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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 . 3

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November, 1998

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IN THIS ISSUE:

- THE VERY STRANGE TALE of the Artist Who Worked For Free:

A Monitor Interview

CONTRACT COMMENTS on the following companies:

- Adobe Systems, Inc.

- Donovan and Green/American Express

- American Management Association (Our analysis, their response

to our analysis, and our response to their response.)

- NEGOTIATIONS: The Whole (Contract) is Greater Than

the Sum of Its Parts (Or, How to Keep Holes Out of the Whole)

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ADOBE and the Artist Who Worked For Free: A True Story

An interesting contract came our way recently, interesting in

that the client wanted to license the rights to some artwork,

and not pay the artist any money. And the artist agreed! What's

up with that?

Adobe Systems, Inc., makers of Adobe Illustrator, includes with

the program something they call the Digital Art Show. The Digital

Art Show is a collection of images created by various artists

using Adobe Illustrator. Adobe uses it to demonstrate the kind

of work that can be done with the product.

Adobe contacted an artist we know and asked if he would like to

have some of his work included in the Digital Art Show that was

being packaged along with the next release of Illustrator. The

artist was interested, and Adobe sent him a contract.

The contract from Adobe was standard in many ways, with clauses

covering the deadline, the rights Adobe was seeking, a warranty

from the artist, etc. What set this contract apart was that Adobe

was not offering to pay for the rights to the artwork.

Since the Monitor is constantly haranguing its readers not to give

up rights to artwork without fair compensation, we wanted to know

why such a contract, which pays the artist nothing, should be

considered, so we asked the artist.

MONITOR: Let's get this straight. You gave away some of your

artwork.

ARTIST: Not at all. What I did was to license Adobe to use some of

my work in a very specific, very limited way.

MONITOR: But you received no money, right?

ARTIST: Right. But I did get some things in return. First, the

images of mine that are in the Digital Art Show will be seen by a

lot of people, which is great promotion for me. Second, my name

and contact information appears with my work. And third, I didn't

create anything new for Adobe. All the images I licensed to them

were from previous jobs. Oh, yeah, and they gave me a copy of the

new release of Illustrator.

MONITOR: So how much is all that publicity worth?

ARTIST: Hard to say. But I've already gotten a couple of phone

calls from people who have seen the Slide Show, so it's certainly

effective as a promotion.

MONITOR: Did you negotiate at all with Adobe? Was the contract

acceptable to you without changes?

ARTIST: I asked for some changes. Actually, working with Adobe was

easy. There were two parts of the contract that concerned me. One

was that Adobe wanted the right to use my artwork not only for the

Digital Art Show, but for advertising and packaging. To me, that

goes beyond what I'm willing to license for free, so I wanted to

restrict my art to just the Art Show.

MONITOR: Did Adobe agree?

ARTIST: They did. The other clause that bothered me was called a

Disclaimer, where Adobe refused liability for damages in case a

third party or end user made use of my artwork. On that issue,

Adobe refused to budge.

MONITOR: But you still signed the contract?

ARTIST: Yes I did. They were really willing to negotiate on

everything else. Adobe gave me a lot of what I wanted, in terms of

rewording the contract. If Adobe had been unwilling to change other

parts of the contract, I wouldn't have signed. But they really

worked to accommodate me where they could, and I felt I could

make this concession.

MONITOR: So both you and Adobe made some concessions?

ARTIST: Yes, and we were both happy with the result.

MONITOR: Did the fact that you weren't being paid change your

negotiating strategy at all?

ARTIST: No. It makes no difference. You still have to understand

what your client wants, and understand how licensing rights work.

MONITOR: Are there any other circumstances where you'd consider

licensing your artwork without being paid a fee?

ARTIST: Well, yeah, for a charity or cause I believed in. But I'd

still make sure the contract stated exactly how my work was going

to be used, and that my rights were protected.

