Imagine, if you will, a wealthy theme park owner has discovered a technique for bringing dinosaurs back to life. He would like to build a dinosaur theme park (because dinosaurs are very cool, and thus economically valuable) and this theme park guy has built lots of other parks — so what could possibly go wrong?! (We know what you’re thinking: someone should make a movie about this!)
Now imagine these theme park owners are brands/advertising agencies (or MCNs), and the dinosaurs are the deals they’re making with creators. Because it turns out that Jurassic Park is a surprisingly helpful model when thinking about digital contracts between these two groups.
The theme park owners want to protect themselves, and they want to use the same systems they’ve spent decades developing. But these dinosaurs are unique animals, separated by 65 million years (or 10 internet years) of evolution. Since the owners have experience putting appropriate safeguards in place, every creature gets a fence, with bigger dinosaurs requiring more drastic protections.
These safeguards are contracts. And as a creator, if you want the T-Rex deal, you’re going to have to work with the T-Rex precautions.
The ICG spoke to almost a dozen lawyers, as well as industry members and creators, to understand their perspectives about why contracts exist and how to think about them. We’ve used this as an opportunity to outline a few examples of what to look out for in common deals.
A few disclaimers:
- We don’t know you specifically;
- The lawyers who contributed to this article are not your lawyers, so the information provided in this article is not legal advice;
- This article is not meant to cover every possible pitfall that a creator might encounter in a contract.
We say all this to emphasize that everyone’s circumstances are different and the best advice and representation should be specific to you. Therefore, if you have questions, we strongly suggest you consult a lawyer directly.
The most important thing for all creators is to fully understand what the other side expects — therefore, don’t sign anything you don’t understand. Seriously.
We hope this primer will help protect creators’ rights by raising the general level of knowledge and increasing awareness of common pitfalls.
Why Do Contracts Exist?
Unlike making a dinosaur, creating a contractual relationship is quite simple.
Party A makes an offer to Party B, Party B accepts the offer — Voila, the parties have a contractual relationship. Offer + Acceptance = Contract. Even without fancy language or a lawyer involved.
In a perfect world, for example, a brand deal would go something like this:
Brand: I’ll pay you $10,000 to feature my product in your video.
Creator: I accept!
Creator makes a video and features the product just as Brand expected/desired.
Brand pays Creator and everyone is happy.
However, in the real world, there are countless ways that the Creator could satisfy the terms of the above-agreement in an unsatisfactory manner to the Brand. To prevent this, companies like to have their expectations and understanding of the deal written down. In simple terms: the more they write down = the fewer the loopholes = less risk of not getting what they want from a deal.
Thus, those who are engaging creators are incentivized to make their offers as robust and unambiguous as possible. So, the next time someone hands you a contract and says “this is our standard/basic form/boilerplate,” be aware — this could mean “here’s a completely lopsided agreement, drafted entirely in my favor that doesn’t include clauses that benefit or protect you.”
Every sentence in a contract has a purpose. Some of these sentences are benign and some are not, but they were specifically crafted to either state an obligation, grant/reserve rights, or clarify an uncertainty. It’s pretty safe to assume that if you didn’t draft a sentence, then it’s not in your favor.
Contracts are meant to be the absolute, final, agreed-upon terms of an agreement, which only really become necessary when there’s a disagreement. As such, contracts favor over-inclusiveness because they want to pre-settle disputes before they arise.
Moreover, a contract’s merger clause (which is discussed in the standard terms resource below) means that the contract is THE deciding document; no matter what was discussed before, and no matter what a prior email, conversation, or meeting may have stated.
If this article can teach you one thing it’s to always make sure you read and understand your obligations in the contract. This is the one section that should never be over-inclusive and should mirror exactly what was discussed and agreed upon. Your obligations should never be open-ended or TBD. If you need clarification, the other side should always be able to explain the agreement.
You should be able to answer the following questions about any potential contract/agreement:
- Who are the parties?
- What are your/their obligations?
- What’s the pay?
- How long does the agreement last?
These elements don’t always need to be stated as over-complex legalese and a seemingly simple agreement featuring a daunting language should raise a few red flags. However, as you (and your deals) grow, so do the risks for the other side. As risk grows, so does the contract’s length and complexity, and lawyers are often the only ones to actually read and understand the entire situation. The more money at stake in a deal, the more you may need a lawyer to review it.
What Terms Do You Need To Know?
We all know that the legalese of any legal contract is not exactly the most exciting to anyone who is not a lawyer. Most people skip over standard terms, considering the provisions to be “boilerplate” (and therefore not of much concern), and preferring to focus more on the fun stuff like how much they are getting paid.
We don’t blame you, but the lawyers we know are shuddering at the thought of anyone simply breezing through these aspects of the agreement.
The ICG goes through some clauses in an accompanying PDF resource.
The ICG’s Recommended Best Practices
Many creators and their teams have learned by trial and error. Our hope is that in pointing out a few common pitfalls and their corresponding fixes, other creators can learn from these experiences. We also call on brands, MCNs, and members of the industry to help move deals in a creator-friendly direction with these best practices. We’ve started with two common types of deals creators encounter, and hope to expand this in the future.
Brand / Sponsorship Agreements
- All services/deliverables should be spelled out in detail. Changes to this, such as additional posts, should come with additional fees. For example, a brand may ask for just one Instagram post, but then after the contract is signed, also ask for a Tweet or Facebook post.
- Revisions/edits/creative approvals should be specified and limited. Your time is valuable and you do not want to be wasting it doing tons of revisions, so specify the number of edit rounds; indicate that the message/deliverables must be in your own style, tone, and voice consistent with your previous videos; and require final creative approval as long as you have followed all the agreed brand messaging points.
