Two Words (part 1 of 2)

From the cover of AIGA’s Design Business Ethics* series (cross out added by me). Design: Grant Design Collaborative

When you cheat you only cheat yourself. That’s how the expression goes. It turns out, though, that’s just not true. I had an experience last week that drew this into sharp focus for me. I’m still a little raw from it, so I apologize in advance for any aspect of this post that seems cathartic. My hope however is that my experience may benefit you.

Here goes.

Two weeks ago we had an inquiry from a potential new client — a new business in San Francisco being started by a really interesting, experienced and genuinely nice guy. His initial email was a little sassy and I immediately got a good vibe about him. We spoke on the phone the following day, and on short notice arranged an in person meeting at our office. He pitched his concept. We shared our work. Mostly though, we just talked about our respective approaches to business, craft, living, etc. and quickly formed a pretty solid rapport.

I spent the entirety of the next day and evening writing a proposal for the project. I knew his budget — which was adequate but ambitious given the list of deliverables — and so tailored a design process to meet his needs. I don’t include concepts in our proposals, but I do outline some of the key conceptual issues and challenges. As such, every proposal I write is basically from the ground up. It’s a significant but necessary investment of time and effort, and an approach that I believe honors the client and respects the importance of the commitment we’re asking them to make.

The next day I received an email from our prospective client saying that he was emotionally moved by our proposal (I promised not to repeat the exact words he used, but they were flattering). Late that afternoon we chatted about some of the particulars and I made a few revisions to help clarify/quantify a few ambiguous points. The next day we won the job. Elation. “We’ll Fedex a check to you today, you should have it in the morning.” Sweet.

If you’re thinking this is where it starts to fall apart, you’re right.

Late the next day (Friday) our new client asked if I could take a conference call with his investors. They had some additional requests. Understandably they all revolved around money:

  1. Can we adjust our terms to require a smaller initial deposit?
  2. Can we give them terms of net 30?
  3. Can we lower our markup on reimbursable expenses?
  4. Can we sign over all rights of ownership and all electronic files?

Request number one was no problem. A larger initial retainer simplifies our billing and puts us at less risk, but I also believe business relationships are based on mutual trust and the proposed restructuring was well within professional norms. Likewise with number two. Request three eats into our profit margin a little, but I’m not a greedy person and as long as they pay their bills on time carrying a few expenses is no big deal. Done.

The fourth request presented more of an issue.

Like photographers, illustrators, architects and almost all other creative professionals we own the copyright to the work we produce. It’s not just an industry norm (see AIGA’s series on professional ethics in graphic design), its the law. When we produce work for a client we assign usage rights to that work. We detail that assignment very meticulously in our proposal so there are no surprises. We also provide a “buyout” option that allows the client to pay for exclusive ownership of the final work, and all the files. Photographers do this for their negatives, illustrators for their original drawings, etc. (for things like logos where the file is inherently the deliverable we don’t apply buy out fees. It’s also important that a client own their identity outright, so I’ve always viewed that as an exception to this copyright clause. We state as much in our contracts).

So here’s my quandary:

The job seems like it may now be in jeopardy, but all I have to do is change two words in our proposal and its ours. My staff is already really excited about it. We’ve already started doing a little research. I’ve put three phone calls, a meeting and 9 hours of proposal writing into capturing the job. It’s a great fit and has amazing creative potential. Plus, I genuinely like the guy. But is it giving away too much? Does it undermine my profession and my peers? Does it devalue our work?

What is the cost of those two words — to our bottom line, to our integrity, to the profession? How much do they really matter, and why?

I’m still not entirely at peace with my decision. But before I tell you how it all went down I’m interested in your thoughts. I’m being pretty candid here, so I hope you will be too.

[you can read part 2 here]

*AIGA’s series on Design Business + Ethics is an excellent resource for the practicing designer, and one on which I continue to rely. The altered cover image is used here for editorial purposes and implies no comment by me on AIGA’s position on this issue, nor any endorsement by AIGA of my views in this instance.

