Inside creator-brand contracts—everything to know about negotiating legal agreements

Many creators, especially those newer to the world of brand collaborations, will rush to sign paid brand partnership contracts without thoroughly reading through the terms of the legal agreement, either out of excitement or because of the confusing legal jargon. But creators who sign a legally binding contract without fully understanding every clause—or without the guidance of a talent manager, lawyer or advisor—risk signing away their rights to their content or being grossly underpaid for their work. “[Creators] will just sign a contract because they’re excited to get the partnership, without actually reading what’s inside,” said Ali Grant, partner and chief marketing officer of influencer marketing and talent management firm The Digital Dept. “But I can count so many times where I’ve received a contract where even the deliverables are wrong in it, or even the amount they’re being paid is wrong.” Ad Age spoke with several talent managers, influencer marketing executives and creators about the most crucial elements of creator contracts; how creators can untangle the more complex areas of a contract, such as usage rights; and the strategies creators can employ in contract negotiations to ensure they’re properly compensated by the brand or agency they’re working with. NextGen Marketing Summit Join us for a crash course on Gen Z, DTC marketing and the creator economy Register today What is a creator contract? A creator contract is a legally binding agreement between a content creator and a company that has hired them to produce videos, photos or other original content for the company. That company can be a brand; an advertising or influencer marketing agency working for that brand; or a tech platform that links creators with brands, such as Grin, Aspire or Izea. Creator contracts are a vital part of brand collaborations, as they define the deliverables and deadlines involved in the partnership; how and when the creator will be compensated for their work; and who owns the content produced through the collaboration, among other key details. They also provide legal protections to both the creator and the company hiring them in the event that either party breaches the terms of the contract. “These are business deals where you’re exchanging money for rights,” said Andrew Schwalb, senior VP and global head of influencer relations & business affairs at marketing firm Edelman. “They’re pretty heavy concepts. I think creators run through them quickly because they want to get paid and they’re excited about it … but we really encourage them to read the agreement from front to back.” Also read: How brands can protect themselves in media agency contracts Also read: 4 creator economy predictions and trends to watch What should a creator contract include? The length and thoroughness of a creator contract can vary depending on the company’s scale and the regulations around marketing in their industry. Multinational conglomerates such as Procter & Gamble tend to have larger legal teams—and thus, longer and more detailed contracts—than newly launched direct-to-consumer brands, said Deneka Dosant, director of talent management at talent management agency Kensington Grey. Companies in industries with strict advertising guidelines, such as pharmaceutical companies or alcoholic beverage manufacturers, are generally also more meticulous in outlining the terms of their creator partnerships. “It’s absolutely essential [for creators] to over-communicate with [brands] in the contracting and negotiation phase,” content creator Grace Wells said in an email. “Never assume that certain terms and conditions are unspoken or common sense.” There are seven clauses that Austin Mayster, a partner and talent manager at Underscore Talent, says should be the bare minimum in all creator contracts: That being said, the talent managers, agency executives and creators who spoke with Ad Age all agreed creators should devote extra attention to two of the contract clauses listed above—usage rights and exclusivity. Read about all of the 2024 Marketers of the Year What are usage rights? Usage rights are the permissions a creator grants to a company to use their content for marketing purposes. They determine where the creator’s content can be used and the length of time during which the company is allowed to use that content in its marketing. Creator contracts should clearly outline the marketing channels through which the company can share the creator’s content, specifying whether it’s limited to the company’s social media accounts or if the content can be used in additional mediums—such as out-of-home displays, connected TV, or paid social ads (a process known as “whitelisting” or “allowlisting”). They should also clearly define the period during which the company can use the content, whether it’s one month or an entire year. Ali Grant, partner and chief marketing officer of influencer marketing and talent management firm The Digital Dept., advises creators to think of the essential elements of a usage rights agreement as “the three Ws”—“Where the content is being used, what