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Topic: Partnership deal - legal concerns.

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  1. #1

    Partnership deal - legal concerns.

    Hi everyone!

    I'm not sure about the whole english business nomenclature here, so bear with me; hopefully the message will get through
    I'm about to close a partnership deal with a company creating stuff (animations, backgrounds, games etc.) for the cell phone market. The products will be distributed in China through a chinese service provider. The company in question is responsible for all customer relations and communication, I just deliver.
    This could prove a lucrative deal, or a crappy one, but I'm willing to take my chances. After all, China is a hugely expanding market. As one would guess, I'm at audio detail; meaning annoying ring tones and sounds, in mp3 and midi format. Not the most artistically expressive quest to pursuit, but hey..we all do what it takes, don't we?
    Anyway...since I've never confronted a written agreement such as this before, there are a few questions remaining before I sign it. I thought some of you more experienced guys could tell me if I'm being ripped off, or if it's a fair deal? I believe in the latter, but just wanna make sure!
    I've tried to translate a few important parts..and here's the gist of the deal:
    (Party "A" - the company, Party "B" - Me. "The material" - my delivered audio)

    "Party A does not have the rights to forward the material to any other party more than necessary for the chinese market.
    Party A owns the exclusive rights to sell and distribute the material in China.

    The copyright on the material falls to Party A.
    Party B is allowed to freely distribute and sell the material to markets other than the chinese.

    Party A recieves 70% of the total income, whilst Party B recieves 30 %.
    The total income being the amount of money that Party A recieves from the service provider."

    So..my main concerns are the copyright issues, and my percentage of the total income. Maybe I'm just a n00b, and these numbers are standard procedure? But to me, 30% sounds a bit low (even considering I would never have had this opportunity at all without Party A).
    Also, it seems a bit strange that I should not own the copyright to my material, even though I get to distribute it elsewhere if I want to. Again, I might be n00by.

    Phew...hope you could stand reading all this legal crap...don't you just hate it...I sometimes wish I could go back and do work for just a pizza and a beer
    Any response would be greatly appreciated!
    Thanx! /Daniel

  2. #2

    Re: Partnership deal - legal concerns.

    As the resident lawyer wannabe around here, I say...get a lawyer.

    While the deal doesn't sound terrible (30% can be good considering they are responsible for all the advertising costs and delivery of the content to the end user costs) it would be best to clarify if that's a 30% off the gross or the net, and if so how the net is calculated and on and on and on.

    Concerning the Copyright, it seems like you are licensing them the stuff for the China market exclusively, but if you intend to sell the material to other countries, then the copyright has to be in your name or else you would be required to ask permission every time.

    So to conclude....get a lawyer, seriously! If you can't afford one, see if you can find someone willing to work deferred or for a percentage of your first year's income from this.
    >>Kays
    http://www.musicbykays.com
    Music Composition for Feature Films, Television and Interactive Entertainment

  3. #3

    Re: Partnership deal - legal concerns.

    Hi Lee. Thanks for the swift response!

    You're absolutely right about the piracy issues at hand. And as you said..I will have no control whatsoever over what's happening 'over there'.
    It could be worth mentioning though, that the company I'm working with, is a local swedish one, not a chinese, so our internal relations and communication is no problem. Also, the agreement states that "Party A shall forward sales statistics on the material to Party B", which af course could mean nothing at all, if the service providers have evil intentions
    I have to completely rely on the honesty of my business partner. On my own, I'm on dangerously thin ice.
    But your last statement is as true as ever.

    Thanx again! /Daniel

  4. #4

    Re: Partnership deal - legal concerns.

    Get an entertainment lawyer. Pay the cost. Check local Artist cooperatives (for a possible discount or referral). Get a lawyer. Get a lawyer. Have I been clear?

  5. #5
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    Re: Partnership deal - legal concerns.

    As a lawyer (now retired to the sample biz), I would concur with others. The best advice is...Get some legal advice.

    This seems like a fairly complex international arrangement. There are custom and usage factors at play, definitions, intellectual property, choice of forum and governing law, and many other issues to be concerned with. You are dealing with two legal systems and the rules are completely different. A good attorney can help guide you through the maze and protect your interests.

    Seems like a good opportunity. Good luck!

    Gary Garritan, Esquired

  6. #6

    Re: Partnership deal - legal concerns.

    I don't normally recommend hiring a lawyer and I usually prefer to handle my contracts myself. But that's because most of my gigs are just run of the mill TV or advertising contracts which are pretty much all the same.

