishers would find useful. I had permission to list what I did.

Maralyn D. Hill, President
International Food Wine & Travel Writers Association
Books By Hills Success With Writing Where & What in the World
Member: Society of Professional JournalistsFinalist in the Writing and Publishing category of the 2009 Next Generation Indie Book Awards, “$uccess, Your Path to a Successful Book,”


Leave a Reply

Your email address will not be published. Required fields are marked *