Protecting Your Dreams

Filtering by Category: Contract Law

Talking to Professionals on the Business of Comics

Added on by Gamal Hennessy.

by Gamal Hennessy

The comic book industry is a confusing, chaotic and insane industry for everyone involved, especially the newcomer. Fledgling writers and artist often make mistakes on the business side of things that cost them tens of thousands of dollars, years of work or both.

The best way to avoid mistakes in the comics industry is to learn from professionals who already know what they're doing. Over the summer, Aaron Long of Comicosity asked dozens of established comics professionals what type of advice they would give to new creators. The insight they provided covered professionalism, marketing, accounting, time management and outlook, but one of the most consistent statements is the same thing I've preached on this site for years. 

COMIC CREATORS NEED TO UNDERSTAND AND NEGOTIATE THEIR CONTRACTS

When I worked at Marvel and Central Park Media, we often sent out contracts to talent saying "have your lawyer look over this before you sign it" knowing full well that person didn't have a a lawyer. I started C3 to change that and give writers and artists a chance to understand and benefit from the legal side of comics. The professionals already understand this. Read their comments and learn from their mistakes. 

Have fun.

Gamal

Success in the comics industry requires an understanding of the business, creative, and legal aspects of the medium.

Sign up forThe Professional Comics Creator to get monthly e-mail news, tips and advice on how to get the most from your characters and stories

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSEING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

Get What You Give (Rights and Revenue in Comics)

Added on by Gamal Hennessy.

by Gamal Hennessy

A contract is an agreement between one or more groups for the exchange of resources. The exchange could be time for money, goods for services, property for future gains or any combination of those things. The best agreements exchange roughly equal resources. The worst ones have one side trading large amounts of resources for little or nothing in return.

This is the problem that artists run into with many of the contracts that I see. The most important service I provide is showing my clients what they are giving up in comparison to what they are getting. I’d like to provide an overview of the different types of rights and revenue streams as a general overview for creators looking to get their projects into the market.

Types of Rights                               

Comics and publishing are governed by a branch of the law called intellectual property. Copyright law is a specific type of intellectual property. A copyright gives the creator of an original work (like a comic) the right to benefit from the sale and distribution of that work. There are various types of ways currently available for comic creators to benefit from their creativity. Some of the major distribution methods include:

  • Publishing (Traditional printing, digital printing, novels, audiobooks, etc.)
  • Public Display (gallery displays of artwork)
  • Theatrical (Movies whether live action or animated)
  • Television (including network, basic cable, premium cable, PPV whether live action or animated)
  • Home Video (including DVD, Blu-Ray, etc.)
  • Live Performance (including Broadway performances and theme park performances)
  • Interactive (including console computer or mobile video games)
  • Merchandise
  • Sponsorships or product placement

As new forms of media distribution are created, new rights are created for the artists. These rights are universal, but they can be divided or carved out by geographic area, time frame, distribution channel, language and other factors. (This division can be complicated, so I’m going to save that for another post)

Types of revenue

Just as there are different rights that creators can use to get their work into the world, there are various ways that they can be paid. Comic creators need to focus on four ideas:

  • A royalty is a percentage that the artist earns for every finished unit that is sold. For example, an artist might receive 30% of every one of their comics that is sold to the public.
  • An advance is paid before the work is finished. For example, a writer of a novel might receive money up for her novel based on the proposal not the finished product.
  • A minimum guarantee (MG) is money paid up before the work is finished, based on anticipated sales. For example, if a toy company plans to sell a new licensed toy for $10 and the creator gets 10% of that sale, then the creator gets $1 per unit sold. If the company expects to sell 100,000 units, then the MG that the artist gets for this deal is $100,000.
  • A page rate is a flat fee paid to the artist for every page accepted by the client or publisher. For example, a penciler with a $300 page rate deal gets $9,600 for a 32 page book, not counting the cover.
  • These are broad revenue concepts. They are often altered and refined by concepts like gross, net, recoupment, offsets and other variables. (This is another complicated subject that I’ll can talk about later.)

Choices that Artists Must Make

In certain comic deals, the types and amounts of revenue are fairly straight forward, like the work for hire page rate. There is more confusion for creators pursuing creator owned deals. There is often no advance, no MG, and a blanket royalty rate for all forms of distribution. This puts them creators in a dangerous position since the lack of upfront money and the uncertainty of any profitable sales in the future means that the creators are really working on spec while at the same time giving up all their rights to their property.

From the publisher’s perspective, it is understandable why they would do this in their contracts. Publishers protect themselves from risk by limiting exposure to projects that might not be financially viable. At the same time, they maximize their potential gain by securing as many rights as possible for projects that are financially viable. Artists need learn the same lesson. They need to counter the publisher’s position by attempting to limit the rights that a publisher gets for projects that are financially viable and maximizing revenue for every project they do.

I know negotiating power is often limited for artists. But having a clear understanding of the relationship between revenue and rights and clear goal of where they want to go can help maximize their limited negotiating power and increase their chances of success.

Best

Gamal

Success in the comics industry requires an understanding of the business, creative, and legal aspects of the medium.

Sign up for The Professional Comics Creator to get monthly e-mail news, tips and advice on how to get the most from your characters and stories

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSEING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 ATgamalhennessy@gmail.com FOR A FREE CONSULTATION.

Ten Books for the Professional Comics Creator

Added on by Gamal Hennessy.

Any aspiring artist needs to study their craft if they want to be successful.

New talent entering the marketplace has to have an understanding of their industry to avoid making mistakes and wasting precious resources.

Comics are no different. A firm understanding of the art and economy of the business is the foundation of success. 

A lot of books have been published to help new and veteran creators navigate the craft. John Wilson of Complete Set recently offered ten titles that touch on the creation and sales of sequential art. Some of his books are classics from forty years ago. Some came out last year. All of them are worth looking into if you want to make and sell comics.