  • Kevin

    I had a similar experience with a client for whom i designed some of my best work — creative, fun, highly visible, etc. They asked for files which I explained legally belonged to me. I also mentioned that my livelihood and the integrity of the design can be compromised.

    They then mentioned that they would find another firm and not give me future work if I did not turn over the files. “Blackmail” came to mind. I did turn over ONE file. In the end, work done inhouse by their “designer” was embarrassingly bad. Their designer was not even competent with the program. I would tell people familiar with my work that I did NOT design certain pieces.

    This client continues to give me new work; and I believe they realize the quality and expertise of design that I provide is much higher than anything they can do inhouse.

    I’m not sure I would do this again…. especially for a new client.

  • theprofessor

    in part, it looks like you’ve answered your own question: “We also provide a “buyout” option that allows the client to pay for exclusive ownership of the final work, and all the files.”

    otherwise, i’ve been out of the game for a while, but i ask: what’s the risk?

    what’s the risk of them taking the design after the fact, repurposing it and putting it out there again? what would you do with the rights if you retained them other than squatting on them? what would they do with them if they owned them? have you asked?

    conceivably, we hold onto these rights for more egotistical rather than practical reasons… practicality comes in when we want to ensure that we can use the work for publicity. however, generally it’s more so that the client will have to come back to us when they want to do something more, no? (i.e.: we hold the keys to future iterations).

    however, if the shoe were on the other foot, we’d get cranky about it. for instance, having to take your car to an “authorized” dealership (or void the warranty) rather than your favorite hometown mechanic… working with an “in-network” doctor even though the doctor who started your treatment was “in” network with the process started but now because of some administrative shift, they aren’t… having to be on X-network, even though they suck, in order to keep your fancy phone… blah, blah.

    no one likes to be locked down after they feel they paid good money for something that they feel is “theirs”…

    seems a compromise would be to adjust the budget accordingly: more money for exclusive rights. or less money for shared rights… and a “portfolio” provision, of course. if they balk, it’s likely a sign that they’re going to turn into the “evil client” at some point in the near future…

    … and, of course, it depends on how hungry you are… that might matter most.

    • @professor: You’re right that the buyout option is there to allow the client to own the work outright. The request was essentially to give them full ownership without any additional buyout — basically to get the design, the rights and the ownership for roughly half price. That frames the problem in a different way: is it wise to compete on the basis of price?

      I think the ownership issue is less about locking a client in to using us exclusively for all future work, and more about the real value of that work. If I create a brochure the deliverable is the finished artifact. The argument goes that if I also give you the file used to create it you could use that file to create derivative works — a poster or website based on the same design, images and layout for example. If the file included licensed photography or illustration, their use is restricted by the license. Same with any fonts that are used. Why would the design be any different?

      On the other hand, as you say, what is the real risk? How much does it really matter? Is this position on design value even relevant or is it hopelessly outdated?

  • You can still say no and it doesn’t mean the deal is off. If you say yes, you will forever have this relationship with him and future projects from him. The expression goes: cheap clients refer cheap clients. Apply that to this situation. You already said yes on 3 of the 4: that’s meeting someone more than half way. He has a buy out option. He can choose to take it. Your proposal moved this guy to tears (exaggeration mine) – I think it’s worth the risk to say NO and it’s worth your future dealings with this company as well. Do it for the industry man! Oh, and feel free to ignore my advice as well. I still think you’re cool.

