What Red Flags Should You Look for in a Comic Book Contract?

By Gamal Hennessy

If you are building a career in comics, you’re going to have to deal with a lot of different types of contracts. They may be work-for-hire agreements (See What Is Work-for-Hire Agreements), collaboration agreements (See What Is a Collaboration Agreement?), licensing deals, shopping deals, merchandise deals, and a lot of other things in between. Every deal is going to be different and the way you approach any specific deal will be based on your leverage, the size of the deal, and several distinctive factors, but if you understand the basics of what a good deal looks like, it will be much easier for you to negotiate the good contracts and reject the bad ones.

I have been a comic book lawyer since 1996 (See What Is Comic Book Law?). I have been an educator and business consultant to comic creators since 2012 (See Bio). Over the past twelve years, I’ve made myself available to answer questions from writers, artists, and publishers about everything from copyright to marketing to licensing to AI. The one important question that comes up over and over again is a variation of “How do I identify good and bad contracts?”

I’ve developed and refined my answer to this question over the past twenty-eight years. Basically, a good contract has a beneficial contractual balance. A bad contract has a detrimental contractual balance.

What Is Contractual Balance?

When I use the term contractual balance, I’m talking about the relative weight between four basic factors in an agreement, relationship, rights, revenue, and responsibilities:

• Relationship is the connection between the people involved in the deal. For example, in a work-for-hire deal, someone is ordering and paying for the work (the client) and someone doing the work and getting paid for it (the talent). Understanding the relationship is important because it establishes the expectations for the rest of the deal.

• Rights define who owns and controls the intellectual property associated with the deal. Copyrights and trademarks are fundamental assets in the comic book industry (See Image and Story), so any legal agreement needs to establish who has those rights, how long they have them, and what they can and can’t do with them. For example, in a t-shirt licensing deal, the side that owns the rights (the licensor) gives the side that wants to sell the t-shirts (the licensee) the right to make and sell the t-shirts under certain conditions.

• Revenue explains what happens to the money generated by the deal. There are many different ways to define and generate revenue in comics (See A Simple Guide to Getting Paid in Comics) and a comic book contract needs to spell out who gets how much, when they can expect to get paid, and how can they confirm they are paid correctly. For example, in a creator-owned deal, there might be both an advance and a royalty paid to the creator if and when the comic book makes a profit.

• Responsibility describes what each side in the relationship is required to do in order to exercise their rights and collect their revenue. In most cases, your responsibility will come in the form of an action (producing art, selling comics, etc.) but it can also include promises you make about the deal (See Double Indemnity: Are You Protected?) For example, in an exclusive licensing agreement (See Your Exclusive Engagement) a licensor promises not to grant the same license to more than one licensee.

How Do You Measure Contractual Balance?

Once you understand the factors that go into contractual balance, identifying a good contract becomes a matter of comparing the rights, revenue, and responsibilities in light of the relationship.

A good option purchase agreement to turn a comic book series into a film could name the comic creator as a producer (a positive relationship) and offer an above-market purchase price and back-end participation (a positive revenue stream) in exchange for the exclusive rights to the IP (a negative rights position) and delivery of the existing comic (a positive responsibility requirement).

Alternatively, a bad creator-owned deal might list the comic creator as the owner of the IP (a positive relationship), but offers you no money up-front and questionable royalties (a negative revenue result), forces you to give up all control of the IP (a negative rights position) and forces you to pay for producing the final pages (a negative responsibility position).

It is important to understand that almost no contract will give you 100% of everything in a deal. Each side has to give up something, even if that something is minimal. You also need to keep in mind that every paragraph in a contract can shift and adjust contractual balance from one side to another and the equilibrium between the factors can ebb and flow depending on time, profit, and other factors. Understanding contractual balance can help you distinguish good deals from bad ones, but it’s not a substitute for experienced contract analysis from a professional who understands how the industry works.

Have fun with your comic.

Gamal

If you enjoyed this post, consider joining Comics Connection. Comics Connection gives creators a community to elevate their comic book careers. We offer access to business and creative resources you can’t find anywhere else. For a limited time, the first month of membership is free.

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 FOR A FREE CONSULTATION.

Dave Chappelle’s Advice to Comic Creators: Part 4

This week, I’ve been using Dave Chappelle’s Unforgiven performance to highlight the need for understanding creative contracts. Today, I’d like to close out the discussion by looking at the concept of assignment.