- Content ownership stays with you. You own the distribution channel(s), so ideally, you’ll retain ownership of any content and you’ll license the content to the brand for a limited amount of time in certain territories on certain media. In turn, they will license to you use of their trademarks and logos and any other intellectual property they may have provided to you to use in the branded content.
- Your fee should be clearly outlined–including how much, when, and ideally some up-front payment. As creators advance in their career, many make a point of getting a percentage upon execution of the Agreement. So, a typical payment structure might be: a non-refundable 25% upon execution of the contract, 50% payable after the first post, and 25% payable once all services have been completed. Also, it’s in the creator’s favor to get “Pay or Play” language inserted, meaning if the brand terminates the contract after it was signed, they still have to pay you the full fee even if you do not perform any or all services (as long as you are not in breach of the agreement).
- The brand’s usage should be specified, and any exclusivity should be short and not too broad. How the brand uses the content you create and the number of times they can re-post it should factor into the fee you are being paid. Additionally, most, if not all brands, will ask you to be exclusive to them for a period of time. In other words, if you do a deal with Airbnb, they will not want to you create any content for Airbnb-type services for a specified period of time. The brand wants this period as long as possible, but you want to be able to resume doing deals with other brands. Therefore, a long exclusivity period should result in a higher fee, and the exclusivity should not be too broad beyond the brand’s “category.”
Multi-Channel-Network (MCN) Agreements
- Get the services you need. The MCN you are signing a contract with should be fully able to meet your needs, so pay attention to their connections, expertise, professionalism, and services. Do some research on the party offering you this contract as, if one MCN is willing to offer you a deal, odds are there are more out there willing to do the same. MCNs often say they can help in the following ways, and you should be clear on what you want, and what they’re agreeing to do for you:
- Seeking out branding and sponsorship deals
- Administrative services — helping you to collect your AdSense dollars, administer the back end logistics of your channel(s), etc.
- Video production and editing services to help create content
- Advice on how to increase your following/subscriber #’s, channel optimization
- Distribution of videos, i.e. an MCN may partner with another platform so you and your videos get exposure to a new audience
- Enhanced analytic dashboards, and productivity tools to connect with your audience
- Access to royalty free content, i.e. stock footage to use in videos and/or music
- Opportunity to collaborate with other YouTubers in the network1
2. Terms should be short, ideally with a trial-period. Watch out for auto-renewal clauses! Six months to one year term is ideal so that you’re not tied down for too long — and you may be able to ask for a thirty-day to three-month trial period. Within the term, some agreements have an auto-renew clause: if the creator is not happy with their network and wants to leave, they must send notice (often up to 3 months before) in the manner specified in the agreement. This is a big red flag, the ICG is advocating for eliminating all auto-renewal clauses from MCN contracts. It’s essential you keep track of the dates in the agreement and what’s required of you if you wish to leave.
3. Compensation could include more than just the % split. Offers can include: a flat CPM rate, an initial signing bonus, or a minimum guarantee with respect to brand deals/sponsorships/endorsements. (With this last one in particular, note the catch that you may only be allowed to pass on a maximum of 2–3 deals that they bring you.)
4. Make sure the content included in the deal is outlined. Networks may try to stipulate that any new content/channel you develop during the term will be included within their network, which may not be in your interest. They may ask for rights to distribute on other platforms besides YouTube, often with language such as “in any and all media now known or hereafter devised,” meaning “even if the platform didn’t exist when the agreement was signed”. Finally, there may be language regarding time frames for publication and content quality control, or even the amount of content you must push out each month. Make sure that the terms used in these sections match your existing content creation practices, and don’t agree to make more content than you already do.
5. Content ownership stays with you. Creative control — the ability to fully determine what goes into and what comes out of content — should always remain with the creator. Furthermore, be sure to retain your copyrights, trademarks, and every other proprietary rights, which should be expressly reflected in the terms of your contract. The rare cases where you may not own a video you make (ie. a branded video) should be negotiated on a case by case basis and not within the overall MCN Agreement.
Know Your Power
Creators must recognize that they have power in these relationships. Creators are beautiful, unique creatures that businesses want to work with because of the economic value they can provide. Those businesses are going to want to protect themselves, and the stability they can provide is vital now more than ever, but don’t let them fence you in completely.
Have you learned from past experiences in terms of the contract clauses you avoid or include? Please get in touch, as we hope to continue growing these guidelines in the future.
Special thanks to:
We’re grateful to all the lawyers who spoke to us for this project, especially these contributors who helped draft the article and resource:
Danny Miller is a talent lawyer at Hirsch Wallerstein Hayum Matlof + Fishman. While he and his firm continue to represent some of Hollywood’s most notable actors, directors, writers, and producers, Danny has carved out an expertise in all things digital. His clientele ranges from some of the largest and most influential creators in the space to emerging and dynamic creators.
Anita K. Sharma is an entertainment lawyer & producer based in New York City. She is the founder of SHARMA LAW PLLC, a law firm that focuses on digital media, branded entertainment, film, television and intellectual property law. Anita is a passionate advocate for her clients and over the past four years, she has developed a specialized digital media practice representing top YouTubers and digital creators throughout the world.
Ryan Morrison has made a name for himself through ensuring the law protects everyone. Deemed “The Video Game Attorney” by the countless developers and YouTubers he has helped through his free online legal Q&A’s, Ryan understands that this new and innovative industry requires a new and innovative approach to law.
The Internet Creators Guild is a non-profit organization that advocates for professional creators through collective representation and action. We rely on membership dues from creators for funding to sustain our small team, volunteer board, and growing community. To support us as a member or learn more, visit us at internetcreatorsguild.com