MONITOR: I want to go back to one thing you said earlier. You said

that you didn't create any new work for this project. Does that

mean that the artwork you licensed to Adobe, you had previously

licensed to someone else?

ARTIST: Right. And that's why you have to be really careful about

what rights you sign away. I made sure that with every piece I

sent to Adobe, I had retained the right to use the piece again. If

I had signed some exclusive-use contract for any of those pieces,

I couldn't have let Adobe use them. Or, even worse, if I had done

them as work-for-hire, I'd have no right to ever use them again.

Tell your readers: Know your rights!

MONITOR: I think you just did! Thanks.

(The contract from Adobe is reviewed below in the

Contract Comments section.)

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CONTRACT COMMENTS

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ADOBE SYSTEMS, INC.--Digital Art Show

Adobe Systems, Inc., is well known for the various page layout and

illustration programs they make. When Adobe wanted to license some

artwork for use in its Digital Art Show (a collection of images

distributed with Adobe Illustrator; see Interview, above), they

sent the artist a contract that was, for the most part, clear and

straightforward. However, a few of the terms of the contract

failed to adequately protect the artist's rights. These are

highlighted below, along with the changes made by the artist.

=> GRANT OF LICENSE

The original contract stated:

"Originator hereby grants to Adobe, a non-exclusive, worldwide,

royalty-free and perpetual license to display, modify, reproduce,

distribute, and use the Licensed Digital Files in whole or in part

on or in conjunction with the Illustrator Product and the non-

exclusive, world-wide right to sublicense others in its normal

distribution channels to do any and all of the foregoing.

Originator also hereby grants to Adobe a non-exclusive, worldwide

royalty-free, perpetual license to display, modify, reproduce,

distribute and use the Licensed Digital Files electronically or in

printed material, including, but not limited to, in advertising

and packaging.

The artist made these changes:

First, the artist deleted the word "perpetual", replacing it with

"limited". This helps to insure that the artwork will be used by

Adobe only for the stated purpose.

Next, the artist did not want to allow uncontrolled modifications

to the artwork, so the phrase in parentheses was added: "modify

(provided all modifications are for the purpose of revising the

form of the Licensed Digital Files and not their content)"

Finally, the artist did not want Adobe to have the right to use

the licensed artwork in advertising or packaging, believing that

advertising art should command the payment of a fee. (Remember

that Adobe was not paying for the right to use this artwork.) The

last sentence of the clause, which would have given Adobe

advertising rights, was deleted.

Here's the final wording of the clause, as agreed to by both parties:

"Originator hereby grants to Adobe a non-exclusive, worldwide,

royalty-free and limited license to display, reproduce, distribute,

modify (provided all modifications are for the purpose of revising

the form of the Licensed Digital Files and not their content) and

use (all or some of) the Licensed Digital Files in whole or in part

in the "Digital Art Show" in the Illustrator Product. Originator

also grants to Adobe the non-exclusive, world-wide, limited right

to sublicense others in its normal distribution channels to do any

and all of the foregoing.

=> WARRANTY

The original contract stated:

"Originator hereby represents and warrants with respect to the

Licensed Digital Files that... (c) the Licensed Digital Files do

not contain any matter that does or will infringe, violate, or

invade any right to privacy or publicity, copyright, trademark,

patent or other right of any person or that is defamatory, and

(d) the Licensed Digital Files do not contain any electronic virus

or other information that will affect or alter the execution of

the Illustrator Product or the program or files of users of the

Illustrator Product."

What concerned the artist was the lack of any limitation on the

warranty. He wanted the warranty to state that he would make his

best effort to guarantee that no one would be harmed by his work,

but also that he could only guarantee the work insofar as it was

within his control.

To do this, the artist added the phrase "to the best of the

Originator's knowledge" to the beginning of the two final parts of

this clause. The artist is still committed to making an effort to

provide work that doesn't cause any harm, but only up to the point

that it is in his power to do so.