Words in the legal world have different meanings than words in the real world. For example, most people define an assignment as a task, duty, or responsibility given by one person to another person. In the world of contracts, an assignment is the transfer of contractual rights and obligations from one party to another party. In most contracts, references to assignments are buried deep in the back of the agreement when your eyes are already glazed over and skipping anything that doesn’t look like the signature line. But certain assignment language can turn a good deal into a bad one right before your eyes.

Musical Chairs

Imagine yourself as someone who makes comics. Also, imagine yourself working hard to get your name out there at cons and online. You meet a small publisher and the two of you hit it off. He loves your work and offers you a deal. It’s not a great deal because it’s your first self-published project, but you take it anyway. Your book comes out and you’re as proud as a newborn parent.

Your publisher treats you like gold. He goes beyond the language in the contract to support and promote your book. He reports sales on time and he even pays you. Your book and the other titles in his catalog start to get a lot of buzz. Hollywood starts knocking on the door. Suddenly, people are talking about TV, video games, and even movies. Your publisher gets an offer for the entire company and he takes it. Now instead of being published by a small visionary publishing company, your book is swallowed up by a big vertically integrated conglomerate.

Your new publisher does not treat you like gold. Your contact at the central office has no idea who you are and isn’t interested in finding out. Your book is buried in an avalanche of content. The money stops. Your book becomes inventory for other media, but it is constantly pushed aside for higher-profile properties. Your entire relationship with them is defined by the original unfair agreement and you want to take your book elsewhere.

That’s when you read the assignment clause of your contract and realize there’s a problem.

Types and Options

Assignment clauses boil down into two types; mutual and non-mutual.

• In a mutual assignment, you or your publisher could assign your rights in the contract to someone else at a later date or neither of you can ever assign your rights to anyone.

• In a non-mutual type of assignment, only one of you has the right of assignment and the other side is stuck.

Publishers have a vested interest in being able to assign contracts. Their ability to sell their company is based in part on what is in the catalog. A company won’t be worth much if every title can walk out the door after a sale. Because of this and the inherent negotiating imbalance, most artists have many artists are not in a position to get a non-mutual assignment clause that goes their way. Many of them can’t even get a mutual assignment clause. Quite a few of them are stuck in a bad position.

This is what happened to Chappelle. His original deal was with Comedy Central, which is owned by Warner Brothers. But when AT&T bought Warner, Chappelle Show found its way to HBO Max and Netflix. Chappelle (because of other clauses in the contract) didn’t have any say in this decision and he didn’t get any money from the lucrative licensing deal.

Your Mission, If You Choose To Accept It…

The rights to catalogs change hands more often than you might think. Aspen Comics recently acquired the rights to Big Dog Ink. A few years back, DC acquired Wildstorm and integrated that entire universe into the New 52. In what is perhaps the largest catalog acquisition in recent memory, Disney bought Marvel, Pixar, and Star Wars. As comic properties become more lucrative more publishers will see value in having catalogs they can assign.

Your response to this situation is threefold:

• Understand what kind of assignment clause you are dealing with and what options you have to walk away from a new publisher in the event of a sale

• Negotiate for the best overall contract you can get upfront

• Understand your long-term success will be based on the language in your contract as much as, if not more than, your relationship with the publisher.

In Chappelle’s case, it worked out in the end. Because he has more leverage with Netflix (see my earlier post on leverage) he could get Chappelle Show taken off the streaming service. You might now be as fortunate. Time alters circumstances and relationships. While you can’t see into the future or account for every eventuality, the more you understand about contracts before you sign them, the less you’ll regret the contracts you sign.

Have fun with your comic.

If you have questions about the business or legal aspects of your comic book publishing and you'd like a free consultation, please contact me and we can set something up that fits in with your schedule.

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE AN ISSUE WITH YOUR COMIC PROPERTY, DISCUSS IT WITH A QUALIFIED CONTRACT ATTORNEY OR CONTACT C3 FOR A FREE CONSULTATION

Dave Chappelle’s Advice to Comic Creators: Part 3

For the past couple of days, I’ve been using Dave Chappelle’s Unforgiven performance to highlight the need for understanding creative contracts. Today, I’d like to take a closer look at the idea of losing the right to use your own name.

Lesson 3: Marketing vs. Manipulation

There is a point in Unforgiven where Chappelle rejects the advice of his friends who tell him to just take Chappelle Show and go to another network. In addition to an analogy of running from one slave master to another, Chappelle mentions that even if he wanted to create a new Chappelle Show, he couldn’t call it Chappelle Show because he signed away his right to use his name that way.

