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You Are Here:  Home  >  FAQ  >  Blogs  >  Negotiation 101: start with "who owns what"

Negotiation 101: start with "who owns what"

Tuesday, March 27, 2007

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Photo Assignment Contracts are one of the top-10 most discussed topics in photo discussion groups, yet fraught with over-simplifications and misunderstandings. So, rather than try to figure it out, most people just use boilerplate agreements they get out of a book or from a photo industry trade association. But this method is similarly fraught with pitfalls.

Using contracts that others say, "they work", doesn't mean much. Unless there's a dispute between parties, all contracts "work." The only way to assess a contract's effectiveness is by how well it serves you're interests when things go wrong. And the problem then becomes you've got a contract that you now have to live with. Even if contracts work for others, it doesn't mean they'll work for you. This is because they often have terms expressed in ways that reflect someone else's business objectives, risk tolerance, or personal objectives. Not yours.

For example, many boilerplate agreements have you indemnify the client in the event of certain third-party claims of liability, and most photographers sign this contract without ever having a single problem come up. So, they claim the contract is good. But if your client gets sued by a model that decided she wanted to re-neg on the model release she signed, your contract now entangles you in this same lawsuit—a term of the contract you could have avoided if you'd known to negotiate it out earlier.

You might ask why those clauses are in boilerplate agreements in the first place; well, that's usually because most clients require them anyway, and since the risk is typically minimal, it's easier to agree to it than give up some else to take it out. This is part of the negotiation process that I'll be talking about later. I mention it here to illustrate that everything in contracts has an implication, and you shouldn't just use any contract that you don't understand.

So if you are looking for the right contract for an assignment you're going to do, where do you turn?

The better approach is to think of the process in reverse. Contracts are the result of negotiations, which take place first. Before you even enter into a contract, you must have already begun discussing terms: what you're going to do, what you'll provide them, and what they'll pay you. Those are the elements that will eventually go into a contract.

If you're thinking that I'm going to now teach you about contracts, relax. That's not something that can be learned in a short article. Law students go to school for years to learn this stuff, and even they aren't very good at it. Sometimes, it takes years of working for large companies as in-house attorneys before they realize just how bad they are at contracts.

What I can do is help you understand some very basic principles that you can think about when you negotiate contracts, which not only helps makes the process of reading contracts easier, but it may also help optimize your financial outcome.

Negotiation

We begin with the basics: You have a client. He wants your services. You want to be paid. Therefore, the most simple, legally-binding contract in the world says exactly that: "I will take pictures of you, and you will pay me."

Obviously, nothing's very specific here. But it's still legal. If you take pictures, and he doesn't pay you, then he violated the contract. Needless to say, however, it'd be a hard case to bring, since it's his word against yours about what he'll pay you. So, it's better to be more specific in the terms.

This is where things go wrong very quickly because many people start out with assumptions that aren't true, and they start writing terms into the contract that shouldn't even be there. (Many of these boilerplate agreements have such terms.) For example, the first thing you need to understand is this blatantly simple question:

Who owns the photos that a photographer takes?

Most people—photographers and clients alike—don't wholly understand the answer to this question. And this is the basis for everything else that a contract may contain. So, we begin here. The law on copyright, as defined by the Berne Convention, to which most countries are signatory, essentially boils down to these two doctrines:

  1. Photographers own all rights, ownership and copyright to the photos they shoot, unless and until they sign those rights away.
  2. No one else has any right to use those images, even if money changes hands, unless those rights are granted explicitly.

Before I go on, I should mention that there are two exceptions to this rule: work-for-hire contracts (where the hiring party owns all copyright to the photos) and pictures shot by government employees as a part of their job functions. In this second case, the photos are automatically placed in the public domain, so there's nothing to discuss here. I'll return to work-for-hire contracts later.

But the reason I mention work-for-hire sooner is because most people— both photographers and those who hire them—often make the incorrect assumption that contract are, by default, "work for hire." That is, people assume that if they pay for a photo service, that they are now entitled to the photos. One certainly can and should assume that such a condition will result, but it doesn't happen automatically. That is, the mere exchange of money is not the trigger that entitles the buyer to the images. It's the agreement ahead of time (either by verbal or written contract) that stipulates the "granting" of rights—which rights, how long, and other terms and restrictions.

