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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 . 2 , n o . 2, p a r t 2
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July-August, 1999
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OUR FIRST TWO-PART ISSUE!!
The Monitor now has a page size limit. Of course you love to read every
word, but ten pages per email is enough for anyone. And, here we are back
in your mail box with the next installment of our Stock Contract Special.
In this issue we cover theispot Contract, but first a little extra-credit
reading assignment...
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DID WE MISREPRESENT SIS? You Decide.
After we "shipped" Part One of Issue 2:2. the following letter appeared
in our email box from Ian Gunn of SIS:
I have just read Brett Harvey's analysis of SIS's agreement and I am
absolutely appalled by its tone, the bias against SIS and the
misrepresentation of my comments. He has managed to not only
misrepresent my responses but to confuse Spots with SIS, assignments
with stock, to append my responses to different comments, and to
infer the exact opposite meaning from clearly stated responses.
I have enclosed my original comments to Mr. Harvey and I think your
readers should have the opportunity to draw their own conclusions
from my verbatim comments.
Sincerely
Ian Gunn
The Stock Illustration Source
Along with the above letter, Mr. Gunn included his original email reply to
the Monitor's initial query. For the record, the contract analysis is
done by the members of the National Contract Committee. The Monitor is
also written by the committee. The intrepid Ms. Harvey, Guild Communications
Director and Liaison to the Contract Committee, sends out queries to
businesses whose contracts we are covering. The Monitor gives businesses
ten working days to send in commentary before we publish.
As an accomplished writer, Brett consented to do the first draft for us
this last issue, and we think she did a first rate job of incorporating Mr.
Gunn's comments with our own. The final draft of the newsletter that you
received is the work of all members on the committee.
We reread Mr. Gunn's original comments carefully and we agree with him
that our "readers should have the opportunity to draw their own conclusions
from (his) verbatim comments." To that end we are placing Mr. Gunn's
commentary in its entirety online on the Contract Monitor Web Site at
(http://www.gag.org/contracts/response.html). Please let us know your opinion.
Our job, as always is to give you the best analysis possible. If we are
misleading you, we'll be the first to set the record straight.
Read the Contract Monitor's Evaluation of the SIS Contract Here.
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BUT WAIT! THERE IS A MISTAKE IN PART ONE!
We spelled SIS co-founder Marie-Christine Matter's name wrong. We
apologize for the error.
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NEXT STOCK CONTRACT ANALYSIS: The Envelope Please....
theispot Stock Submission Agreement
theispot is an image marketing website at www.theispot.com developed by
Applied Graphics Technology, Inc., in 1996, for Artists' Representatives
Gerald & Cullen Rapp. Illustrators pay an annual fee plus an additional
fee for each image posted to theispot site. Potential buyers visit the
site and contact the artist or artist's rep directly to negotiate the
licensing and price of an image. When a sale is made, the artist contacts
theispot which faxes the buyer a License Agreement and Invoice form.
When the buyer signs and returns the form, theispot runs a credit check
and then ships the image out to the buyer.
In this type of arrangement artists and buyers negotiate directly,
rather than through a middleman. However theispot does provide
services to the artist, from image display to invoicing. In addition
theispot takes a small fee on the sale of work from the site. and
these services naturally require a contractual agreement. The Monitor
feels strongly that it is wise for artists to examine all the types
of business contracts so we decided to review theispot's "alternative"
approach to stock sales.
The Submission agreement is a two-sided, two-page document. The artist
supplies Contact Information, including rep names if applicable, and
checks off a list of applicable fees. These fees include an annual fee
for submission, a database maintenance fee per image, scan fees and
shipping fees. The fees list is followed by payment choices and a
signature area.
Side two contains the contract which is broken into 12 clauses. Due
to space constraints we will cover clauses that we feel will be of
the most interest to our readers.
Clause 1. In the first clause the artist agrees to pay all charges
specified on the checklist at the front of the form.
The Monitor has no problem with the payment clause. The charges are
clearly defined. One caveat: the checklist includes this note: "If you
are uncertain how to compute production, you may leave the computation
to us. Please complete and sign the form and we will call you to
review all charges before processing."