Read Ten Books to read Before You Start Creating Comics: http://bit.ly/2bAuyXA

Success in the comics industry requires an understanding of the business, creative, and legal aspects of the medium.

Sign up for The Professional Comics Creator to get monthly e-mail news, tips and advice on how to get the most from your characters and stories.

Have Fun.

Gamal Hennessy  

My Podcast Interview with Comics Pros and Cons

Added on by Gamal Hennessy.

by Gamal Hennessy

Comics Pros and Cons is a podcast hosted by Derek Becker about the craft and creativity of comics. While most of his guests have been comics creators, he decided to bring me on to talk about the business and legal aspects of the industry. 

Our conversation covered a lot of ground, including a discussion of:

  • Copyrights and trademarks
  • The four types of comic book professional
  • The fan art controversy
  • When comics creators need to have a contract

We had a lot of fun recording the podcast and the topics will be of interest to anyone interested in the comic book industry. Feel free to click on the link below and subscribe to Comics Pros and Cons while you're there.

Gamal Hennessy interview with Comics Pros and Cons

Have fun.

GH

Why Can’t You Write the Contracts for Your Freelance Business?

Added on by Gamal Hennessy.

 

This might be the best time to be a freelance professional. The existence of so many online tools gives you the chance to take an idea and turn it into a business.

But can the DIY spirit be dangerous if taken too far? Is there a point where it is helpful, even preferable, to bring in a professional for certain jobs? 

This video talks about three reasons why it makes sense not to do it yourself when it comes to legal agreements, especially ones involving your intellectual property.

Have fun.

Gamal Hennessy, Esq.

NYS Bar Number 2917649

What is a Contract and Why Do Artists Need Them?

Added on by Gamal Hennessy.

If you’re a professional freelance artist, you already have a lot to worry about.

Do you need to concern yourself with contracts too?  

In a world of instant transactions and online business, do you really need to spend time and money on a piece of paper no one wants to read and few people understand?

And what is a contract anyway?

What’s the point of it?

When do you need to have one?

The first episode of my video series will touch on all these questions, and then talk about what could happen if you don’t have the right contracts for your work. 

Letters of Intent: Uses and Abuses

Added on by Gamal Hennessy.

By Gamal Hennessy

            Contracts come in a variety of flavors. Some are simple one page affairs. Others run dozens of pages. They can be unchanging boilerplate or fluid documents with several amendments and changes overtime. Even a verbal agreement can be enforceable as a contract under certain circumstances. Every contract is a different animal. Being familiar with the variations can save you a lot of headaches in your business.

            A letter of intent (LOI) is a very curious beast. It is often used in major deals like business acquisitions or investments, but they are also used frequently in entertainment and media contracts. Sometimes they are called deal memos, short form agreements or memorandums of understanding. Each one has their own nuances and weight in a legal sense, but the basic concept behind each one is a sort of pre-contract; a meeting of the minds before a more formal agreement is negotiated.

            In some instances, an LOI is helpful, even vital (See Forbes: The First Step in a Big Deal). In other situations it can signal a dead deal or deceptive maneuvers by the potential partner. Here are some of the pros and cons of LOI’s and what you should look for if they come up in your freelance or small business.

Uses:

A LOI can help you close a deal in several ways, including:

  • Wrapping Your Head Around the Deal: It can help you figure out what you’re getting and what you’re giving up. If you don’t understand the economics of your contract in a few pages, you probably won’t understand it in a few dozen pages. (See Considering Consideration)
  • Understanding the Economics: A LOI is a good place to figure out who gets paid, how much they get and when they get it. (See Your Slice of the Pie)
  • Getting a Feel for Your Negotiation Partner: Contract negotiation can be stressful or easy. A LOI can give you a sense of how hard it will be to both close the actual contract and work with the person once the deal is done. Someone who is easy to deal with for a LOI won’t always be the best business partner, but a difficult LOI negotiation can be a red flag for the road ahead.
  • Creating Something Each Side Can Bring to Their Respective Camps: If you have partners, investors, attorneys or anyone else who has input on your business, it can be helpful to hammer out a LOI to get their sign off before slogging through a contract. One document with all the major deal points is a useful tool for getting buy in and advice on both sides.
  • Creating Momentum: A LOI can generate a sense of inevitability in a business deal. Once everyone agrees on the major points, there can be more motivation to work together and close the deal. This psychological impact isn’t guaranteed and it might be fleeting, but it’s useful if you can get it.
  • Space to Shop: Unless there is a specific prohibition in the LOI, both sides have the ability to continue negotiating with other parties while the deal terms are being laid out. Either side might feel jilted if the other partner decides to leave in the middle of the dance, but a LOI often gives both sides room to maneuver.
  • Due Diligence: Related to the ability to shop around for a better deal and feeling out the other side, negotiating a LOI gives each side time to investigate and research the other side before the contract is negotiated. Potential problems and issues revealed in this stage can be corrected or avoided without much loss on either side.
  • Savings: A LOI can be negotiated at a lower cost in terms of time and money than a formal contract. So if the deal breaks down at the LOI stage, both sides can often walk away without much loss.

Abuses:

There are also several ways a LOI can be used as a weapon, including:

  • Contract Replacement: There are circumstances where one party might negotiate a LOI without any intention of executing a more comprehensive agreement. There have been several court cases where a LOI has been found to be an enforceable contract. If there are aspects of the deal one side was planning to negotiate in the main contract, they’ll never get the chance if the main deal never comes.
  • Creating Confusion: A LOI often focuses on the business and economic aspects of the deal without much attention to the legal considerations. If this LOI is the only thing the parties have signed, many questions about the deal could go unanswered.
  • An Inducement to Act: One side can use a LOI to pressure the other side to pay for something or perform some action before the final deal is in place. Once one side acts, their ability to negotiate might be hampered because they’ve already invested in a deal that may or may not exist. The other side can take advantage of this weakness and force a deal they couldn’t otherwise get.
  • A Delaying Tactic: This is related to the Space to Shop benefit described above. If one side isn’t really looking to make a deal with you, a LOI might give them the space they need to find another partner and waste your time. In addition, if your LOI negotiations are not bound by a confidentiality agreement, the terms of your LOI could be used by your alleged partner as a negotiation tool to close a deal with someone else.