=> Here's the final wording of the clause, as agreed to by both

parties:

"Originator hereby represents and warrants with respect to the

Licensed Digital Files that... (c) the Licensed Digital Files do

not contain any matter that does or will infringe the copyright of

any third party, (d) to the best of the Originator's knowledge the

Licensed Digital Files do not contain any matter that does or will

infringe, violate, or invade any right to privacy or publicity,

trademark, patent or other right of any person or that is

defamatory, and (e) to the best of Originator's knowledge the

Licensed Digital Files do not contain any electronic virus or other

information that will affect or alter the execution of the

Illustrator Product or the program or files of users of the

Illustrator Product."

UNCHANGED PARTS OF THE CONTRACT

Two other clauses in the original contract, neither of which were

changed, are worth looking at. The first is one that ought to be

included in every artist's contract:

"NO ASSERTION OF RIGHTS

It is expressly understood and agreed that, except for the licenses

granted Adobe under this Agreement, as between Originator and Adobe,

all right, title, and interest in and to Licensed Digital Files

vests solely and exclusively in Originator."

This important statement makes it clear that the rights licensed to

Adobe are only the ones specified in the contract, and that the

artist retains all other rights.

You can think of this clause as your Bill of Rights. In fact, it's

just like the final item in the real Bill of Rights! The Tenth

Amendment to the Constitution of the United States (you remember

that one, don't you?) states:

"The powers not delegated to the United States by the Constitution

or prohibited by it to the States, are reserved to the States

respectively, or to the people."

Good precedent!

The other clause is the one that the artist tried unsuccessfully to

change, the Disclaimer clause referred to in the interview, above.

The DISCLAIMER clause attempts to prevent the artist from ever

recovering any damages from Adobe.

It reads, in part:

"Adobe shall not be liable to Originator...for any loss of revenue

or profit...even if Adobe has been advised or had reason to know

of the possibility of such damages. In no event shall Adobe be

liable to Originator for any unauthorized or unintended use of the

Licensed Digital Files by Adobe's end users or any third party."

The artist felt that if Adobe knew about, for example, an end

user's misuse of the artist's work, and Adobe did nothing about it,

Adobe should be liable for damages. According to the artist, Adobe

felt that deleting this clause would open them up to unlimited

liability for damages, in circumstances over which they had

no control.

As the artist explains in the Interview above, he accepted Adobe's

stand on this for two reasons. First, the person he was negotiating

with from Adobe was careful to fully explain why this clause

mattered to Adobe. Second, and more importantly, the artist felt

that Adobe had engaged in honest and genuine negotiations, as

evidenced by their concessions on other points.

Both Adobe and the artist worked hard to achieve several goals:

- to understand their own needs

- to understand the other party's needs

- to establish trust in each other

- to write a contract that worked for both

It appears they succeeded.

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DONOVAN AND GREEN, INC

(Contract) size doesn't matter!

There are actually three parties to this contract, rather than the

customary two. The first party is Donovan and Green, a design firm.

The second party is a large, well known financial services company,

for whom Donovan and Green is producing a newsletter. Donovan and

Green is contracting with the third party, an artist, to produce

illustrations for the newsletter.

The contract we reviewed from Donovan and Green is short and

simple--so short and simple that at first glance, we assumed

something must be missing. Short contracts often leave out

important protections, but the Donovan and Green contract covers

most of what we feel is crucial for the artist.

Here's how this contract handles some of its points.

=> INTENDED USE OF ARTWORK

Item: Donovan and Green has the right to "One time, exclusive use

of work commissioned by Donovan and Green for use in

[name of newsletter]."

Comment: This is a clear statement of the exact purpose for which

the artist is licensing rights to the artwork. Any other use is not

covered under this contract.

=> OWNERSHIP OF ARTWORK

Item: "The illustrator will have ownership of drawings."

Comment: The disposition of original artwork is sometimes

neglected in a contract. Here it's dealt with as it should be.