content is being used, and when the content is being used.” @aligrnt Thanks to @Instagram Creators for having me share “3 things to look for in contracts as a content creator”— thought I’d share here. Creator contracts can be long, at a very minimum, look for these three things. #creatortipsandtricks #creatortips #influencertips #howtobeaninfluencer #instagramtips ♬ original sound - Ali Grant | Creator Tips Creators should go into contracts with the expectation that the company will be requesting six to 12 months of “organic usage” of the creator’s content—meaning the company can post the content on its social channels—and incorporate that into the rates they charge for content, said James Nord, founder and CEO of influencer marketing agency Fohr. But “if they’re putting paid behind it [on social], if they’re putting it on their website or putting it into an email—basically, if they’re using it on an explicitly sales-driven page—they should be paying for that,” he said. Sara Rezaee, Edelman’s head of influencer in North America, agrees creators should “automatically reconsider” the amount of compensation the company is offering in the contract if they’re asking for usage rights beyond purely organic social. Creators should always be paid for any additional usage of their content, as the rates they charge companies don’t account for those companies “extending their name and likeness to a much broader audience,” she said. “It’s very important that a creator spends most of their time understanding usage, specifically, because that's their biggest bargaining chip,” Edelman’s Schwalb said. How should creators negotiate usage rights? There isn’t an industry-standard formula for creators to calculate the additional fees they request in exchange for extended usage rights, but talent managers and influencer execs said creators should tack on a minimum of 20% of their standard rate to any piece of content the company is seeking usage rights for. Mayster said he typically charges about 20% of a creator’s fee for every 30 days of usage by the company. For example, if a creator’s rate for an Instagram Reel is $10,000, he would charge the company $2,000 for every 30 days of paid media usage. Most creators charge between 30% and 50% of their content rates for usage rights, according to the 2024 Creator Pricing Benchmark Report from F*** You Pay Me (FYPM), a platform where creators can review brands based on their experience collaborating with them. The report, based on data from roughly 21,000 reviews posted on the platform, found that creators add an average of 20% of their rate for one to three months of usage rights, and just under half of their rate for usage rights extending beyond three months. View this post on Instagram A post shared by f*** you pay me (@fypm.vip) Usage is an aspect of creator contracts where “bad actors” in the influencer space most often attempt to exploit creators who aren’t familiar with contracts and how much they can charge for usage rights, Nord said. Lindsey Lee Lugrin, the founder of FYPM, said she started the platform after she won an Instagram contest in 2015 that made her the face of an international Marc Jacobs ad campaign. The brand plastered her face across billboards, magazine ads and bus wraps, yet Lugrin received just $1,000 for the entire campaign. “I had no idea what I had signed—no clue,” she said. What are perpetual usage rights? Companies will frequently include language granting them the right to use a creator’s content across the agreed-upon marketing channels “in perpetuity”—or in other words, indefinitely, and without additional compensation. Dosant and Kristen Bousquet, a creator monetization coach and founder of Your Soulcialmate, both advise creators to immediately scan a contract for any use of the words “perpetual” or “perpetuity” with the keyword search feature (CTRL + F) upon receiving it. If the contract contains any language granting the company indefinite rights to a creator’s content, the creator should aim to negotiate that out of the contract before inking the deal and instead set a specific term the company can use their content—and while compensating them for it, of course. Companies requesting perpetual usage rights will often slip the word “irrevocable” into the same sentence, Bousquet added, meaning a creator cannot withdraw their permission for the company to use their content unless the contract is terminated. “If ‘perpetual’ is in there, I would bet my life that ‘irrevocable’ is in there, too,” she said. “I would always try and remove it—you want it to be revocable, just in case for whatever reason you don't want to represent the brand anymore.” Platforms connecting creators with brands or serving as a marketplace for brand deal opportunities—such as Aspire, Cohley and #paid—also typically have perpetual usage of creators’ content “baked into their terms and conditions,” Lugrin noted. “Creators don’t even know they’re signing away all of their rights just by joining the platform,” she said. @kbousq WHY YOU SHOULD NEVER AGREE TO PERPETUAL USAGE RIGHTS ↓🫣 in many creator contracts you say see the terms “perpetual” and “irrevocable” usage rights.. the brand is requesting that you HAND OVER the rights to USE YOUR CONTENT forever without the option of revoking those rights. there are THREE reasons why you should NEVER agree to this. → 1. It's impossible to compensate for forever. 