When it comes to using stock photos, there's several stock photo licenses you can buy: Royalty Free, Rights Managed, and Extended. And you should really know and understand how each of them works if you want to be able to buy photos that fit your needs perfectly.
While each image provider adjust these agreements to their business and include their own requirements, each license type has its own concept and general terms that are common to all of them.
In general lines, Royalty Free is the most flexible and affordable (and therefore the most popular option), Rights Managed is the most specific and the one that enables exclusivity, and Extended provides extra permissible uses that eliminate restrictions from standard licenses.
But let's go a bit beyond in each licensing model:
Royalty Free (RF)
We said it's the most affordable and most popular license type for stock photos. Now, let's continue by stating that Royalty Free images are NOT FOR FREE. The “Free” in Royalty Free means you don't have to pay extra royalties to either the agency nor the image owner, other than the initial license fee.
RF is a one-time, flat rate license fee. The image provider sets up the price for the license, and you pay for that price once. That entitles you to use the image multiple times, in a wide range of permitted uses, and forever, without every paying extra royalties. Pay once, use forever. Simple as that.
This concept is what allows RF images to be low priced, and their affordability makes them the best choice for budget-minded buyers.
The downside in this license type is that all RF images are non-exclusive – anyone can purchase a license and use them. And given they are cheap, and they have the most lenient permissible uses for commercial, editorial and personal projects, they are often bought and used by many individuals or companies at the same time. This could potentially reduce the uniqueness in your work containing RF images, and at the worse case scenario it'd also dilute your brand awareness.
Rights Managed (RM)
Rights Managed might not be as popular as Royalty Free, but it certainly offers one thing that the latter cannot grant: exclusive usage rights.
RM license is customized to your specific usage needs. It gives you rights to use images in a determined way, for a certain period of time, in a particular geographic region, and for a limited distribution/reproduction volume. However, these parameters are not preset, and you can ask for the exact rights to cover your intended use. RM images are commonly more expensive than RF, and their cost varies depending on the rights you include, falling anywhere from $50 up to thousands of dollars.
The big plus is, given RM controls the use for all the licenses they've sold to an image, it's possible to exclusivity usage rights, and assure you'll be the only person using the image, for a limited time. Moreover, some agencies are also able to give you a usage history for the photo, enabling you to see all the ways it was used before, and make sure you're working with it in an innovative or unique way. Although much more expensive, exclusive use RM licenses allow you to protect from brand dilution and add value to your projects.
Customizable terms and the possibility of exclusive use makes RM the chosen license for big brands and companies conducting global marketing or branding efforts, or any other endeavors where exclusitivy of the visuals adds value to the final results.
Extended / Enhanced licenses
This license type is related to Royalty Free: while very flexible, RF images still come with certain restrictions, mainly regarding distribution/reproduction volume, and use of the images in products that you will then resale or redistribute. Extended license (also called Enhanced at some agencies), let you “extend” your rights over the images to include those uses prohibited by the Standard RF license.
Extended license may include the right to increase the limit of copies or reproductions of the image, or eliminate it completely by giving you unlimited copies; to use the image in items for resale (print-on-demand products, calendars, t-shirts and other merchandising, greeting cards, etc); to allow more people to access the downloaded images and work on them, before they are in use (Standard license states only the owner of the license can access the images); and allow for other methods of distribution and use.
Extended licenses are more expensive than Standard RF. They are however very useful when you want to get more rights than those of the Standard RF, but you don't want to go through the process of setting up a custom RM license, which could also be more expensive than an Extended.
As a downside, it's also noting that not all agencies include all the mentioned extra rights in their Extended agreement. Some include only a some of them, so your intended use might still not be fully covered by their terms. And others sell each Extended right as a separate license, which can make an image really costly if you need more than one license.
And you should never forget three very important points. The first, that none of these licenses make you the owner of the image. What you buy is the right to use the photos, not the ownership of the photos themselves. Copyright and full ownership of the content remains with the artist/photographer that created it, and the agency you licensed it from is the intermediary agent.
The second, is that most agencies prohibit sensitive uses of the images, in all the license types. This means you cannot use an image in any pornographic or adult-related concept, in any concept referring to illegal or criminal practices, nor any other defamatory or morally questionable use, including but not limited to controversial subjects regarding race, gender, religion, violence, hate.
Plus, this sensitive use prohibition is extended to images of people: you cannot use a photo of a model in a way that makes it look the person depicted is endorsing a product or a service, nor in any way that portrays the model in a negative or potentially offensive way, included but not limited to the sensitive subjects mentioned before.
Third and last, but not least, is that all agencies modify the licensing terms to their likes, introducing and removing terms and clauses. For this reason, you should always read the license agreement thoughtfully, including the fine print, and make sure you understand the agreement before using the images, to ensure you're using them in a legal, accepted way.
To find great agencies to buy stock photo licenses, do check this awesome list of the Best Stock Photo Sites.