*Contract Monitor 1:2*
| Disclaimer: This information is true and accurate as of the dates specified, to the best of our knowledge and belief, and is provided by the Graphic Artists Guild to help artists make informed choices. |
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G R A P H I C A R T I S T S G U I L D
N a t i o n a l C o n t r a c t M o n i t o r
v o l . 1 , n o . 2
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July, 1998
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IN THIS ISSUE:
- EVERYBODY WINS! A SUCCESS STORY
- KILL FEES: Is there life after death?
CONTRACT NEWS on the following companies:
- Herring Communications, Inc.
- Microsoft Corporation/Slate Magazine (with a brief response
from Slate)
- Careers & Colleges magazine (with a response from C & C)
- The Plain Dealer Publishing Co.
- UPDATE on Meredith Corporation
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INTRODUCTION
The Contract Watch Committee of the Graphic Artists Guild created
this electronic newsletter to provide information about contracts
between artists and their clients. In each issue we examine
several contracts, analyze their terms and summarize what they
mean for the working artist. We report both on contracts we feel
are unfair, and on those we feel are fair. We inform the
companies whose contracts we are reviewing, and we offer them ten
business days to respond to our questions and comments before we
publicize our findings.
Without you, we're nothing! We encourage you to participate with
us. Ask us questions. Provide answers for us when you can. And use
us to stay in touch with your community. If you have comments on
companies and contracts featured in the Monitor, send them to us.
When you are given a new contract to sign, alert us to any terms
you think might be unfair. And send us any contracts you think
we would be interested in seeing.
LEGIBLE hard copies of contracts should be MAILED (not faxed) to:
Contracts
Graphic Artists Guild
90 John Street, Suite 403
New York, NY 10038
We need to be able to contact the companies whose contracts
we review, so please include the name and address of the
company, the name of a contact person at the company, and a
phone number if possible.
Confidentiality will be strictly observed.
To subscribe to or be removed from the Contract Monitor mailing
list, e-mail Paul Basista at: pbasista@nac.net
Back issues of the National Contract Monitor are summarized at
http://www.gag.org/contracts/contracts.html
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In the first issue of the Monitor, we wrote:
"Most importantly, if you are ever successful in positively
changing the terms of a boilerplate contract, let us know.
That kind of information will build solidarity and provide
the necessary leverage we need to change the terms offered."
Well, like we said! Below, in the CONTRACT COMMENTS section,
you'll find our review of a contract from Careers & Colleges
magazine. In the review we point out some provisions that we
felt could stand a little improvement. We took our cue from the
artist who originally received this contract. He was not
entirely happy with it, but was able to negotiate some
important changes.
When we informed C & C about our upcoming review, their
response was quick and on target. Read about it and see
how artists and their client companies can benefit from
discussion, negotiation, and, of course, reading each issue
of The National Contract Monitor!
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AND NOW...
Take a look at the paragraph below. It is most of a contract
that recently came our way. (The rest of the one-page document
consisted of just one other sentence that stated the artist's
fee and the deadline.)
Directions: Read the paragraph and answer this question:
= = = = = = = WHAT'S WRONG WITH THIS CONTRACT? = = = = = = =
"By signing where indicated below, you grant and assign
to Plain Dealer Publishing Co., publisher of The Plain
Dealer, the non-exclusive right, throughout the world,
by itself or through third parties, to publish, reuse
or make any other use of said illustration, including
but not limited to the sale or resale of illustration
which the Company purchased from you. Such right will
continue for the full term of copyright in such
illustration and may be exercised with regard to all
media, including but not limited to electronic media
now in existence or hereafter developed and whether or
not combined with the work of others."
The answer is at the end of the newsletter.
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Life Insurance For Your Artwork
(Note: This important subject is covered extensively in the GAG
Handbook: Pricing and Ethical Guidelines. We have summarized it
below to provide a context for the comments about kill fees in
the discussions of individual contracts that follow.)
