Creators' Rights Alliance - Manifesto for creators - 3: You need sound contracts
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What is needed - 3

The contract practices faced by many talented, experienced creators are a disincentive to remaining within the sector. They are a major factor in the ‘brain drain’ faced by the UK’s creative economy.

In theory, creators’ rights and royalties should be negotiated. Too often, in practice, ‘standard terms’ are imposed.

No more poor contracts; no more ‘Rights Grabs’

There is no way to be polite about many contracts that creators are saddled with. Many of them are just shoddy, unfair and grasping and can only be described as ‘rights grabs’.

We have already discussed the poor contracts that bully creators into parting with their moral rights. More broadly, we also regularly see the use of ‘standard’ contractual agreements by commissioners, broadcasters, publishers and producers, in which all rights and secondary income opportunities are bought outright from the creator in return for a one-off fee. Increasingly this includes ‘bundling’ of rights for digital exploitation.

In our experience, these contracts are already damaging the fragile economic base for creators and ultimately the healthy base of our creative sector. Media companies argue that buy-outs are essential to maintain a global advantage, but they present long-term problems for the economic sustainability of creators’ careers. Creators, across all sectors, commonly complain that ‘negotiations’ consist of coercion and threats of blacklisting of those who fail to comply. Such negotiations are highly asymmetrical and are far from fair.

To ensure the future growth and competitiveness of the UK it is vital that this contractual inequity is addressed and the rights-grabs are brought to an end.

The National Union of Journalists sees examples of poor contracts offered to its members on a depressingly regular basis. For instance:

  • Photographers refusing to sign an all-rights contract from a major UK magazine publisher are offered no further work;
  • Major national magazine titles cancel commissions for photographic portraits when the photographer asked to retain their copyright;
  • Media conglomerates whose standard contracts are for all rights, for the world.

The Association of Illustrators has documented cases of commissioners (particularly publishers) who demand ownership of physical artwork as part of their terms. This prevents the sale of the artwork by the illustrator and therefore stops the release of secondary revenue. They also regularly see increasingly detrimental contract terms gradually eroding the fees of their members.

Creators must be protected from unfair contracts

It is not just the CDPA that poorly serves creators: the explicit exclusion of intellectual property from the 1977 Unfair Contract Terms Act is another factor. In many creative fields, for example in photography, where individuals or micro-businesses deal with large publishing houses, photographers are faced with a situation in which unless they sign the offered contract, they don’t work.

The CRA recommends that the government changes the law to include IP in the terms of the Unfair Contract Terms legislation. This would go some way to bringing the UK into line with broader European practice where copyright is seen as an author’s right: a personal right, rather than an economic or property right.

The CRA further recommends the incorporation into UK law of the principles of the 2002 German law governing contracts for exploitation of creators’ works: particularly that providing for re-negotiation of contracts in the event of ‘windfall’ income from a work that was not envisaged at the time the contract was struck, with arbitration in the event that the parties fail to negotiate successfully.

Government must itself lead in best practice

It does not help, of course, that HM Government is a copyright bully. It issues more than its fair share of poor contracts. It is standard practice among Government departments to make copyright assignment a condition of being offered work.

This is a curious position for the Government to take. The Government introduced, and Parliament passed, the 1988 Copyright, Designs and Patents Act. It gave creators more rights over their work than before, for example by fully recognising photographers as creators and by introducing moral rights (albeit in the enfeebled form discussed above). But many sections of the Government now actively work against its own legislation by insisting creators assign their rights to the Government.

The CRA urges the government to set an example by ending its current practice of seeking copyright assignment, and to adopt best practice that could be promoted nationally.

Exploitation of works should be by licence only

The CRA recommends that third-party exploitation of creative works should be by licence only.

This proposal will probably elicit complaints from rights exploiters with a vested interest in the current system. But in countries where the law works in this way, such as Spain, Austria and Germany, there has been no impediment to the creativity of the economies.

On the contrary, moving to a similarly flexible approach will have many benefits for the UK’s creative economy in the future. The current situation is extremely wasteful of our stock of intellectual property under copyright: rights exploiters who own copyright to work outright are currently under no obligation to do anything with it.

Rights-grabs remove works from the economy and culture

The ‘rights grab’ means that there are currently thousands upon thousands of creative works, still under copyright, laying dormant because rights exploiters have demanded assignment of all rights. These assigned rights are not being exploited – so they are contributing nothing to the wider economy.

