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Brands and artists: the delicate balancing act between rights and obligations Artist endorsements of products and services, as well as company sponsorships of tours and festivals, have been a part of the music industry for many years, and examples of successful alliances between brands and artists are numerous. Although ensuring that all interests are served without limiting artists’ creativity can be a complex process, achieving the right balance between rights and obligations can be beneficial for all concerned.
Using a high-profile artist or band to sell a product or service not associated with their music is a practice that has been going on for many years. Artists have been licensing their names or likeness since the early days of Elvis Presley, and the practice has grown and evolved so much that income from brand association and product endorsements can often rival actual recorded-music sales. In October 2010, Forbes published its 10th annual listing of the highest-earning dead celebrities. For the 12 months to end-September 2010, Michael Jackson topped the list with gross earnings of US$275 million, much of which came from sales of his music, the movie This Is It and earnings from his share in Sony/ATV. But second on the list was Elvis Presley, and his estate is reported to have earned about US$60 million. In addition to income from music sales and admissions to Graceland, the estate has in place more than 200 licensing and merchandise deals. The estate of Elvis Presley has been successful in earning revenues from numerous intellectualproperty-rights deals. However, although there are many examples of services using the singer’s image or music to sell products, negotiations and agreements with the estate will, for obvious reasons, not need to include any restrictions or clauses on the singer’s everyday actions. In contrast, companies looking to complete brand agreements with current artists have far more considerations to take on board.
Can brands impose restrictions on artists? When a brand and artist enter into a media partnership, they both have their own interests to serve. The hope and the intention is of course that a mutually beneficial and fruitful alliance will unfold. To achieve that result, there needs to be a careful balance of rights and obligations in the media-partnership agreement. Usually, the first stage of any such collaboration will include the negotiation of the terms that govern the relationship and the putting in place of a contract that incorporates those terms. A well-thought-out contract that captures the needs of the brand, without overreaching, simplifies the contractual process and helps the brand to achieve its objectives. If the terms are too onerous, an artist can be left feeling hard done by before the partnership has begun. An artist can even be scared off if the brand is seen to be demanding too much. The length and breadth of a brand and artist arrangement are key to any endorsement deal. To begin with, the “rights package” required by the brand is identified and shared with the artist. The rights package comprises the services the artist is required to undertake, the usage and exploitation rights the brand requires, and where and how those rights can be exercised and for how long. Along with financials, the rights package is the most fundamental aspect of the contract. In a commercial arrangement, it is of course reasonable for a brand to seek to impose restrictions such as exclusivity provisions on the artist. However, unless these provisions are reasonable in terms of sector, duration and area, they will not be welcomed and can be problematic – sometimes even unenforceable. For the artist, consideration will be given to whether the brand is paying enough to take the artist out of the relevant market altogether for the life of the campaign.
Brand disassociation “Good behavior” clauses are often controversial. Every brand needs to protect the reputation of its goods or services, which will have taken considerable time and resources to build. As a chosen ambassador for the brand, understandably there is an expectation that the artist will uphold, and not tarnish, the reputation of the relevant goods or services. “Good behavior” restrictions can therefore be expected, but within reason. Balanced against the brand’s need for protection is the reality of the world in which today’s celebrities live. The artist is bound to have an immense public profile, which involves a huge amount of day-to-day publicity and scrutiny of the artist’s every act. It is reasonable to impose penalties for a situation in which an artist intentionally does something in public during the life of the campaign that has a direct and serious negative impact on the brand. The criteria for deciding whether an artist has behaved “inappropriately” are then not wholly subjective. However, if the legal framework exposes the artist to being sued over behavior that not everybody would consider damaging, the artist might find himself questioning whether the partnership is in fact “worth it.” There is therefore a careful balancing act to be undertaken when drafting “good behavior” clauses. A brand also needs to consider whether the act of suing an artist would create even more publicity and draw attention to the very issue that the brand would prefer to be buried. So an appropriate remedy for intentional wrongdoing by the artist would be termination of the agreement and, possibly, reimbursement of part of the fees depending on what value the brand has received before the termination. Madonna famously upset Pepsi more than 20 years ago when the singer released a controversial video for the track Like a Prayer, resulting in Pepsi’s cancellation of a US$5 million endorsement deal. Since then, there have been numerous instances of artists upsetting their brand and sponsorship partners. Yet, the number of brand partnerships with top-selling artists continues to grow. Among many other high-profile artist endorsements, Justin Bieber is a spokesman for Proactiv skin care products and Beyonce has endorsements with numerous cosmetics brands, including L’Oreal, Tommy Hilfiger and Giorgio Armani.
Mutually beneficial To some extent, brand/artist partnerships will always be a leap of faith. However, there are practical considerations that can offer brands some comfort outside the legal framework. Brands will select artists who want to work with them and contribute positively to their promotion. As well as the brand’s reputation, the artist will also be eager to protect his career and his own reputation, both within the industry and publicly. It is not in the artist’s interest to jeopardize the reputation of his chosen media partner. An artist will be accustomed to being at the forefront of the creative process in all aspects of his career, and so when it comes to endorsement partnerships, the likelihood is that he will expect to be treated in the same way. Although materials that go into the public domain are of course promoting and endorsing the brand, they are still using the artist’s image and public profile. Usually, the artist will want to contribute to the process by way of approval over materials using the artist’s name, image or performance. Although the artist does deserve some input, it would not be fair for the brand to be put in a position in which it is left high and dry with no campaign materials because of a stalemate over approval. To avoid any standoff, a fair balance is usually struck when drafting and agreeing on the approval process. Most brands will conduct sufficient due diligence when putting together the rights package for an endorsement deal. The artist will usually have other contractual commitments, restrictions and obligations already in place that will need to be taken account of. Often, a third-party partner, such as the artist’s record company or music publisher, will be involved in negotiations alongside the artist, depending on the nature of the rights being granted to the brand. Such complexities can lead to lengthy contract negotiations. But those involved in contact negotiations suggest that the process can be expedited and simplified if a pragmatic approach is taken from the beginning. An onerous legal contract might offer a high level of protection for the brand in one sense, but a more balanced approach can shorten the negotiations and help tonurture a long-lasting and healthy partnership. This article was provided by Ailish McKenna, a solicitor with Bray & Krais Solicitors.
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