Considerations:

            When faced with the prospect of negotiating a LOI instead of a full contract, how will you know whether the document is being used or abused? Every situation is different, but consider these questions when analyzing the situation:

  • Is a LOI necessary for this deal? Does it make sense to have a LOI given the nature of the agreement or the parties involved? If not, the other side could have ulterior motives. Keep in mind, the larger or more complicated the deal, the more a LOI can make sense.
  • Can you get some specific benefit from the LOI? If you aren’t exactly clear on the terms or economics, a LOI might be what you need to get comfortable with the process.
  • Do you see the potential for abuses from the other side? If you don’t see an upside to drafting a LOI, ask for clarification and don’t be afraid to walk away. (See How to Reject a Bad Contract)

If you do decide to move forward with a LOI for any deal, be sure to compare the terms in the main contract to the terms you agreed to in the LOI. It does you no good to make a good LOI and then sign a bad contract.

Have fun.

Gamal

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU NEED A CONTRACT WRITTEN, OR YOU HAVE A CONTRACT YOU NEED EXPLAINED TO YOU, CONTACT ME ATgamalhennessy@gmail.com FOR A FREE CONSULTATION OR VISIT C3 athttp://www.creativecontractconsulting.com/ FOR MORE INFORMATION ABOUT MY SERVICES.

Are You Working for Free? (Considering Consideration)

Added on by Gamal Hennessy.

by Gamal Hennessy

Consideration is one of the most important aspects of commercial contracts, especially for freelance professionals and small business owners. In a legal context, consideration is not about being thoughtful. It’s about an exchange of value between you and the other side.

In most cases, a contract is an agreement between two or more parties who trade something of value. A lot of things can be thought of as valuable in these situations: money, goods, services and even promises can be used as consideration under certain circumstances. As an independent artist, freelancer or small business owner, there are four types of consideration you should look for in your contracts. If you don’t find any of them in a particular deal, then the deal might not have any value to you.

The Four Types of Consideration

·         Delivery Based ConsiderationYou get something specific once you deliver the agreed upon material. For example, if you design a website for $300 per hour and you spend 22 hours on the project, then you get $6,600 upon delivery of the site. This type of consideration could be defined as a flat fee, based on some measure of performance. This type of payment is typical of work for hire agreements where you are hired to perform a specific task for a limited amount of time (See Contracts 101: Creator Owned vs. Work for Hire)

·         Performance Based ConsiderationYou get something specific once the project begins to generate some sort of profit. For example, if you are entitled to 20% of the gross revenue of a book, then you make money if and when revenue comes in from the sale of the book. This is a common form of consideration for collaboration agreements, self-publishing platforms like Kobo, KDP and creator owned agreements with certain publishers.

·         Combined ConsiderationYou get paid coming and going. In an extreme example, Robert Downey Jr. allegedly pulls in up to fifty million dollars in direct salary, box office bonuses and back end participation for playing Iron Man in the Marvel cinematic universe (See RDJ Pay Set to Hit Fifty Million). While you might never make as much as RDJ, these can be the most lucrative types of deals because they give the artists both protection against a poor performing project and the benefits of a successful project.

·         Production ConsiderationYou get someone else to pay for the cost of your project. For example, if you have a story you want to publish, but can’t cover the production and distribution costs of the release, someone else can pay those upfront costs to get your work out into the world. Sometimes this comes from single sources, like a production company or publishing house. Crowdfunding is another variation on production consideration. This can be the least lucrative kind of consideration. With a single source, the creator can lose all the rights to their characters and stories for a few thousand dollars that they never receive directly. With crowdfunding, all the revenue might go into the project or you may fail to reach your funding goals altogether. While many of these deals can provide exposure and ego gratification, many people regret signing these deals, especially if the project becomes successful and they have no ability to share in the financial windfall.

One of the first things you need to ask yourself when looking at a contract is ‘what am I giving up and what am I getting for it? Giving up your time and effort for cash is a way to make a living. Giving up your inspiration and creativity for the chance at future success is also a decent idea. Giving up everything for nothing is no way to manage your career. Always try to get some consideration in your contracts, even if the other side isn’t being considerate.

Have fun

Gamal

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU NEED A CONTRACT WRITTEN, OR YOU HAVE A CONTRACT YOU NEED EXPLAINED TO YOU, CONTACT ME AT gamalhennessy@gmail.com FOR A FREE CONSULTATION OR VISIT C3 at http://www.creativecontractconsulting.com/ FOR MORE INFORMATION ABOUT MY SERVICES.

Get What You Give (Rights and Revenue in Creative Contracts)

Added on by Gamal Hennessy.

By Gamal Hennessy

At its most basic, a contract is an agreement between one or more groups for the exchange of resources. The exchange could be time and skill for money, goods for services, property for future gains or any combination of those things. The best agreements exchange roughly equal resources. The worst ones have one side trading large amounts of resources for little or nothing in return.

This is the problem that freelance professionals run into with many of the contracts that I see. The most important service I provide is showing my clients what they are giving up in comparison to what they are getting. I’d like to provide an overview of the different types of rights and revenue streams as a general overview for creators looking to get their projects into the market. While independent artists will benefit most from this discussion, elements of it will be applicable to small business owners of all types.  