The name and image of an artist can have a significant impact on the success of any creative project. The difference between an A-list actor, writer, or artist can mean the difference between a hit and a failure. This is one of the reasons certain artists are mentioned so prominently in a comic, film, or video game.

But you can’t just use anyone’s name to sell something without their permission. Invasion of Privacy is a set of legal concepts that include the use of someone’s name or likeness for commercial gain, intrusion, undue publicity, and false light.

Companies get around this law by asking artists to allow for their name and image to be used to promote whatever project is being contracted. They also normally acquire the right to use the name of the project itself, because it is hard to ask someone to buy something if you can’t mention what it is.

That isn’t a problem. The problem comes in the way the language is written into the contract. Take this example for instance:

“Company shall have the exclusive right to use the name and likeness of The Artist in connection with the advertising, promotion, exploitation, and exhibition of any product based upon the Material under this Agreement, in perpetuity, throughout the universe in any and all media now known or invented in the future.”

If Chappelle signed a contract that included a clause like this, then he gave up the right to use the title Chappelle Show, even though his name is included in the title and even though the places where the show is being marketed now didn’t exist when he signed the contract. Chappelle’s name belongs to him. Chappelle Show belongs to Comedy Central.

The impact of this clause isn’t hard to see when you see it in isolation. When it is buried in a 25-page contract, and you are three months behind on your rent, and someone is holding a check with your name on it for more money than you’ve ever had in your life, it’s not as easy to see into the future. It happened to Chappelle. It happens to comic creators all the time. But it doesn’t have to happen to you.

Tomorrow, I’ll look at the final lesson I found in Unforgiven. Until then,

Have fun with your comic.  

If you have questions about the business or legal aspects of your comic book publishing and you'd like a free consultation, please contact me and we can set something up that fits in with your schedule.

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE AN ISSUE WITH YOUR COMIC PROPERTY, DISCUSS IT WITH A QUALIFIED CONTRACT ATTORNEY OR CONTACT C3 FOR A FREE CONSULTATION

Dave Chappelle’s Advice to Comic Creators: Part 2

Yesterday I used Dave Chappelle’s Unforgiven performance to highlight the need for understanding creative contracts. Today, I’d like to take a closer look at the idea of leverage for you and your comics.

Lesson 2: Use and understand your leverage

Leverage in contract negotiation is defined as the power one side has over the other in the pursuit of their interests. Depending on the disparity between the parties, the leverage one side has over the other can define the negotiation process. For example, when Chappelle was a struggling stand-up comic with a wife about to give birth to their first child, he had a lot less leverage than the programming executive at Comedy Central who could give a show to dozens of hungry comics. In the same vein, if Marvel or DC make an offer to an aspiring artist, their leverage might be so high that the artist signs whatever deal put in front of them. Leverage comes from supply and demand. More specifically, control over scarce resources creates leverage.

Scarcity Breeds Power         

Comic book publishers have to take the financial risk of releasing an unknown and unproven book. To mitigate this loss and to give themselves the potential for substantial revenue and control on the back end, many of them incorporate biased language into their contracts. Many creators sign those contracts because of their lack of leverage.

The publishers currently corner the market on supply. They often have more experience with the means of production, direct distribution, and some control secondary monetization (merchandise and media licensing).

The number of comic creators who are in demand for the publisher’s supply is massive compared to the number of publishers. To put this into context, there are about 300 comic book publishers in North America. Who knows how many potential artists and writers are out there dreaming of getting their books in print, movies, and games?

The scarcity of publishers relative to the abundance of creators produces a situation where publishers can afford to offer one-sided deals. Every unknown creator who demands a superior deal can be rejected by the publisher because ten or twenty other creators are willing to accept an inferior deal. Since the publisher is primarily looking for books to fill their publishing plan, one unknown book is just as valuable as any other from their perspective. This was the same situation Chappelle faced in the beginning of his career, but that isn’t his situation now.

Options for Creators

In light of the reduced negotiating power that undiscovered creators have, does it make sense to push for a bigger deal for a creator-owned project or work for hire page rate? Yes and no. While you might not be able to wrestle a six-figure advance out of Marvel, there are options you can pursue to make the most of your work.

• Establish your reputation in the industry by taking on work for hire projects that will get you exposure for your skill without exposing the characters and storylines that you are saving for creator-owned work.