Note that granting rights to someone is not the same as transfer of rights. In the latter case, you would lose your own rights to the images. When you merely grant rights, you haven't given up anything—you're just letting someone else use the images as well as you. What rights you grant them is why you have a contract. This is the difference between normal photo assignment contracts and work-for-hire agreements—the latter is a contract that transfers all rights to the buyer. Again, I'll get back to that later.

The mistaken assumption that exchanging money also transfers rights is the main reason for very bad photo assignment contracts. The most common clauses you'll see in boilerplate agreement templates that illustrates this are those that go to great lengths to mention that the photographer "retains ownership of the photos," that he can "use them on his website," or "in his portfolio," and even "to license them to third parties."

None of this is necessary. Worse, trying to articulately and thoroughly say so may ultimately undermine your own client's understanding of what you can do, which itself can lead to a third-party's understanding of what you and your client agreed to. If something goes wrong, and you have to present your case in court, a judge is going to read the contract and assume make assumptions about your agreement that may not be in your best interests.

For example, if the contract says that you can use the photos in your website and can license them to third parties (as mentioned above), and you eventually come out with a coffee table photo book that uses some of the photos, the client might try to weasel a way to stop you by claiming that the book publication was not authorized in your contract. Normally, it wouldn't have to be, since art books are editorial in nature, which normally don't need consent by third parties. (See Model Releases, the section on "Art".)

If your contract never listed anything, there wouldn't have been any question about your giving up your existing rights in the first place. Sure, an upset person can still cause trouble, but they'd quickly find roadblocks much earlier in the legal process once they contacted a lawyer, who would then have to educate them, and it'd never get to a point where it'd have to be argued in front of a judge.

Therefore, when reading and drafting photo assignment contracts, be aware that unless you specifically assign your otherwise lawful rights to the images, you still own everything, and the client owns nothing, irrespective of payment. You don't need to explicitly state facts that are already true by default.

The possible exception to this is if there's a known disagreement ahead of time about a point of fact, and you want to emphasize that point so the client doesn't try to rethink it yet again at some future date. That is, if the client says, "You know, you do not have the right to use these photos for anything else," then you can say, "well, since I do have the right by default, we can add it to the contract that I will not use the images for other purposes, but you'll need to pay me X-dollars more for that. Otherwise, I'm giving possible future revenue, which then makes this assignment less useful to me."

At this point, the sequence of events goes like this: the client declines paying more for the service, you then use the images as you said you would, and the unhappy client returns to his previous misunderstanding that you were not entitled (by default) to use the images, and then sues you. In such cases where you had a discussion, couldn't agree, and decided to leave it alone, that's when it may be prudent to include the statement in the contract, even though it would otherwise not be necessary.

And now you're beginning to see how boilerplate template agreements evolve. Such an event happened with someone at some time, so he added the phrase to his contract to avoid having the same problem again in the future. Over time, more such events build up, and you eventually have these really long agreements that end up in books and on websites.

But as I've illustrated earlier, there are pitfalls to this very approach. And we come full circle to a paradox: if you put something into the contract, the consequence may be that you inadvertently put into doubt other rights that you have. If you don't put it in the contract, then you get a potential upset client. How do you reconcile this paradox?

What you need to understand is the subtle nuance: Preempting a known disagreement ahead of time is wise; trying to anticipate every condition by padding the contract ahead of time can lead to worse problems. The best draft agreements are those that start very minimally, reflecting only the items discussed with the client, avoiding statements of fact that are true by default.

This can be recapped as a re-writing of the two bullet points earlier:

  1. Begin all negotiations with the assumption that you own everything, and that the client owns nothing.
  2. Don't use language in a contract that isn't needed. Keep it as simple, and as brief as possible to start, and build it up gradually on an as-needed basis.

Is a Contract Even Necessary?

I mentioned earlier that the simplest and best (hypothetical) contract is one that stipulates only what the client owes you, but doesn't get into much detail about your obligations.

Odd as it may sound, it may very well be that no contract at all is necessary. For example, if you're going to volunteer your photo services for non-profit organization, and they are going to pay you nothing at all, you have absolutely no interest whatsoever in having a contract. It can only do you harm. Whatever that contract says will require you to do something. Now, you may very well be willing to do it. But it's always better to do it at your own free will and generosity. In case something goes wrong, you don't want to have to suddenly find yourself contractually obligated to do something. And you certainly don't want to give up anything (like rights) unnecessarily.

