This is the final installment of a 3-part series on the importance of collaboration agreements for every writing or other creative team. In Parts 1 and 2, I analyzed some of the important provisions found in properly negotiated and drafted collaboration agreements. Here, I'll continue that discussion, and explain the advantages of using entertainment lawyer -drafted agreements.
G. Division of Royalties and other revenues/expenses
Generally, the authors of a collaborative work share in the Net Income derived from exploitation of the work. The definition of Net Income, while sometimes a hotly contested issue in negotiations with third party purchasers, shouldn’t be a major point of contention among collaborators. It’s usually a relatively simple formula… Income, less expenses and commission equals Net Income, which is then divided according to the agreed splits among the collaborators.
H. Small/Grand Rights
Since Musical Theatre projects consist of both musical and literary material, it’s important to distinguish between the sources of revenue for the musical components of the work.
Songs, for example may, in addition to being performed as part of the show, be re-recorded by other artists, played on radio, tv, over the internet, etc.
The rights in such non-dramatic performances of musical works are typically referred to as “small performing rights”, while “Grand Rights” refers to performances within the dramatic context of a staged production.
Since there are different sources of revenue, it’s important that the collaboration agreement address the manner of accounting for each. As a general rule, the small performing rights are controlled by the lyricist and composer (or their publisher). The big question, then, is whether the bookwriter/librettist should participate in such revenues, and if so, to what extent?
Other considerations might include revenues from merchandise focusing on a particular element, say a song-title on a T-shirt, or a lyric printed on a greeting card.
Similarly, what about subsidiary uses of only a single element. (i.e., the publication of the book only, or music only?)
Still further consideration should be given to the inclusion of a buy-sell provision. This would require that if a collaborator wishes to sell his/her interest in the show, the other parties might have a right of first refusal, last refusal, or even an absolute right to bar the sale to any third party. As with many provisions of the collaboration agreement, the better spelled-out the mechanisms, time frames, and procedures are, the less likely that misunderstandings will arise.
J. Resolving Disputes
Historically, parties have relied on court proceedings to resolve disputes that arise out of collaborations… but the expense of such proceedings is considerable and is often a deterrent to pursuing the issue. Many collaboration agreements now contain provisions for less formal methods of dispute resolution, such as mediation, and failing agreement following a mediation, arbitration of the dispute. Care should be taken to select mediators and arbitrators familiar with the particular industry involved, so you get an informed and meaningful result.
Special Situations with Company-Created Works
While a typical collaboration agreement can deal adequately with a 2- or 3-member team of collaborators, it is not well suited to the situation of Company Created Works.
A Company Created Work is a work that is authored by a collective, such as a theatre company, acting class or improv group. The questions (ownership, control, merger, division of revenues, etc.) that arise in such situations are similar to those of collaboration, but the way they’re handled can differ greatly. I’ll make this the subject of a future article. Stay tuned.
Why agreements should be drafted by an Entertainment Lawyer, and not simply copied from books or the internet.
While there are plenty of “form” collaboration agreements available on the internet, in books, and elsewhere, entering into a collaboration agreement should be looked at in the same way someone would view starting any other new business. The advice and counsel of a knowledgeable, experienced entertainment attorney is invaluable in protecting the interests of all concerned. The cost of preparing such an agreement is negligible compared to the losses that can be suffered if a project is abandoned, or winds up mired in litigation.