• Find a more flexible small press that will offer more reasonable terms for new creators.

• Explore independent publishing if only to increase your name recognition in the market.

• Accept the biased deal as a means of name recognition.

While none of these methods is a quick road to fame and fortune, they can boost your negotiating power over time. An unknown creator has almost no leverage with a publisher. A creator with a following who represents tens of thousands of copies sold per month can command lucrative exclusive contracts, back end participation deals, and creator-owned contracts that give them considerable revenue and control potential. That’s one of the reasons why Chappelle said he prefers working with Netflix over Comedy Central. When he was negotiating with Comedy Central, he had no leverage. In his discussions with Netflix, he has the power to pull content off the air with a phone call.

Need to Understand Your Agreements

Whether you choose to accept a one-sided deal, negotiate better terms, or walk away, you need to understand what the terms are for the deal you are being given. It might make sense to take a bad deal now if it will boost your career later. The key is making an informed decision about what you are doing. Whether you decide to use a service like mine or not, knowing what you are signing and why is key to building and leveraging your negotiating power.

Tomorrow, we’ll look at a more nuanced element of Chapelle’s lesson. Until then…

Have fun with your comic.

If you have questions about the business or legal aspects of your comic book publishing and you'd like a free consultation, please contact me and we can set something up that fits in with your schedule.

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE AN ISSUE WITH YOUR COMIC PROPERTY, DISCUSS IT WITH A QUALIFIED CONTRACT ATTORNEY OR CONTACT C3 FOR A FREE CONSULTATION

Dave Chappelle’s Advice to Comic Creators Part 1

To the best of my knowledge, Dave Chappelle doesn’t publish comics. He is one of the most celebrated comedians of his generation. He has created legendary stand-up performances, an iconic sketch comedy show, and he’s received some of the highest honors in his artform. If anyone has succeeded as a comic, it is Dave Chappelle.

But he wasn’t always at the top of his industry. At a certain point, he was a struggling comic trying to make it to the next level. Like many comic creators in the same situation, Chappelle got burned by his business partners.

This is the backdrop for the latest stand-up segment he uploaded to YouTube a few days ago. Dave Chappelle doesn’t make comics, but his experience offers four distinct lessons for anyone who wants to have a career in the comic book industry. This week, I’m going to cover those lessons, but I urge you to watch the special and share your thoughts on his experiences.

Lesson 1: Know what you are signing

When I started consulting clients about comic book contracts, I planned to explain the finer details of contract language, so artists and writers could make informed decisions about selling the rights to their work. Now that I've been doing this for fifteen years, I can see that I was wrong.

Some contracts that I've seen are prudent actions by publishers trying to protect their investment. But too many of these agreements are nothing more than a blatant attempt to hijack intellectual property from unsuspecting artists. This is the same issue Chappelle ran into when he signed his deal with Comedy Central.

The Double-Edged Sword

Signing a contract with a publisher can start an artist down the road to professional recognition and lucrative opportunities far beyond comics. It can also strip you of everything you have worked so hard to create. There are a lot of potential pitfalls in creator-owned contracts, including:

• Giving the publisher complete control of the property, not just the actual comics, but the underlying copyrights and trademarks.

• Giving the publisher control of the property in all media ever created, not just in digital and printed comics

• Agreeing to financial terms that are designed to keep you from ever being paid for your work

• Agreeing to give up your rights without being paid for them

• Agreeing to never get back the rights to your property

Of course, not every contract is written this way. Not every publisher is a demon attempting to steal your life's work. But the history of entertainment in general, and comics in particular, is littered with famous stories of iconic characters being given away by their creators for little or no money. But the answer isn't to avoid all contracts all the time. The key is to understand what you are signing and what you are and are not willing to give away.

Reality Check

It is obviously self-serving for me to make dire claims about the dangers of creator-owned contracts. The more you are concerned about this legal problem, the more likely it is you will become my client and pay my fee. It is also clear that many creators feel compelled to sign away their ideas to get their foot into whatever door they have found into the ultra-competitive comic book industry. Both of those concepts are true. I get it. Chappelle is living proof of that.

