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 how to pay the people who collaborate on your comic. While this can’t be used as legal advice, I hope you’ll find it helpful.
After ownership of the intellectual property, getting paid (or consideration as it’s referred to by contract attorneys) might be the most negotiated aspect of collaboration agreements. You need to pay each collaborator the right way, depending on the deal you’ve created with them. We’ve touched on both basic contract language (See A Simple Guide to Understanding Creative Contracts) and collaboration agreements (See A Simple Guide to Artist Collaboration Agreements). Now we need to take a closer look at the consideration in collaboration agreements.
Can Exposure Be a Form of Consideration?
Like many small business owners, independent comic book publishers try to keep costs low. One method that persists in this and many creative industries is offering “exposure” to creative talent instead of actual consideration.
While there will always be eager novice artists and writers willing to accept this professional abuse, but before we explore legitimate forms of consideration, I’m going to try and explain why you shouldn’t make “exposure” a part of your pitch to talent at any time.
“Exposure” is based upon a hypothetical, best case scenario. The publisher has an idea that is a “guaranteed” success. Anyone associated with this amazing book will become famous, because the book will be famous. Then, other publishers and creators will then seek out talent from this book to use in their own projects, and will pay substantial amounts for the privilege. In essence, talent gives up money now for a chance to “get their name out there” and achieve fame and fortune later.
This scenario falls apart upon casual inspection.
First, there are no guaranteed successful ideas in comics or any other form of entertainment. Second, there is no tangible assurance that the work done for exposure will ever lead to later paid work, even if the book is a hit. Third, in the 21st century, every artist, writer and creative profession market themselves using social media. Finally, the talent has financial obligations they are trying to fulfill with their creative work. There is no reason or incentive for comic book creators to spend their limited time and resources on the illusion of exposure.
Keep in mind, there is a related form of consideration called credit, which does have secondary value to comic book creators. Industry leaders like Jim Lee, Todd McFarlane, Frank Miller, and Mark Millar all leveraged their work for the Big Two into fame and success in their own projects. But the credit came in addition to the page rates and other forms of consideration, not as payment on its own.
Paying talent can be one of the biggest drains on your financial investment, but your professional reputation and the success of your book will suffer if you attempt to get people to work for free. Exposure by itself is not consideration. You need to offer something more.
What Forms of Consideration Are Used in Collaboration Agreements?
Because creators who sign a collaboration agreement own a portion of the underlying property, there are four major types of consideration they can get, based on the deal negotiated between the parties.
Intellectual Property Ownership: Collaborators share in the copyrights and/or trademarks associated with the project. This could mean that they get a portion of the revenue generated by uses of the IP not directly related to the publishing, such as the film, TV and merchandise. This also means they can have authority over how the IP is developed and how it can and can’t be used.
Please note that there is a mathematical limit to IP ownership. You can’t offer more than 100% of the property, so pay attention and don’t try and give away 130% of your book to various members of the team.
Credit: As I mentioned earlier, collaborators can get their name on the book and associated properties, as is customary in the industry (i.e. on the cover, in associated advertising and social media.) which can bolster their professional reputation over time.
Revenue sharing: Collaborators can share in the success of the book by dividing profits between them. For example, if the writer and the artist collaborate on a book that generates $5,000 in sales, and they agreed to split the money evenly, each of them can walk away with $2,500, depending on how revenue is defined. Again, you can’t offer more than 100% of the revenue, so be sure to check your math.
Upfront payment: Collaborators can negotiate terms where they get a portion of the investment prior to the collection of revenue in exchange for less initial money when the book starts generating sales. For example, if a writer took $2,000 as his overall page rate in our example above, he wouldn’t be able to collect any royalties until the book recovered his page rate from sales.
Copies of the final product: If you are going to distribute your project in digital or print format, one form of consideration is a specific number of free copies of the book. You can also consider giving talent the opportunity to buy additional copies at a discount so they can either give them away as promotional items or sell them on their own. If you decide to use this form of consideration, just be sure to factor this into your print runs. If you have a large team or you offer a large number of copies to each person, you could be cutting too deep into your revenue.
How Is Revenue Defined?
Collaborators who decide to share revenue need to be very specific about the definition of revenue if they want to avoid financial disputes (See Your Slice of the Pie). In general, revenue is defined as the income generated from the sale of goods or services. For your project, revenue can come from advertising, books sales or licensing of the IP. But all revenue is not created equal. Gross revenue is all of the money collected from the exploitation of the IP. Net revenue is gross revenue minus expenses related to the goods and services being provided.
Let’s go back to our earlier example to understand the difference between gross and net. If the collaborators made $5,000 in sales from their book and the revenue split is defined as 50% of the gross revenue, then each collaborator is entitled to $2,500. But, if the book cost them $4,000 to produce, print, and ship, then the net revenue is $1,000 ($5,000 - $4,000) and they each are entitled to $500. If the book cost $10,000 to produce, then there is a loss of $5,000 that the collaborators could deduct from their personal income depending on how the underlying business is set up. The majority of collaboration agreements use the net revenue definition, especially when the initial investment doesn’t cover production and distribution, but talk to your accountant to determine how the losses from a business apply to you.
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