Read the Contract Monitor's Evaluation of the SIS Contract Here.
From: Ian Gunn
To: <Execdir@gag.org>
Sent: Friday, July 23, 1999 4:27 PM
Subject: SIS Agreement Analysis
Dear Paul;
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 Illustation Source
MY MEMO TO BRETT HARVEY
TO: Brett Harvey
FROM: Ian Gunn
RE: SIS Agreement
DATE: June 30th, 1999
Hi Brett
Thanks for the fax about Contract Monitor. Actually, I was not aware that
you were reviewing our agreement. Anyway, let me address the points you
raise.
Irrevocably?
The whole point of having a contract is that both sides agree to be bound by
its conditions, that it can't be unilaterally amended on a whim or a casual
change of mind by either party. Irrevocability is important because both the
artist and SIS have risked a considerable amount of money. Because of our
investment - 85,000 color catalogs, CD-ROM's, interactive website, and
overseas offices - it's only fair that we have the time to recoup it. Plus
art directors and designers want the catalogs on their shelves to be "live"
for as long as possible and five years is not an unreasonable amount of
time.
Exclusive Agent
Again, exclusive representation is extremely important because of the scale
of our investment.
Sole and complete discretion
In today's environment art directors must have immediate answers on price,
availability and image history. If you've ever tried to reach an artist, you
run in to the problems of time zones and answering machines. I would say
that over fifty percent of the time the artist is unavailable and it's
simply not possible to run a stock agency on this basis. Ultimately, the
artists have to rely on the agency to negotiate the best possible price on
their behalf and, of course, it's in our own best interest to obtain the
best possible price. Incidentally, our largest price for a single stock
image was $50,000.
It is simply not true that the images can be used for any purpose. Hate
groups, pornography and other offensive uses are excluded out of hand plus
the artists can specify exclusions?many artists with SIS prohibit the use of
their images in tobacco, alcohol and fur advertising, for example.
Regarding assignments, for a long time we've been battling the perception
that each stock sale subtracts one commissioned work from the market place.
This is just not the case. While it's easy to understand this perception,
the reality is that stock illustration competes far more with stock
photography than commissioned illustrations. SIS generates a lot of
assignments and it's my contention that if there were fewer commissions
available, then the volume of our assignments would be declining. But the
fact is we're generating more assignments than ever. Although many people
don't like to hear this because it goes against their strongly held beliefs,
there's no question that stock illustration has expanded the market for
illustration.
?a period of time in excess of the length of the agreement.
The reason for this is very simple. The largest sales that stock agencies
make are those that involve the exclusive use of an image for a given
industry or a length of time or both. Let's say, for example, that a
pharmaceutical company wants to license an illustration for twelve months
for $20,000. If the artist/agency agreement were due to expire in six months
the agency would be unable to license the image. This clause merely enables
the sale to be made which, after all, is our raison d'être.
Net licensing income.
The artist earns 50 percent of the net royalty fee. The exceptions are the
costs involved in repatriating money from abroad - bank charges and currency
fluctuations - and SIS shares in these equally. You mention that the artist
has incurred all the costs of producing the images. True. But this ignores
our costs - printing and distribution of 85,000 catalogs and CD-ROM's both
here and abroad, an Internet site, maintenance of overseas offices to enable
foreign sales, high rates of taxation, etc., etc. We continue to lose a lot
of money on overseas sales and, although many people will refuse to believe
this, we maintain our overseas offices simply to permit U.S. artists to make
overseas sales. We could eliminate our foreign offices tomorrow and add
those savings directly to our bottom line.
Commissioned work.
Assignments generated through SIS are handled on a one-time basis and such
assignments do not make SIS the artist's agent for subsequent work with that
particular client or any other. Many artists have approached us in the past
and asked us to be their exclusive agents but we have always declined
because we believe they'd be better served by a good artist's rep.
Finder's Fee
The same finder's fee applies to overseas work.
Exclusivity
Please refer to previous explanation.
Insurance
You state in your letter that the insurance value is placed at $250. This is
a misreading as the contract actually reads $450. While I agree that even
this higher amount this does not reflect the real value of the majority of
the illustrations we receive, it is the maximum amount we were able to
obtain from our insurance.
Receipt of income.
Our statements to the artist clearly state the date of the invoice, the
amount, the client, the size, and how the image was used. We have recently
starting sending royalty checks twice a month rather than the previous once
per month. In addition SIS is, to the best of my knowledge, the only stock
agency in the entire world that supplies tear sheets of usages.
Infringements
SIS has an excellent record -one-hundred percent - in protecting artists'
work from infringement and we have obtained very satisfactory
settlements?$40,000 in one instance. However, to give you an extreme
example, if someone in the wilds of Afghanistan scans an image from our
catalog there is no practical way of pursuing them thus we should not be
legally obliged to spend tens of thousand of dollars on a futile pursuit, no
matter how regrettable the theft may be. As I said, this is obviously an
extreme example but I think it illustrates the point. We will certainly
proceed against any infringements where it is feasible to do so, even if we
lose money, as we have in the past. As for the artist having to cooperate
with us, it seems to me that it's in the artist's own interest and this is
hardly an unreasonable request.
Litigation Costs
If SIS loses an infringement suit, SIS pays all the legal fees and court
costs and nothing is paid by the artist.
Artist notification
60 days notification is about what we had in mind. We'll probably telephone
and follow up with a letter or email.
Commission after termination
This is a paragraph I borrowed from rep contracts and those of other stock
agencies on the basis that if they had it I probably needed it, too. My
understanding of this is that if the agency has been working on a project
prior to the termination of the agreement and it is successfully concluded
after the effective end date of the agreement, the agency is entitled to be
compensated for that work. However, this does not make it a 5-1/2 year
agreement as once the five years are up, we simply don't sell the artist's
images.
Advertising
I define royalties as the fifty percent commission the artist earns on each
use of an image.
We consider SIS and the artists to be in partnership. We pay for the actual
advertising, which is designed to benefit all SIS artists, and the artists
contribute their talent. Let's contrast this approach to that of artist's
reps who actually charge the artists for their advertising. We sponsor a
very expensive advertising campaign which, incidentally, is designed to
promote all SIS artists and illustration as a whole, rather than simply
publicizing SIS. Given the amount of money we spend and the benefits to the
artists this advertising generates, I feel it's entirely fair that we don't
incur additional expenses. And keep in mind that every artist whose work is
used has given us permission?under no circumstances would we use an artists
work if they did not wish it. But most artists are pretty savvy and they
know that the use of their images in an advertising campaign directed to art
directors and graphic designers is very desirable publicity for them.
Arbitration.
First, let me say that we've never had to arbitrate any dispute. Our policy
is that if there's any doubt we settle in favor of the artist and that's
what we've always done. The choice of New York was made not to make it
difficult for artists to go to arbitration but because disputes have to be
settled somewhere and New York seems the place where a lot of artists, and
SIS, reside.
Overall, Brett, I have the impression that we're being taken to task for
omitting somewhat peripheral information from our agreement. The problem is
that if we were to include every possible scenario we'd have the familiar
8-to-12 page agreement like other agencies and we'd be criticized for it. We
prefer a short, reasonable agreement that is supplemented by dealing
ethically with artists. As you may know, we're the only agency or rep that
makes their agreement publicly available by printing it in our brochure.
If you have additional questions, Brett, please don't hesitate to contact
me.
Sincerely
Ian Gunn/SIS