  • theprofessor

    well, if you posed the buyout-option and they balked (and asked for the proverbial milk-for-free) then robyn’s advice holds much more merit (not that it was merit-less before, they’re wise words).

    it does seem, though, that — by holding onto the copyright — you’re “holding the keys”… and that it’s less about this vague value proposition, but more about a bottom line: who gets paid?

    who gets paid when the brochure turns into a website? if you own the rights they have to come back to you, no? how is that not locking a client in? if you’re good, of course, they’ll come back to you regardless of the rights issue. which brings up another question: if you’re confident in your skills, services and pricing, do you need contractual-handcuffs?

    an old football coach used to yell out the plays we’d be running to the other team — so confident that we ran them better than anyone else that the other team wouldn’t be able to counter a solid defense. he was right most of the time.

    from a design perspective, a previous studio had a very interesting take on the “value” of design… and modeled a few contracts as such: we made money when the client made money. in other words, we do the design for minimal expenses and in exchange, we take royalties off of future profit of X-item.

    in the face of a challenge, designers get innovative, right? in challenging economic times and in an era of questioned value of intellectual property, perhaps we have gotten rusty in a few areas.

  • Amy

    I’ve been in this situation a number of times and have lost projects over it—clearly I think it’s important. Our contracts were set up similarly to yours—you pay X dollars for the brochure and you pay 2X to include the files and rights to make derivative work. If we say that the value of the design and ownership of that design is the same as the brochure artifact, then we’re just contributing to the commoditization of design.

    To me it becomes a big-picture risk in the same vein as spec work—it might not cost me individually that much, but it costs the profession a lot.

  • I wouldn’t do it. One, it sets a precedent, two, it undermines the strength of your colleagues being able to hold out for their rights in similar situations esp now that you have made it public because everyone will want to know the outcome, three, it sets an example to students and interns that whatever the client wants no matter how unfair, greedy, paranoid, control-freakish or just ignorant, they get because basically a designer is a lesser being than a client and four, clients will probably cave anyway. If there is a compromise it is joint ownership, which I have reluctantly done and can end up working in your favour but is also a pain a lot of the time. Better than compromising your professional policy/values. I do think it devalues your work. On the other hand, if you decide to do it, I am absolutely convinced that there will be an excellently reasoned rationale and I will have difficulty in maintaining my adamant stance in the fact of it. (Difficulty, not impossibility.)

  • @Harrison Solow: Thanks ma. All compelling reasons to do the “right” thing (nothing like having one’s mother offer ethical guidance in a public forum!). All I’ll say right now is that in these oft described “challenging economic times” determining the “right” thing to do is a more complicated calculus.

    Oh, and don’t worry, we’re doing fine.

  • Harrison Solow

    “”There is one thing, Emma, which a man can always do, if he chuses, and that is, his duty; not by manoeuvring and finessing, but by vigour and resolution.” On the other hand, “duty” is pretty interpretable. And “mother”, yes, but also “writer” and not all that happy at the moment about certain copyright issues in the UK regarding ownership of my intellectual property! (And I know you’re fine, I just talked to you and heard from Amelie!)

  • I am glad I read this. Because I am a new (a.k.a. naive) designer, I had always thought that it was standard routine to provide your clients with the files at no extra charge, once a project is finished.

    I’m no expert on protocol in these situations, but the troubling thing here seems to be the retroactive adjustment of terms, after the “winning” of the project. Surely this does not bode well for the future.

    Having said all this I really want to read Part 2, although I’m 90% sure I already know how it ends.

  • @Max Batt: I think it surprises a lot of people (students and clients alike) that its customary for the designer to retain ownership of their original work. We understand and accept this for photographers, illustrators, painters, type designers, architects, product designers, musicians, software designers, authors, etc. etc., but for some reason its harder to grasp in our profession.

    You can buy a Coke for $1, but good luck asking for the formula for the same amount.

    You buy an iPhone for $300, but you can’t rebrand it and sell it as your own design.

    You can buy a font, but you can’t make a copy of it and sell or give it to your friend. Nor can you install it on more than one computer of your OWN, unless the license specifically authorizes you to.

    The reason in all of these cases is that there is a difference between intellectual property and commodity. A single serving of Coke or a 5-user font license have limited end value. The ownership of those original ideas has a much higher value (somewhere between $50 and $22 Billion). The same is true for graphic design.