A "kill fee" is a fee paid by the client to the artist when the
client does not use the artwork. "Kill fee" is a general term
that covers two types of payments: a cancellation fee, and a
rejection fee.
CANCELLATION FEE
A cancellation fee should be paid when the artwork satisfies the
client's stated requirements, but the client decides, for reasons
outside the artist's control, not to use it.
For example:
- the artwork was intended to accompany an article that has
been killed;
- unforeseen space limitations don't leave enough room for
artwork.
REJECTION FEE
A rejection fee should be paid when the artwork does not satisfy
the client's stated requirements. When this happens, the causes
are, in theory at least, within the artist's control.
For example:
- the artwork unexpectedly deviates from the artist's
traditional style;
- the final artwork is not consistent with the preliminary
sketches or roughs that were accepted by the client.
In either case, the artist should be paid a fee. The amount of
the fee is usually a percentage of the agreed-upon fee for the
finished piece. We have seen a wide range of kill fees, from 20
to 100 percent. The amount usually depends on the stage of
completion of the artwork at the time the project is killed.
Two additional points are worth noting:
1. The issue of copyright does NOT go away just because a
project has been killed. When a project is cancelled,
the client still obtains all of the originally agreed-upon
rights to the use of the artwork upon payment of the
cancellation fee (unless there is a written agreement that
the rights revert to the artist if the project is cancelled).
When artwork is rejected, the client has chosen NOT to obtain
any rights to the use of the artwork.
2. If the contract does not mention a kill fee, there is no
guarantee that one will be paid.
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CONTRACT COMMENTS
# # #
HERRING COMMUNICATIONS, INC. - Nothing fishy going on!
Herring Communications produces Red Herring, a print magazine.
For the most part, their contract is fairly clear (and clearly
fair). It presents an interesting mix of provisions--most are
artist-friendly, but some could stand a little revision.
=> KILL FEE -- The contract states: "Should the Art Buyer decide
the artwork represents a clear deviation from the artist's
established quality and style or that the artwork will not be
used for any other reason, we will pay you a kill fee of 50%
of the agreed fee."
NOTE: In using this wording, Herring does something very
common: they combine a rejection fee and a cancellation fee
into one provision covering "kill fees." If the project
is killed during a preliminary phase, Herring's payment of 50%
of the fee is a reasonable amount. However, if the final
artwork was submitted, accepted by the client, and the
project then killed by the client, for reasons beyond the
artist's control, the artist should receive full payment.
=> THE DURATION OF THE EXCLUSIVE RIGHTS PERIOD -- The contract
states: "Our exclusive rights extend until 90 days after the
publication date..."
This is a clearly stated and reasonable provision.
=> REUSE OF THE ARTWORK in electronic media is not reimbursed.
Bad news. But...
=> REPUBLICATION IN BOOKS AND COMPILATIONS is reimbursed, at 50%
of the original fee.
Good news.
=> OWNERSHIP OF ORIGINALS -- The contract states that the artist
"shall retain ownership of all original artwork." This is a
good provision, offering some protection for the artist, by
making it clear that Herring is paying for specific rights to
use the artwork, as opposed to purchasing it outright.
=> DAMAGE TO ARTWORK -- The contract states that Herring assumes
responsibility for damaged, lost or destroyed artwork up to
$1,500. This is another provision that helps to protect
the artist.
Well done, Herring!
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MICROSOFT CORPORATION/SLATE MAGAZINE
In addition to publishing Slate Magazine,
Microsoft Corporation also sells software.
Slate Magazine is an on-line magazine produced by
Microsoft Corporation.
As this issue of the Monitor was nearing completion, we received
a response from Slate, included at the end of this section.
The Microsoft/Slate contract appears to have been intended
originally for writers, but is now being used with artists.
Such a contract is not always in the artist's interest; some
of the reasons are listed below.
NOTE: In this contract, Microsoft Corporation is the client.
