LEGAL CONSIDERATIONS FOR INFLUENCER CONTRACTS
By Julian Dobre
LEGAL CONSIDERATIONS FOR INFLUENCER CONTRACTS
By Julian Dobre
Introduction
As influencers or content creators build their following, they start to attract brand deals, which become an important source of revenue. But depending on the size of the influencer, the brand deals can be onerous and impose strict obligations on the influencer. The smaller the audience, the less negotiating power the influencer has. As the influencer gains a substantial following, they gain negotiating power, and can demand better terms.
It’s important to work with a lawyer who understands the social media legal landscape. They may call themselves an entertainment lawyer, an intellectual property lawyer, or, specifically, a social media lawyer. Working with the right lawyer can help the influencer get better terms such as a higher fee, intellectual property ownership, a shorter exclusivity period, and a less intrusive license.
What are some confusing legal terms in influencer contracts?
The intellectual property and license clauses are something that most people, other than IP lawyers, find very confusing. There are dozens of different toggles to these clauses that could either make them say what you want or say what you definitely don’t want.
For example, you’ll see language like: “Creator gives Brand an exclusive, fully-paid up, world-wide, transferrable, royalty-free, commercial license for paid and commercial use, reproduction, distribution, transmission….” What do all those words mean? They’re all different toggles to a license that should be negotiated between the parties. They all have legal consequences and shouldn’t be accepted unless you know what they mean. Most of the toggles should have a price tag attached and the brand should be paying for them. For example, an exclusive license should be more valuable than a non-exclusive license; and a commercial license should be more valuable than an organic usage license.
What are the most common issues encountered in influencer contracts?
The most common issue I see is that the contracts are stacked heavily in favour of the brand. Oftentimes the contract is there to protect the brand and give the brand advantages while only imposing obligations and penalties on the influencer. This is more often the case when the influencer has a smaller audience, and as such, less negotiating power. As the influencer gets a larger audience, and more negotiating power, the deals get better.
But regardless of the size of the influencer, the first contract the brand sends is rarely one I recommend signing. It’s possible to receive a balanced deal the first time, but unlikely in my experience. It takes redlining and negotiations to bring the contract to one that I would recommend signing. It’s very important to work with an experienced lawyer who understands the social media sector to get a good deal otherwise you could lose control of the situation.
What are common redlines that are requested?
Typically, the brand is the one sending the contract so it’s already in a form that they want. When I redline it’s usually for the influencer. You can think of the brand’s desired redlines as the mirror of everything I list below. Every influencer contract is different and unexpected things pop up all the time, but I’m typically reviewing the contracts with the following lenses, including:
- the creator owns the IP in the content,
- there’s a limited exclusivity period,
- there’s limited termination capabilities for the brand,
- the license granted to the brand is limited in scope,
- there’s no undue penalties on the creator, and
- the creator retains their rights, including moral rights.
What are the implications of exclusivity for the influencer and the brand?
For the influencer, it’s a list of competitors of the brand that the influencer is not allowed to work with. If the main portion of your revenue is in brand deals, you should see exclusivity as blocking off potential revenue streams; opportunities you lose by working with a specific brand. If you give exclusivity to Coca Cola, for example, you cannot work with Pepsi. This is something that Coke should be paying for. It’s typically not to be given up by the influencer without negotiating a high fee.
For the brand, they typically want a very broad exclusivity as against every competitor in their category and similar categories. They may also want no brands featured in the influencer’s content for a period of time, regardless of if they’re competitors. They do this because they want to be the only product in the audience’s mind. If the audience sees too many trademarks then the brand’s trademark could get lost in the mix. The brand is also very worried about PR. They don’t want to be associated with other brands, topics, or people that could reflect poorly on themselves via association. The more the influencer can showcase other brands, the more likely a negative association could happen.
This blog is for general information and entertainment purposes. It is not intended to be legal, business, or other professional advice to be relied on. Do not make or refrain from any decisions on the basis of this blog. Please contact DOBRMAN Law to receive advice from a social media lawyer.
