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3 Things Every Influencer, Brand and Agency Need to Understand Before Doing An Influencer Deal

Enrico Schaefer - February 21, 2020 - Social Media Lawyer

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Enrico Schaefer: Welcome Tech Law Radio. I am social media attorney Enrico Schaefer and today we’re going to be doing another show on influencing and influencers. In today’s show, we are going to discuss what influencers, brands and agencies need to understand about endorsements and licensing; three things that you had better understand if you’re in the influencing game.

Influencing and Social Media Endorsements Are Licensing Deals

So what are the three things that we’re going to talk about today that you absolutely need to know, and why are we having a show on this topic. The answer is simple to why we’re having the show on the topic. And that’s because you would be shocked at the number of people in the influencing space who don’t even understand the basics of the business model. They don’t understand what is happening in an endorsement deal. A person’s got money, they’re going to pay for a post on Instagram. The money changes hands, voila, right? No. Okay? This is about licensing.

The very first thing that we’re going to talk about today is that brands, agencies, influencers – you’re in the licensing business. Licensing of copyrights and publicity rights are the foundation of your business model. Do you understand licensing? Do you understand how licensing works? Do you really get the nuances of licensing? If you don’t, well then the show is here to help because it is a core part of the business that all three players in the space need to embrace and understand. If you want to leverage your business from any of the perspectives from any side of the equation, one way to do it is to get a much higher-level understanding of the licensing side of social media influencing, and celebrity endorsements.


Copyrights & Publicity Rights

Now, this first item, licensing, really breaks into two categories. Two things are being licensed: One is publicity rights. The second is copyright.

In most endorsement deals, most social media influencing deals, two things are getting licensed — publicity rights, someone’s name and likeness, and the copyright, which is either the text, the photo, the video that goes along with the endorsement. So the photo, the video, the text, those are copyright-protected items that belong to a copyright owner, oftentimes the influencer, that are being licensed to the brand.

The publicity rights are the name and likeness, which might be the handle, if it’s not the person’s literal name, the handle, which might be the brand for the influencer, and the person’s likeness, what they look like, their face, who they are, right? So when Khloe Kardashian does an endorsement, everyone can see that’s Khloe Kardashian and her face, her voice, her account. She is the one that’s saying, “I endorse this product,” right? So her publicity rights are also being licensed to the brand.

So item number one we’re going to talk about. This is the licensing business. Two things are being licensed: publicity rights and the copyright. Second thing that we’re going to talk about today, which I think would be of value because a lot of people don’t understand it, is that, look, you need to have a contract here that spells out in detail the core aspects of the license agreement and other issues that exist between the brand and the influencer, right?

Influencing Deals Requires An Customized Social Media Influencing Contract

So there are these form contracts that are revolving around out there, and you can find some online. However, those are not specific to your influencing deal, and they may or may not be protecting you, and they may not be maximizing your value. Every endorsement deal is slightly different, and many are vastly different than others. So you need the right contract in place that spells out in detail what you as the influencer must and must not do. And from the brand’s point of view, what the brand can and cannot do with the licensed material. All this should be defined as the license.

So item number two for today is understanding that licensed deals need to be spelled out in detail.

Copyright law is either your best friend or your worst nightmare.

Number three: the number three thing I want you to take away from today’s show is that copyright law is not Switzerland. It’s not neutral. And keep in mind, we already talked about this is a copyright licensing transaction. Copyright law protects that copyright. Copyright law is either your best friend or your worst nightmare. You better see it one way or the other, right? If you’re the copyright owner, chances are it can be your best friend, assuming that you licensed the copyright appropriately, that you’ve limited the rights.

If you’re the brand and you don’t handle the copyright correctly and you don’t get the rights that you think you’re getting and it’s not clear, then copyright law is your worst nightmare because you could be liable for hundreds of thousands of dollars in damages, statutory damages, plus attorneys’ fees if you violate the copyright, if you go beyond the license agreement.

If you are the influencer and you fail to specify the rights in your copyright, then again, copyright law is not Switzerland. It’s going to be your worst nightmare because you’re going to lose all of the rights that you have, the bundle of rights under copyright law and potentially because you didn’t get the right deal with the right detail in place.

We see the whole playing field.