It goes without saying that the non-profit wants to use the photos, in which case, they want you to grant them some limited, non-exclusive rights to use them. But again, you can verbally grant these rights without a contract. Sure, they have to trust you, but so long as it's you that needs to be trusted, you don't need a contract. You can trust you, right?

What's more, if the non-profit use the photos in ways that you don't like, such as selling those images to their own members—something that non-profits don't typically do—you are in a much better position to stop them. That is, if you want to stop them. If you had a legal contract that you now had to dig up and fight about, your job is much harder.

Some non-profits have dealt with unreasonable photographers, and have learned their lessons that they want you to sign a contract agreeing to grant them certain rights. That's fine, but be darn sure that you're not giving up anything that could harm your business potential, either with the photos themselves, or your services. It's up to you to discern whether their terms may harm your interests.

Working without a contract if you're not getting paid is one thing, but what if the client does pay you. Does this mean you should have a contract? Let's say you have a client that wants you $500 to take pictures of him at his house with his pet cat. If you were to draft a contract, what should it say?

  1. What are your obligations?
  2. What are Mr. Doe's obligations?

Here's a perfectly valid contract that satisfies the above questions:

"Photographer will show up at John Doe's house and take pictures of him with his cat. Mr. Doe will then pay the photographer $500."

Pop Quiz:

  1. What are Mr Doe's rights to the photos?
  2. What do you have to deliver to Mr. Doe?

According to the simple contract I provided, your obligation is only to take the pictures. And when you're done, he has to pay you for them. This contract does not obligate you to give him any photos at all. And it certainly doesn't entitle him to any rights to those photos. (Of course, you don't have rights to his likeness either. Just because you own the copyright to the photos, it doesn't mean that they can be published in many commercial contexts without his consent. This is a matter of publicity laws, not of copyright ownership. For more, see the chapter, Model Releases.)

Now, you probably would give him copies of the photos, wouldn't you? And if you didn't, Mr. Doe might take you to small claims court where a judge would look at you with a very stern and disapproving look. Of course you would—you have no reason not to. You're in business, But in reality, that won't happen. After all, this is your chosen business: you want people to pay you, and you want to give them photos. So, even though you don't have to give him photos, you will. Even though this contract doesn't, itself, obligate you to do so.

You'll give him the photos because it's in your best interests to do so, and you want to continue having a successful business. Accordingly, you don't really need a contract to do this simple job. Except that Mr. Doe still needs to pay you. If he doesn't, then you'd need the contract in order to sue him effectively. (That is, you could still take him to small claims court, in which case, the judge will bind Mr. Doe to his verbal agreement with you, which is still binding.) (And, he will administer the same stern look of disapproval to him as he did to you earlier.)

So, the contract is a good idea because that's what obligates Mr. Doe to pay you. But let's say you have him pay you before you take the pictures. Once he's paid up, you don't really need the contract. Mr. Doe might want to have it so he can show it to the judge and say, "I paid him and he didn't deliver my pictures." (By this point, the judge is really getting tired of both of you.)

The underlying principle is that contracts are there to help both parties—the terms obligate each party to fulfill their end of the agreement to the other. Your needs of the contract are different than the clients. And since you want to perform your end of the agreement to the best of your honorable and ethical standards, you generally don't "need" a contract mentioning those things. Your choice on using a contract should be based on those needs, not by a default assumption that one is required.

In my personal business, I rarely ever use contracts for photo assignments. Like the latter part of the Mr. Doe example, I always demand payment in advance of shooting. Once I'm paid, a contract serves me no purpose whatsoever; it would only go downhill from there. Of course, I'm obviously willing and eager to make my clients happy, and I will perform services to the best of my abilities, and I permit my clients use images in ways that are always consistent with our agreement. But if anything were to ever go wrong, I always have the upper hand, simply because the default basis of law is on my side. I'm the copyright holder.

It's not that my clients would have no legal recourse, it's just that I'm in a better position than I would be if terms were spelled out in ways resulted in outcomes that I might not have been able to anticipate. (Disagreements are usually the result of unanticipated future interpretation of terms.)

