In the world of entertainment contracts it can be next to impossible to comprehend the legalese without a thorough understanding of the law. Yet, there must be some essential points to an entertainment contract that all creative people should know about, right?
In searching for an answer to the “essential points” question, I decided to poll five prominent entertainment attorneys from across the country and ask them! Here’s what I discovered:
Casey Summar is the Executive Director of the Volunteer Lawyers and Professionals for the Arts. She is well known for her work pairing low-income artists and arts organizations with volunteer attorneys and professionals. She graduated from, and is currently a professor at, Vanderbilt University Law School.
What are Casey Summar’s Five Entertainment Contract Essentials?
1: Rights Reversion
Reversion of rights refers to the agreed upon point at which the artist’s rights are returned to them from the party to which they were granted. A contract should contain language that returns a work to the artist at a defined time in the future. For instance, a book publishing deal might define when a book is “out of print” and whether a reversion of rights is triggered after a certain event.
The exclusivity provision will define how tightly the agreement will bind you. Ms. Summar says, “Non-exclusive agreements can be significant.” An exclusive rights deal can be thought of as a monopoly over a particular work. In an exclusive rights deal, an artist agrees to only license a particular work to one party. For example, a musician might sign a deal to write songs for XYZ Publisher and no one else. A non-exclusive rights deal allows an artist to contract the release of a work through multiple parties.
3: Term and Termination
Ms. Summar says that a majority of contracts she encounters don’t address termination. She says the key is to “look for how you get out and when.” Some contracts might have a 30-days notice. Both parties to a contract are free to make adjustments and just because it isn’t present, doesn’t mean you should be afraid to add it into the contract.
4: Rights Transferred
A wide variety of rights exist that can be transferred under the U.S. Copyright Act. The full list of rights available to an artist is found in Section 106. In a contract “there can be some sort of trigger that transfers the rights,” Ms. Summar says. For example, a work is often exploited across a couple of genres. Therefore, when a publisher agrees to shop your song, you don’t want the rights in that song to be transferred until they are successful in getting a major label deal. “This is in contrast to transferring the rights upfront” before the song is picked up to be cut. This same principle can be applied across film, book publishing, and more.
5: Completion of the Contract
Casey Summar says her last essential “isn’t really a provision of the contract,” but instead should be included on a contracting checklist. “Too often there are key items or key attachments that are left blank,” she continued. Make sure the contract is complete and accurate and that both parties receive a signed copy. This would be a wise decision as learned from the contract made available publicly (note the lack of signatures) following the fatal 2011 state fair incident before Sugarland was scheduled to perform. Ms. Summar recalled a recent worst-case scenario: two publishers ended up splitting the income from a song and the songwriter was left with nothing! The songwriter granted part of the rights to a song to a publisher, therefore when a second publisher found placement for the song, the income was split among the publishers and they, not the songwriter, profited from the deal. In the agreement, the songwriter could only transfer what she owned, which was 50% of the song left over from the prior publishing agreement. Another example Ms. Summar gave related to art gallery agreements. The agreement should contain a clear list of work is being given to the gallery. Regardless of the contract being signed, both parties should receive a signed copy of the contract.
Professor Loren Mulraine (@LorenMulraine) is my Copyright Law and Entertainment Law Practicum professor at Belmont University College of Law in Nashville, TN. He graduated from Howard University School of Law. Before practicing entertainment law, Professor Mulraine began his career as a government contracts attorney with the Federal Aviation Administration in Washington, D.C. Some of his past clients include Grammy, Dove and Stellar award winners such as CeCe Winans, Take 6, Bobby Jones, and Out of Eden.
What are Professor Mulraine’s Five Entertainment Contract Essentials?
The term must be defined in any contract. The parties need to know how long the deal will last and how the time is defined. For instance, in a record deal the term might be defined by the number of records released. However, a management contract might stipulate terms in the form of number of years the agreement lasts. Both examples are terms of a contract, but it is essential to know how long the contracting parties are tied to any deal.
2: Royalty Distribution
What is the division of assets or royalties? What percentage of the material or income will be split off? Professor Mulraine says you would typically see a royalty clause within the contract that determines the distribution of royalties and the division of assets. Typical record deal contracts would provide 12% or more. Artists should be careful of when the contract falls outside of a traditional deal.