=> NON-COMPETE

Item: "Illustrator agrees not to use the artwork for similar

products and/or competitive companies for a period of one year...

except as authorized, in writing, by Donovan and Green."

Comment: This seems fair. The right to license the artwork reverts

back to the artist after a year, but during that year, Donovan and

Green's exclusive use is protected. Donovan and Green also allows

for the possibility that the artist might be able to regain this

right before the year expires.

=> ARTIST'S CREDIT

Item: "Credit shall be given as follows: Illustration by

(name of artist)."

Comment: Again, an item that is sometimes neglected by both artist

and client, and again, a clear statement of what will be done.

=> WARRANTY

Item: "...the illustrator assures Donovan and Green that the

illustration(s) provided is/are his/her own and that he/she has the

right to approve its use as indicated in this agreement. He/She

will also hold harmless and defend Donovan and Green and its client

(name of client) against any claims arising in connection with the

rights in question of title or authorization for the use of the work."

Comment: Compared to other warranty statements we've seen, this is

a model of simplicity. Note that the artist is not being required

to "hold harmless and defend" Donovan and Green against any claims

at all, only against those that have to do with ownership--

something the artist is able to control.

=> REUSE OF ARTWORK

Item: "Additional reproduction of artwork by our client (name of

service company) will be cleared by the client directly with you.

Donovan and Green is responsible for the use(s) specified

below only."

Comment: This is the only clause which we felt could have used a

little fleshing out. We don't know exactly what is meant by the

word "cleared." We assume, of course, that to "clear" something

means to ask permission, and that the service company would ask

permission to reuse the artwork. Our concern is that the phrase

might be interpreted to mean that the service company merely has to

notify the artist in order to reuse the work, which would not be in

the artist's interest. One possible way to way to clear up the word

"clear" is to change it to "negotiate."

All in all, this is a contract that protects the artist and the

client, using clear simple language to express terms that are fair.

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AMERICAN MANAGEMENT ASSOCIATION

When is a contract not a contract?

American Management Association (AMA) is a not-for-profit New York

educational corporation. We were originally going to review this

contract, which is for artwork for a periodical, in the last issue

of the Monitor. When we notified AMA of our intention to review

their contract, AMA sent us a response. In the interest of

fairness, we include (in Part 2, below) all relevant parts of

their response.

AMA, PART I: THE CONTRACT

First, the good news:

=> PAYMENT SCHEDULE -- AMA, unlike many of the companies we've

seen, pays the artist upon acceptance of the artwork. This is a

good thing!

Now, the bad news:

=> REVISIONS -- The contract states that "AMA may demand changes

in the preliminary sketches, and the Artist shall make such

changes."

Comment: It's reasonable for a client to expect the artist to

make certain types of revisions for no additional fee.

However, if the revisions are significant enough that the

artwork no longer conforms to the terms of the original

agreement, the artist should be paid for the extra work.

One illustrator we know handles the issue by including this

provision in his contracts:

"Client shall be responsible for making additional payments

for changes requested by Client in the original assignment.

No additional payment shall be made for changes required to

conform to the original assignment description."

=> THIRD-PARTY LICENSING -- The contract also states that the

artist transfers to AMA the right to "license the Work...to third

parties, " but the contract does not stipulate that any additional

fee will be paid to the artist.

Comment: We feel that the artist should always receive additional

compensation when artwork is licensed for a third-party publication,

and when artwork is reused in other publications owned by the same

client.

=> MODIFICATIONS TO THE ARTWORK -- Under the terms of this contract,

the artist specifically "waives his rights to object to any

distortion or alteration of the Work..."

Comment: By accepting this waiver, the artist accepts a diminished

role in the creation of the final product, and runs the risk of

losing any input into the look of the finished work. We don't

believe that the artist and the client are adversaries, and we

suggest a different approach: give the artist the right to be

consulted regarding the changes, and let the artist have the first

shot at making them. That type of working relationship protects

the interests of both parties.