We recommend that artists call and get a clear idea of the charges
before they sign, a simple enough process.
Clause 2. "Applied Graphics Technologies, Inc. (AGT in its capacity
as agent for theispot may refuse to publish any submitted
entry...which it deems, in its sole discretion, unsuitable
for publication on theispot(tm)...In the event that AGT
rejects any of the Illustrations and no substitutes (acceptable
to AGT) are submitted within 10 days after notification of
such rejection, AGT shall return the Subscription Fee paid
by you."
Fair enough, we say. It's a nice touch that theispot doesn't withhold any
portion of the fee for processing. We know a few other businesses that
could learn from that policy.
Clause 3. "You shall at all times and under all circumstances be obligated
for all charges set forth herein."
The Monitor asks: In the case of technical difficulties with theispot's
server; should Artists be liable for a service they are not receiving?
Websites are still a developing technology. Since the client (that's you)
is paying solely for a site posting then perhaps this cclause needs to
include a fee contingency in case of possible system failure. See
theispot's response below:
"While not in the contract, theispot(tm), from its inception,
has made a practice of extending its members' contracts in cases
where theispot has failed to provide service in ways significantly
affecting a member's benefits from the site."
That's music to our ears, but if a service is not spelled out in the
contract, then it will be provided at theispot's discretion, not by
contractual obligation.
Clause 3 continues: "You further agree that you will only license the use
of the Illustrations through theispot. This agreement may not
be canceled by you during the first 12 months following receipt
of the illustrations through theispot(tm)."
The Committee can see where this grant of exclusivity may be a problem for
artists who have shown the contract images in other contexts (i.e., in
their portfolio or in a print directory). It would be very useful at
this point in the contract to be able to refer to an addendum listing
the stock illustration images that are being covered in this contract.
There should also be a specific means for the artist to change the
available image(s) being exhibited on theispot under this contract
(and there should be a similar provision for the updating of the addendum
or Exhibit A within a set time frame).
theispot responds: "theispot(tm) requires exclusivity (meaning all
stock sales must go through theispot) because, unlike with a
stock agency, theispot(tm) is putting the buyer directly in
touch with the illustrator to negotiate the rights being sold
and the fee. If the illustrator was not bound by contract
to make sales through theispot(tm), we could easily be cut
out of the transaction and not receive the nominal fee we
request for bringing the parties together. Our policy also
insures that the record of previous usage associated with
each illustration remains up to date. This is only fair to
our buyers."
Actually, we would think the services of invoicing and credit checking would
be enough of an incentive for artists to willingly pay that nominal fee. So
why insist on exclusivity?
Theispot adds that "illustrators may add to their stock images on theispot(tm)
at any time. Likewise, after an image has been on the site for one
year it may be removed at any time."
Clause 3 continues: "Thereafter you may cancel this Agreement if AGT
receives from you prior written notice of cancellation. Upon
the effective date of cancellation, theispot will refund
your Subscription Fee on a pro-rata basis."
The Monitor wonders if a time frame for delivery of the artist's
cancellation notice should be specified here, i.e., 30 days prior to or
dating from the end of the annual term. In this way all parties are on
the alert. Since we already know that the artist pays an annual fee then
the Monitor wonders if the contract is automatically renewed when the fee
is due, since no method of renewal is specified anywhere in the contract.
theispot responds: Theispot(tm) accepts cancellation notices up to and
including the last day of an illustrator's contract. Renewal
is automatic, but this does not pose a problem for our members
as after year one, they can receive a full pro-rata refund.
Fair enough, we say, but what's not stated formally in the contract is
only good intention, not a commitment.
Clause 3 continues: "Theispot will forward to you 95% of all licensing
fees actually received from licenses of your Illustrations
through invoiced transactions, and 90% of all licensing fees
actually received from licenses of your Illustrations through
credit card transactions."
We note that nothing is said in the contract about how payments to the
artist are to be scheduled--monthly, weekly, or thirty days? When is the
client billed, and what payment terms are they given on invoiced transactions?