Types of Rights

As discussed in an earlier post, copyright law gives the creator of an original work the right to benefit from the distribution of that work (See Image and Story, Copyright and Trademark). There are various types of ways available for creators to exploit their work. Some of the major distribution methods include:

  • Publishing (Print, novelization and Digital)
  • Public Display (gallery displays and public performances of some of the methods listed here)
  • Theatrical (Movies whether live action or animated)
  • Television (including network, basic cable, premium cable, subscription, and PPV whether live action or animated)
  • Home Video (including DVD, Blu-Ray, etc)
  • Live Performance (including Broadway performances and theme park performances)
  • Interactive (including console computer or mobile video games)
  • Merchandise (as discussed in last week’s post)
  • Audio (soundtracks and audio novelizations)

As new forms of distribution are created, new rights are created for the artists. These rights are universal, but they can be divided or carved out by geographic area, time frame, distribution channel, language and other factors.

Types of revenue

Just as there are different rights that creators can use to get their work into the market, there are various ways that they can be paid. Creators need to focus on four ideas:

  1. A flat fee is a one-time payment that the artist earns upon the delivery of the finished work. For example, a copywriter might get a flat fee for work she does for a website or blog.
  2. A royalty is a percentage that the artist earns for every finished unit that is sold. For example, an artist might receive 30% of every one of their comics that is sold to the public.
  3. An advance is paid before the work is finished. For example, a writer of a novel might receive money up front for her novel based on the proposal not the finished product.
  4. A minimum guarantee (MG) is money paid up before the work is finished, based on anticipated sales. For example, if a toy company plans to sell a new licensed toy for $10 and the creator gets 10% of that sale, then the creator gets $1 per unit sold. If the company expects to sell 100,000 units, then the MG that the artist gets for this deal is $100,000.

These are broad revenue concepts. They are often altered and refined by concepts like gross, net, recoupment, offsets and other variables. (This is a complicated subject that I can talk about later.)

Choices that Artists Must Make

In certain creative circles, the types and amounts of revenue are fairly straight forward. Writers for some mediums often get an advance. A work for hire artist (See Creator Owned vs. Work for Hire) for comics often gets a page rate. There is more confusion for creators pursuing creator owned deals or multimedia works. There is often no advance, no MG and a blanket royalty rate for all forms of distribution. This puts creators in a dangerous position since the lack of upfront money and the uncertainty of any profitable sales in the future means that the creators are really working on spec while at the same time giving up all their rights to their property.

It is understandable why a publisher or other distributor would take this stance in their contracts. Publishers protect themselves from risk by limiting exposure to projects that might not be financially viable. At the same time, they maximize their potential gain by securing as many rights as possible for projects that could be financially viable. Artists need to learn the same lesson. They need to counter the publisher’s position by attempting to limit the rights that a publisher gets for projects that are financially viable and maximizing revenue for every project they do.

I know negotiating power is often limited for artists (See David vs. Goliath in Contract Negotiations). But having a clear understanding of the relationship between revenue and rights and clear goals of where they want to go can help maximize their limited negotiating power and increase their chances of success.

Best

Gamal

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSEING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 ATgamalhennessy@gmail.com FOR A FREE CONSULTATION.

Five Good Reasons Freelancers Need Contracts

Added on by Gamal Hennessy.

By Gamal Hennessy

Before I had to focus all my attention on releasing my new book*I wrote an article about getting paid as a freelance professional (See Solving the Payment Problem). One of my main tips was getting your payment terms in writing. Recently, another contracts lawyer (my apologies I couldn’t find the author’s name on the site) recently posted a similar article entitled Why Freelancers Should Bother with a Contract. The article focused on the ways you could be hurt by agreeing to contractual terms you don’t know about because you didn’t use your own contract. I agree with the article and I encourage you to read it (it’s very short). I’d also like to offer my own reasons why every freelance professional should have a contract in place for each of their clients and vendors.

If you want more advice on freelance and small business contracts,

sign up for the C3 Newsletter

Five Ways Contracts Can Improve Your Business

  1. You want clear payment terms. This one was important enough to get its own article. Unless your business is not designed to make money, or if you enjoy spending a lot of time chasing clients for missed payments, it helps for you and your client to know how much they’re paying, when they need to pay and how they need to pay. Those points all go in the contract.
  2. You want clear deliverables. A client can order one service and then expect another. They can order one product and then change their mind. You can deliver the agreed upon product and the client could come back with endless requests for modifications, alterations and “one last change”. This pattern of behavior can be reduced with a contract. If your deliverables are in writing, there’s less chance for a dispute when they come back wanting more. You can always give it to them, of course, but with a contract you have the option of getting an additional fee for the additional work.
  3. You don’t want to rely on memories, email chains or texts. Contracts do not have to be in writing to be enforced. Contracts can be created without the formal process of writing and signing something. You don’t want to deal with any of that. Memories and informal agreements suffer from a lack of accuracy, subconscious bias and interpretation. A written agreement can remove most, but not all of those problems.
  4. You want accurate records for your taxes. At least once a year, you have to account for the truckloads of money you made to the IRS and your state taxation authorities. You could rely on Paypal and Fiverr CSV files, invoices and other receipts, but if you have a contract with each client and payment terms in each contract, it might be easier for you to figure out, and explain if need be, where your income came from.
  5. You want to improve the perception of your business. Certain things make a business appear more professional. Your website, your logo, your address all send a message to your potential clients, vendors and competitors. When you put a contract in place with each client you increase the perception of legitimacy in your enterprise. This is more psychological than legal, but it can save you troubles in the long run.

I can feel your cynicism seeping through the internet. You’re right: 

  • Contracts take time to draft and negotiate.
  • Contracts are not guarantees that your business deals will go well.
  • I do have a bias towards you getting a contract because I have a business writing contracts.

All these things are true, but they don’t reduce the value of having a written agreement in place. Whether you get your contracts from me or someone else, there are plenty of good ways contracts can enhance and protect your business.

Have fun.

Gamal

If you want more advice on freelance and small business contracts,

sign up for the C3 Newsletter

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE SPECIFIC CONTRACT ISSUES OR QUESTIONS, DISCUSS THEM WITH YOUR LEGAL ADVISOR OR CONTACT C3 ATgamalhennessy@gmail.com FOR A FREE CONSULTATION.