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 give the client the right

to make changes of "cropping and sizing only."

=> WARRANTY -- The contract states that the artist warrants that

the work is original, not previously published, will not infringe

or violate the copyright of any person or party whatsoever, and

that the work is not defamatory or otherwise unlawful in any

respect. This clause also calls for the artist to indemnify AMA

and its licensees against any damages that might arise if the

warranty was breached.

Comment: We appreciate that AMA wants to be certain the artwork is

original. We also believe that an artist cannot have complete

control over whether artwork is later deemed to be defamatory or

otherwise unlawful. We recommend the insertion of a simple

phrase--"To the best of the artist's knowledge"--to protect the

artist. The new wording might read: "Artist warrants that to the

best of his/her knowledge, the work is not defamatory..." etc.

=> KILL FEE -- None. The contract can be "terminated by AMA at

its sole discretion" without payment of any fee.

Comment: (See our discussion of kill fees in the last issue of the

Monitor.) We feel that if the artist does any work on a project, a

reasonable kill fee should be paid.

AMA, PART 2: RESPONSE FROM AMA

This response was sent by Seval Newton (Director, Art & Production,

AMA Periodicals) to Paul Basista, President of GAG.

I have looked at the points you raised regarding our contract

for services with artists. Obviously this contract was passed

on to your offices, by an artist who has not worked with us. I

am quite confident that any artist who has been working with us

and never faced the unfair situations you describe would have

trouble sending it to you. And the reason for that is that none

of the situations you are concerned about are accurate.

Here are my answers:

We rarely make any 'extensive' changes to the artwork. If the

changes are our fault (either we did not relay the information

properly, or asked a bar chart, but it should be a graph chart,

etc.) we pay extra money. There has never been a time when an

artist felt that he made too many revisions and got nothing for

it. If we do major revisions, we pay extra even if it is no

fault of AMA's.

The agreed upon price covers all the mentioned additional usages,

which is fully explained to the artists, and the art always

stays with the article, no matter in which form it is published.

If we want to use the art with another article, that is a re-use

that we pay for, after agreeing on a price with the artist.

If I am going to do any color or other alterations, the artist

is contacted and given the chance to do it himself. Usually we

agree upon having us do the minor revisions (such as deletion of

bkg color, or an unimportant element, or changing a business

suit from yellow to a more businesslike color, etc.) in

Photoshop to save time. Other changes that may occur happen

during the printing; overinking or underinking can change the

original colors to some degree, and that is unavoidable in web

printing.

This paragraph [Editor's note: we assume that this is a

reference to our comments on the Warranty Clause] is bad news

ONLY if the artist is using someone else's work and presenting

it to AMA as his own. Then, he definitely should bear the cost

of the consequences. It is silly to suggest a "frivolous suit"

at this point.

We do have a kill fee. This is another contract. All the artists

who work for me, work with the understanding that they'll do a

good job, and nobody asks for this information. But if they did,

I would say yes, we do have a kill fee of 50% of the sketch fee

or if the art went into finish, then 50% of the contracted

amount. This is very rare, usually both I and the artist can

tell when a concept is not working well at the sketch stage. In

all my 9 years with the Management Review magazine, we only had

one instance where the sketches were fine (this was a new artist),

and the final he brought in looked so different than both his

samples, and the sketch he did, that I could not publish the

work. The artist's execution was poor. However, due to the fact

that he had finished the work, he was paid the full fee, and

another artist was assigned to do the job over.

The reason you are asking these questions is because you have

not talked with an artist who works with us. Otherwise you

would know that these are not our issues at all. Our issues are

usually how to do the best job, how to meet the deadlines. I am

also an artist and I am quite comfortable that we are FAIR to

our artists. I can give you as many names as you like, you can

call them ask them how they like working for AMA.