The previous essential element of an entertainment contract is directly related to Professor Mulraine’s next essential: ownership. Professor Mulraine says, “Long term you want to know who has the control.” Control becomes a major point in a contract. Every contract will mention control, but the essential points govern who has the control to make decisions. From an artistic perspective, the artist will want to maintain control over everything from the marketing of their appearance to the look, sound and feel of their music. However, a record label will most likely not grant 100% control to a brand new artist. He says it comes down to clout and which side of the deal has the most negotiating leverage at the time of signing the contract.
4: Creative Control
The fourth essential element Professor Mulraine points out is creative control. Professor Mulraine recently watched ‘Behind the Music: NE-YO’ (which you can watch online here) and refers to NE-YO’s story of dealing with being molded into a certain image. “The label had a hardcore approach as to how he was going to be marketed. They wanted him to be a hip-hop artist, but he wanted to be an R&B artist.” NE-YO went on to lose his record deal because he knew who he was and he didn’t want to be the style ‘the machine’ wanted him to be. Professor Mulraine says, “You need to have some creative control over your image if that is important to you.”
5: ‘360’ Contributions
What are ‘360 deals’ and why have they become the industry standard? 360 deals require an artist to share all of their profits (from record sales to touring to book rights to movie contracts) with the entertainment company they sign with in return for financial backing. (For more, see this recent NY Times article) Professor Mulraine points out the importance of understanding exactly what is going to be done by each part for the duration of a 360 deal. “You want to make sure the record [or entertainment] company actually does something to generate the income they are taking a piece of,” he says. It is important to not just “let them take a piece of the pie without contributing. Your viewpoint should be, ‘If you’re going to take a piece of the pie, you need to bring some apples!”
Tara Aaron (@tara_aaron) is an intellectual property attorney with Aaron Sanders PLLC in Nashville, TN. Her typical client work includes licenses and disputes involving copyrights, trademarks, patents, domain names, software, and trade secrets across a variety of industries. She graduated from the University of Tennessee’s College of Law and is a member of the Tennessee Bar.
What are Tara Aaron’s Five Entertainment Contract Essentials?
First, Ms. Aaron says you must ask, “Who owns the copyright?” The publisher typically owns the copyright in a publishing deal. However, “placement deals can be publishing deals in disguise.” Ms. Aaron explained that placement agreements “generally say that a company has the exclusive right for a certain period of time to try to get your music placed in movies, commercials, or tv shows, but they don’t take ownership of the copyright.” In contrast, a publishing deal usually results in the publisher taking ownership in the work.
The second essential element Ms. Aaron says is to ask “how much does the songwriter get?” She says, “Publishing deals where the copyright is being assigned should pay better than placement deals where you get to keep your copyright. Make sure you understand the percentages on each different royalty stream.”
3: Publisher Obligations
The contract should define the role of the publisher and what they are responsible for doing. “Make sure there are clear obligations for the publisher in terms of actually getting your works used commercially, registering your copyrights (if the publisher is the owner), and going after infringers” Ms. Aaron says. “You want to be sure that your songs aren’t sitting on a shelf somewhere forever.”
4: Licensing Limits
The fourth essential element focuses on the limitations that are put in place on the publisher’s licensing of the work. “If you don’t want your song licensed for a porn movie, or if you have something against advertising for Doritos, make sure it’s in the contract.”
5: Think Ahead
Ms. Aaron’s fifth essential element is making sure the contract defines what happens at the end of the deal. “Ideally, you would want the copyright interest to come back to the writer, but that is often not the case,” she says. “Make sure you understand what is happening to your copyright, during and after the term of the agreement, before you sign.”
Judith Dornstein is an entertainment and intellectual property attorney based in Beverly Hills, California. She has over 35 years of experience in entertainment and intellectual property law practice in Los Angeles, California. She is a graduate of New York University School of Law and a member of the New York and California bars. Some of her past clients include actors, producers, writers, production companies, and publishing companies across a variety of media platforms. She is currently the President and CEO of her own boutique law firm the Law Offices of Judith C. Dornstein.
What are Judith Dornstein’s five essentials for an entertainment contract?
