What should creators know before signing a brand deal?
*This article first appeared on LinkedIn*
Thousands of dollars are flowing to content creators making videos about brands. It’s been called a digital gold rush, but what do creators have to lose under the agreements governing these relationships?
In Brief: (1) Content creators make thousands and sometimes millions of dollars from brand deals on social media. (2) The contracts governing brand deals have historically been brand-favorable, with creators signing onto terms that hand away their intellectual property, right to compete, and even management rights to their social media accounts. (3) Absent legal representation, creators are taken advantage of in the space. (4) With the creator economy growing at a rapid rate and no signs of slowing, creators should tread lightly when entering brand deal contracts.
Question:
What do creators have to lose under the agreements governing creator relationships? Let’s Chat.
Content creators on social media are making thousands of dollars for posts advertising with brand partners. Creators big and small sign onto brand deal contracts that govern these deals, most of the time without an attorney’s involvement. The terms in the agreements - ranging from one to as many as fifty pages each - cover items ranging from time of payment, content requirements for the creator, employment aspects of the relationship, and intellectual property rights. Creators make thousands (and some make millions) from these deals, driving many to seek out the fame to make a living. But what do creators have to lose from these deals? When the ink is dried, what is at stake? Will a creator ever regret signing onto a brand deal?
Left unchecked brand deal terms can be ruinous for a content creators’ career. Here are some terms that creators’ should pay close attention to and, ideally, have a legal team review.
Indemnification
Indemnification clauses allow brands to be compensated (indemnified) by the creator in the off chance that the brands face legal action stemming from the creator’s work. Absent a cap on indemnification, the influencer can be held responsible for the full amount of lawyers’ fees in litigation arising from their content – even if the influencer is arguably not responsible for the lawsuit.
As an example let’s say a creator undertakes a sponsored Instagram post for a skincare brand. A consumer buys the product after seeing the post and later sues the company for the clinical effects they face as a result. An indemnification agreement clause in favor of the brand would require the creator to pay for the brand’s lawyers’ fees in the litigation.
Location of Suit/Jurisdiction of Litigation
Brand deal agreements sometimes include a choice of forum clause - a clause stipulating where litigation must be held should it arise. Brands will often write these agreements to their favor choosing the jurisdiction they prefer or where their headquarters are. Should litigation arise, the creator must then travel to such location even if it’s on a different continent. Not ideal.
Licensing Rights
Licensing rights of the creator’s name, social media handle, images, likeness, and/or creative content are a key part of brand deals. Some brands set outlandish periods of time (in some cases in perpetuity) for such licenses of the creators’ content, giving them power to use it at no cost despite it being the intellectual property of the creator. These licenses are valuable and brands will often pay a premium for them if the creator asks for it. Of course, many creators do not know this and sign away their content at no additional cost.
Non-Competition clauses
“You can never work in content creation again.” That’s a term under a non-compete clause that I’ve seen proposed to a content creator whose livelihood depends on future brand deals. Brands love non-compete clauses that prevent creators from working for competitors. After all, why give a competing company a chance to use a content creator if that creator is being paid by the brand?
The problem with these clauses is, of course, that the creators receive the short end of the stick. Creators are most often independent contractors who work for brands once (and if they are lucky, more than once). Their living depends on their ability to work with brands. Non competes limit that ability. They are uncommon in brand deals but aggressive companies will slip them into contracts without creator’s realizing it.
Limitation of liability
Limitation of liability clauses are exactly what they sound like - clauses that limit the total liability of either the brand or creator under the agreement. Without limitations of liability creators’ could be sued for breach of contract for damages in the millions of dollars. Nothing is stopping the brand from coming after their home, car, and personal assets (assuming they haven’t shielded themselves with an LLC or corporation, which many do not). Limitation of liability clauses put a cap on this liability and mitigate the risk from entering into these deals.
These are only a sample of the many terms that content creators agree to on a daily basis. And even though the creator economy is underdeveloped and the wild west, the terms of these agreements are 100% binding, 100% real, and 100% legal. Creators (and many aspiring creators) look to content creation as an effective way to earn a living while doing something they love. Combine this with brands who want to reach their audience and it’s a win-win scenario. But the legal terms the creators are signing onto are far from perfect. Brands have multi-million dollar legal budgets and teams of lawyers drafting agreements that protect them in every conceivable way. Creators, on the other hand, historically haven’t used legal representation (in no small part due to inaccessibility and cost).
The outcome of the status quo is something we see time and time again. Creators getting awful deal terms that give away their intellectual property. Brands getting more than what they bargained for simply because the creator didn’t understand the contract terms. Creators being sued by brands and having no leg to stand on due to the egregious agreement they signed. And ultimately, the side with more power, influence, and money walks away unscathed.
This is why I’ve chosen to use my law degree to protect content creators’ interests everywhere. It’s no easy thing building an audience digitally and subjecting ones’ self to the ruthlessness of the internet. And while the spoils from such adventures are great, so too are the risks.
Creators should tread lightly when entering brand deals. It’s all fun and games until their life is turned upside down.
Explore more:
How brands should navigate the creator economy by Gillian Follett for Ad Age
How an empowered creator economy is challenging marketers by Jessica Deyo for Marketing Dive
Sandy Lin, a creative who gives guidance in the creator and brand space