When creators have assigned all rights, or even granted an exclusive licence covering many uses, they are thereby prevented from making their own work available to the public. In an age where ‘content is king’, our content creators are being paupered.

This is not only wasteful, but in this multi-media age of emerging digital markets it is utterly unnecessary. Moreover, it is clear that today, when consumers are not able to access musical content that they want, they resort to acquiring it illegally, for instance via file-sharing websites.

The CRA therefore recommends that if rights remain unexploited, and the assignor has no evidence of any intention or plan to exploit the IP in the foreseeable future, the rights should be returned to the creator, so they can find another route to market for their work.

Contracts must be based on reality, not ‘boilerplate’

There are many occasions when poor contracts demand rights which are not necessarily going to be exploited when the client may not have the ability or expertise in the relevant area. For example, greetings card and giftware manufacturers and children’s book publishers are keen to lock up merchandising rights in characters created by illustrators, with no guarantee of exploitation.

Sometimes these contracts are put forward as much through ignorance as greed. For instance, terms of trade may be drawn up by company lawyers who are not in touch with conditions ‘on the ground’, with a view to ‘simplifying’ their IP and getting ownership of as much of it as possible.

This is impractical and leads to confusion because:

  1. There is a lack of communication between the people commissioning, who are usually at a junior level in the organisation, and the devisors of the terms of trade (the legal department);

  2. The people doing the actual commissioning seldom understand (and often have not read) their own company contracts;

  3. Because these terms are so unreasonable, a lot of creative suppliers refuse to agree to them. Those with most clout are often successful in this. Those starting out or in need of money are more likely to capitulate and sign.

There is nothing like enough time, in most cases, to re-negotiate properly. The resultant agreements are therefore often crude amendments of the original contract which are themselves unsatisfactory, and ill–understood by either party.

‘Creative Commons’ are not the answer

Creative Commons licences1 are a recent phenomenon aiming to providing creators with a sliding-scale of rights control, particularly designed for the digital age. Unfortunately, these contracts seem to invite unscrupulous rights exploitation.

The intention of CC is to allow a work to be placed in the public domain under a subset of copyright – for example it might be licensed to be freely copied provided no money is made from it with the caveat that the license must be passed on with the copy. The system provides a number of templates for various restrictions on the use of a work.

A Creative Commons (CC) licence might be effective in very limited circumstances – in particular as a marketing tool where it may give some comfort to a beginner launching a demonstration work in the hope of finding a market. But it is dangerous to creators in most other circumstances. In theory CC presents creators with a range of options, in practice the CC templates offered encourage creators to abandon their works to the public domain and sever their links with them.

Far from being a radical alternative to the existing system of copyright, CC relies on a strong existing rights regime as its starting point. If a creator really wants to give their work away, they can ensure that it stays given – that it cannot be privatised by a powerful corporation – only if they have strong rights that enable them to enforce the CC licence.

Many creators, particularly younger creators with little knowledge or access to advice or experience, have signed their work away without appreciating the consequences. It is often only once the contract needs to be invoked that the poor terms that it offers creators become apparent.

Once signed, default Creative Commons licenses saddle creators with an irrevocable, non-exclusive licence for all uses of a work, sometimes including commercial uses, without payment. Creative Commons admit as much in their online FAQs:

“Creative Commons licenses are non-revocable. This means that you cannot stop someone, who has obtained your work under a Creative Commons licence, from using the work according to that licence. You can stop distributing your work under a Creative Commons licence at any time you wish; but this will not withdraw any copies of your work that already exist under a Creative Commons licence from circulation, be they verbatim copies, copies included in collective works and/or adaptations of your work.”2

Young creators – such as musicians keen for exposure above all else – may not realise that this affects the likelihood of another licensor using the work, for instance in commercial exploitation.

Worse is the example of a Creative Commons licence leaving the creator to repent at leisure provided by the 2007 court case Chewywong vs Virgin Mobile. An advertising agency acting on behalf of the mobile telephone company Virgin had scoured the online photo resource Flickr for images with Creative Commons licences. It used them in a Australian national advertising campaign. It obeyed the terms of the CC licence (attributing the creator) but never offered payment nor even contacted the creator before the campaign had gone live.