    I didn’t learn any of this until I was working in the field, and much of it I only fully appreciated once I started my own firm. Some I read or received consultation on, but a lot of information and standards I came to through discussions with my peers and involvement with AIGA. If you want an excellent and very accessible book on the subject, I recommend Shel Perkins’ excellent and accessible book, Talent is Not Enough.

  • “somewhere between $50 and $22 Billion.” You are funny.

    I like the Coke example. I mean, it totally sounds reasonable hearing you explain it, I just hadn’t considered it quite this way before. So thanks for the enlightenment, and for the book recommendation, which I will definitely be checking out.

  • The ethics of the design profession, as this post illuminates, are somewhat insular and at times, fuzzy. Thank you for turning a personal business situation into a learning experience and discussion for a greater audience. Only through strengthening the ethics within the profession, will considerations like #4 be seen as absurd, non-issues.

    I have 3 responses to this situation, which I’ll try to keep brief (yet candid).

    #1
    Maybe the client is just unaware of our profession’s business ethics. Are the client’s requests knowing affronts to the commandments of AIGA or are they naive concerns by suits with three letter titles? I could certainly continue on a tangent regarding the perceived value of digital work in our ever increasing file-swapping happy times, but I’ll stop here. Plus, the “Buy a Coke—not the recipe,” example is a nice one.

    #2
    What if you withheld that you had made a decision (in the interest of the profession) and you crowdsourced your answer? This would give you an interesting read on the business ethics of the profession. I know it sounds like you’d be stealing from Peter to pay Paul, but it’s purely a “What If?” situation (and of course you would have made your decision prior to the crowdsourcing).

    #3
    My immediate response is somewhere between: “Of course we can sign over rights and the electronic files, once proper payment is received per the buyout clause on line xx of page blah blah.” Or the alternate (Read this in a Samuel L Jackson voice): “Motherf######, can you read?! Or maybe you’re just blind*. We ain’t givin’ you shi## until you show … us … the moneyyy!” *(Apologies to any blind or illiterate folks reading the blog)

  • The more troubling aspect for me, beyond the copyright, is that all the demands from point 1-4 force you to devalue and renegociate the worth of the work and basically fall into business under their terms. I wonder how much this foreshadows further interactions with this client. Will this set the tone for current and any other future work? Will this mean that after all is set and done, the investors will always have the last word — one that maybe challenges your policy / values? Does the opportunity of doing that particular job overshadow the consequences all those compromises entail? It seems, those adjustments have less to do with ‘intellectual property’ and more with how we choose to define the value of our design work. Do we only define it in monetary terms? I hope not. Maybe there’s much more (or much less) that this project brings to the table than just the sum in the paycheck.

    Your analogy got me thinking: what exactly is the original idea: the formula for coca-cola or the iconography of its identity? Aren’t they both in direct relation to each other and conceptually inseparable? The greatest dilemma in design is that we are at the service of the original ideas of others, thus, how can we define who owns what?

  • theprofessor

    re: Design as a commodity… (a devil’s advocate/pot-stirrer POV)

    In Josef Müller-Brockmann’s day, to become a designer meant apprenticing with a printer/designer. In the early 90’s, my Quadra workstation cost more than my car. Today, schools are educating countless folks on “design thinking” principles and “InDesign 101” is available at the local Extension campus… and the tools to do the jobs are more accessible than ever. Bring in the web-aspect (be it a blog or blurb.com) and the barrier of entry for publishing evaporates completely. In regards to print/graphic design, the table-stakes have dropped tremendously and have begun to force a new way of thinking about the profession and its future. Is it a pain in the ass? (Yes). Is in inevitable — or a long-time-coming? (Likely)… At least we’re not alone (got any friends in the newspaper business?).

    The all-or-nothing mentality of rights management seems to be showing its age in an era of a more-flexible take on IP-rights (how many un-purchased MP3s are on your iPod? I’m not going to even ask about “borrowed fonts”). Perhaps the reason your client sees that asking for rights is no biggie is because the playing field has changed so much in the last decade that it’s a different game entirely… but we’re still playing cricket by provincial rules.