All right, before we dive into each of these topics, I want to first provide you some context. You’re probably a brand or a lawyer, attorney or an agency or an influencer listening to the show. So the reason why I’ve picked these three things is because we represent influencers and celebrities across a wide range of issues. We represent brands doing endorsement deals. And we represent agencies and marketing companies looking to match celebrities and influencers with brands on specific marketing projects as well as platforms that broker the deals between influencers, agencies and brands. So we see the whole playing field. We see it from all sides. We don’t have a horse in the race in the sense that we’re advocating for one side or the other; we get to see it all. So we can adequately represent any of the interests because we know all the different points of view.

We realize that the brands, the influencers, the agencies don’t understand these concepts at a high enough level. So that’s why we’re doing today’s show. Some other context:

What is an influencer?

What is an influencer? Well, we know that the term gets thrown around a lot. What I would like to say is that everyone’s an influencer, right? Everyone who’s got an online social media account, anyone who’s got expertise, anyone who has a voice that other people listen to can exert influence. So obviously, celebrities just automatically have influence with at least some population, good or bad. And influencers who have become celebrities have the ability to endorse products and brands in order to drive business and good will. But there’s a whole micro-influencer market out there which are people with less celebrity, but who can still exert influence.

What is the difference between a celebrity and an influencer?

What is the difference between a celebrity and an influencer? Well, you know, celebrities perhaps are celebrities before they become influencers, celebrities who market and monetize their endorsements become influencers. And influencers can become celebrities because despite the fact that no one knows who they are, at one point, they get enough followers on social media to where they actually have their own celebrity. Influencing is here to stay. Paid endorsements are the current iteration of social media influencing. All of this is going to evolve. It’s still very early in this game, but it’s going nowhere. So everyone’s an influencer, right? Everyone needs to understand how this stuff works.

The last piece of context before we dive in is something that’s also very important. Every company is a brand, yes. So every company has got a company name, and they may have product and service names that are the same or distinct, and that’s the branding. That’s easy.

Trademark Your Name, Account Name or AKA.

What I think a lot of influencers fail to appreciate is that every person is also a brand. You as an endorser, as an influencer, as a celebrity, a lot of times your account name, which might be distinct from your actual name, is a brand. And if you’re in the influencing game, then you’re monetizing and commercializing your name, your brand, your account, I.D., and that is using Commerce under Trademark Law. So every person is a brand. You need to treat your name or account name as a trademark, as a protectable brand.

Reputation is the currency of the next decade. And your reputation as reflected by your account name, by your publicity rights and by the copyrights that you generate are going to be something that you can really monetize.

Let’s Talk About Publicity Rights

When you buy a product, you’re buying the product. You get it. You take it home. It’s yours, right? You get all of it. But publicity rights are the rights to your name and likeness, right? And you can license that your publicity, your name, your likeness, your face, to a brand as part of an endorsement. And you have the same concept with copyright.

Copyright is the ownership of original works of authorship — pictures and videos typically, but sometimes the text that goes with them. Whoever generated, whoever is the author of that copyright who took the picture and video, is the copyright owner. If someone was paid to do it, then hopefully it’s a work for hire. That’s a whole other show. But let’s just say the influencer is also the copyright owner. And again, just like publicity rights, instead of just giving the whole thing away and allowing a brand to take it, run with it and do whatever you want with it, you should be and you are licensing the copyright publicity rights.

Licensing is Flexible.

And the key here is you can slice and dice those rights in a thousand different ways, right? So you can license the copyright and also your name and likeness for the purpose of the endorsement where you’re gong to make an influencer post. You’re going to say, “I believe in this brand. I’m a champion of this brand. I want everyone to take a look at this product that I love. And I encourage you to buy it as well.” And the license may specify that’s the only use that can occur and that the brand can’t even repost that. They can’t take a screen capture and put it on their Web site. They can’t turn it into a T.V. commercial. They can’t use it with other influencers on other campaigns. They can only use it on the Web. They can only use it for a period of time. They can only use it within a territory. There are all these different ways to slice and dice a license that you can’t do with a product that you’re selling out the door. This is the key.

Influencers are licensing to brands, publicity rights and copyright protected photos and videos. You can upsell and down-sell. If they’re going to pay a little, they get fewer rights. If they’re going to pay a lot, they get more. If you’re a brand, you better make sure in that detail that you’re getting all the rights that you think you’re getting.

