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 . 3 , n o . 3

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September 2000 - BUSINESS WEEK
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Greetings to our Contract Monitor Subscribers!

We hope that you're having a GREAT summer, and that you're making
good use
of the Copyright FAQs from the last issue.
This issue is about empowerment-- namely empowering you to get the
best deal
that you can. As you know, we usually analyze one of the industry
contracts, and point out its good points, as well as its pitfalls and
landmines. But what good is it if the client won't budge? Well,
sometimes *how* you ask for something can be as important as *what* you're
asking for. Let's look at Business Week (BW) as an example. From what we hear, BW
is a great client-- they hire often and pay on time. Yet, they recently
announced a new freelance contract that put a lot of artists on edge. So we
took a look at it, and instead of just telling you, loyal readers, what was
up, we decided to ask Business Week directly.

What follows are copies of our correspondence with BW. Obviously, BW
is under no obligation to talk to us or pay any attention to anything we
say. We like to think our civil, non-hostile style was conducive to
dialogue-- but maybe they just didn't want us to give them a lousy grade and
tell you all about it. The bottom line is, BW listened and responded. It's
still a work in progress, but progress it is.

We're not necessarily suggesting that you copy our exact language when
dealing with your own clients (even BW), but you should notice certain
tactics - like ask, don't demand. Also, let your client know that you
understand what the underlying issues and concerns are, and offer an
alternative that meets both your needs better than the client's
original proposal.

Tell us what you think-- and let us know if any of these techniques
work for you. If you have some tricks up your own sleeve, please share!
Oh-- and if you're wondering how BW responded to the Aug. 8 letter --
they're "amending the agreement."

~~The Contract Monitor Team
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BY FAX AND MAIL
July 20, 2000
Malcolm Frouman
Art Director
Business Week
1221 Avenue of the Americas
New York, NY 10020
Dear Mr. Frouman:
Graphic Artists Guild members from across the country have been
asking for our advice about the proposed letter of agreement you are offering
illustrators. We intend to publish our questions in a future issue of
the Graphic Artists Guild's Contract Monitor and Guild News, and in the
interests of fairness I wanted to give you an opportunity to respond
to our questions and concerns. My hope is that we will satisfactorily meet
the needs of all those concerned in a professional and respectful manner.
Regarding your proposed fee structure, it is of course good news that
you are raising your fees. You may not be aware that these are the same
dollar amounts illustrators received in the mid-1930's, when advertising
revenues for the magazine industry were only $150 million. While fees paid to
illustrators have remained constant for decades, the Magazine
Publishers Association reported that 1998 magazine advertising revenues were
$13,813,403,372, and its 1998 circulation revenues were
$9,923,311,967. Surely BW has enjoyed comparable success. In light of this, it makes
us wonder why you are not at least offering cost-of-living escalations
as you have photographers? Without this, at the current rate of inflation,
fees could decrease 10% or more in real terms over the contract's 4-year
term. Clearly, the contract applies to all new illustrations created for BW
during the agreement term. However you are also asking for these terms to
apply to works already delivered but unpublished at the contract's
commencement. This probably does not affect a great many works, but don't you think it
reasonable to exclude unpublished works delivered more than 30 days
prior to the contract's start date?

We think it's terrific that artists will retain the copyright to their work.

However, there are some vague and ambiguous parts of the proposed
agreement that need your clarification.

1.. Paragraph 1, sentence 2 states that "All use of the Work by BW
and its licensees will be limited to media that are either in the context of,
branded by, or otherwise associated with BW." Later in the paragraph
it states, "This grant of rights includes, but is not limited to, the
right to store and distribute the Work in print or electronic form in BW
articles, including on the Web, in foreign language editions (whether published
by BW or its licensees), to use the Work as it appeared in editorial
context for advertising and promotion, to reproduce the Work in reprints and the
right to grant these rights to others, such as our joint venture
"partners." We are very concerned about who are BW's potential "licensees" and "joint
venture 'partners.'" If BW decides to partner with Getty Pictures or
Corbis, for example, artists who rely on aftermarket uses of their work would
suffer severe economic harm by having to compete with their own work. If you
intend the third-party use to be exclusively editorial, in conjunction with
the article in which the Work originally appeared, it would help if you
were more explicit expressing this.