Here is my response to those facts; if you don't want to use me to review your contract, I respect that. By all means, use someone else with a background in contracts, IP, or entertainment law. Just don't do it yourself. This is not an insult to your intelligence or business savvy. It is the recognition of your specialization. You are an artist or a writer. You probably didn't waste a lot of time in law school learning about contracts (if you did, sorry about the loans). It is unrealistic for you to be expected to understand the implications of contract language. Many of the most successful businessmen have several lawyers explaining things to them when they need to make a major decision. Chappelle needed a good lawyer to steer him away from a bad contract. You should too.

And even if you do find yourself in a position where you “have to” sign a bad deal, do it with your eyes opened. Know what you are getting into, so you don't wake up one day without any claim or credit for what you worked so hard to create.

Tomorrow I’ll talk about the idea of leverage and how it evolved for Chappelle over time. Until then,

Have fun with your comic.

If you have questions about the business or legal aspects of your comic book publishing and you'd like a free consultation, please contact me and we can set something up that fits in with your schedule.

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE AN ISSUE WITH YOUR COMIC PROPERTY, DISCUSS IT WITH A QUALIFIED CONTRACT ATTORNEY OR CONTACT C3 FOR A FREE CONSULTATION

The Professional Comics Creator for November 2020 (Avoiding the Pitfalls)

As we struggle and claw our way towards the end of the year, this month’s PCC looks at some of the challenges and obstacles facing the industry as we head into 2021 and beyond.

How Did the Pandemic Impact the Industry Overall?

(Forbes)

"The events of 2020 created "five years’ worth of change in a year” in the comic book industry. The pandemic accelerated dynamics already at work in the industry and forced publishers, distributors, and retailers to face weaknesses in their models."

Is This End of the Comics to Film Pipeline?

(ICV2)

The comic book industry has always found success off the printed page. Comic IP adapts from radio dramas to merchandise to video games. No other media has been as successful as film, especially since 2000. But as the pandemic cripples production in Hollywood and movie theaters inch towards oblivion, how will the IP adapt in the future?

Avoiding a Terrific Trap for Comic Creators

(Io9)

Abusive contracts are nothing new to comics. Creators have been abused since Superman. The latest poster child in this sad cycle is Terrific Productions. I offered some perspective for this article, and if you want more tips on dealing with this kind of abusive publisher, see my article on How to Reject a Bad Contract

Systemic Racial Bias in Comics

(Business Insider)

2020 didn’t just expose systemic weakness in the distribution of comics. It also reminded us of the flaws within the halls of some of the biggest companies in the industry. DC has been hit with waves of upheaval, layoffs, and changes in their business model this year, but Harvey Richards and Lateef Williams catalog years of racial discrimination. This situation isn’t unique to comics, it is only more pronounced because the people in the business love the medium and that love is often abused.

Finding The Best Marketer for Your Comic

(Comics Experience)

If you don’t find a market for your comics, there is a good chance no one will read them. There are various methods and partners you can use to find and connect with your market, but in this video, I explain why you are the best marketer for your comic and what you can do to build your audience. If you want more insight into the comic book marketing process, check out the videos I did for GlobalComix on comic book marketing.

2020 Best Year Ever for Comics on Kickstarter

(Kickstarter)

This year might have been challenging for major publishers, distributors, retailers, and freelance creators, but independent creators and publishers found success in the crowdfunding space. Between pop culture icons like Keannu Reeves, industry veterans like Scott Synder, yours truly and thousands of other creators, comics on Kickstarter alone have generated twenty-two million dollars this year. Can 2021 match those numbers? There’s no way to know. But crowdfunding can be a viable business model, as long as you build and continue to satisfy your crowd.

A Simple Guide to Creative Contract Negotiation

By Gamal Hennessy

This is a modified excerpt from a book I’m working on called Independent Comic Book Publishing. It’s designed to walk you through the basics of contract negotiation. The post is geared towards comic book creators, but the information is also applicable to independent entertainers and small business owners of all types.  While this can’t be used as legal advice, I hope you’ll find it helpful.

Getting a contract signed for your independent comic book can be a complex process. First, you need to understand what a contract is and what elements go into an agreement (See A Simple Guide to Understanding Creative Contracts). Then, you have to figure out if the particular deal you’re working on requires an artist collaboration agreement (See A Simple Guide to Artist Collaboration Agreements), or a work for hire agreement (See A Simple Guide to Work for Hire Agreements). Finally, you have to agree on the terms of the specific agreement with each creator.

Achieving this consensus isn’t always easy. Both sides could have competing interests, agendas and levels of leverage. This post offers some guidance on how to negotiate a contract that everyone is happy with, instead of one that someone (or no one) is excited about signing.

