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Tuesday, March 27, 2007

Negotiation 101: start with "who owns what"

I've posted a lot of articles lately about big-picture photo industry trends and such, but I still get the constant stream of the good ol' down and dirty stuff everyday photographers face. So, I thought I'd address something that needs to be touched upon now and then: the art of negotiation.

This is one of the top-10 most discussed topics in photo discussion groups online, yet is always the one where the discussions are fraught with over-simplifications and misunderstandings. One pivotal reason for this is because licenses, contracts or photo assignments are bid based on the terms of an agreement. If the terms are not spelled out correctly--or more importantly, lean too far in one direction or another--then the side with the steepest uphill battle is the one that is less likely to get the financial terms he desires. Negotiation is hardest when most of your work is spent trying to get back to the 50-yard line, rather than toward the other goal.

Ironically, the best place to start this discussion is with a blatantly simple and obvious question:

Who owns the photos that a photographer takes?

This may seem obvious, but the basic law is this:
  1. Photographers own all rights, ownership and copyright to the photos they shoot, unless and until they sign those rights away.

If it's so obvious, why am I discussing it? Because the sample photo contracts I've seen pass through my email box (many having come from well-selling photo business books), contain more language about what the photographer's rights are to his images than what the client's rights are. That is, it's almost as though photographers assume the client already owns everything, and the photographer is just trying to get some rights to the images back from them. (For those thinking ahead, we're not yet talking about work-for-hire contracts. We're talking about simple shooting assignments and stock license agreements. I'll get to work-for-hire issues soon.)

In one particular contract that someone sent me, 9 of the 11 sections stated what the photographer's rights to the images were, and only two sections indicated what the client's rights were. The 9 paragraphs went into detail about how the photographer is going to great lengths to get the images, and how the value of the images is so integral to the viability of the business, that loss of the images would constitute irreparable harm, and so on. The two paragraphs that discussed the client's right to the images merely stated that the client has the right to use the images for a catalog, and that the payment for the use of the images would be due 30 days after the invoice.

(On an unrelated note, I never do an assignment without 50% payment before the shoot begins, and the other 50% due before the final photos are delivered. I never want to chase the money that's owed me, and the way to do that is never deliver images before payment.)

Why is all this so important? For two reasons. First, you can compromise a legal position you already have by presenting it as a point to be negotiated. And second, the end objective is to negotiate for money. And that process involves exchanging tokens: "I'll give you this if you give me that." Let's address each of these points individually.

On the point of legal protections in the contract, many photographers get into a mode of thinking, "we have to protect ourselves." This reminds me of Shakespeare's famous line from Hamlet, "The lady doth protest too much, methinks." In other words, you can get yourself into more trouble than had you let well enough alone.

By stipulating exactly what your rights are to your own images, you can't possibly cover every single right. And since you already have those rights by default, you inadvertently introduce a degree of ambiguity about those rights you didn't mention. This lack of clarity to an objective observer unfamiliar with the history of the relationship may cause him to wonder what the real intention was between the parties. With all the talk about what the photographer's rights to his own images might be, a judge might assume that the business terms were more of a work-for-hire agreement as a baseline, where the photographer negotiated an addendum to retain rights that he would otherwise have given up. For example, if the contract says that the "photographer retains the right to use the photos on his website," he may actually find himself in a defensive position trying to submit those images to a stock agency, simply because that wasn't one of the listed uses in the contract. (Why would a photographer need to "retain rights" unless the intent of the contract was to have given them up?)

It's because photographers don't leave well enough alone that contracts are far more involved and detailed than they need to be. And which often leads to legal and financial upheaval than necessary.

The lesson of all of this is: don't use language in a contract that isn't needed, or it may compromise (or aggravate) aspects of your rights that would never have been called into question.

An example of where this came up recently, someone was going to go along with a film crew who was shooting a documentary in Mali, West Africa. The photographer was concerned about retaining some rights to the images she shot, so she wanted to give the client an agreement that secured those rights. "Before we talk about what rights you want to retain," I said, "tell me what rights is the movie studio asking for?" The surprising answer was, "we hadn't gotten to that yet." And this was the first mistake this photographer made: she started from a defensive position. Imagine how hard it is to negotiate if most of the talks are about defining the terms for her own use of the images that she already has, rather than where they should start: what rights does the client want? when the discussion revolves around that issue, the psychology of the negotiation is that the client has to start giving up tokens in order to get the tokens he wants.

Of course, we can skip ahead and assume that the studio is going to want all rights to the images. Which is perfectly fine--that's exactly where we want them. Being the first to present a contract is always more advantageous because you set the discussion points going forward, and the financial terms (and justifications for them). My advice was not to present them with a contract that said anything about her rights, but only what the studio's rights would be. If the studio were to present the contract to her first, you can be sure they would request all rights to the images, putting her in the defensive.

