Artist Merchandise Contract
Optional rights. The following rights can be included in a merchandise contract: Touring merchandise (such as concert t-shirts and stickers) or “merch” is an important source of income for many musicians. Offers of tourist goods can become quite complex; This is not a friend selling T-shirts from a table in the back of a club. Payments. Under your license agreement, you will receive an ongoing payment (“License Fee”) based on a percentage of the revenue from the Licensed Product. In other words, if the goods sell well, you will get more money. In some cases, a licensee must make advance payments of royalties (referred to as “advances”) or pay fixed or “guaranteed minimum annual royalties” (see below), regardless of sales. In other words, money and time can be spent even if the licensed product is not successful. Below are definitions of some of the terms in the license agreement that you may need to use. Gross sales refer to the total amount charged to customers. Net sales are usually defined as the licensee`s gross income minus certain deductions. In other words, the licensee calculates the total amount charged to customers and deducts certain items before paying the license fee. It is generally acceptable to deduct from gross sales all amounts paid for taxes, credits, returns and discounts at the time of sale.
It is also customary to deduct shipping costs (the costs of delivering the products to the buyer). Another alternative is for the goods manufacturer to hire an artist, photographer or musician to create the material as an employee or as a contractor with a lease. In both cases, the end result would be that the company owns the artwork and does not have to ask the artist for permission to use it for property or other purposes. You cannot have an agreement with two circuit manufacturers at the same time. Where exclusivity becomes difficult is when you have a separate agreement for the retail sale of goods and/or your brand plans some sort of promotion of the merchandise at your salon. Reservation of rights. General contract law states that if you do not grant a particular right, you have retained that right (also known as “reserved”). While it makes no legal difference that you state this fact in your agreement, most licensors prefer to include this statement. 6) The artist understands that all profits from the sale of the artist`s property will benefit the fellow.
Confidentiality. While it may seem obvious that your discussions are confidential, you`d be surprised how easy it is for you – or the other party – to forget about this and disclose confidential information provided by one party. When you`re in the middle of a conversation with your friend, hairdresser, or mechanic, it may seem so natural to say, “This company I`m dealing with is considering expanding into the fabric industry.” They have now revealed potentially important facts about the other party`s state of affairs. Confidential information includes any information that gives an advantage to a company and is treated confidentially. The confidentiality clause below reminds each party to keep the other party`s confidential information – and allows either party to sue in the event of a breach of contract if the other slips. What happens if you don`t sell everything the travel agency produces during your tour? The merch company will try to sell it. They have the right to limit where they can sell the goods and for how much. Your contract should give you the option to buy the remaining goods at cost price plus a small markup (but make sure the contract doesn`t say you have to buy them). When most bands start, it is likely that the task of organizing the sale of merchandise at concerts falls to their manager or, in the absence of a manager, their girlfriends/friends, siblings or parents. However, once a recording deal is concluded and the band starts playing in reasonably large venues and co-coordinating tours, it is likely that one of the merchandising companies will make an approach. It`s worth remembering that merchandising can be an important source of revenue that record companies and music publishers can`t see and therefore can`t progress. (This is, of course, provided that you have not already assigned your merchandising rights to a record or production company and that they are likely to “claim” those rights unless you are fighting).
For many bands, this can mean the difference between an existing livelihood and a reasonable livelihood. This clause is important in that it allows the merchandiser to suspend royalty payments if the band substantially fails to meet its obligations or if a third party asserts a claim that, if successful, would constitute a material breach of the band. It is important to ensure that, if the transferor has to retain royalties, they are paid only in an amount proportional to what he is likely to lose and that there is a limited period within which those amounts must be released if no proceedings are initiated, for example, within six months. The licensed product. A licensed product is any product that the work contains. If the definition of the product is too narrow, the licensee may be excluded from certain markets. For example, if the licensed product is called “T-shirts”, other shirts such as tank tops cannot be sold. Similarly, the term “ceramic cups” excludes the sale of plastic cups. However, if you want to keep the assortment of potential products tight, be sure to set your licensed product very specifically.
For example, instead of “outer bodywear,” define your licensed product only as “T-shirts.” Definitions should be included in Appendix A. Most derivative advances are paid during your visit to help you cover your costs and stop paying if you do not meet the conditions set out in your contract. You get a block at the beginning and end with one or two payments in the middle. Useful for labels or production companies that wish to obtain an exclusive license for the intellectual property of artists for the production of goods. The promotions of record companies, . B such as a gift of concert shirts from the local radio station set up by the label, should also be allowed in your contract. However, the tourist goods company can and will limit the amount of goods that you or your label can donate for free before a show. If a merchandise company doesn`t want to deal with the details of an artist`s license, it has other options than licensing agreements. One is to acquire an assignment, which is essentially an agreement to acquire the copyright in the work of art, according to which he is the owner of the work and can use it as he pleases without having to ask permission (i.e. obtain a license).
Your agreement must state if, how and when you can approve the merchandise that the company/designer produces for your shows. Even emerging artists with little touring history can gain full creative control over merch offerings. Here is an overview of the key points of tourist goods offers. A percentage of net sales (the product`s license fee) is the most common form of license payment. Net royalty payments are calculated by multiplying the royalty rate by net income. For example, a royalty rate of 5% multiplied by net sales of $1,000 equals a net income fee of $50. Estimates of commodity royalties are included in section A1 above. Back to agreement Licensing fees per unit are related to the number of units sold or manufactured, not the total money earned on sales. For example, under a unit royalty, you can get $0.50 for each licensed product sold or manufactured. The licensee cannot choose by both unit and net selling fees. If the licensee intends to license your work for free distribution, e.B to issue hundreds of products as part of a promotion, check the “manufactured” box.
If the licensee offers your work for sale (not free), check the “Sold” box. .