The Artist – Agent Relationship
Joshua J. Kaufman © 20003
The artist agent relationship is one that is often compared to a marriage. I think the analogy is wrong. While the artist agent relationship must be based on trust. Artist don’t have to love their agents and agents don’t have to love their artists. It certainly helps if in the relationship between the artist and the agent there is affection however, it is a business relationship and as long as the parties trust each other and have a similar view of the development of an artist’s career and how to market the artist’s work, there is a basis for a relationship. The more the agent believes in the artist work, the better it will work. However, an agent need not and in fact probably should not be as emotionally invested in the art as the artist. The artist should be completely passionate about their work. The agent needs to appreciate the work, understand its beauty, but more importantly, needs to be able to analyze its place in the market place, be able to look at it, and without considering if it is beautiful or not, identify with whom it can be placed and for what products it will be suitable.
The agent often plays the role of the business person so that the artist need not, at least on the surface. Any artist who does not look after their careers in a business like manner, will eventually run into a great deal of difficulty and more often than not, fail as a professional artist. A truly successful artist creates marketable art, meets deadlines and establishes a strong team comprised of a knowledgeable attorney, accountant, perhaps a consultant and often an agent.
An agent is critical for an artist starting out in the licensing arena. No matter how good and/or commercial an artist’s work is, if it does not reach the right people with the appropriate product lines, it will simply wither unnoticed in the artist’s studio. The most important thing an agent can do for an artist, at the outset of the relationship, is to help the artist develop their art in a manner which makes it attractive to manufacturers and then once the line is ready to show, to exhibit it at the various trade shows and equally if not more importantly, make private presentation and pitches to the right manufacturers. The good agent will be able to use their contacts to bring their artists to the notice of the buyers, get them to the forefront to make them the wheat as separated from the chaf. There are tens of thousands of wonderful images that are being marketed every year for potential license the successful agent is the one who has the ability and instincts to know which works to bring to which licensees. An agent who simply pitches image after image in an indiscriminate way at potential licensees does no one any good.
Once the agent and the artist have identified each other as compatible partners in the licensing arena, where a proper business rapport is establish, when there is a meeting of the minds as to the art, where the nature of the development of the art is agreed to, when the long term goals of the artist are understood, after the agent and the artist have come together and understand where and how to take the artist’s career, are in synch or how to brand the artist name and work so that it stands out from crowd, then once this common bond is forged, it is time for the parties to enter into a binding and enforceable agreement. An agreement that has teeth in it that makes sense and is fair to both sides. The problem of course is there is an inherit difference between the parties as to what they will consider fair and this is only natural. Both parties need to understand that while there is great deal of overlapping territory, there are simply certain areas on which they will fundamentally differ. It is a matter of pure negotiations as to who will prevail in areas of inherit differences.
In a review of the "standard artist-agent agreement" there are a number of important points and a great deal of boiler plate (which people overlook but is important). What most people of course are interested in first and foremost, (although in the long run, it isn’t necessary the most important factor) is the money. By far and away, the vast majority of artist agent arrangements contain 50/50 splits between the parties. This is for starting out artists as well as established artists. The more successful artist after time might find that they may be in a position to negotiate a 60/40 split in their favor. The 50/50 and 60/40 splits encompass probably 90 percent of the transactions in the marketplace. There are of course exceptions on both sides. The extremely successful artists might negotiate a deal better than the 60/40, however, what often happens, when an artist is that successful when their contacts with their agent expires, they take their business in-house. The artist hires a number of people to help run their operation. It is a lot of work and aggravation but the financial up side can be great. On the other extreme, there is one art licensing agent that I am aware of that takes a 75 percent commission for themselves giving the artist a mere 25 percent. However, numbers like that are generally an aberration.
The average term of a licensing agent contract is three years. However, for an artist with clout it is not uncommon for certain thresholds which need to be met in the initial year of a contract or it is terminable by the artist. For example, a designated number of contracts need to be signed in the initial year. Due to the nature of licensing agreements, money does not usually flow until the second or third year of a contract as such pegging any performance criteria early on to monetary receipts does not work. For a five year contract, certainly financial performance criteria can be built into it based on revenues after two or three years. If they are then not met, such an agreement would provide the artist with the option to terminate.