2.. It is certainly understandable for you to request the right to
use the Work for advertising and promotion within the pages of the magazine
itself, and if it's used in the original, editorial context. However, is this
restricted to advertising and promotional only within BW itself?
Advertising on billboards, transit posters, direct mail and in other
McGraw Hill publications, for example, are valuable subsidiary uses for which
artists usually receive fees greatly exceeding the fees paid for the
original editorial use. Is it BW's intent to enfold compensation for
this kind of advertising/promotional usage into the original editorial fee?

3.. Reprint rights provide an important revenue stream to BW. We
believe if the illustration appears on the reprinted page, the artist should be
appropriately compensated. We know that photographers are being
recognized and compensated for reprints of their works, in this area,
particularly if the BW cover is attached to the reprint. One way for determining such
compensation to artists might be to such fees to reprint quantities,
as BW does with photographers.

4.. There is nothing wrong with BW asking for a 90-day embargo period
to guarantee a degree of exclusivity. However, if BW chooses not to
publish a work, when can an artist attempt to use it elsewhere? If you do not
exercise your rights of reproduction within sixty days, perhaps those rights
could revert back to the artist?

5.. Artists should warrant, to the best of their knowledge (this
phrase should be added), that their Work is original and does not violate or
infringe any variety of laws. However, if you provide the reference
material for the artist to work from, will you warrant that the rights have
been cleared to that material?

6.. It is difficult to understand why a weekly magazine on tight
deadlines requires 60 days to pay on its accounts. Is there a specific reason
why payment cannot be made within thirty days? Industry practice
underscores payment within 30 days. In fact, it is customary for many artists to
impose a 1.5% late charge for invoices paid after 30 days. I'm sure you know
that illustrators are under-capitalized sole proprietors whose businesses
depend upon a reliable cash flow. Are you proposing to negate long-standing
industry practices, thereby putting artists at risk?

7.. Paragraph 5 also promises "BW will use all reasonable efforts to
include a credit line to the Work's owner." What do "all reasonable efforts"
include? What action will you take to make whole the artist whose
credit line is omitted? Perhaps you can rerun the Work with credit in a
subsequent edition in an errata box, on the masthead or on the table of contents
page. I understand that photographers bill for triple their fees when
credit is omitted. Should illustrators be treated any differently?

8.. Paragraph 7 states "The grant of rights and your representations
and warranties shall continue after termination of this agreement in
perpetuity with respect to all of the Work covered by this Agreement." We are
troubled by a contract with a 4-year term that attempts to capture rights "in
perpetuity." Since most of BW's coverage is time-sensitive news that
is quickly out-of-date, isn't it more reasonable to link the term of the
license to the term of the agreement, which can be easily renewed?

9.. In paragraph 8, you limit BW's liability for loss or damage of
work to "gross negligence." Would you define the circumstances of "gross
negligence?" How would an artist be compensated for loss or damage if
it were somewhat less than "gross negligence?"

10.. Lastly, the fee schedule states "The fees above cover the entire
'Rights Package,' in perpetuity." Does this mean that rates will never
change for the life of a Work's copyright?

The Graphic Artists Guild appreciates your intent to adequately
recognize illustrators and their work. I look forward to the progress we can
achieve.

Thank you in advance for replying within 10 business days of your
receipt of
this letter.
Sincerely,
Paul Basista, CAE
Executive Director
Cc: Executive Committee
Contracts Committee
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Paul & Malcolm then discussed the letter and the contract over the
phone.
This letter was sent to Malcolm after that conversation.
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BY FAX AND MAIL
August 8, 2000
Malcolm Frouman
Art Director
Business Week
1221 Avenue of the Americas
New York, NY 10020

Dear Malcolm:
It was a pleasure speaking with you earlier this week about the
concerns illustrators have over the proposed Business Week (BW) letter of
agreement. We agreed that I could summarize our discussion, and upon your
approval of its accuracy, I could make it available to our audiences as a future
issue of the Contract Monitor.