1: Option Period
In regards to an option/acquisition agreement for an original story, or a story based on a book, with a TV or motion picture production company, the option period should be short. Ms. Dornstein says the writer should “try for an option period of no more than a year.” This timeframe allows for development of the property and starting of production. Furthermore, an option payment should not be applicable to the purchase price. Should another option period be negotiated into a deal, she says, “Again, try for no more than one year and then another option payment if the option is extended.”
2: Property Reversion
A writer’s contract should include a provision that provides for reversion of the property if the option is not exercised. Ms. Dornstein says, “Even if the option is exercised, if the property is not produced within a given time period, try for 2 years from purchase, make sure the property is reverted back to the writer or other owner of the story, script, or book.”
3: Proper Credits
Credit to the writer and/or owner of the property is an essential element to a writer’s contract. Proper billing of writers, actors, and other industry players are vital to a career. Common examples Ms. Dornstein recommends be applied are: written by, created by, based on a book by, based on a story by, executive producer, or producer.
4: Retain An Interest In Derivative Works
Derivative works are works that are created using an essential element of another copyrighted work. Under Section 106 of the U.S. Copyright Act, creators have an exclusive right to create, or authorize others to create, additional works based on their copyrighted work. Ms. Dornstein says, “The writer of an original TV or film script should try to retain the rights to all other uses of the property in media other than TV or film. So for example, the writer would retain rights to radio, live stage, book publishing, and author written sequels.” Circling back to her third essential element, Ms. Dornstein adds, “The writer should be attached as a writer for all sequels, remakes, spinoffs.”
5: Payment to a Writer or Owner
A contract should state the terms for payment to the writer or owner of the work. Ms. Dornstein suggests negotiated items should include, “the purchase price, plus bonuses, plus “back end” profit participation, plus residuals in original TV or film production, and in all sequels, remakes, spinoffs.” When considering a contract’s terms on payment, you must include “the right to regular accounting statements and to audit the company that produces and/or distributes the TV or film project.”
Portions Copyright 2013 Judith Dornstein. Used with permission.
David Crow is a partner at Milom Horsnell Crow Rose Kelley, PLC in Nashville, TN. His practice focuses on representing independent artists, independent labels, major label artists, songwriters, technology companies, producers, publishing companies and those companies and individuals that seek to license and exploit intellectual property content. He received his B.B.A. in Music Business Management from Belmont University in 1996, and his J.D. from the Vanderbilt University School of Law in 2000.
What are David Crow’s Five Entertainment Contract Essentials?
When looking at a contract, Mr. Crow says he wants to know “how long we are in business together and when can we move on if the deal is not working.” The terms of a deal provide a defined length of time and should be included in every entertainment contract.
Secondly, Mr. Crow says you should always ask whether “this deal prohibits any activities or offers.” The exclusivity of a deal can hinder unknown opportunities that might arise after a contract has already been signed. It is important that those limitations are clearly defined and understood before signing an agreement.
Mr. Crow’s third essential element is the territory provision. Understanding where an agreement applies is important to any entertainment contract. A contract with overly broad or narrow territory definition can leave both parties in limbo as to where a work can be exploited in the future.
Mr. Crow advises that when you are looking over a contract, it is essential to start by reading the defined terms. “A royalty may be stated as a percentage… but a percentage of what? That is the type of thing we find in the definitions.”
5: Post-term Rights, Duties, & Obligations
“What survives the termination and what ends at the end of term?” Mr. Crow asks. “The contract should address whether unexploited materials will be reverted back to the author, whether there will be ongoing indemnification obligations, ongoing insurance obligations… and the list can go on.”
The evident take-away message from these experts is that every contract you sign (or don’t sign) should be reviewed by a licensed entertainment attorney. You can see from the wide-range of responses above that there are a lot of elements that must be considered when signing any entertainment agreement. Whether you are new to the entertainment world or have been in the industry for 40 years, it is essential to meet with an attorney and have a third party review any contract before signing.
Post Image Credit: frank3.0 on Flickr
Casey Summar (Image Credit: ABC Nashville)
Professor Loren Mulraine (Image Credit: Belmont University)
Tara Aaron (Image Credit: Aaron Sanders PLLC)
Judith Dornstein (Image Credit: Judith Dornstein)
David Crow (Image Credit: Milom Horsnell Crow Rose Kelley, PLC)