    Should good design be bought, sold and held only by the elite? If design is indeed becoming a commodity, then is that a bad thing? Is it bad that you can get a well designed widget made in a sustainable way from your local big-box (who hires locally and provides benefits to its employees and gives back to the community)? Wouldn’t it be a great world if designers were indeed jobless because all design was good and people automatically made choices in the best interest of innovation?

    Sure the designer wants a nice house and the kids in braces but is that a self-serving way of thinking or a holistic one? In so many conversations about “preserving the profession, standards, value, etc”, there’s simply an underlying verve of selfishness which just seems, well… not as virtuous as we propose to be. The designer wants to get paid for doing what they love — and, while that’s not a bad thing, carrying that banner under the flag of “professional virtue” is beginning to seem weird to me. It’s not the profession we’re protecting, but the practitioners.

    Truth be told, I’m not sure myself… though it seems, perhaps, that the “change or die” axiom is upon us. Or maybe not and the above is utter bullshit. Maybe we do stick to our guns — and if we all do it, the profession will either weather the storm or at least we’ll all go down with the ship holding hands and feeling really good that we made the right decision.

    However, that the folks that do good work seem to make it work out in the end… and I have no doubt that your decision will turn out well for you. There are some excellent points above and like Timbo pointed out, thanks for opening the discussion.

  • @theprofessor: 100% of the songs on my iPod were purchased. We also buy our fonts and our chairs are authentic.

    I’d counter by asking how much of the produce in your fridge is stolen? When did you last negotiate the price of a restaurant meal? I’m going to guess none and never because I think you’re a nice guy who likes farmers and grocery clerks and chefs and waiters. I do too. Every bit as much as I like musicians and type designers. And graphic designers.

  • “When did you last negotiate the price of a restaurant meal?”…

    Funny you should ask. I was at a restaurant just the other day and looked at the entrees. The one that caught my eye was more than I wanted to spend and had a few bit that I wouldn’t have otherwise chosen. On the specials one-sheet, there was something similar for literally 1/2 the price. It wasn’t as large, but I wasn’t that hungry… and a smaller meal might actually do me some good. And I asked the waitress if I could substitute this-for-that.

    So, I actually didn’t have to negotiate per se — the restaurant gave me many options to choose from and I was able to craft something to my liking from the available and presented options that fit my budget and expectations (and the waitress said “sure” on the substitution). So I left well fed with a great experience (and will likely be back) and the restaurant made just as much money off of me as anyone else ordering the special.

    But to your original question: “Is this position on design value even relevant or is it hopelessly outdated?”… generally graphic design services aren’t an al la carte menu of options and there’s little flexibility comparatively (the all-or-nothing bit mentioned earlier)… but could they be? Is it time we look at service offerings in a more innovative way?

    It seems like you did offer some options in this case — and they balked (which, I agree, was not ideal). And I’m guessing that you passed on the project, which is sad to some degree since you/staff were jazzed about it. However, I’m left wondering if there was another option. Was there another way to look at rights/ownership that would have been beneficial to all?

    • So you got a smaller meal for 1/2 the price. That sounds fair.

      I wouldn’t say that we passed on the project — it passed on us.

      We’re talking a lot about the client here, but as you’ll see in part two I think designers are the culpable ones in this scenario.

  • I just read the 2nd part… well played (with unfortunate results).

    You creatively looked at a problem that previously had an A or B choice and came up with C — a solution that should have alleviated the client’s concerns and also met your own standards. You busted the “all or nothing” paradigm.

    Interestingly enough, it was the “all” (the firm that threw in the rights/files) and the “none” (the designer that left the client feeling over a barrel) that ultimately made this one go sideways. I hope you continue to fight the good fight while looking for innovative ways to solve the issue at hand.

    Now all that’s left is the answer to the question: Who was the other firm? (not expecting a reply to that one, of course).