Slate Magazine is the publication in which Microsoft intends to
use the artwork, but under this contract, Microsoft can publish
the artwork elsewhere, for a smaller fee. See below.
=> KILL FEE -- Similar to Herring, above. If the "Material"
(artwork) is not published in Slate "for any reason",
Microsoft will pay a 50% kill fee within 60 days of receipt.
See our comments on Herring's kill fee, above.
=> PAYMENT SCHEDULE -- Microsoft specifies that if it goes ahead
and publishes the artwork, it will pay within 30 days of
publication. This could create a long waiting period between
the time the work is submitted and the time the artist is
paid. We suggest that the payment clock start ticking when
the artwork is received by client, not when the artwork
is published.
=> SYNDICATION FEES -- If Microsoft publishes the artwork in any
other Microsoft-owned publications, the artist is paid 25% of
the original fee. It appears that this is meant to refer to
reprint rights--where the artwork has first been published in
Slate; in this case the 25% payment would be in addition to
payment of the full original fee. Unfortunately the contract
language is not clear on this point.
=> THIRD-PARTY PUBLICATION -- Microsoft has the right to "publish
through third parties", and to "license publication rights...
to any third party..." Microsoft can do this without the
artist's approval, and will pay the artist 50% of the license
fee it receives. Again, the contract is unclear on what
payment will be made if the artwork has not first appeared in
Slate prior to being licensed to a third party.
NOTE: The question of licensing artwork to a third-party
is complicated, and we will be covering it in an upcoming
issue. Briefly, however, we recommend that the right to
license artwork to a third party NOT be included in a
contract unless the basic elements of the third-party
license are spelled out. In general, when a third party
acquires rights to use artwork, the third party should be
under the same copyright limitations as any other client,
and the artist should receive the same fees as with any
other client.
=> MODIFICATIONS TO THE ARTWORK -- Microsoft gets the right to
"edit...the Material." This language must have been intended
for use with written material. Traditionally, a publisher has
the right to edit written work. The right to modify artwork,
however, ought to belong to the artist. One solution is to
insert a phrase that gives the artist the right to make
suggested modifications, or to approve modifications made by
the client. Another possibility is to define "editing" as
"cropping and sizing only."
=> ADVERTISING -- The artist's "name, biography and likeness" can
be used "in any related advertising and publicity efforts."
Will the artist be endorsing a product?
=> MORAL RIGHTS -- The artist "waives all moral rights" with
respect to the artwork. A full explanation of moral rights
can be found in the Guild Handbook, and we strongly recommend
that you read it. Briefly, moral rights are personal rights
of creators in their original (not reproduced) works,
regardless of the sale or transfer of copyrights. Four
specific rights are included:
- the right to protect the work from modifications that would
harm the reputation of the artist;
- the right of attribution, so that authorship is acknowledged;
- the right of disclosure, to control presentation of artwork
to the public;
- the right of recall, to withdraw or disavow a work if it is
changed.
Does Microsoft really need to make this demand?
SLATE'S RESPONSE
When GAG informed Slate that the Monitor would be reviewing
Slate's contract, Rogers Weed, the Publisher of Slate, sent the
following response, included here in its entirety.
"Thank you for your letter dated June 1st. We consider the
contract terms of Slate with our contributors a private matter
between the magazine and the people with whom we do business.
We have no other comment on your review, but appreciate you
giving us the opportunity to respond."
We at the Monitor are not surprised that Microsoft/Slate would
prefer to keep their contract terms private. After all, if the
people with whom Slate does business, namely the freelance artists
and writers who contribute work to Slate, begin to discuss those
contract terms, they might actually ask for a better contract.
So we appreciate Slate's response, and we intend to continue to
inform our subscribers all about Slate's contract.
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>From the city that brought you Al Capone...
This contract, for an editorial illustration, is another example
of a contract that may originally have been intended for use with
written material.
