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.

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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.

Will You Accept Your Assignment?

By Gamal Hennessy

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 new born 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 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 (See David vs. Goliath) 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.

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 and Star Wars. As comic properties become more lucrative (See Making Comics Isn’t Really About Comics Anymore) 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 some cases, you might want to have the rights to your book assigned to another company. Just understand the process and work to adapt the contracts you sign to the goals you have.

Have fun.

G

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.

Understanding Comics Law: Don't Wait Until It's Too Late

By Gamal Hennessy

The most insightful thing I learned at this year’s New York Comic Con wasn’t at a professional panel or lecture. It happened at a random conversation on the show floor.

I was talking to Andy Schmidt, a former colleague at Marvel and founder of the professional education and publishing company Comics Experience. We talked about the new six week course he’d developed with entertainment attorney Joe Sergi called Comic Book Law for Creators. The workshop sounded like an amazing resource that writers and artists would be dying to get into. But Andy told me he had a hard time getting creators signed up. “A lot of them tell me they’re not ready to learn that part of the business, which really doesn’t make sense.”

I could only shake my head in response. I’m familiar with the mentality because I’ve seen it in my own practice. Writers and artists often spend so much time developing their craft and fighting to get their name out there to get that big break. But when their hard work pays off with publisher interest or some other opportunity, many of them don’t know how to protect their rights. Their big break turns into a painful lesson in contracts, licensing and intellectual property law.

Last year, I conducted a survey with the modest title “The Great Independent Comics Survey”. In that experiment, I found out that one in four independent creators lost some or all of the rights to their work as a result of licensing deals.  How many of these artists could have benefited from a course on the legal aspect of comics?

The answer is probably 100%

Trying to get into comics while ignoring the legal aspects is like jumping out of an airplane in mid-air and then deciding you need a parachute. It’s like climbing into the UFC octagon for a championship match and then deciding to learn how to fight. It’s like trying to get insurance for your house after it’s already on fire. You need to know the relationship between your business needs and your legal options to make the most of your opportunities and you need to know before success knocks on your door, not after. (See Treat Your Art Like an Investment)

Books like Words for Pictures and courses like Comic Law for Creators won’t eliminate the need for writers and artists to get legal help with their contracts (See Why Creators Need Lawyers). It will make them better consumers of professional services and better equipped to make informed decisions about how to pursue their careers. Making comics is like skydiving. It can be fun, but you’re probably going to need that parachute.

Have fun.
Gamal

A Last Minute Deal with Kirby Saves Marvel from the Supreme Court

Deadline Hollywood is reporting a settlement between Disney/ Marvel and the Kirby estate for the ownership and control of many of Marvel's flagship characters. I'll have a more in depth article about this next week, but my initial thought is the 11th hour deal might have saved Marvel and many other companies who rely on work for hire artists from the risk of costly re-negotiations and payouts down the road.

http://deadline.com/2014/09/jack-kirby-marvel-settlement-lawsuit-supreme-court-hearing-841711/ 

Have fun.

Gamal

When Artists Hire Artists

by Gamal Hennessy

The business of storytelling is evolving to take advantage of new technology and business models. It’s creating new opportunities to get stories in front of people by breaking down the old barriers to entry. Self-publishing and independent projects are growing at a record pace, thanks to digital distribution and micro niche marketing.

Creators are now in a better position to publish books on their own without traditional publishing houses to act as gate keepers. Some artists are releasing their own comics to build their reputation in the industry and break into the mainstream. Some writers are self-publishing their books to retain more profit and control. But with great power comes great responsibility (sorry, that was too tempting to leave out).

Artists and writers who used to be forced to sign a publisher’s work for hire agreement are now in a position where they need their own work for hire contracts to protect their rights. But what are the key elements that need to be in this kind of contract? How can you protect yourself in both the short term and the long haul? How can you be the type of creator other artists want to work with? When artists hire artists, they need to take care of their world, their defenses and their reputation.