* In case you didn’t know, I’m a writer in addition to running C3. My fourth novel, Smoke and Shadow, came out this week. It’s doing pretty well so far but it’s not selling like Harry Potter so I’m going to keep my day job for now…

Freelancer’s Union Endorses the C3 Contract Negotiation Concepts!

Added on by Gamal Hennessy.

by Gamal Hennessy

The Freelancer’s Union is a non-profit organization created to advocate the rights of freelancers, consultants and independent contractors. It has more than 200,000 members across the United States and provides health care to more than 10% percent of its membership. Freelancers Union also maintains a blog called the Freelance Broadcasting Network to discuss issues and topics related to the freelance life.

A couple of weeks ago, I posted an article entitled Twelve Tips for Contract Negotiation. Early this week, Freelancer’s Union found my article and asked for permission to repost it to all its members. I’m always looking for ways to get the word out, so of course I agreed. I wanted to share the new post with you and suggest if you need support, ideas or networking opportunities for your freelance or small business, get involved with Freelancer’s Union if you haven’t done so already.                                          

Click Here to Read the Creative Contract Consulting Article on the Freelance Broadcasting Network

And if you want more advice on freelance and small business contracts,

sign up for the C3 Newsletter

Have fun.

Gamal

Avoiding the Trump Effect in Your Creative Contracts

Added on by Gamal Hennessy.

By Gamal Hennessy 

National politics has been obsessed with Donald Trump since he announced his bid for the presidency. Whether you agree with him or not, his brand of political discourse creates an “us vs. them” mentality the media can’t resist. When he talks, people often react in extreme ways.

Many businesses reacted by terminating their contracts with Trump and his companies. After his now infamous quotes about Mexicans, Chinese and immigrants in general, NBC cut him from The Apprentice. Celebrities dropped out of his beauty pageant. High profile chefs refused to build new restaurants on his properties (See Trump Litigations Pose Questions for Restauranteurs). Trump responded by suing everyone who tries to distance themselves from his comments. While the Trump show has moved on to other acts in its political circus, I’d like to take a look at things creatives should consider when dealing with public image in their contracts

The Impact of Reputation on Business

Even before the rise of social media, the image of a person or company could be the difference between the success and failure of an entertainment release. Associating a new sneaker or film with a star could guarantee millions of dollars in sales. An arrest or scandal at the wrong time could destroy a franchise or an entire company. In the world of Twitter, Facebook and Instagram the same rules are applied with the speed of thought. No one is immune from the critical eye of public scrutiny. The most modest and low budget film, graphic novel or musical release needs to have some kind of escape route if one party pulls a Trump.

Types of Contract Protections

Contract law deals with damaged reputations in four distinct ways. The first two come into play more often in media employment and endorsement contracts, and the last two are more universal ideas. Each of them could deal with a Trump in a different way, with different levels of effectiveness.

  • The Morals Clause prohibits a party from engaging in certain behavior in that party’s private life. For example, an actor for G-rated family films might have a morals clause in their contract making arrests for DUI, drug use, solicitation of prostitutes or other scandals grounds for terminating the deal.
  • The Non Disparagement Clause prohibits a party from discrediting, dishonoring or lowering the esteem of the other party. So if a writer sells her book to a movie studio, a non-disparagement clause might prevent her from going to the press and criticizing the movie or the studio
  • The Confidentiality Clause could prohibit any public discussion of any aspect of the agreement. In some cases, a party might not even be allowed to discuss the existence of the agreement itself. We sometimes see this when actors are put under a gag order to limit leaks for an upcoming release.
  • The At Will Termination Clause is the broadest type of termination clause. It gives a party the right to walk away without giving any specific reason for termination. It often doesn’t allow for a cure period (where whoever is at fault gets the chance to fix things) and creates the most precarious type of contract.

It is unclear which if any of these clauses were in the restaurant or beauty pageant contracts, or how the cases against Trump will play out. It is clear that as more creatives and corporate executives get treated as public figures, the more these clauses will come into play for future deals.

Finding the Protection

When a creative person looks at a contract, the focus is often on the money, the deliverables, and the deadlines. They might not be willing to slog through the swamps of boilerplate language to consider the impact of confidentiality or morals clauses. Without professional advice, they might do or say something to put their deal at risk even after it’s signed. Or they might find themselves publicly connected to a media nightmare. In the modern digital landscape, it pays to have a professional review all the aspects of your deal to point out pitfalls unrelated to dollars or deadlines (See Why Artists Need Lawyers). Not all of us can be Donald Trump and say whatever we want. Over time, we might find out he can’t do it either.

Have fun.

Gamal

Sign up for the Creative Contract Newsletter to learn about the legal issues facing artists, writers and creative professionals everywhere. It's free, it's monthly and it can help protect your dreams.

PLEASE NOTE: THIS EMAIL IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSEING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

How a Lawyer Beat Darth Vader

Added on by Gamal Hennessy.

By Gamal Hennessy

Star Wars is one of the most well-known franchises in modern entertainment. Return of the Jedi holds a special place in the mythology of the Jedi saga. But the film that gave us Darth Vader’s last moment of redemption is also the film that continues to disappoint at least one actor.

Several news sites reported on a recent interview with David Prowse, the actor inside the Darth Vader suit for Return. According to letters received from Lucasfilm to Mr. Prowse, Return of the Jedi has never made enough money to trigger a net royalty payment for his performance. In spite of the film making more than five hundred and seventy million dollars in the box office since its initial release over thirty years ago, Mr. Prowse, and actors like him, are not in a position to get paid beyond their initial salary for the project.

Gross vs Net

While the story is notable for the popularity of the character and the prestige of the film, the elements of it are fairly common in contracts of all types, not just entertainment related ones. The difference between gross and net in the calculation of revenues can be the difference between being paid indefinitely and not being paid at all.

