“I’m sorry… WHAT did you sign??” Part Two

by guest blogger Emily Danchuk

The relationship that keeps on taking – artist representative agreements.

In Part One of this series, I illustrated the unfair nature of license agreements with some “big box” companies. In this Part Two of the series, I’ll vent my frustrations with artist representative agreements.

Every time a client comes to me with an artist representative agreement, I cringe. Usually because the agreement has already been signed, and the client is trying to find a way to terminate the agreement. An agreement that wasn’t reviewed by an attorney before it was signed.

Sometimes, however, I’m hired to review one of these monsters before execution, and I’m able to triage the potential harm that the artist is about to dive into. So, what, exactly, is my beef with artist representative agreements, or “agent agreements?” How are they different from other agreements? Well, I’ll tell you.

Recently I was hired to help a client terminate her contract with an artist representative.  I reviewed the short contract defining the relationship, cringing and looking for The Clause. And there it was. The Clause.

It stated, “Agent shall continue to receive its standard commission with respect to each agreement in place at the time of termination for the life of the product.” I was looking for it, like you look for the victim of a car crash on the highway. And there it was. The term that defies all logic; the term that keeps artist agents in business.

Let’s back up and break this down. So, let’s say you have an agent agreement, with all licensing contracts going through the agent. Let’s say you’ve done well for yourself, and you have a bunch of agreements through this agent, with all of them having two years left until termination. Your agent gets 35% (a modest percentage in the agent game) of all sales of products sold via the licensing contracts.

Then, you decide that you want to terminate the agent agreement and handle all licensing matters yourself. Or you decide to hire another agent, or representative, to handle your agreements (because you haven’t suffered enough).

If your agent agreement has a termination clause similar to the illogical monstrosity above, your agent may contractually be able to stop doing any work on your accounts, and continue collecting her 35% fee. For the life of the products produced under your handful of licensing agreements. That agent is still going to collect 35% of your income from those agreements. And doing nothing to earn that money. Does this make sense?

AND, if you do decide to hire another agent, THAT agent is going to take another 35% for handling your existing licensing agreements. So, essentially, you’re left with 30% of your 6% license fee. Do you see me cringing? I’m cringing. In Cringe Town.

Another problem I have with many artist representative agreements is the artist’s surrender of all things branding. Branding is the most important thing you can do for your business. Did you hear about Cards Against Humanity selling poop on Black Friday last year?  It was a huge hit. Why, oh why, oh good Lordy, why? Because of branding. So, the short lesson is, you can literally sell feces if you have the right branding tactics.

The more substantial lesson is, don’t surrender your branding strategy to someone you don’t really know. Your branding strategy is a personal – almost intimate – way of expressing what your product means to you, and the direction of your branding is a sort of measure of self-respect. It makes all the difference in whether your product ends up at Barney’s or Big Lots. And when you surrender your branding direction to an artist representative, you’re at the whim of their Rolodex and networking skills, and, many times, you don’t have a say in who your artwork is licensed to.

The last big “no-no” that I see with entering into artist representative agreements is lack of diversification. When you sign an artist representative agreement, the agent usually requires that you grant them exclusive representation of your work. So you’re putting all of your eggs in one basket.

When you create a financial asset plan, your accountant is most likely going to recommend that you diversify (or, in other words, put your stock into various companies instead of just one.) That’s because if one company’s stock tanks, you’re not going to lose all of your pension – just a little bit. Similarly, if you have a really bad or apathetic artist representative, who may have bigger and better clients than you, too bad, so sad, you’re stuck. So if you are convinced that the artist representative avenue is, in fact, the way to go, you better make sure you trust that agent.

In summary, my advice is to hire an attorney to look over any agent representative agreements that you’re planning on signing, as they can be extremely one-sided, and to consider how the agent will handle your branding.

Emily Danchuk is an intellectual property attorney and founder of Copyright Collaborative, designed to educate, empower and unionize artists in the fight against copyright theft.

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