We’ve certainly represented our share of brands that reposted influencer post endorsements on their Web site, which was beyond the scope of the license, and then they got sued because they exceeded the license. So brands that are licensing the influencer’s name and likeness, publicity rights and copyrights from the influencers, you need to make sure that you are doing that correctly. Agencies are putting these deals together. Their interest is in getting the deal done. They are not lawyers. They may represent one side or the other. They work with templates, but templates don’t always work in this business.

Every Social Media Influencing Deal is Unique.

Every deal is unique. And we certainly know an awful lot of really good agencies and agents who really understand the licensing game very well. So that is awesome. But we also see the opposite. We see agencies. We see agents that really are just looking to get the money from one place to another, take their cut, and they’re not paying enough attention to the licensing. Or in some instances, they don’t even understand licensing. So getting a lawyer involved who does this for a living can be really important. All right, number two — getting detail, right?

Licensing is about rights and control. Rights can be sliced and diced. Who gets to decide? Control is who gets to decide. Licensing is sliced and diced. Make sure it’s in detail. You want to maximize your revenue and value as an influencer. Understand how you can slice and dice the rights you provide to a brand. Brands that pay more get more rights and control. Brands that pay less get less. You need to value your licensing in a way that is going to be appropriate to your monetization scheme. And if you don’t protect your copyright name and likeness, if you simply say, “Well, I got money, and that’s all I care about, and now they’re going to do whatever they’re going to do” and it’s not spelled out, well, you may be leaving a tremendous amount of money on the table as an influencer. Because there’s a big difference between allowing your image and your copyright to be used, it’s going to be displayed to 1000 people than a million people. And if it’s going to be displayed to a million people, then it should be worth more money. All right.

Copyright Infringement is Serious Business.

Copyright law is not Switzerland. That’s our third item for today, right? What if an influencer fails to spell out exactly what rights are being provided? Well, in a way, everyone loses. The influencer is losing because they didn’t properly monetize and protect their copyright, their name and likeness and their brand. The brand also loses because they don’t know what they can and cannot do. And we see it all the time where the influencer comes back and says, “Wait a minute. I didn’t tell you you could do that.” What does the agreement say? The agreement doesn’t say in detail what the deal is. Well guess what? There could be an implied license right there, that, “Oh, well, it was certainly understood between everyone that we could put this image on our Web site or that we could use it in a YouTube video or we can bundle it up with other influencers, etcetera. We talked about that. But it’s not in the agreement.” Guess what? On implied license rights, they typically can be terminated at will, meaning that the copyright owner, the name and likeness, the influencer can say, “Okay, fine. I’m terminating your rights to do that. You have to take everything down now.” So everyone loses. Influencer didn’t get what they should have gotten for their influence. The brand is at risk moving forward for some copyright infringement dispute down the line.

Copyrights should be registered with the copyright office.

You don’t have to in order to have a common law copyright. But you can’t go to federal court and sue for copyright violation unless you have a registered copyright. You can’t get statutory damages of up to $150,000 or more if it’s not registered with the copyright office within three months of publication or prior to the infringement.

So, again, we’ll do a show in the future that instructs influencers how to get their copyrights registered cheaply and effectively and teach them how to go through that copyright process so that they’re on a rolling three-month basis getting their feed copyright protected. So if there is a product on the line, they can wield a $150,000 stick, and we represent a lot of copyright owners who simply make a living going after infringers and getting paid for it. So, $150,000 in statutory damage for willful infringement if you have a registered copyright.

Digital Millennium Copyright Act (DMCA) takedown rights.

The other thing that you need to know, copyright law is not Switzerland because copyright owner has Digital Millennium Copyright Act takedown rights, meaning if a brand is using an influencer’s copyright-protected works in a way that the influencer says is beyond the scope of the license, that influencer can simply issue a DMCA takedown notice to the Web-hosting company or other third-party provider: Twitter, YouTube, Instagram, etcetera. And those platforms will simply remove the image from the brand or the Web site use that is contemplated. They can still sue you, but they can also have things removed.

Do it right the first time.

So copyright law is pretty powerful stuff, and brands need to make sure they’re getting the rights that they think they’re getting so that they don’t have a problem later. Brands who get control in brand rights can monetize beyond the contemplated campaign if these things are not spelled out. And then they’re at risk of early termination for implied license. So understand copyright law, get it in detail, understand that this is the licensing business. My name is Enrico Schaefer. That’s all for today. Hope you enjoyed the show, and we’ll see you next time.

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