A while back, I wrote a piece about the difference between gross and net payments in creative contracts (See Your Slice of the Pie: Part 1). I explained Gross revenue or gross profits as the pure income that a product or service generates while Net revenue or net profits is the income that a product or service generates minus certain expenses. Taking a very simple example, if you acted in a film and were promised a cut of the gross revenue, you’d get paid based on how much money the movie made. If you agree to take a cut of the net revenue, you get paid based on how much is left after all the expenses for the film are paid. If the expenses of the film are never paid off, then you never get any royalty, even if you are the most dread Sith in the galaxy.

Hollywood Accounting

The film industry is often blamed for manipulating accounting methods to avoid paying artists. The term “Hollywood accounting” refers to concepts like using net profits instead of gross to pay creatives and then extending expenses out forever to ensure a film never gets to a stage where royalties need to be paid. Hollywood might use these tactics in the most spectacular ways, but they are by no means the only entertainment industry with this practice. In fact, it is not just the entertainment industry. Any type of contract where payments are based on future earnings can be manipulated by the gross vs. net concept.

Eyes Wide Shut

People may mock actors like Mr. Prowse who agree to net profits, but these deals have to be considered in context to be understood. In many cases, a creative person is so eager to cash in on his big break that they agree to bad terms just to get the deal done (See You Signed the Contract, but Do You Know What It Says?). In other instances, an artist often doesn’t have the negotiating power to push for the best terms. (See David and Goliath in Contract Negotiations) Sometimes, an artist doesn’t have any legal advice when signing a contract. This often leads to situations far worse than Mr. Prowse (See Why Artists Need Lawyers)

One word or concept can make a world of difference to a contract. If you’re not trained to find it, not even The Force will be able to help you.

Sign up for the Creative Contract Newsletter to learn about the legal issues facing artists, writers and creative professionals everywhere. It's free, it's monthly and it can help protect your dreams.

PLEASE NOTE: THIS EMAIL IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSEING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT  gamalhennessy@gmail.com FOR A FREE CONSULTATION.

Have fun.

Gamal

All for One and One for All: Artist Collaboration Agreements

Added on by Gamal Hennessy.

by Gamal Hennessy

Most of the contracts I deal with are between an artists and publishers. I take the publisher’s standard contract and explain it to the artist in language they can understand so they know what they are getting into, for better or worse. What clients don't normally ask me to do is create agreements between the artists working together on a project to define their relationship with each other. What they often don't realize is that this type of contract is just as important as the one between the artist and the publisher. Without this type of agreement an otherwise successful partnership can lead to misunderstandings, conflict and disputes down the road that can be just as costly as any disagreement with a publisher.

Keeping the band together

Certain creative endeavors like comics, movies, films and theater are normally created through a collective effort. While there are some creators who do everything, most projects are created by the continuing collaboration between the members of the group. In the same way that a band combines the talent of each instrument to make music, a creative team comes together to make other types of commercial art (even if they only come together in a cloud server that they upload the work to).

Just like a band or a movie crew; each member of the team should know what he or she is getting out of any deal that involves the property they work on. This might not be significant when you are selling a couple hundred books a year on your website and losing money on the cost of production. This becomes a huge issue when a property is picked up for a film, TV show, video game or merchandise deal. It helps to have all the issues squared away before Hollywood starts calling. If you wait too long, anger, resentment and actual litigation could tear the team apart just when things start to take off.  That is where the collaboration agreement comes in.

Putting the ducks in a row

A well drafted collaboration contract contains six elements:

  1. Who is responsible for creating each element of the property
  2. How is the copyright for the property going to be distributed between each creator
  3. How will the revenue be distributed between each creator
  4. Who has decision making authority for the property
  5. Who is the primary contact for the property
  6. What happens when someone leaves the creative team

While the contract can be overly complex with just these elements, the best ones address these issues without a large amount of legal gymnastics. At the same time the elements of a collaboration agreement should not conflict with the terms of any agreement with a third party publisher or licensee of the property. Your legal advisor can review both contracts to ensure there is harmony between them.

Other options

Of course, there are cases where only one or two of the artists on a project will actually own the copyright and the other participants may participate on a work for hire basis. Also there are some instances where the creative team actually forms a separate company to manage and exploit the property. In those cases, as with the collaboration agreement described here, a contract should be in place before any work is done to protect the rights of each artist in relation to each other as well as to a publisher.

Have fun.

Gamal


PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSEING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 ATgamalhennessy@gmail.com FOR A FREE CONSULTATION.

A Framework for Creative Contract Negotation

Added on by Gamal Hennessy.

by Gamal Hennessy

Creative people just breaking into their field often see contracts as a necessary evil. At worst, they ignore it as much as possible, hoping the other side will treat them fairly. At best, they look at it as an obstacle to overcome, something they just have to get through with as much speed and as little pain as humanly possible (See Understanding Contract Law: Don’t Wait Until It’s Too Late). Budding creative professionals like this often lose legal control of the stories, characters and worlds they’ve created. They trade a potential source of revenue for a painful lesson in contract law (See Deal With the Devil: How Creators Get Their Rights Stolen).

Seasoned creative see contracts as an opportunity to turn their talent into profit. They might spend weeks or months negotiating a deal, hiring attorneys, accountants and other professionals to hammer out all the details. They learn from their peers and the people who came before them to figure out what to give up and what to ask for. They turn their characters into merchandise, their stories into books and film and their worlds into franchises.

