When you bring in a web designer or agency to build your business website, you might assume that the entire finished product belongs to you. After all, it’s your company, your brand, and your money! But website ownership is much more nuanced than that. Understanding these nuances means you first have to understand your contract.
I know, I know — no one gets excited about contracts or the legalese contained in them. Blah, blah, blah. However, while contracts are boring, they are essential to any healthy business relationship for these three reasons:
- First, it defines the relationship between you (the client) and the company. Meaning, what the agency is going to do for you, by what time, for how much, etc. It also details how you’ll move forward if something goes wrong.
- Second, the contract details your rights and responsibilities with regard to the digital agency. In other words, it lays out what you need to do in order to help the agency fulfill their part of the bargain, as well as what you are entitled to from the agency.
- Finally, the contract protects you legally if the agency fails to meet the terms of the agreement.
At least, that’s what they’re supposed to do. If the contract is vague or fails to address certain key elements of your relationship with the agency, it can leave you unprotected and vulnerable.
One of the most important, yet often overlooked, things to address during the contract phase is ownership. Once your developer has completed the project for you, who owns the work? Again, you might assume you own the website and all its contents. While that may be true in many cases, it’s important to realize that certain parts of your site may be “borrowed” from another entity. Let’s walk through the differences between work for hire, a license to reuse software, software as a service, and any other specialty licenses.
Work for hire
A work for hire is when the entirety of the product being developed belongs to you. It can include the files used to design the site; associated graphics, videos, and stock images; and the database programming. This is the simplest form of ownership, but it can also be the most expensive, because all the elements of the website must be built from scratch in order to be transferred to you in the event that you are no longer a customer.
License to reuse software
In many cases, there may be limitations in your agreement as to the level of ownership offered. The digital agency might have developed their own hosting platform or other software elements, and in the contract, they state that they’re granting you a license to use the work product as long as you make recurring payments. This is a pretty common arrangement, but you need to understand that this provision ties your website to the agency for ongoing services. You may own the content on the site, but if you leave the digital agency without lining up a replacement arrangement or you stop making the payments altogether, your services may be suspended or terminated. So just be clear about what type of product you want and what type of product you’re purchasing.
Software as a Service (SaaS)
In some situations, your digital agency might utilize a set of licensed products to build and manage your website. These products are referred to as Software as a Service, or SaaS, and may include DIY site building products like Wix or Squarespace.
For all intents and purposes, these are leased websites that are owned by the software company. When you contract with one of these services, you’re paying a fee for a license to use their product that is revocable. If your website violates their Terms of Service (ToS), if they dissolve their business, or if you discontinue paying their recurring charge, the website you worked so hard to build on their platform is gone.
When a digital agency you’ve hired utilizes a SaaS, make sure the following questions are addressed in your contract with the agency:
- Who owns the software license associated with your website? In other words, is it your organization’s license, or the agency’s?
- If there are fees for the use of the software, who makes the payments month after month, year after year?
- Does the agency make these payments for you and pass the cost to you? Or are you expected to pay the fees directly to the SaaS provider?
- If the agency pays the fees but goes out of business, what happens to your website when they stop making the payments?
Other licenses to consider
Beyond the content management system, or CMS, that your website runs on, there are other elements of your site that might require licensing. If your site uses a shopping cart, there may be a separate license for the shopping cart software, the security certificate, the merchant account services, and the web hosting.
If additional licenses are required to build your site, you need to know the following:
- Who holds those license keys?
- How much is the renewal?
- Who will be responsible for the renewal of those licenses? Is it you, or the digital agency?
All of these details should be spelled out in the contract to avoid any pitfalls down the road.
One of the most common license types to also keep in mind is stock photos and graphics, which are often licensed for use for one year at a time. Who owns the license to use them? Do you have a license of your own, or are the photos posted under the developer’s license? Even worse — is there even a license at all?
Stock photo licenses gets people into trouble more often than you think. At Southern Web, I always recommend that my clients open their own account with a stock photo provider so they can purchase the license themselves and, if necessary, manage any renewals. If they forget, stock providers are very good at sending out cease-and-desist orders and fine letters for violations.
Wondering what can happen when the license to use stock photography isn’t properly cleared? Here’s one horror story I’ll share:
A digital agency we know had a client in need of a website. At the time, they were subcontracting the graphics work to a graphic designer who was doing a limited stint with the company.
Unbeknownst to them, this designer put together a web design that included images they had found on Google Images and just saved without purchasing the rights. Those images were not the client’s property, nor did anyone have the authorization to include those images in the design. The client loved the design, and the digital agency was none the wiser.
Six years later, the digital agency received a cease-and-desist request from an attorney who represented the owner of one of the images that had been used without authorization. Accompanying the request was an invoice for $850 for unauthorized use of the photo, offered as an alternative to litigation. Sadly, had the graphic designer done their job properly, the agency could have licensed the stock photo six years prior for maybe five bucks. But because of the historical nature of the web, the copyright owner could easily prove that their image had been used illegally year after year. The graphics subcontractor was long gone by this time, and the unauthorized use wasn’t the client’s fault — so the agency was left to cough up $850.
In the case above, the digital agency, not the client, got burned by a dishonest (or perhaps just careless) subcontractor. But situations like these underscore the importance of respecting and protecting all intellectual property. To keep things simple, it’s best for you to purchase your own license to any stock photography so it’s not tied to your digital agency, but in any case, always be certain that the contract spells out who is responsible for ownership and licensing of the photos and graphics. If your digital agency owns the license, that’s fine, but you’ll need to replace those photos or buy your own license if you ever part ways with the agency.
Again, it all boils down to your contract
The bottom line is that when you’re negotiating your contract, make sure all ownership and licensing details are spelled out clearly. After all, you’re more likely to get screwed over by what is not in the contract than by what is. This is why, as boring as it might seem, you must never take your contract lightly.