BY ROBERT J. LABATE
Whenever I watch my kids play on a computer, I’m reminded of how
little I use that collection of circuits sitting under my desk. Oh, it’s
not that I don’t spend hours and hours interacting with my PC, it’s
just that I am pretty much limited to preparing agreements, searching
Internet sites and responding to dozens of email messages each day. To
someone who thought that an IBM Selectric was the ultimate in cool, the
current technology is magical, but it is no surprise to me that my five-year-old
leaves me in the dust when it comes to getting our money’s worth
from our computer.
It is also no surprise that musicians, artists, writers, actors and other entertainment professionals routinely use only a small portion of what lawyers call the "bundle of rights" which they hold in their creative endeavors. Sometimes artistic rights are given away for a good reason, such as where an artist tries to get her foot in the door of an opportunity. Sometimes an artist has no choice because she understands that if she wants to participate in the project, she must work on a "made for hire" basis (meaning that her employer owns all the rights to her creation). But often, the artist gives away all of her rights when she really only needs to give away a few sticks from her "bundle of rights."
Slicing Your Rights Thinly
One of the best features of The Copyright Act (the federal statute that governs a great many intellectual property rights) is that it permits great flexibility in the licensing of creative rights. Because of this flexibility, the copyright owner can license some of her rights in a work and retain others, but only a handful of entertainment professionals understand that rights can (and should) be licensed using an eye-dropper rather than a ladle.
Years ago, music publishers learned that they could make more money for themselves and their clients by slicing their licensed rights as thinly as possible. Ever since, music rights have been licensed on an a la carte basis, meaning that the more you want, the more you’ll pay.
For example, the cost of putting a song into a film will depend upon a number of factors such as: the duration of license, the number of seconds (yes, seconds) of the song you want to include, the form of distribution of your film (for example, full theatrical release, "pay" cable, network TV, subscription television, digital, satellite or educational), the territory of the license (U.S. only, certain foreign countries only, worldwide), the inclusion of the song on a film soundtrack, or the use of the song in your film (such as opening title, featured, background or closing credits).
Writers also have learned that they should not give away all of their rights in their work. In book publishing agreements, authors frequently retain (or attempt to retain) the right to license the work for film, television, live stage, radio or other ancillary rights that could arise in connection with digital distribution. Royalties paid to the author may increase, depending upon the use (called "exploitation") of the work in periodicals, book clubs, audio versions, foreign language editions and paperback. While publishers like to stick with their standard forms of agreement, concessions will be made if the author has sufficient "leverage." These concessions are not always in the form of money because a publisher cannot permit one author to be paid too much more than another, but the author may be able to limit the number of rights that are being licensed to the publisher.
Authors of literary works and screenplays also have learned to restrict the rights which are being "optioned" and to limit the length of the original option period and the number of "automatic" extensions permitted to the producer who options the screenplay. Some agreements restrict the media in which the work may be produced (for instance, film, but not radio or live stage), retain certain "subsidiary" rights and the right to create author-written sequels or to use the characters in other works, and some agreements restrict the producer’s ability to change the nature and "feel" of the original work.
Agreements between recording companies and recording artists differ greatly depending on the perceived commercial value of the artist. Sometimes the difference is in the royalty rate paid to the artist but, more often, it concerns the degree of marketing the company will provide to a new artist, how many music videos will be produced per album, and what deductions and reimbursements will be permitted to the record company.
Actors and models should be careful to negotiate separately for each use of their photos or filmed work. Blanket waivers and releases are to be avoided unless the model/actor is adequately compensated. Standard model vouchers normally limit the use of each photograph, taken at the session, so that the model’s image is not put on the internet and does not appear in an ad unless she has been paid separately for such use. Failure to carefully review the scope of the waiver and release may cost thousands of dollars in income or could permit an undesired use of an image.
Not-for-profit arts organizations ("NFPs") which license their performances for broadcast on television or cable sometimes can negotiate the right to create VHS, DVD or audio CD copies of the performance for sale to the public. Adding a few extra provisions to a license agreement is not difficult and the performance videos or DVDs can serve as an important source of revenue when sold at future performances. But you won’t get those rights, or retain others, unless you ask.
So, whenever you are about to license or sell your creative rights, first determine what rights you have and then decide what rights you might sell and which you might retain. Consult with someone who has some experience in such agreements and don’t be afraid to bargain.
© 2002 Robert J. Labate. This column is provided as a source of information and is not to be construed as legal advice or opinion. You may contact me through our firm’s web-site (mbc.com), via email at labate@mbc.com or, via mail, to Bob Labate, McBride Baker & Coles, 500 West Madison Street, Suite 4000, Chicago, Illinois, 60661 312/715-5700.