I've heard that if one is a professional photographer that it's bad to perform work on a "work for hire" contract. Why is this situation unfavorable to the photographer?
I am assuming that this is in reference to United States Law.
Under US law, a copyright is assigned at creation to the employer or person for whom the work is created if it is done as a "work for hire".
This means that you, as the photographer, are not the owner of the copyright.
If you instead use a contract that gives you the copyright, you are then able to license the work, and you then have control of the work. If you don't own the copyright to your works then you can run into situations where you would be required to obtain a license in order to make use of an image that you created.
I do 'work for hire' assignments all the time as part of my business.
I think the real 'danger' is not getting paid an appropriate amount in order to relinquish the copyright to my work. If you've set your payments appropriately, then work for hire can be extremely... and I mean extremely... lucrative for a photographer.
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