2. It eliminates the freedom of being able to work with brands of our choosing in the future. 3. It forces me to agree with the brand's every move.. forever. this is why it's so important to EDUCATE yourself on what you're ACTUALLY signing in your contracts! #creatorcontract #influencercontract #contractterms ♬ original sound - Kristen 🪩 Creator Biz Coach What is the difference between usage rights and ownership? While usage rights specify how a company can use a creator’s content in its marketing, ownership instead defines whether the creator owns the copyright to the content they produce for the company through the contract. Determining which party owns the content (either the creator or the company) after it’s completed “is the first question creators should be asking as they review the deal,” Schwalb said. Generally, creators should aim to retain ownership of the content and then negotiate usage rights with the company for how, when and where the company can use that content, rather than giving the company ownership of the content, Grant said. Otherwise, “if you’re just handing [content] over to them for full ownership, without any stipulations on usage, then they could put it up on a billboard in 15 years, and you're not compensated for that,” she said. What is exclusivity? An exclusivity clause prevents a creator from working with other companies—typically, companies in the same category as the one hiring the creator—for a specified period of time. Companies requesting exclusivity from creators is extremely common, Edelman’s Schwalb said, and creators should look for three key components in the exclusivity clause before agreeing to it: Unlike perpetual usage, most talent managers and influencer executives say that creators can agree to exclusivity clauses as long as they’re compensated accordingly for any potential brand deals they could be missing out on while locked into an exclusive agreement with the company. “Exclusivity should equal more pay,” Grant said. “It takes you out of a certain industry for a certain amount of time, so you want to be compensated for that.” Additionally, granting a company the right to use a creator’s content in paid media comes with “a level of implied exclusivity” that creators should consider when negotiating the total amount they charge the company, said Victoria Bachan, president of talent management company Sixteenth, formerly Whalar Talent. If the company is running the creator’s content as a social media ad, for instance, a rival company could see that ad and choose not to work with the creator in the future because of their association with their competitor, even after the contract ends, she said. “You have to think about the full picture,” Grant said. “A brand using your likeness for 30 to 60 days, even if there’s no exclusivity, might put you out of a category and working with another brand in it. If I’m Maybelline, and you’re in all these L'Oréal ads, I probably won’t want to work with you.” Become an All Access subscriber Get access to exclusive resources including Leading National Advertisers, World’s Largest Advertisers, Agency Report, Agency Review Tracker and TV Pricing Report. Click here What are the standard payment terms in creator contracts? Creators should expect companies to compensate them anywhere from 30 to 90 days after they submit an invoice to the company for their work, generally upon completion of the agreed-upon content. The contract should define the exact payment term, be it “Net 30” (30 days after the creator submits their invoice), “Net 60” or “Net 90.” Industry experts all advise creators to attempt to negotiate payment terms down to a Net 30 timeframe if the company is proposing a term of Net 60 or longer in the contract. A company demanding a payment term that exceeds 60 days should cause the creator to “consider whether they are partnering with the right brand or company,” Rezaee said. “Ultimately, in the creator economy, this is their business—they are the CEO of their own brand,” she said. “So, they should really be making sure they're setting conditions that are going to be beneficial for them.” Beyond negotiating the payment timeline, creators can also push to receive 50% of their total pay upon submitting their invoice and the remaining 50% 30 to 60 days later, Mayster said. “It’s hard to get that,” he acknowledged, “but it’s always worth asking.” He’ll also often negotiate for the company to pay the creator in full before they’ve begun to produce content if it’s a company he’s unfamiliar with—be it an international company or a newly launched startup—“to avoid as much risk as possible.” After all, Underscore Talent receives emails “every single day” from scammers posing as companies wanting to collaborate with one of the creators on its roster, Mayster said. Dosant also encourages creators to include a provision in the contract indicating what would happen if the company is unable to meet the