As many photographers know, not all clients are easy. And though I choose to work with easy clients, this isn't always possible. And I do work with clients that require contracts. This is particularly important when there's the situation I mentioned earlier: clients that misconstrue copyright law to assume that they own rights simply because "he paid for the service," this is where it helps to have a contract in place: to articulate exactly what he is going to get.

The Contract-Writing Process

Which brings us to the contract-writing process: since it's rare that sophisticated clients will be willing to risk using your images without a contract, one will eventually have to be written. And that's exactly where contract negotiation begins. As illustrated here, good contracts are simply statements of each others' intentions and obligations. The client wants to obligate you to perform the service and deliver them photos and grant them rights to use those photos in some pre-defined manner.

You want them to pay you.

Contract-writing starts here.

As negotiations go on for what your client wants, his list of "demands" gets longer. Here, you goal is to balance those demands with money. The more he wants, the more you ask for. Adding "stuff" into the contract interferes with your primary goal of getting paid more, especially if it's not stuff that needs to be added (such as your retaining rights that you already own).

Note that you don't always have to ask for money as part of your negotiation. For example, some photographers want to assure that the client lists the photographer's website as a photo credit where the photo is used. That has value that might be used as a bartering token in exchange for one of the things the client wants. Or, that the client will pay for airfare upgrades, or to give you special access to a place or celebrity that you want. It doesn't matter—just be sure you balance genuine needs in negotiations.

The mistake you don't want to make is the kind that your own clients are often guilty of: thinking they want certain things that they don't. In the case of stupid clients, the most common example is the client that asks for "copyright ownership" without really understanding what that means. In reality, most such clients just want to use the pictures in perpetuity without restriction, and they think that they need to own the copyrights in order for that to happen. Rather than try to educate someone on copyright, reel him in and get to the basics: "What are your real, tangible business needs with these photos? What are you going to do with them?" As he describes them, you can always say, "I can grant you those terms if you want them. And I can do it without my giving up copyrights. It'll cost a lot, but not nearly as much as it'll cost you if you want me to transfer the copyrights to you."

If they remain insistent on this point, it would be a good time to present the idea of a work-for-hire agreement. As mentioned earlier, this is one that, by law, grants to the client full ownership, rights and copyrights of all the photos the photographer shoots while under the terms of the contract. You are nothing more than a robot hired to press a button. Since this is essentially what they want, then the work-for-hire agreement is the cleanest way to do it. Your only objective now is to maximize your financial return. Insofar as "rights" go, this case is entirely opposite: you are starting with nothing. And that's a very good way to leverage the position that they pay you a gazillion dollars.

Note that some photographers regard work-for-hire contracts as inherently "bad" both for photographers, but for the industry as well. Their contention is that, because the photographer gives up everything, it sets a bad precedent for others. But this is rather simplistic and one-sided view. Most advertising photographers who shoot for catalogs love work-for-hire contracts for two basic reasons: they pay really, really well; and there isn't a whole lot of after-market use for the photos anyway. Why hold onto the "rights" to images that you have no use for after this client goes away?

Summary

You'll noticed I didn't talk about contracts very much. If you were expecting me to, you might want to buy my book Photographers Guide to Model Releases. It's got a whole chapter on this subject, and covers it in much more depth. But don't expect me to examine actual boilerplate agreements either. Spoon-feeding you contract-writing will never teach you anything. Instead, I dive deeper into the more technical language that's often used in contracts to help you learn what to do—and what to avoid.

All this discussion should cause you to think deeply about the things that are important to you and your career objectives. When you shoot photos, what use do they have to you after the gig is done? If very little, then ask for more money in return for granting rights (that you own by default) to the client. This is the kind of negotiation strategy that will help you succeed. More ideas are covered in the article, Photography and Business Sense.

Lastly, don't expect to be perfect every time. Don't feel badly if you think you're leaving money on the table—everyone does it in the beginning, and even the pros never get it right every time. It is not easy to negotiate with seasoned professionals, be they lawyers, art directors, or just big companies. Many have their forms and processes, and may not give you any real effective negotiation wiggle room: either sign the contract, or you don't get the gig. In such a case, it's just about money. If you want the money, take it. At the same time, don't dismiss the huge intangible value of just getting a big gig in the first place.

Learning how to negotiate is a valuable experience that some people pay to get. If you can get this experience through a real-world photo assignment, all the better. It will be through this and similar experiences that will give you the skills that will ultimately translate into an emerging career in photography.

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