Regarding BW's proposed fee structure, I questioned why you were not
offering the cost-of-living escalations you were offering
photographers. You stated the fee structure you offered was fair, and already anticipated
inflation. However, while the increase in fees will apply to all
illustrations (including the estimated 60% that BW will never reuse),
doesn't it represent an option on the additional rights beyond print
that BW may choose to exercise, not a cost-of-living escalation? Wouldn't an
annual cost of living adjustment merely maintain the value of the proposed
fee increase over the life of the contract?

Regarding the question of BW's "licensees" and "joint partners," you
were emphatic that BW has no intention of ever using an image outside of
the context of the article that it appeared alongside. You stated that BW
has no intention of being a stock house, but does want to retain the
privilege to license certain articles to third parties like French magazines. We
agreed the current language was ambiguous and could be easily
misinterpreted, and that you would look into re-wording it. Clarifying this language
would go a long way to allay artists' concerns about accepting this agreement.

Regarding advertising and promotional use, you said it was highly
unlikely that an illustration and accompanying article would ever appear in an
advertising vehicle like a billboard or transit poster. You said the
possibility was so remote; it did not appear on your radar screen.
However, you said the BW legal department insisted that this language be
included. We agreed that you would research inserting new language that would
limit the possible uses or compensate for them, no matter how remote. However,
if all we're concerned about is a one-in-a-million occurrence, perhaps a
simpler way for you to address this issue would be to delete this clause and
deal with the million-to-one-shot when it comes up. Would you consider
this?

I appreciated learning that photographers are not compensated for
article reprints unless the cover photograph is reprinted with the related
article. I understand that most requests for article reprints come from
companies that BW features on the cover, making it highly unlikely that an
illustration would appear on the cover. However, shouldn't illustrators be treated the same as photographers even in those remote instances? Again as above, if this occurrence were so
rare, perhaps it would be simpler to delete the clause and address it on a
case-by-case basis when it comes up.

If BW kills a job and chooses not to publish a work, you stated that
the artwork is promptly returned to the artist permitting him or her to
use the work elsewhere. Would you consider including a simple document
releasing the artist to use the work elsewhere?

We agreed that you would insert "to the best of their knowledge" to
the artist's warranty clause. You indicated that BW is very careful about
clearing the rights to all reference material, and that BW would be
responsible for any reference material it provided. Am I correct that
there would be no objection to write this warranty to indemnify into the
agreement?

BW routinely pays its invoices within 30 days and will continue to do
so. We agreed that you would amend the "60 day payment" language to conform
to its practice either now, or when the contract comes up for renewal in four
years. You should be aware that this is an extremely important item,
especially to artists whose businesses depend on their ability to
manage their cash flow.

BW would print a correction in the week following the publication of
an illustration without credit, but the art would not be reprinted.
Would you offer an example of how and where an erratum might appear? Thank you
for pointing out that photographers are not paid triple fee for a missing
credit, and that they would not be working for BW very long if they
insisted on that.

BW will consider amending the grant of rights from "in perpetuity" to
four or five years from the date of commission, especially since the vast
majority of reuses occur within a few months of publication. I'm sure
you recognize how crucial this point is; changing the "in perpetuity"
clause would bring cheers from the creative community.

BW is very careful about returning artwork promptly and in good
shape. BW has been, and will continue to be responsible for any loss or damage
to original art. We also understand that as more artists migrate to
digital delivery of art, this will be less of a concern. Perhaps you can again
explain why the agreement states "gross negligence" rather than
"negligence." Wouldn't "while in BW's possession," resolve the
ambiguity?

You clarified that the fees you are offering were not intended to be
"in perpetuity," only the grant of rights. Hopefully, that will change as
discussed above.

Sincerely,
Paul Basista CAE
Executive Director
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We are awaiting an answer from BW on the issues raised by the Guild on
behalf of the community of illustrators. We hope to be able to
announce
material changes in the contract in an upcoming issue of the Monitor.
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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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Guild (http://www.gag.org), a not-for-profit organization
headquartered in the
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Please credit the Graphic Artists Guild, and do not alter
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(c) 2000 Graphic Artists Guild