And this brings us to the discussion of a work-for-hire contract. This is one that, by law, grants to the client full ownership, rights and copyrights of all the photos the photographer shoots while under the terms of the contract. Many people regard the work-for-hire contract as bad, but this is an oversimplification. Most advertising photographers who shoot shoe catalogs, or fashion photographers who shoot for major cosmetic companies, love work-for-hire contracts for two basic reasons: they pay really, really well; and the photographer typically has no other use for the images other than the one client anyway. For such photographers, signing away all rights to the images is par for the course. (Now, these photographers may want to have a clause that says they can use images for their portfolio, and this is precisely the right way to stipulate one's rights into an agreement--to get back a right that was otherwise signed away.)

So, where does that leave our photographer who is currently working without a contract for the movie studio? First, until a contract is in place, the studio has no rights to the images. But, before negotiations begin, the photographer has to ask the most basic of questions for herself concerning her own business objectives: what use does she have with these images except for the documentary film? Is there a substantial after-market for photos of Mali? Well, obviously, if the film does really well, she would have a lot of opportunity with the photos. So, retaining some rights to them could have a nice pay-off later. But, that's a big gamble--if the film doesn't do well, then having those rights may not amount to much. (It's a documentary, after all, not the next Hollywood blockbuster hit.)

If you're thinking, "so what! Take all the rights you can." Well, business negotiations aren't that simple: again, it's all about trading tokens. Business is done when both parties feel they are getting what they want in exchange for something they are willing to give up.

In this case, asking for the rights to images is a lot for a movie studio to give up, and so they're going to ask for a lot in return... like not being paid, for example. Or worse, making you pay your own way on the 6-9 month shooting schedule in the mosquito-infested region of Timbuktu during malaria season. Do you really want to keep your rights to images shot in that location, just so you have bragging rights on the ownership of those images?

Negotiation is not about honor, respect, or fairness. It's about whether the terms of the business deal are satisfactory to both sides. If they are, business is done. And to get there, the art of negotiation comes into play. For the photographer, the best way to negotiate this, or any other deal, is to have a pretty good idea on where you think the client really wants to end up, and allow him to get there by paying a toll for each bridge he crosses to get there. The wrong way to go is getting bogged down in negotiations on points that don't require them to give up anything to achieve them. If you're engaged in negotiations and find yourself struggling to keep above water, find a way to turn the discussion topics elsewhere.

Granted, most stock photographers don't like work-for-hire jobs because the nature of their business is to acquire images that can be sold in the after-market. That's not to say that such offers wouldn't be turned down if they were financially worthwhile, but a business is best run when you stay focused on your business goals. If you're into stock, then it just may not make sense to even consider a bid that involved a work-for-hire relationship.

For others, it may make sense to work with a movie studio, or even with other large companies with singular and proprietary product lines, where the after-market opportunities with the photos would be limited. Here, work-for-hire contracts are fine. But beyond those rarer types of clients, most assignments usually don't require such limitations that work-for-hire entails. As such, if it even comes up in the first place, it's usually because the client is unfamiliar with how the photo business works. That is, a lay person thinks, "I'll hire a photographer to shoot this thing I need, and he'll give me the pictures." That's the non-photographer mindset. So, don't just assume someone's trying to pull a "rights-grab" on you. Indeed, you can turn this fact into a negotiating advantage.

The best thing to do is determine what a client's real needs are with photos. Usually, clients don't need to own the actual copyrights; they just want to use the pictures you take, perhaps even unrestricted use. There's no point in discussing money until you get a fundamental understanding of what kind of terms they really need. As you go through these discussions, you can educate them on terminology used in the business, and so on.

Once they understand the terminology and the ramifications of having certain rights, then you can discuss the financial implications associated with each choice. It's in their best interests to determine precisely what they want because that will keep expenses low. You're more than happy to make it either a work-for-hire or a perpetual license, or whatever it is that they want, because that simply translates to money of various amounts.

This leads to the next tactic of negotiation: explaining the reasons why prices fluctuate. "A photographer's income is based on his ability to use and re-use images in the after-market," is usually a good discussion-opener. "If you own the copyrights, then there's no opportunity to realize additional income from the photos in the after-market, so I'll need to charge more to do the shoot to make it worthwhile. You can keep your costs lower if you don't ask for such sweeping terms, so I can sell into the after-market."

But be careful here, you need to do this analysis yourself before you have them do it, because you need to know where you want to lead them: are these images actually useful in the after-market? Can you really make any additional money selling stock or prints of these images? If not, you may wish to lead them toward a work-for-hire contract, or to pay a higher rate for what they perceive to be higher value. I'd much rather shoot an assignment for $5,000 and sign away all rights, than accept only $200 to keep images that will likely never sell.

There are no pricing guides you can look up in charts or in software designed to coach you in pricing negotiations. In fact, trying to read about it can take your eye off the ball, and make you less effective. Negotiation is all about human communication skills, being able to read another person, and articulating your position in a way that gets you closer to want you want.

The easy part is starting the discussions at the right point: in your favor, with their objective being to try to get rights from you. The hard part is thinking on your feet without the benefit of having done this a million times before. To that, understand that this is a learning process. Don't feel badly if you think you're leaving money on the table--everyone does it in the beginning, and even the pros never get it right ever time. Indeed, don't dismiss the huge intangible value of just getting a paying gig in the first place. Learning how to negotiate is a valuable experience that some people pay to get. It will be through this and similar experiences that will give you the skills that will ultimately translate into an emerging career.