One of the main differences between the new creator and the veteran is the tactics and framework they use to negotiate and close deals. Alex Furmansky recently published a piece in Inc. Magazine where he discussed seven concepts for contract negotiation (See: Don’t Sign Anything Without Knowing These Seven Contract Negotiation Tactics) including:

  1. Control the first draft
  2. Ask for the kitchen sink
  3. Keep the relationship healthy
  4. Make sure the other side can look good
  5. Deal with the decision maker
  6. Use an intermediary
  7. Learn everyone’s real motivations

This list isn’t specific to creative contracts, but it does offer some useful concepts we can use. The last five are key in any contract you do. Take the last tip as an example. If you’re negotiating a publishing contract with a comics company, but he insists on getting the film and merchandise rights, does he really want your book, or is he looking for a really cheap way to acquire properties to option to a studio? Taking some time to learn his motivations will help you figure out what’s really important.

In addition to Mr. Furmansky’s list, I’d like to offer three more items to round out the framework for your deals. I try to discuss this with each of my clients and most of them have found it to be helpful:

  1. Understand what you want from the deal: Not everyone wants the same thing from their contracts. Some people are looking for recognition to build their portfolio. Others want money up front. Some want back end participation. Many want creative control of the property. Some people want it all. The only way for you to know what you can and can’t agree to is to know what you want to walk away with when the deal gets signed. (See Losing Control and Loving It)
  2. Understand what each section of the contract means: The first couple pages of a deal often have the basic terms both sides have agreed to. They’re like the frosting on a cake. You need to make sure what’s under the frosting is actually cake and not a pile of manure. Contract language can be dense, circular and confusing, but that’s where the money and control are won and lost. The devil is in the details (actually, the lawyers are in the details here, but sometimes that’s the same thing) and you need to know what’s going on in the details. (See You Signed the Contract, But Do You Know What It Says?)
  3. Decide when you need to walk away: Not every deal is worth signing. If you have to give up everything just to close a deal, it might make sense to walk away. This can be a difficult proposition, especially when someone has worked for years to get their big break, but the creative industry is littered with artists who gave away their life’s work, watched it become a hit and get nothing in return. At least if you walk away from a bad deal, you still have the potential to shop property somewhere else. (See How to Reject a Bad Contract)

Taken together, these ten concepts can be a helpful guide for any contract you encounter. They won’t replace professional advice on contract drafting and negotiation, and they won’t guarantee you get the best deal, but you’ll be in a better position with these than if you just ignore it and hope the other side treats you fairly.

Have fun.

Gamal

If you want more tips and insights on creative contracts, sign up for the free Creator Contract Newsletter.

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSEING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

Before You Sign on the Dotted Line.

Added on by Gamal Hennessy.

by Gamal Hennessy

When an artist, writer or other creative person gets a contract from a publishing or distribution company, it can be a confusing and stressful situation. Many artists work for years, dreaming of the day when a large company is ready to give them a contract, but very few of them understand the language in contracts and how that language will affect their ownership of their creation or the money they can make. This is the point where an artist needs professional advice from someone who understands how contracts are written.

This is the service that I provide. The main specialty of C3 is providing legal analysis of contracts for artists and creators. I break down and explain each paragraph of the contract in straightforward terms, so you can make an informed business decision on what conditions you can and can't agree to. This will give you the confidence you need to discuss the agreement with your potential business partner and sign a contract that protects your rights and puts you in a position to profit from your creativity now and in the future.

There is a long list of creators in music, publishing, television and film who signed away all the rights to their original work because they didn't understand the contracts they signed. The analysis I provide is designed to prevent that. Of course, there are many situations where the main goal of the artist is upfront payment or exposure. There are times when you might be willing to accept a deal that is not set up in your favor. But even in those cases, it is better to know what you are signing and how it will affect your rights and income going forward.

A C3 review will give you that.

If this is something you are interested in, please leave a comment below or contact me at gamalhennessy@gmail.com and we can set up a free call to discuss the specifics of your situation.

Best

Gamal

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

Opportunities and Obstacles

Added on by Gamal Hennessy.

by Gamal Hennessy 

I hope the weather is warm or at least warmer, where you live. I also hope your business prospects are warming up as well. Before the spring hits and productions of all types get under way, consider these three essays on the state of entertainment contracts. 

What the Valiant Movie Deal Means for Movies, Comics and You: Is the reported nine-figure development deal a desperate money grab or a new avenue for creative artists? 

Your Exclusive Engagement: Can you afford to put all your creative eggs in one basket?

The Cautionary Tale of A Wheel of Time: Franchises like Harry Potter, The Hobbit and Game of Thrones show the potential of bringing fantasy books to a wider audience, but what happens when a deal like that goes wrong?

Contact C3: If you have a contract you need reviewed or help protecting your art and your career, please contact C3 for a free consultation. 

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

Have fun.

Gamal

Your Exclusive Engagement

Added on by Gamal Hennessy.

 

By Gamal Hennessy

Many people don’t read the contracts they sign. Even fewer people read the “boilerplate” language often found at the end of the agreement. People want to know things like when they’ll get paid, how much they’ll get paid, and what they have to do to get paid. Avoiding so-called “boilerplate” might be a natural response to getting a contract, but the clauses at the end of an agreement have a significant effect on, and could completely alter where and how the money flows.

Over the next few weeks, I plan to shed some light on typical boilerplate clauses in entertainment contracts. This isn’t going to be a definitive treatise on legal concepts or the final word on the current status of contract provisions. This also isn’t going to be a replacement for actual legal advice about your specific contract. My goal here is to help artists, writers and other creative people become better informed about various aspects of contracts they might be confronted with.

 In this second installment, we look at the concept of exclusivity.

The word “exclusive” is often used in entertainment marketing to trumpet some special event or limited time offer. We hear about exclusive engagements in theaters, exclusive releases in video games and exclusive production deals in film and television. While the word designates a special event in ad copy, the term exclusive has even more impact when it comes to creative contracts. The restrictions and the costs of exclusivity are important considerations for any artistic professional.

Concept

Exclusivity is a concept modifying a grant of rights or access to goods and services. You are in essence, excluding everyone else from the right, good or service. The opposite of exclusive is non-exclusive.