Artists who have been licensing on their own and have a certain track record in revenues who are then solicited by agents, might be able to obtain guarantees from their agents. If the pitch from the agent is that the artist will earn more money by signing with them, it is not uncommon for the artist to demand a guarantee comparable to the money which they have earned in the past. Of course accommodations and/or carve outs have to be made for the lag time found ramping up, securing licenses and the beginning of the revenue stream.
All artist agent agreements tend to be exclusive in nature. For pre-existing contracts there might be a carve out. However, if the agent starts to manage and handled those licenses, they are eventually rolled into the agreement.
In whose names are license agreement entered into is often bone of contention. A good number of licensing agents want all contracts in their name as they believe that they obtain more control that way. Licensing agents who put contracts in their own names, should be aware that while they may obtain more control over the process (especially in post-termination matters) they assume a great deal more exposure. If the contract is entered into between the agent and the licensee and if the artist defaults, (for example, does not provide the art work), the licensee has a claim against the agent, not against the artist. On the other hand, if the licensee does not pay the agent the monies, or it breaches the agreement, the agent may find themselves still liable to the artist. Therefore, an agent should think long and hard about whether or not the additional control which they may exercise is worth the exposure that it brings.
The greatest issue of tension and dispute between artists and their agents surround post-termination issues. For whatever reason, artist-agent relationships do not tend to be life long affairs. After a term or two, most of them seem to end. The reasons, for the purposes of this article, aren’t really relevant, however, what occurs after the termination or expiration of the contract often resemble battle fields covered with bodies. The issue of how long an agent is entitled to keep receiving its commission after the contracts terminates, is one that is strongly negotiated. Agents of course, wish to be compensated for not only the full term of their contract but for the term of the licensing agreement and of all extensions and renewals. The artist wants to limit the payment to the agent after their contract expires. Agents believe that they secured the contract, they work long and hard, had to wait for their money and should be entitled to their receipts throughout the term of the contract. Artists on the other hand might feel that when their contract is over so is the agents right to receive funds in part because what the agent is doing for their fee is managing the agreement, and after the relationship terminates, either the agent will not be in the position to manage the licensee agreement or the artist doesn’t want them to because their relationship has soured. As such the artist don’t believe that the agent is entitled to as much of the revenues. Also, when contracts get renewed and incorporate other products or other art works the question is, does the agent receive a commission on the additions. If the artist has a new agent who has negotiated the extension into other product lines or renewals under more favorable terms—how is the new agent compensated if the first agent is still receiving their commission—a very difficult and tricky problem that needs much work.
One finds in many agreements prohibitions against dealings by an artist, post termination, with the agent’s clients. First of all there is a question (which depends on which state law applies) whether those clauses are enforceable and to what extent. The more successful the agent and the larger their client base, the greater the likelihood that such a clause will not being enforceable. If the agent’s client list is very large, and there is a blanket restriction against dealing with the agent’s clients, and this precluded the artist from doing business or greatly hampered their ability, many states will disallow the restriction. Moderation is the key in an enforceable non-compete clause.
The core obligations of the parties should also be addressed. Amazingly, this is an area which is almost always overlooked. There is usually simple language to the effect that the agent will attempt to or perhaps exercise best efforts to try to find contracts and the artist will cooperate. What if the agent for whatever reasons chooses not to market the artist’s work and the parties are locked into a three year exclusive contract? If licensing is an important part of the artist livelihood, the artist can be without any licensing revenue and have very little recourse. On the hand, if the artist refuses to provide the art work to the licensing agent or refuses to signoff on the licensee contracts then the agent can be out spending a great deal of time, money and energy for nothing. Obligations clauses should be discussed in much greater detail then they generally are in the industry.
Artist-agent relationships a can be very tricky and their agreements, should be drafted with great care, discussion and thought.
Joshua Kaufman, Esq. is a partner in the law firm of Venable, LLP. While he is based in Washington, DC, his practice is national in scope. He is one of the country’s foremost attorneys in the field of art and licensing law. He has published over 200 articles on various topics in the field. He is also an adjunct professor of law at American University Law School. A large number of his articles can be read and downloaded from, www.jjkaufman.com.