=> PAYMENT SCHEDULE -- In this contract, the artist is paid
"...upon publication, use or distribution of the material..."
Again, we believe that payment should always be made upon
acceptance of the artwork, regardless of when it is published.
=> KILL FEE -- The contract calls for a kill fee "to be
negotiated" if the artwork is not published. The good news
here is that the client at least recognizes such a thing as a
kill fee. The bad news is that the amount and the terms of
payment are not specified. They should be.
=> RIGHTS GRANTED -- In one short paragraph, the Chicago Tribune
Company tries to get it all. Read it and see:
"You...assign to CTC...and their affiliates a non-exclusive
and perpetual worldwide license and right to publish, copy,
modify, display, distribute, perform and broadcast the
submitted material, in whole or in part, in any print,
electronic or digital media or software of any kind now
existing or developed in the future."
Does the phrase "lock, stock and barrel" sound about right?
And then there's this:
"The submission of material by you as a freelancer as well as
the receipt of payment for such material is a binding
acknowledgement of the grant of all rights to CTC... In
addition, your endorsement of any CTC check issued to you
shall constitute your confirmation of the continued existence
of this agreement."
Let the artist beware! If you read the last issue of the
Contract Monitor, you know that when a client wants "all rights"
to your work, you stand to lose a great deal. In addition, we
don't think companies should attempt to acquire rights through
"submission of material" or "endorsement of a check." Signing a
check should be confirmation of nothing other than that the artist
wants to get paid.
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THE ART OF NEGOTIATION
NOTE: The following two contracts, from Careers & Colleges
magazine and P.S. Greetings, were forwarded to us by artists
who had some objections to specific provisions in the contracts.
The artists decided that instead of simply rejecting the
contracts, they would change or delete certain contract
provisions, and then sign the modified contract. In both
cases, the companies accepted the changes made by the artists.
There's a moral to this story: YOU CAN NEGOTIATE! Contract
workers sometimes feel they face a black-and-white choice when
deciding whether to accept or reject a contract. Not true--you
can always attempt to negotiate with the client, and rewrite or
delete unfair provisions so that your interests are protected.
The next two contracts are examples of successful contract
negotiations.
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NOTE: As mentioned above, it is the Guild's policy to inform
companies when their contracts are being reviewed by the
Contract Watch Committee, and to print any response from the
Company. Careers & Colleges has responded very positively to
our comments, and we commend them for it. Their response is
included directly following our comments below.
What follows are two versions of each contract provision. The
"Original Statement" is the provision as it was written by the
client. The "Artist's Change" shows how the artist altered the
provision.
Remember, these are changes that were accepted by the client.
=> KILL FEE
Original Statement: "If the Work is not accepted, [Careers &
Colleges] will pay 20% of the Acceptance Fee..."
Artist's Change: The kill fee will be 50% after the preliminary
sketch is accepted; 100% after final art is accepted.
NOTE that the artist not only increased the size of the fee, but
clarified the conditions under which the kill fee would be paid.
=> RIGHTS GRANTED
Original Statement: "You also grant us the right to use the
Work, for no additional compensation, for advertising and
promotional purposes. You also grant us the further right to
use the Work or portions thereof in newspaper or magazine
articles. For use in newspapers and magazines, we shall pay
you a reasonable amount to be determined by us in our sole
discretion, which shall not exceed 25% of the acceptance fee."
Artist's Change: The artist deleted the above sentences.
NOTE that the client originally wanted the right to decide,
without consulting the artist, what constitutes a "reasonable
amount" for certain reuse of the artwork.
=> EXCLUSIVE USE
Original statement: "If reprinted [by another client], you
shall require that we shall receive suitable credit on the page
where the work appears."
Artist's Change: The artist deleted this sentence.
It looks to us like the company was trying to get a little
free advertising for themselves, at the expense of the artist.
=> CREDITING ARTISTS' SOURCES
Original Statement: "The Supplier [artist] will duly credit
any source material incorporated into the work..."