The easiest real world example I can offer is a car vs. a cab. When you buy a car, you and the people you designate are the only people who can use the vehicle, until it is repossessed, stolen or destroyed. When you hail a cab, you can use the vehicle for a little while, but before you got in and after you get out anyone can use that vehicle, assuming the cabbie will stop for them.

The entertainment industry is filled with examples of exclusivity. When I worked at Marvel, we often signed A-List writers and artists to exclusive deals to keep them from working with DC. Film distribution companies always push for exclusive domestic distribution rights to a film. Publishers can obtain exclusive rights to an image used in a cover. An actor or director could be retained on an exclusive basis for a period of time for a particular project. Almost every avenue of entertainment and media has some relationship with exclusivity, so understanding its impact is important to everyone.

Economic Impact

In any exclusive agreement, there are at least two parties who need to deal with the scope and the cost of the contract: at least one side gives exclusive rights and at least one side gets them. The side you’re on dictates what your goals and obstacles are and how you can massage them in your favor.

The person or company giving away exclusivity limits their ability to generate revenue based on the rights granted. For example, if you release a book through Amazon’s KDP select program, you can’t publish the book on any other platform for at least 90 days. Likewise, a screenwriter who has an exclusive deal with a production company gives up the ability to generate multiple streams of revenue by writing for other artists. Parties in this position naturally try to charge more to get into an exclusive deal to cover the lost revenue streams. At the same time, they try to limit the length or term of the exclusivity to reduce the financial impact of the arrangement (See Eternity is a Long Time in Creative Contracts)

The person or company getting exclusivity limits competition in the market. If only one company can show a movie, release a game or throw a concert, that entertainment is perceived as more valuable because of its scarcity. Exclusivity doesn’t always work directly. In video games, an exclusive PS4 title still sells at the same price as a multi-platform game, but if the system has more high-quality exclusives compared to the competition, the value of the PS4 system increases, not just the value of the game. To maximize the benefits of an exclusive, the side who gets it often tries to keep their rights forever.

The Shell Game

Like most legal concepts in contracts, there are situations where the impact of a word changed its initial meaning. Under certain circumstances, the grant of an exclusive license in certain media can amount to a change in overall ownership and control, especially if the rights granted are broad and the term is forever. For example, I’ve reviewed graphic novel licenses for my clients where the publishers wanted exclusive print publishing, film, television, video game, internet, stage play and other rights everywhere, forever, amen. In this case, a simple deal for print publishing is an attempt to tie up the property in every conceivable form. I try to advise my clients to avoid these types of deals, especially when there is no compensation. (See Get What You Give: Rights and Revenue for Creators)

Even parties who get exclusive rights need to be careful, especially when services are involved. Hiring an independent contractor is easier from a legal perspective than hiring an employee, but getting the exclusive rights to a person’s services might change your legal relationship with them depending on the nature of your working relationship. Producers in film, television, music and even publishing should be familiar with their state’s labor laws and withholding requirements whenever they consider bringing in exclusive talent, or they could find themselves on the hook for several unforeseen costs.

Exclusivity is a powerful aspect of entertainment law. Like fire, nuclear energy and love, it should be handled carefully to make sure no one gets hurt.

Have fun.

Gamal

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

The Wheel of Time Offers a Cautionary Lesson for Turning Novels into Film

Added on by Gamal Hennessy.

By Gamal Hennessy

            Imagine you wrote a story. It’s a popular story, selling forty-four million copies over 14 connected novels spanning from 1990 to 2013. Now imagine your type of story is popular, because stories in the same fantasy genre, like The Hobbit and Game of Thrones, have been cleaning up in movies, TV and video games. Finally, imagine you’ve licensed your story to a production company created just to produce your work and they signed a distribution deal with Universal to distribute your story to the masses.

            Are you excited? Can you see yourself inviting J.K. Rowling and George R.R. Martin to your castle in Davos for a poker game with solid gold chips? Hold that thought.

What if I told you there is such a story, The Wheel of Time written by Robert Jordan? What if I also told you the only TV or movie adaptation ever made of this story in thirteen years was a half hour TV show that aired on FXX at 1:30 am without any advertising, marketing or official notice? What if I told you the show was thrown together weeks before without the knowledge or consent of Jordan’s estate? (See The Sad Lesson of The Wheel of Time) It’s not as exciting now, is it?

The Wheel of Time problem stems from two related contract concepts. The first is the loss of control a writer gives up in exchange for optioning his book, play or comic to be made into a movie (See Losing Control and Loving It). This is a normal aspect of film licensing. Most of the time, a competent production company can adapt a written story to the aesthetics of the screen in a way that makes money. The production company in this case seems unwilling or unable to bring the book to life.

The second problem revolves around the retention of rights. Many licenses for literary properties only last a certain number of years. This is known as the term. The term can be extended as long as the company holding the license continues to release work based on the story. You can see quite a few examples of this in modern film. To a certain extent, the Spider-Man, Fantastic Four and X-Men franchises all get new films every few years to prevent Disney/Marvel from becoming even more of an entertainment juggernaut than it already is (See Is the New Marvel Universe a Secret War on Fox Super Hero Films?). But in the case of Fox and Sony, the source material gets a big budget treatment and star power put behind it. The movies aren’t thrown on to a third tier cable station in the middle of the night without anyone knowing about it.

Hope isn’t lost for an authentic Wheel of Time TV franchise. Many popular characters, including Superman, Terminator, James Bond and Spiderman had to fight in court before they could fight on screen. But creative professionals need to learn from the Wheel of Time debacle. Not every deal is a good deal. Time frame and control of rights matter, even when you’re a novelist or comic author thinking about movie rights. You might not be in the best position to make a deal (See David vs. Goliath), but you and your attorney should strive to give your property the best chance for success (See Treat Your Art as an Investment)

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE A LICENSING OR INTELLECTUAL PROPERTY ISSUE, DISCUSS IT WITH YOUR LEGAL ADVISOR OR CONTACT C3 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.