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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.

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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.

Are You Working for Free (Considering Consideration)

Added on by Gamal Hennessy.

Consideration is a basic concept when you’re dealing with contracts. It’s not about being considerate in terms of being thoughtful, it’s about an exchange of value.

In most cases a contract is an agreement between two or more parties who agree to trade something of value. A lot of things can be thought of as valuable in contracts: money, goods, services and even promises can be used as consideration under certain circumstances. As an independent artist, there are four type 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 Consideration: You get something specific once you deliver the agreed upon material. For example, if you draw 22 pages for $300 per page, then you get $6,600 upon delivery of the pages. This type of consideration could be defined as a flat fee, based on the number of words or pages or some other measure of performance. This type of payment is typical of work for hire agreements where the artists is hired to perform a specific task for a limited amount of time (See Contracts 101: Creator Owned v.s. Work for Hire)

  • Performance Based Consideration: You 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 money comes in from the sale of the book. This is a common form of consideration for collaboration agreements, self-publishing platforms like Kobo and KDP and creator owned agreements with certain publishers.

  • Combined Consideration: You 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 movies (See RDJ Pay Set to Hit Fifty Million). While you might never make as much as RDJ, these are the most lucrative types of deals because they give the artists both protection against a poor performing book and the benefits of a successful book.

  • Production Consideration: You 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. This is the least lucrative kind of consideration, because an artist can lose all the rights to their characters and stories for a few thousand dollars that they never receive directly. While many of these deals can provide exposure and ego gratification for the artist, most 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