Artist's Change: The artist added the phrase "to the best of
my knowledge".
By adding that phrase, the artist gains some protection against
claims challenging the originality of the work.
=> WARRANTIES AND INDEMNIFICATIONS
Original Statement: The supplier shall indemnify Careers &
Colleges and hold it harmless from any claims damages, losses
and costs (including reasonable attorneys' fees) arising out
of any alleged violation of any representation or warranty
contained in this Assignment Agreement."
Artist's Change: The artist deleted this sentence.
We feel that this provision could have exposed the artist to
liability for costs, even if the alleged violation turned out
to be false. The artist was very smart to delete this.
=> RESPONSE from Careers & Colleges <=
In a letter sent to GAG, Careers & Colleges states that:
1) They will raise their kill fee from 20% to "25% prior to
completion of sketches, 50% for sketch phase and 100% for
finished art";
2) They will raise their syndication fee from 25% to 50%;
3) Their advertising and promotional use of the artist's work
will be limited to C & C, and will "always" be credited; and
4) They confirm that their contract is negotiable.
We applaud Careers and Colleges magazine for their willingness
to examine their policies toward artists, and even more so for
making significant changes to their contract. Their new fee
schedules are fair. More than that, their attitude reflects a
genuine respect for the work artists do.
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P.S. GREETINGS, INC. (P.S. is a greeting card company)
This is another good example of a contract that was modified by
the artist.
=> NON-INTENDED USE OF ARTWORK
Original statement: P.S. received "exclusive world-wide rights
for greeting cards (and/or related items)..."
Artist's change: the phrase "and/or related items" was deleted.
NOTE that the artwork is being created by artist for use in
greeting cards. If the client wants to use the artwork on a
calendar, or coffee mug, or T-shirt, the artist deserves some
additional money.
=> RIGHTS GRANTED
Original statement: P.S. receives "...all copyrights,
trademark rights or other intellectual property rights."
Artist's change: The artist deleted this phrase.
NOTE that this is a good example of what one member of the
Contract Watch Committee calls "a typical grab for all rights"
that artists should watch out for.
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THE ART OF NEGOTIATION -- SUMMARY
All these changes made by the artists in the above two
contracts add up to a very important lesson. We said it
before, and we'll say it again: YOU CAN NEGOTIATE! When
you read a contract carefully and think about what each
provision means, you can make changes that protect your
rights and your income.
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UPDATE: MEREDITH CORPORATION AND WORK-FOR-HIRE
In the first issue of the Contract Monitor, we discussed the
"all-rights" contract, and the reasons why such contracts put the
artist at a disadvantage. We also drew this distinction between an
all-rights contract, and "work for hire":
"Remember, no matter how bad the all-rights contracts are, a
work-for-hire contract is worse, since it actually strips
artists of legal authorship."
Well, Midwest Living magazine, published by Meredith Corporation,
apparently has decided to make a great leap BACKWARD, from an
all-rights contract to work-for-hire.
When we reviewed Meredith's contract last issue, we found it to
be unfair in the extreme, because it required the artist to give
up all rights to the artwork. Now we learn that Midwest Living
is attaching a "rider" to the Meredith blanket contract, and this
rider redefines contributed artwork as "work made for hire."
Here's the rider:
"This agreement will confirm the work made for hire you have
agreed to perform as follows pursuant to the Master Agreement
signed by you earlier. The rights granted include the right
to edit, alter, and modify the Work and to publish or authorize
the publication of the Work in all devices, media or modes of
communication, whether now known or hereafter created,
throughout the universe."
As we explained last issue, under a work-for-hire contract, the
company that hires the artist becomes, for legal purposes, the
creator of the artwork. The original artist can no longer claim
authorship of the artwork. This means that the artist may not
even display a work in his or her portfolio without the new
"author's" permission!
We believe that work-for-hire agreements represent the worst
possible terms under which artists can work, and we strongly
encourage artists not to accept any work-for-hire agreement.