    Your gig, on the other hand, sounds complicated. So I think you'd be best off hiring an attorney.

    Then again, back to the first hand, hiring that attorney would cost at least a few hundred and very likely over a grand if it were done here in the U.S. I don't see why Sweden would be any cheaper. So there's a bit of a gamble with the whole gig as to whether you think the back end (future earning) possibilities are worth throwing a bunch of cash at the negotiating stage today.

    Tough call. The terms don't sound that bad to me, by the way. Kays makes a good point about whether 30% is off net or gross. You don't want net.

    - Mike Greene

  7. #7

    Re: Partnership deal - legal concerns.

    Quote Originally Posted by midphase
    As the resident lawyer wannabe around here, I say...get a lawyer.

    While the deal doesn't sound terrible (30% can be good considering they are responsible for all the advertising costs and delivery of the content to the end user costs) it would be best to clarify if that's a 30% off the gross or the net, and if so how the net is calculated and on and on and on.
    You're right, 30% isn't too bad with the circumstances in mind..and I'll certainly check up on the gross or net issue.

    Quote Originally Posted by midphase
    Concerning the Copyright, it seems like you are licensing them the stuff for the China market exclusively, but if you intend to sell the material to other countries, then the copyright has to be in your name or else you would be required to ask permission every time.
    Oh..true, I should've thought of that..my bad. I hope they'll not make a fuss about this, or else I'm in for a nice argument. Asking for permission to sell my own stuff is not exactly a priority of mine.

    Many thanks for enlightening me!
    /Daniel

  8. #8

    Re: Partnership deal - legal concerns.

    Thanks Craig, Gary and Mike!!

    I certainly see the necessity of hiring an attorney in complicated affairs such as this, and I would not hesitate, if it weren't for the fact that Mike pointed out. Hiring such assistance is not exactly cheap. And the big question is if it will pay off in the end or not, since it's difficult to foresee how things will turn out income-wise.

    Maybe a good idea is to try this out small-scale and see where it leads. Since IF China rips me off (I'm pretty sure "Part A" wont), at least I haven't invested that much time and effort in the project. (Let's face it..a bunch of good sounding catchy ring tones and fancy SFX won't take ages to make). And then I've learnt my lesson.

    Then if this turns out good, and I actually do see some positive figures, then I could hire an attorney to further protect my interests.

    Or..Gary..since you were in it for real, don't you want to make a ravaging comeback in international law by handling my case? I'll buy you a pizza hehe!

    Thanks for your replies everyone. Tremendously appreciated!
    /Daniel

  9. #9
    Senior Member Bruce A. Richardson's Avatar
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    Re: Partnership deal - legal concerns.

    HIRE A LAWYER!!! Not just any lawyer, but one with expertise in intellectual property.

    Really. Just do it. As pointed out, the details of agreement you've already shared are not in your best interest at all.

    And for sure, plan on "Party A" being boned by the Chinese. So, I'd probably have the attorney create some kind of language that reverts all rights back to you and away from "Party A" if the Chinese fail to honor the agreement. You don't want to get stuck having signed away your property on a deal where you made nothing.

  10. #10

    Re: Partnership deal - legal concerns.

    Sounds like a terrible deal to me.
    I once did midi, ring tones and even full wave file songs for a huge telephone company (starting with an "N" and ending with "okia") and I can tell you the amount of money they make with these snippets of sounds are beyond your wildest dreams. Even more so in Asia. Cell phone users have contracts that give them "free" ring tones, pictures and songs every week but they do pay a dollar or more for this free service. It's immensely popular. Other countries just sell ring tones on a pay-per-download basis. We are talking about 100's of millions of downloads each month.
    Now follow your instinct.
    Everybody wants to have that hot latest Madonna ring tone or their favorite song, not the other 50,000 tunes they have. The other 50,000 are dead meat and bring in money by reversed accident: when unexperienced users download the wrong track or they are given away for free with these monthly contracts.
    If you get paid for what is sold, you'll probably never see a dollar for your work, because nobody is going to advertise your work as the hottest stuff on earth (be honest; it's not Madonna).
    If you sign away you copyrights, you'll have the added problem of never being able to use and exploit your own work.

    Beside getting a laywer (always consult a laywer before signing any contract) you may also want to talk with your contract party about a fixed royalty advance or even a fixed fee per contribution instead of a royalty structure.
    Best regards,
    Michiel Post


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