One comment on the Flickr blog sums up the exasperation of professional creators at talented amateurs being being robbed of the potential value of their creativity:

“People: if you are going to conduct business with your images, remember that is a business... Companies are very happy to increase their revenues by profiting off of your work and your investment in your photo gear. Respect the value of what you are doing – don’t be taken advantage of.”3

Beware greedy hosts

Aside from Creative-Commons-fuelled ‘rights grabs’, there are occasions when rights are demanded by online traders and hosting websites, even when the creative content is not the business end in itself, but a route to their customer.

This situation has only been remedied in cases where the rights exploiter (or would-be rights exploiter) has been challenged to explore the considerations and circumstances of creators more carefully. When they have done so, these traders sometimes concede the unfairness of these practices.

For instance, in June 2006, after public pressure, brought to bear primarily by UK singer-songwriter Billy Bragg, News International’s online social networking site MySpace changed its terms and conditions which had previously allowed it to use and sub-license musical content that the site’s users had uploaded onto MySpace, without any remuneration for the creator.

In August 2006, again after pressure from Bragg, the UK’s most popular social networking site, Bebo, changed similar terms and conditions. Bragg commented:

“Social networking sites are a revolutionary tool for new artists who utilise them in order to gain a following. Any ambiguity about the ownership of rights could have serious implications not only for artists but for the sites themselves. If this new medium is to attain its full potential, it is crucial that artists are able to post content secure in the knowledge that doing so will not hinder their future career and earning potential. Recognition of artist ownership of content should be an industry standard for the new media.”4

Bebo’s terms and conditions now open with a clear declaration of artists’ rights.

So if a ‘rights-grab’ approach carries over into the online age, it risks making creators’ situation worse by assigning intellectual property that the new owner may have no intention of exploiting, or may exploit with little or no benefit to the artists that created this property.

As Bragg suggests, this affects not only the business of creators, but also the businesses of the would-be rights exploiters themselves. As many online services rely on word-of-mouth publicity to build a community of users, practices such as those illustrated above may harm their interests by alienating potential customers and users.

This business case may have been a motivating factor for both MySpace and Bebo’s change of heart. Whether or not this was the case, it is clear that the clumsy profligacy of the ‘rights grab’ can hinder both creators and exploiters of IP, and thus jeopardise the UK’s creative economy.

Creators’ income is not only fragile and open to abuse, it is also time-limited by the terms of copyright. After that it is public property for all time.

Contracts should favour the creator when they are unspecific

Often assignments of copyright or unfavourable licences (as in the case of Creative Commons explored above) are made when creators are young or inexperienced.

Irrespective of age, contractual negotiations between creators and rights exploiters rarely take place with both parties on an equal footing – but equality is assumed by the legal principle of freedom of contract. Most often the creator conducts negotiations from a poor bargaining position which favours the prospective rights exploiter.

Unfortunately, this encourages wasteful as well as exploitative practises – as contracts are drawn up in intentionally unspecific terms to obscure the scope of the assignment, or simply to ‘cover all bases’ by taking as many of the creators’ rights away as possible. There is seldom any plan or intention to exploit all rights assigned or licensed.

Shoddy, catch-all clauses such as the one quoted below are all too common:

“The Contributor hereby assigns to [name of exploiter] irrevocably and with full title guarantee the entire copyright (if any) in the Work whether vested contingent or future together with all rights of whatever nature in and to the Work including without limitation all rental and lending rights throughout the universe and in all media whether now known or hereafter invented for the full period of copyright including any extensions and/or renewals thereof to hold the same to [name of exploiter], its successors, assignees and licensees absolutely”

Therefore, in parallel with the recommendation that exploitation is by licence only and that rights in unexploited works return to the creator, the CRA recommends that contracts should be presumed in the favour of the IP creator where they are unspecific – so that what is not mentioned is not licensed.

This would give the IP creator more autonomy and financial security against potential future income. It would also render unspecific contracts unenforceable, and go some way to end the wasteful ‘rights grab’ engaged in to acquire IP at contract stage, hoping to cover any eventuality. It would focus the rights exploiter’s attention on how they were going to use the IP they were licensing from the creator.

 


^ Manifesto: 3: You need sound contracts

* 4: You should get fair pay


Notes:

1 See www.creativecommons.org/ accessed  04/03/2010

2 See http://wiki.creativecommons.org/FAQ accessed  04/03/2010

3 See http://flickr.com/photos/sesh00/515961023/ accessed  04/03/2010

4 Bragg B (2006) http://media.guardian.co.uk/site/story/0,,1856724,00.html accessed  04/03/2010

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