Also, how will theispot handle late or non-paying customers and uncollectible
accounts? Will the artist share in possible collection costs?
theispot responds: "As explained in theispot's(tm) stock brochure provided
to each member before signing the contract, artists are paid
within seven business days of theispot's receipt of payment from
the buyer. In addition theispot(tm) takes a small fee on the sale
of work from the site. Theispot(tm) frequently is paid by credit
card, which speeds the payment process. The terms on other
transactions are net 15 days.
Theispot(tm) utilizes Dun & Bradstreet to conduct credit checks
to qualify buyers before the transaction takes place ensuring bad
debts are kept to a minimum. In fact, although we have had our
share of slow payers, there has not been a single unpaid stock
invoice to date."
Clause 4: "You agree to provide AGT with originals of the Illustrations
(or reproduction quality transparencies...)...AGT will scan, upload
and create digital reproductions of your illustrations on
theispot...The location of your illustration within the sequence
of pages...shall be at the sole discretion of AGT...AGT shall be
the sole and final judge of the reproduction quality of the
Illustrations on theispot"
The Monitor finds this acceptable, provided the artist can take down an
illustration and substitute another without penalty if the artist is
dissatisfied with the quality. After all, the artist is paying a fee for
any scanning done by AGT.
theispot responds: "Seems like a reasonable idea and one theispot(tm)
can agree to; however, to date, theispot(tm) has not
experienced this problem.
Clause 5: "You grant to AGT, its successors and assigns, the non-exclusive
right, license and privilege, worldwide during the term to
create digital reproductions of all illustrations submitted by
you...to incorporate such illustrations in an Internet site,
and to reproduce, distribute, perform and display such
illustrations on such Internet site and to promote theispot."
We always have a problem with a clause like this, even though the Monitor
understands the need for the service to promote itself and its wares.
Should the artist ask for more control and possibly compensation when images
are utilized in promotional materials for theispot?
theispot(tm) responds: "Theispot's(tm) position on this is consistent with
that of American Showcase. If theispot(tm) had to pay for such
use, we would not be able to afford nearly as much promotion or
we would have to promote without using very much imagery."
Clause 7: "The total responsibility for any to or loss of any original
illustration supplied by you...in no event shall the insurance
valuation exceed $10,000."
This clause does not make clear whether this $10,000 ceiling is per
illustration or for the total package of artwork.
theispot responds: "The $10,000 ceiling is for the total package of artwork.
We suggest illustrators desiring more coverage simply split
their submission into multiple shipments. That way they can
achieve as much protection as they like and not risk the
loss of a single package containing so much of their work."
Clause 9: "Payment made by you after the due date of such payment shall
be subject to interest charges computed on the basis of 15%
per year."
The Monitor always likes to point out the good, as well as the bad. The
interest charge stated is actually a low rate-- usually, late payment fees
are 1 1/2-2% per month, or 18-24% per year. (Of course, a good relationship
does call for timely payment.)
The Monitor would like to close with one last question: Why is there no
mention of AGT/theispot's responsibilities to promote the site and bring
potential buyers to it?
theispot responds: "Theispot(tm) periodically gives details of its
marketing efforts to its members both on the site and via email
This information is not routinely found in contacts of this nature.
For example, theispot's(tm) contract is consistent in this respect
with that of American Showcase, The Workbook and The Guild's own
Directory of Illustration."
************************************************************
Well, that wraps up Part Two of our Stock special. We've given you two
very different approaches to the stock marketplace and we plan to cover
other companies as contracts come our way.
Just remember: Without you, we're nothing. We encourage you to participate
with us. 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
Until next issue....
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The Graphic Artists Guild National Contract Monitor is an
intermittent e-mail service published by the Graphic Artists
Guild (http://www.gag.org), 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.
Back issues of the National Contract Monitor are posted at
http://www.gag.org/contracts/contracts.html. The web site also contains
a glossary of legalese and other useful features.
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
ntended for presentation as originals or reproductions.
(c) 1999 Graphic Artists Guild
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