Your World

When you create a story, you have the power to define what happens. When you have your own creative project, you have the power to define your relationship with your artists. The three key factors you need to deal with are:

• Defining the project: Spell out in as much detail as you can what the artist is working on, what kind of work they’ll be doing, when the work is due and how much they’re going to get paid.
• Owning the Services: Make it clear that your relationship with the artist is a work for hire. This means they aren’t going to have any ownership or control over the property itself or the underlying characters or stories they’re going to be working on.
• Own the use and distribution: Reserve the right to use any work the artist does for you in any and every way you can think of. You might only be planning to do a web comic now, but you don’t want to limit your options to do a deal with Netflix or whatever the next hot media turns out to be

Your Shield 

Producing your own book opens you up to a certain amount of risk. You could pay for work and never get the finished product. Your artist could deliver artwork done by someone else. There are all sorts of pitfalls in publishing, but certain terms in the contract can help protect you from trouble.

• Payment: If you tie payment to delivery of work, you are more likely to get the services you commissioned.
• Representations and Warranties: If your artist makes promises to protect you and your work, they’re less likely to screw you over because they’ve been put on notice
• Indemnification: If they do break their promises to you, an indemnity (just a fancy word for repayment) gives you the ability to resolve your dispute in a court (which is one place artists don’t want to go).

These protections are not perfect. People breach contracts all the time. But when all the terms and conditions are spelled out, people are more inclined to see you as a professional and treat you in a professional way.

Your Reputation

Clear and consistent contract terms will remove most of the confusion and doubt that comes with making a business deal. As more and more people do business with you and get exposure to your business practices, the better your reputation will be in the industry. The creative world of books and comics is a small one if you stay in the game for a while. A professional reputation as both an artist and a publisher can be just as critical to your long term success as your ability to write or draw.

Independent creators need to tailor each work for hire contract to fit each new creative project. Larger publishers work better with form agreements and economies of scale, but until your publishing evolves into that level, a custom agreement is probably your best bet.

Have fun.

Gamal

P.S. I’m going to be attending New York Comic Con on Thursday, October 9th, 2014. If you’re going to have a booth in Artist’s Alley or you’d like to set up a free consultation, please leave a comment and let me know.

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.

Words for Pictures: A Book Review

As a child, the first book I recall getting my hands on about the comic book industry was How to Draw Comics the Marvel Way. After I got out of law school, I got my hands on Understanding Comics by Scott McCloud. The first book exposed me to comics as a technical skill and not just a bunch of cool pictures. The second book reintroduced me to comics as an art form and not just a childish obsession. Words for Pictures is a book on the same level. It describes the creative and practical aspects of comics as a business and belongs on the radar of anyone with any interest in the medium.

Brian Michael Bendis is an award winning writer who has worked on seminal franchises including Spider-Man, X-Men and Guardians of the Galaxy. He’s also had success with his own original titles including Powers, Torso and Scarlet. Bendis brings years of experience to Words, walking an aspiring creator through major aspects of the writing business including:

• The motivations for writing
• The form and function of the script
• Collaboration with editors and artists and;
• Protecting your business interests

Bendis doesn’t just rely on his own perspective for this book. He adds the insights from dozens of top writers, artists and editors to create a behind the scenes look into the business that is now driving the blockbuster movie industry. One of the most important lessons in the book gets a chapter to itself. Bendis advises anyone and everyone who gets into comics on any level to protect their creative investment by seeking out and listening to lawyers and accountants when it comes to handling their career.

Even if you’re not interesting in writing comic books, Words for Pictures still has value. If you’re a writer on any level, the advice he offers transcends the comic book page and extends out to novelists, playwrights and screenwriters. If you simply love iconic artwork, Words is filled with art from some of the top comic book artists of the past and present. In the same way you don’t have to read comics to enjoy comic book movies, you can enjoy Words for Pictures without trying to be the next Walt Simonson of Brian Michael Bendis.

Have fun.

Gamal 

Are You Working for Free (Considering Consideration)

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