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A Framework for Creative Contract Negotation

Added on July 1, 2015 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:

Control the first draft
Ask for the kitchen sink
Keep the relationship healthy
Make sure the other side can look good
Deal with the decision maker
Use an intermediary
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:

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)
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?)
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

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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 AT gamalhennessy@gmail.com FOR A FREE CONSULTATION.

Before You Sign on the Dotted Line.

Added on June 9, 2015 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 March 24, 2015 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.

Have fun.

Gamal

Your Exclusive Engagement

Added on February 26, 2015 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

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

Added on February 19, 2015 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)