[End of quote from letter]

AMA, PART 3: GAG AND THE MONITOR RESPOND TO AMA

Paul Basista wrote back to AMA as follows:

Dear Ms. Newton:

Thanks for your email message of June 23 in response to our

letter concerning the AMA's contract for services with artists.

Contrary to your assumption, the contract was forwarded to us by

one of our members who received it from you. In fact it is the

policy of Contract Monitor only to review contracts that have

been brought to our attention by members who have actually

received them from clients.

Our subscribers will be pleased to learn that your actual

practices are more equitable than your contract indicates.

However, we question why the realities of doing business with

the AMA are not spelled out in your contract.

We look forward to hearing from you again, and we're sure our

Contract Monitor subscribers will be interested in your response.

Sincerely,

Paul Basista, CAE

Executive Director

[End of Paul Basista's letter]

To Paul's excellent response, we at the Monitor would only add this:

When you sign a contract, the terms of that contract are the terms

under which you have agreed to work. The more clear and

comprehensive the contract, the less chance for problems to

develop later on. Most of AMA's response to us focuses on claimed

differences between the stated terms of the contract, and the way

AMA actually deals with artists.

There is nothing preventing AMA from changing its contract so that

it reflects the type of artist/client relationship spelled out in

Seval Newton's letter. We encourage AMA to do so.

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NEGOTIATIONS: When the whole is greater than the sum of its parts.

If the contracts you get are always written exactly the way you

like them, boy, are you lucky! More often than not, there's a

problem with at least some of the terms of the contract that's

being offered to you. But you don't want to reject a job just

because part of the contract isn't perfect, do you? What to do?

NEGOTIATE!

Negotiating at its simplest means discussing the terms of the

contract with your client, with the goal of fixing the problems.

We offer three tips to help you to be a good negotiator.

TIP #1: UNDERSTAND THE TERMS OF THE CONTRACT. You already know this

is important, or you wouldn't be reading the Monitor. Contracts are

often loaded with words and phrases whose meanings are, to put it

mildly, not completely clear. You have to consider every clause,

and ask yourself, If I agree to this clause, exactly what am I

promising to do? For example, if you read in a contract that the

work you will be doing is "work-made-for-hire," you have to know

what that phrase means in order to decide if you want to agree to

it .

The phrase "work-made-for-hire" has a specific meaning that is not

immediately obvious just by reading the words. (See the glossary of

contract terms on the GAG Web site, at

http://www.gag.org/contracts/glossary.html)

TIP #2: CONSIDER THE CONTRACT AS A WHOLE. Another way of saying

this is, think about the connections between one clause and

another. For example, fees are often covered in one clause, while

the project deadline is covered in a separate clause. But a tight

deadline might be worth a higher fee.

TIP #3: KNOW WHAT YOU NEED. Yeah, yeah, we can almost hear you

saying to yourself, "I need what every other artist needs, lots of

love and a faster internet connection."

But you also need at least one of the following: more money; more

clients; more time. If you can prioritize your needs, you can

negotiate more effectively.

The Adobe contract we covered at the beginning of this issue

illustrates these points. The artist who signed that contract is an

established, successful illustrator, who can command high fees

for his work. Yet he was willing to license rights to his work to

Adobe for free, because the job gave him something he needs as much

as money: exposure. At the same time, he when studied the original

contract and understood its terms, he saw that some changes were

called for. He asked for, and got, most of what he wanted. And

when he made a concession to Adobe on an important point, he was

still satisfied with the contract as a whole, because Adobe had

accepted most of the changes he suggested.

Lots of books have been written on the subject of negotiating. One

that we found helpful is "Getting To Yes: Negotiating Agreement

Without Giving In," by Roger Fisher, published by

Houghton Mifflin, (c) 1991.

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The Graphic Artists 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.

The Guild is a union that embraces creators at all

levels of skill and expertise who produce graphic art

intended for presentation as originals or reproductions.

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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