BUT WAIT, THERE'S MORE!
When Meredith receives an invoice from an artist, the company
responds by sending a purchase order to the artist. Included in
this purchase order is this little contractual gem from Meredith:
"Unless otherwise provided in a separate written agreement...
the following additional conditions also apply: The party
accepting this order transfers and assigns to purchaser each
and every right, title and interest of whatsoever nature to
the property sold..."
Using a purchase order to impose contract terms for work already
completed and accepted by the company is insidious at best; using
it to impose all-rights conditions out and out stinks.
ALSO SEE our comments in the review, above, of the CHICAGO TRIBUNE
CORPORATION contract, at the end of the RIGHTS GRANTED section.
Meredith Corporation appears to be going out of its way to treat
its artists badly. We urge the company to take a look at these
practices, and to start bringing some fairness to its contracts.
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Remember, the question was: What's wrong with this contract?
ANSWER: Just about everything.
Okay, let's take it apart and find out why.
"By signing where indicated below, you grant and assign
to Plain Dealer Publishing Co., publisher of The Plain
Dealer, the non-exclusive right, throughout the world,
by itself or through third parties, to publish, reuse
or make any other use of said illustration, including
but not limited to the sale or resale of illustration
which the Company purchased from you. Such right will
continue for the full term of copyright in such
illustration and may be exercised with regard to all
media, including but not limited to electronic media
now in existence or hereafter developed and whether or
not combined with the work of others."
1. WHERE DOES THIS CONTRACT APPLY? The contract applies
"throughout the world..."
Be aware that some companies are willing to negotiate
foreign publication rights separately. Not the Plain
Dealer.
2. LICENSING: Your artwork can be published "through
third parties..."
Some companies will pay the artist an additional fee
if the artwork is licensed to third parties. Not the
Plain Dealer. (NOTE: Also see our comments on third-
party licensing in the review of the Microsoft/Slate
contract, above.)
3. REPRINTS: The Company can "reuse or make any other use
of" your artwork.
Some companies pay additional compensation for reprint
rights, and for using artwork in places not originally
intended. Not the Plain Dealer.
4. RESALE: The Company can sell your artwork to someone else.
Some companies reimburse the artist if they sell the work
to a third party. Not the Plain Dealer.
5. ELECTRONIC MEDIA: The Company can use your artwork
in "all media...now in existence or hereafter developed."
We would like to suggest that the right to publish artwork
in a medium that doesn't yet exist ought to be negotiated
after the new medium is invented, not before.
6. MODIFICATIONS: The Company can combine your artwork with
"the work of others". Thanks, but No Thanks.
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The Graphic Artist Guild National Contract Monitor is a
bimonthly e-mail service published by the Graphic Artists
Guild, a not-for-profit organization headquartered in the
State of New York. Information provided in the Contract
Monitor is accurate to the best of our knowledge as of the
date shown above. The Graphic Artists Guild provides this
information to members to help them make informed choices.
The Guild encourages reproduction and distribution of this
document for the benefit of free-lance artists and designers.
Please credit the Graphic Artists Guild, and do not alter
contents.
Additional information on companies listed here can be found
on the Graphic Artist Guilds web site at www.GAG.org
Back issues of the National Contract Monitor are summarized at
http://www.gag.org/contracts/contracts.html
The Graphic Artists Guild promotes and protects the
economic interests of its members. It is committed
to improving conditions for all creators of graphic
art, and to raising standards for the entire industry.
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For submissions/comments, send your request to
Paul Basista at execdir@gag.org
Inquiries and information are always welcome.
Graphic Artists Guild
Contracts Committee
90 John Street, Suite 403
New York, NY 10038
212-791-3400
212-791-0333 (fax)
http://www.gag.org
(c) 1998 Graphic Artists Guild
Paul Basista, CAE
Executive Director
Graphic Artists Guild