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 how to pay the business and creative people who help create your comic. While this can’t be used as legal advice, I hope you’ll find it helpful.

 

What Forms of Consideration Are Used in Work for Hire Agreements?

Because creators who sign a work for hire agreement do not own a portion of the underlying property, the four major types of consideration they can get are different from collaborators (See a Simple Guide to Getting Paid in Collaboration Contracts), based on the deal negotiated between the parties:

1. Page rate: Different professions get paid according to different measurements. Most lawyers get paid by the hour. Sales people get paid based on commissions. Freelance comic book artists normally get paid a page rate. The basic idea is for every page you’re hired to work on, you get a set fee. So if you get $100 per page and the book is 32 pages, then you get $3,200. A page rate is a base number. It doesn’t take into account incentives like royalty pools, recoupment, back end participation or anything else that could muddy the waters. It’s a straight forward transaction; one page for one price. As long as you know what the price is, everything else is based on that.

2. Credit: This is similar to collaborators, where work for hire creators can get their name on the book, as is customary in the industry (i.e. on the cover, in the advertising materials and on social media)

3. Revenue sharing: As an additional financial incentive, some work for hire deals include a royalty in addition to, or in place of, a page rate. A royalty is defined in comics as a payment based on the revenue generated from a distribution source. For example, you might offer your artist 25% of the net profits from any poster or t-shirt sales that use their artwork. You can also allocate royalties into a royalty pool that pays all participants from a shared source of income, but those kinds of financial structures are utilized by larger companies and usually aren’t necessary for your initial project.

4. 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 Do You Determine the Right Page Rates?

Page rates in the comic book industry are not standardized, since there are several factors that will go into what a freelance creator will command including:  

• Their experience

• Their skill level

•  Their established fan base.  

While these factors are subjective and based on what you can afford to pay, there are some baselines you should keep in mind. This unofficial snapshot of industry pages rates is based on information contained on the 2016 survey website Fair Page Rates:

• Writers:            $25-$220 per page

• Cover Artist:    $200-$750 per cover

• Pencils:           $100-$250 per page

• Inks:                $75-$200 per page

• Coloring:          $35-$150 per page

• Flatting:           $8-$20 per page

• Lettering:         $10-$50 per page

What Forms of Consideration Are Used in Business Work for Hire Agreements?

Business professionals are just as important as creative professionals in publishing a successful comic (See You Need Two Teams to Publish an Independent Comic). Business work for hire agreements differ from creative work for hire agreements in comics because the base line measurement of a page isn’t helpful as a calculation. In addition, each team member has to deliver something different, so you can’t use a single standard. Business and creative work for hire contracts can be similar if you replace the concept of a page rate with a unique milestone for each role.

A milestone is a stage of development in a project that can be used for the measurement of work performance. For in creative work for hire agreements, the page serves as the milestone. You can create specific milestones for business work for hire agreements. For example, let’s suppose you want your book to be available as a printed single issue for comic book shops. The person who takes on the printing role might have the following milestones in their contract. Every milestone can be tied to a date, a payment or both.

1. Create the criteria for printer selection

2. Develop list of potential printers based on printer selection criteria

3. Send out RFP to printers

4. Collect samples from potential printers

5. Evaluate all RFP and assist in the selection of a printer

6. Negotiate terms of printing agreement with selected printer

7. Manage the delivery of the final print files to printer

8. Manage the printing of the first issue

9. Ensure quality of the printing process

10. Manage shipment of books from printer to customers

11. Confirm accuracy of the invoices received from the printer

Business work for hire agreements can also include things like credit in the book and revenue sharing. The important point is to clearly spell out the relationship between milestones and compensation in each contract.

 

How Can You Define the Relationship Between Consideration and Performance?

The relationship between the consideration you pay your talent and their performance on your project boils down to how you manage your leverage (See Are You Working for Free?). Leverage is defined as the ability to influence people, events and decisions.  As an independent publisher, your main source of leverage will come from your consideration.

Managing the timing of your consideration is key. If you pay talent before all the pages or milestones are delivered, then they will have less incentive to perform their role on schedule. If you try to make them finish all the work before you pay them anything, they will probably refuse. Even if they don’t, you will have less incentive to pay them if you already have everything you need. This isn’t an indictment of anyone’s morals on either side. It’s simply an observation I have made over the years in my legal practice and my professional life.

The middle ground between everything up front and everything at the end is a give and take system I refer to as the tennis method. The basic process is simple. Each side divides their performance or payment into several stages. One side starts things, normally by making the initial payment. The other side responds by completing part of the performance. This exchange goes back and forth until all the consideration is paid and all the performance is completed. (See Solving the Payment Problem video for more details) Using our printing manager as an example, the consideration and performance can be divided this way:

1. Both sides sign the contract: (Publisher pays 5% of the printing consideration)

2. Print manager creates the criteria for printer selection (Publisher pays 5%)

3. Print manager develops a list of potential printers based on printer selection criteria (Publisher pays 10%)

4. Print manager sends out RFP to all printers (Publisher pays 10%)

5. Print manager and Publisher evaluate all RFP and select a printer (Publisher pays 10%)

6. Print manager negotiates terms of printing agreement with selected printer (Publisher pays 10%)

7. Print manager manages the delivery of the final print files to printer (Publisher pays 10%)

8. Print manager manages the printing of the first issue (Publisher pays 10%)

9. Print manager ensures quality of the printing process (Publisher pays 10%)

10. Print manager manages shipment of books from printer to customers (Publisher pays 10%)

11. Print manager confirms the accuracy of the invoices received from the printer (Publisher pays 10%)

This method also applies indirectly to royalties or any kind of consideration based on the performance of the book, because the book performance triggers the new payment. For example, if the talent handling your sales gets a bonus if a certain number of issues sell, then the sales milestone triggers the payment.

 

What Happens If You Don’t Pay the Consideration?

The only thing worse than offering exposure is promising to pay your talent and then not paying them. A breach of contract is defined as failing to perform a contract obligation without justification. If you sign a contract and then fail to perform (i.e. you don’t pay your talent) that can be grounds for a civil lawsuit, arbitration or mediation which can lead to financial, legal, and professional consequences that far outweigh the money you might save in the short term.

• Financial: The penalties for breach of contract often involves the payment of damages, which is the money paid as compensation for the breach. The amount of damages can range from nominal amounts, paying the amounts you owe or paying a penalty of twice as much as you were supposed to pay in the first place.

• Legal: Courts can force you to take a specific action (like pay your talent or not use the work they did for you), transfer your IP to the talent because your breach invalidated the IP ownership clause, or cancel the entire agreement. This might be annoying if you’re project is just getting off the ground. It could be devastating if you’ve already sent the books to the printer or if you got some interest from Netflix for your book.

• Professional: No one wants to work with someone who has a reputation for cheating their business partners. Comic publishing is a small industry. It only takes one lawsuit to define your company. So only agree to pay what you can afford to pay and when it’s time to pay…pay.

 

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.

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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