How Do You Reach an Agreement Everyone Is Happy With?

Creating a mutually beneficial contract requires balancing relationships and interests. Because you’re going to be working with the other person for weeks or months, you don’t want that interaction tainted by negative feelings related to the contract. At the same time, you might not be able to give the other side everything they want for the sake of the working relationship.

What you can offer any potential business or creative talent will be based on:

1.    Your goals

2.    Your budget

3.    Your timetable

4.    Your level of interest in the skills and abilities of the individual.

The offer your potential talent wants to accept is based on:

1.    Their professional goals

2.    Their financial needs

3.    Their available time

4.    Their level of interest in your project and you as a publisher.

Because your interests are different and in some cases in direct opposition to each other, there is a tendency for each side to try and negotiate a compromise between the two positions. This is known as positional bargaining. The problem with positional bargaining is that neither side really gets what they want. Depending on the negotiating power of one side over the other, someone might feel they are signing a contract out of duress or with a certain amount of resentment. This isn’t the best way to start a creative relationship.

Fortunately, there is an alternative to positional bargaining. Roger Fisher, William Ury and other members of the Harvard Negotiation Project developed an alternative negotiation theory known as interest based negotiation in their bestselling books Getting Past No and Getting to Yes. While it is not a perfect solution to the negotiation process, it does strive to create solutions both sides want, instead of forced concessions.

How Does Interest Negotiation Work?

Ironically, understanding when it is time to walk away can help bring parties together. One of the primary concepts of interest negotiation is the Best Alternative to a Negotiated Settlement (BATNA), or what I like to refer to as options. A BATNA is “the most advantageous course of action someone can take if the contract negotiations fail”. For example, if a publisher wanted to hire you as an artist for their comic and your demands were more than they were willing to agree to, their option would be to hire someone else.

Most options are not that straight forward. In many instances, options have to be developed. Some negotiators begin by compiling a list of alternatives to the current proposal. At this stage, no alternative is rejected. This is a creative exercise to explore all possibilities to figure out what you actually want to accomplish with this deal. The most promising opportunities are then singled out and improved upon if possible until the best option to a contract is found. In our example, the publisher might have a list of other artists, or they could learn to do the work themselves, or they could create a novel instead of a comic, or they could try to sell the idea to another publisher. In the best case scenario, you have several different alternatives to achieve your interests.

The next step in the process involves trying to understand the other side’s options in specific detail so you can identify their interests. As an artist, you might want a combination of money, ownership, creative freedom, credit or other factors that are important to you.

When the time comes for all sides to negotiate the terms of a contract, the underlying interests of both sides are used to reach a consensus. Each side understands the interests of the other side and expresses their interests with the goal of seeking a flexible solution. If the goal of the publisher is to keep costs down and the goal of the artist is money, then a possible solution is for the artist to handle the art, inks, lettering and colors at a reduced page rate than the publisher would have to pay for four different people.  

What Are Interest Negotiation Techniques?

While every negotiation scenario is different, there are some basic principles that apply from the perspective of writing the contract.

1.    Look for a favorable agreement on all sides, not just an acceptable one.

2.    Create language in the contract on an ongoing basis to record areas of agreement

3.    Move towards commitments gradually on both sides

4.    Offer tentative commitments until you see the total package

5.    Be rigid in your pursuit of your interests, but flexible in terms of solutions

6.    Do not allow a “bottom line” to blind you from creative solutions.

7.    Consider being generous near the end but stick to your interests

How Does Leverage Impact Interest Negotiation?

Different sides have different levels of power and control in contract negotiations. Leverage is defined as the power one side has over the other side in the pursuit of their interests. Depending on the disparity between the parties, the leverage one side has over the other can undermine the interest negotiation process. For example, if the publisher in our example was Marvel or DC and you were an aspiring artist looking for their first major gig, their options would outweigh your options so much that you might sign whatever deal they put in front of you (See my post on Negotiating Power in Creative Contracts).

The concept of leverage might not strike you as fair, but as attorney and author David Tollen states in his book The Tech Contracts Handbook, “If you focus on what is fair, you might walk away from deals that make economic sense.  But that is a poor choice if you can’t get better terms from anyone else, and if accepting the terms would be more profitable than dropping the project.” It makes more sense to focus on the best option available, rather than fairness.

