Posts Tagged Contracts

Creators’ Contracts – unfair?

“The existing contractual protection of authors, as included in copyright law and, indirectly, in general contract law, appears not to be sufficient or effective to secure a fair remuneration to authors or address some unfair contractual provisions.

Besides the causes that are generally put forward to explain this unbalance and lack of protection, new elements have emerged. Firstly, the increasingly dynamic markets for exploitation, notably digital markets, lead to the quick obsolescence of a contract agreed upon at any point in time. Secondly, due to the multiplicity of forms of exploitation and of undertakings exploiting works in the current environment, the contract between the publisher/producer and the author is only but one element in a web of contractual relationships and revenues streams. The examples given in this study of the difficulty to secure a fair remuneration in digital exploitations, of the practice of buy-out contracts, of the invocation of the presumption of transfer, of the refusal to pay CMOs remuneration for authors of audiovisual works, are illustrative of the shifting power among the stakeholders to the detriment of creators. A last factor is the cross-border dimension that increasingly characterises the exploitation and use of works, which is likely to enhance the discrepancies of the contractual protection of authors depending on the level of protection they enjoy in each of the countries involved.

The digital economy is based on creative works. A basic principle is that authors should be associated in the exploitation of their works and receive a fair remuneration each time the economic value of their work is exploited. The rules existing in some Member States to protect the creator aim, on the one hand, to define the conditions of negotiation so as to balance the bargaining power of both parties (acknowledging that such a balance is tilted against the author) and, on the other, to impose some basic obligations inherent to the bargain itself. Despite the additional recourse to the general principles of contract law, such rules do not address the following key issues:

  • the adequate remuneration of the author is not sufficiently ensured by provisions on copyright contracts;
  • the weaker position of the author in the enforcement of the protective legal provisions is largely ignored;
  • no adaptive or corrective measures allow to amend contracts governing a dynamic and evolving situation;
  • the obligation of an explicit determination of the scope of transfer of rights proves inefficient in preventing an all-encompassing, and time unlimited, assignment.”

This is the conclusion (pages 13-14) of a recently published study commissioned by the European Parliament’s committee on Legal Affairs on “Contractual arrangements applicable to creators: law and practice of selected Member States” which was conducted by KEA and CRIDS (University of Namur). Following this far-reaching conclusion, some recommendations were put forward to improve the level of fairness in copyright contracts such as imposing minimal formalities, an obligation of exploitation, obligations of transparency and reporting of financial streams and revenues related to the exploitation of works, unwaivable rights to remuneration for some kinds of digital exploitations, etc.

After several calls from European authors’ organisations (here and here) to put an end to buy-out contracts, this study provides evidence of the rights’ confiscation phenomenon that many European authors experience in their professional life. The study’s proposed remedies are particularly timely and should be taken into account by the European Commission in the current review of EU copyright rules.

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Stop Buyouts

For the first time, on a European level, the three main organisations representing screenwriters, directors and their collective management organisations came together to call for an end to buyout contracts.  This is big news.

These are becoming the norm in our industry and, with the future of distribution destined to be online, more and more authors are signing away their exclusive rights against a lump sum and denying them the opportunity to receive some of the revenues from that online exploitation for ever. For ever.

Authors’ exclusive rights are the foundation of the European vision of authors’ rights and are what enable a screenwriter or director to make a living and keep being creative.  They are exclusive but not unwaivable.  As a result of weak negotiating power in many European countries, screenwriters and directors increasingly waive these rights for a single sum of money.  Although sometimes quite a significant amount, in many cases this is the last remuneration the author will see for their work.  A producer might argue that the author is lucky to get all that money before the film is even made (remember however that production is split into two phases – pre-production and exploitation – the author has often spent years developing the work for no money) and irrespective of its success, but that misses the point.  Doesn’t the creator deserve to be linked to the success of their work? 

When you buy a DVD, shouldn’t you know that some of that money is going to the screenwriter and director, the people who had the idea and crafted the story that you want to watch?  When you download or stream a film, wouldn’t you like to be sure that part of the cost (if you downloaded or stream legally) goes to those creators?

The reality is that this is probably not the case.  As ever, the question is complex.  In the production country of the work, the author should hopefully get something.  But what about the sales outside of the production country?  How transparent is Europe’s audiovisual chain as a whole?  Can a screenwriter or director really monitor how their work is doing abroad and whether they are due any money?

There are several reasons for this. Europe’s audiovisual industry is almost entirely made up of SMEs, sometimes tiny production companies made for a single project.  Although they might not like to admit it, these companies often do not have the capacity to follow their own income, let alone what should be passed on to authors.  Herein lies the reason behind the sector’s dependency on minimum guarantees.  Take what you can up front and don’t worry about the rest.

This all said, this is not a reason to divorce authors from their works.  If you can’t manage the money then get together and set up a structure that can and ensures that the online service that makes the works available to the public pays.  The solution is not to force screenwriters and directors to sign everything away so you don’t have to worry about them.  Screenwriters and Directors don’t want to meddle in producers licensing systems but they do want to be linked to the success of their works.  Authors can understand that producers need to cover their outlay that financed the film and that they would like to make a profit which they could use to finance the next project.

They just want a fair contract that gives them income that is proportional to the exploitation of their work.


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