Hey guys, I'm planning to outsource concept art but I have some issues regarding the usage rights of the illustrations.
I mean, when contracting someone to create a visualization of your idea, whose creation it is? Is it a shared creation? how does that work?
Do you have to pay royalties to the concept artist that draws your idea? Do you have any restriction in using your own character if it uses the visual concept drawn by another person?
How indie game studios usually handle this situation?
Yes, very. Most companies (game and non-game) retain full ownership of all art that is created for them and this is defined in the contract.
However, you should at least allow the artist to use it in a portfolio after the game has been released / abandoned.
There's also the little issue of payment to consider... If you are paying near-market rate, then you can certainly purchase exclusive rights to the artwork. If you are paying considerably less (i.e. you have little budget for art), then the artist may want to retain more rights to the original artwork (offering you a non-exculsive license, or a term-exclusive license, instead).
The copyright in the artwork will be owned by the artist unless you have a (1) written agreement that states (2) it is a "work for hire" and that all IP rights in the artwork are assigned by the artist to your company. Compensation for the work is between you and the artist. It might be a good idea to reach out to a lawyer with an IP background to give you some forms to use in connection with the project to ensure you are getting clear chain of title to all the assets. Good luck!