Keep in mind that leverage can be abused to the detriment of the more powerful side. The comic book industry is small. Reputations, good and bad, travel quickly. Power and influence are relative. Positions shift all the time. Keep the following ideas in mind, especially if you have the leverage:

1.    Don’t damage the relationship

2.    Don’t damage your reputation

3.    Don’t overstate your value.

4.    Don’t agree to things that won’t work for either side.

Drafting, negotiating, and signing the contracts for your creative project might take some time and cost you some money, but if you sign the right contracts up front, you'll save money in the long-term and put both you and your book in a better position to succeed.

If you have had contract negotiation issues in the past, feel free to share them in the comments below and tell us how you dealt with the problem.

Have fun with your comic.

Gamal

If you have questions about the business or legal aspects of your comic book publishing and you'd like a free consultation, please contact me and we can set something up that fits in with your schedule.

If you enjoyed this post, consider joining Comics Connection. Comics Connection gives creators a community to elevate their comic book careers. We offer access to business and creative resources you can’t find anywhere else. For a limited time, the first month of membership is free.

PLEASE NOTE: THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. IF YOU HAVE AN ISSUE WITH YOUR COMIC PROPERTY, DISCUSS IT WITH A QUALIFIED CONTRACT ATTORNEY OR CONTACT C3 FOR A FREE CONSULTATION

Get What You Give (Rights and Revenue in Comics)

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.

David v.s. Goliath: Negotiating Power in Creative Contracts

By Gamal Hennessy

When I analyze contracts for my clients, I point out all the language in the agreement that has been written to favor the publisher. I point out all the ways that contract clauses are used to limit their control over their work and their ability to make money. I offer them suggestions on how to make the contracts more equal and level the playing field. But I am aware that the terms of most of these deals will never be changed. As a comic book creator, you often must deal with the reality that you have little or no negotiating power relative to a publisher. Taking this fact into account will help you make decisions about what deals you will or will not get into and help you understand how they will impact your career.

Scarcity Breeds Power         

Publishers have to take the financial risk of releasing an unknown and unproven book. In order to mitigate this loss and to give themselves the potential for substantial revenue and control on the back end, many of them incorporate biased language into their contracts. Many creators sign those contracts because of their lack of influence.

It is easy to understand why comic creators normally have very little negotiating power. It boils down to supply and demand and market scarcity.

The publishers currently corner the market on supply. They control the means of production (printing) and direct distribution (comic shops, bookstores, online and digital) and often control secondary distribution (merchandise and media licensing)

The number of comic creators who want to gain access to the publishers supply is massive compared to the number of publishers. Who knows how many potential artists and writers are out there dreaming of getting their books in print, movies and games?

The scarcity of publishers relative to the abundance of creators produces a situation where publishers can afford to offer one sided deals. Every unknown creator who demands a superior deal can be rejected by the publisher because there are ten or twenty other creators willing to accept an inferior deal. Since the publisher is primarily looking for books to fill their publishing plan, one unknown book is just as valuable as any other from their perspective.

Options for Creators

In light of the reduced negotiating power that undiscovered creators have, does it make sense to push for a bigger deal for a creator owned project or page rate? Yes and no. While you might not be able to wrestle a six figure advance out of Marvel, there are options you can pursue to make the most of your work.

• Establish your reputation in the industry by taking on work for hire projects that will get you exposure for your skill without exposing the characters and story lines that you are saving for a creator owned work.
• Find a more flexible small press that will offer more reasonable terms for new creators.
• Explore self-publishing if only to increase your name recognition in the market.
• Accept the biased deal as a means of name recognition.

While none of these methods is a quick road to fame and fortune, they can boost your negotiating power over time. An unknown creator has almost no leverage with a publisher. A creator with a following who represents tens of thousands of copies sold per month can command lucrative exclusive contracts, back end participation deals and creator owned contracts that give them considerable revenue and control potential. The best analogy is the contract situation in professional football. As a player, you may not make very much on your first deal but once you prove yourself as a marquee player, your subsequent contracts can be huge.

Need to Understand Your Agreements

Whether you make the choice to accept a one sided deal, negotiate better term or walk away, you need to understand what the terms are for the deal you are being given. It might make sense to take a bad deal now if it will boost your career later. The key is making an informed decision about what you are doing. Whether you decide to use a service like mine or not, knowing what you are signing and why is key to building and leveraging your negotiating power.

Best

Gamal Hennessy

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 at gamalhennessy@gmail.com FOR A FREE CONSULTATION.