Understanding Digital Product Licenses: A Guide for Digital Creators
Did you know that someone who lawfully purchases your digital product could *technically* and legally resell, give away, or dispose of the product?!
Sounds crazy… I know, but here’s how this works. ⬇️
In the legal world, there’s something called the first sale doctrine that says an individual who knowingly purchases a copy of a copyrighted work from the copyright holder receives the right to sell, display, or otherwise dispose of that particular copy, notwithstanding the interests of the copyright owner.
Still sound crazy? Well to be quite honest with you, it’s because IT IS!
As a digital creator, the last thing you want is people ripping off your products for their own.
You put a lot of time and effort into creating your products and as a business owner, you want to know that time and effort is going to pay off – aka grow your business by attracting new followers, subscribers, and even earn you money (rightfully so).
In business, you have 3658375937 billion things to worry about (not an exact number, just an educated guess 😅) and someone reselling your products shouldn’t be one of them.
SO, how can you avoid this? As your legal bestie, I’m here to tell you how.
How To Protect Your Digital Products From Being Resold
The most simple answer is this: implement contracts and/or licensing agreements in your business.
Yes, it really is THAT simple!
But if I know anything about being a business owner myself, it’s that simple doesn’t always equal easy.
Sometimes the most simple tasks are the hardest for us to do, so let me break this down a bit further and give you a seriously EASY way to implement this in your business.
First things first, it’s important to understand the different types of digital product licenses.
When you're creating digital products, understanding the types of licenses you can offer is crucial. It's the difference between protecting your work and maximizing its potential in the market!
Here are the key licenses to consider:
This is probably the most common type of license that you’ll use when creating your digital products and you’re essentially saying, “Hey! You can’t give this away.”
This is the type of license that we use for our contracts in the TBL Contract Shop!
This allows multiple buyers to use your digital product. It’s a way to sell the same product repeatedly without limiting its use to one purchaser.
For instance, if you create a software tool, you might offer a non-exclusive license to multiple companies or individuals.
A rights-managed license is specific and controlled. You define how, where, and for how long the buyer can use your product. This could include restrictions on geographical use, the duration of use, and the type of use.
Let’s use a photographer as an example – that’s an example of a digital work where the photographer may choose to implement a rights-managed license to control how a particular image is used.
A royalty-free license lets the buyer pay once and use the product multiple times without paying additional fees, however, there are usually restrictions, such as not being able to sell the product as if it were their own.
This is a super common license for music, stock imagery, or other forms of media where the customer would typically need to use the digital product over and over again.
A personal use license is exactly what it sounds like: the buyer can use the product for their own personal use, but they cannot profit from it or use it for any business purposes.
For example, a graphic designer might create digital templates that people can purchase for personal use, such as invitations or social media graphics, but they cannot resell them for business gain.
A commercial use license, on the other hand, allows the buyer to use the digital product for commercial purposes, which can include marketing, business operations, or even direct resale within certain limits.
These licenses are for creators who want to offer their work with fewer restrictions. They allow for modifications and sharing under certain conditions and are often used for software, educational material, and creative works.
Understanding each of these license purposes is the first step in protecting your digital products because they allow you to know which license YOU specifically need.
Something important to remember is that every digital product will be different.
Each time you create a new digital product, you must consider: how do I want people to be able to use this product? What is the intent?
Thinking about those things each time you create a digital product will allow you to then implement the correct licensing agreement into your terms of purchase, which is where the actual clause will be stated that buyers must agree to!
How to Implement a Terms of Purchase for Digital Goods
Once you know what type of licensing you need for your digital product, it’s time to actually put it into action, so you can avoid the potential nightmare of your customers re-selling your work for their financial gain.
So, how do you do it? Insert a Terms of Purchase at checkout!
The KEY in this Terms of Purchase is that you display your licensing agreement (this template already has that for you and allows you to edit based on your needs) and make sure that your terms are set up as a clickwrap (more on that here!) at checkout, so that the customer is actively agreeing to them when they make the purchase.
It really is that simple AND that easy.
All you’ve gotta do is grab your Terms of Purchase for Digital Goods HERE, plug in the details that apply to your business, and set everything up on your website.
Oh and to make it even easier for you, you’ll receive step by step instructions for how to use the template correctly to ensure that you really are protecting yourself and your business in every way! 🙌🏻