agreed-upon payment terms, such as if the company goes bankrupt in the middle of the contract term. @kenedielynn Reply to @creatorella_ Ner 30 payments and working with brands #contentcreationtips #workingwithbrands #net30 #microinfluencerclub #microinfluencertips #nanoinfluencer #microinfluencersunder10k #microinfleuncerjourney ♬ original sound - Kenedi ELynn How does the contract term differ from payment terms? The term of a contract refers to the duration of the legal agreement between the company and the creator. All other clauses in the contract related to a specified period of time, such as usage rights and exclusivity, “tie back to the term,” Schwalb said, meaning it’s vital for the contract term to encompass the correct dates. The contract term should “include everything from the minute you get on a briefing call [with the company] all the way through execution” of the agreed-upon content, as well as the duration of the company’s usage rights, Rezaee said. Often, if the negotiation process extends across days or weeks, the start and end dates of the contract term will need to be updated to reflect the adjusted start date of the partnership, Dosant noted. If the contract term isn’t updated before the creator signs the contract, the contract may expire prematurely—for instance, if the contract term ends before a Net 60 payment term is over, and the company fails to pay the creator for their content 60 days after they submit their invoice, the creator’s legal right to that payment will no longer be protected by the contract. “So, the last thing I always say in [negotiations] is, ‘Can we update the initial term date to reflect where it’s actually going to fall now?’” Dosant said. What is a termination clause? A termination clause outlines the conditions under which the creator or the company can end the contract. Those conditions typically include a party violating the terms of the contract or failing to hold up their end of the agreement, such as a creator not delivering their content by the deadline specified in the contract. Termination clauses can also include a provision allowing either the creator and/or the company to end the partnership “without cause,” meaning neither party breaches the contract but simply opts to exit the agreement. Creators should be wary of “without cause” provisions, as companies can sneak a termination clause into the contract that allows them to terminate the contract at any time without compensating the creator for any content they’ve already completed as part of the contract, Grant said. If the creator does agree to a “without cause” provision in the termination clause, they should ensure the clause defines the amount the company must pay them for the content they’ve delivered before terminating the partnership, she said. Fohr, the influencer marketing agency, typically assigns each piece of content outlined in the contract a certain monetary value and requires the company to pay the creator for whichever pieces they’ve delivered if they choose to terminate the contract, Nord said. For example, if the company agreed to pay the creator $12,000 for three pieces of content and the company ends the partnership after the creator provides two of those deliverables, the creator would receive $8,000 of the agreed-upon $12,000 total fee. “If [a creator] goes and creates all this content, and then the contract gets canceled, they want to make sure they're protected,” he said. “Brands change their priorities. Things shift. Products sell out or aren't selling as well as they expected, and they want to move spend. So, [creators] will definitely have a situation where they have a contract that gets canceled in the middle of it, they'll want to know how to deal with that.” Companies are also increasingly adding morality clauses into their creator contracts, which allow the company to terminate the contract if the creator “does something that doesn’t align with their values,” Nord said. Creators, too, should negotiate for a morality clause that includes a provision enabling them to end the partnership if the company “does something [the creator] no longer wants to associate with,” he said. Also read: How brands and creators are navigating partnerships What is an LLC? Why should a creator form an LLC? Forming a limited liability company, or LLC, effectively separates a creator and their personal assets (such as their home, their car or the money in their checking and savings accounts) from their business assets, Bousquet said. Put more simply, if Bousquet was sued by a company that accused her of violating a contract, “they’re not coming for my house or my personal bank account—they’re coming for things that Your Soulcialmate owns,” she said. “It just gives [creators] more protection and separates them from their business.” Dosant recommends creators form an LLC before they begin entering contracts with companies and signing those contracts with the name of their LLC rather than their own name, for the added layer of protection Bousquet describes.

Inside creator-brand contracts—everything to know about negotiating legal agreements

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