Social Media Influencer
The influencer landscape is constantly changing, as different platforms emerge and the government cracks down on monitoring and regulating those who make a living online. Our job is to take care of the legal aspects, so you can focus your energy on the creative side of your business.
What do you do when your online hobby has suddenly turned into a business, and you’re being offered the chance to sample and promote products? Social media influencers build a reputation and following that enables them to influence others. As a result, brands want to work with them in the hopes that the influencer’s recommendations will positively impact the brand and entice people to buy its products and services. However, influencers are subject to frequently updated legal rules when they engage in these relationships. To avoid liability, good legal advice is essential. Our firm takes care of the legal issues, so you can focus your energy on the creative side of your business.
An option agreement is a contract between the original owner of a specific work (e.g., a novel or a screenplay) and a producer who is interested in turning the work into a film, play, or television series. Through the option agreement, the owner gives the producer the exclusive option to purchase the rights in the work during a limited time. An option agreement typically includes a set purchase price to be paid to the owner in the event the producer exercise the option. Other examples of crucial provisions that should be negotiated between the parties include the option fee, option period, purchase price, rights granted/reserved, set-up bonus, contingent compensation, and reversion rights.
However, before an option agreement can be signed, the producer should have documentation that the appropriate intellectual property rights have been or can be secured and ensure that there is a clean chain of title. A chain of title is all necessary documentation—such as copyright registrations or licensing agreements—required to show establish ownership in a particular project. Such documentation should address the rights to any underlying works (book, screenplay, etc.), as well as the rights to use the story in sequels, prequels, remakes, and merchandising.
Additionally, when the story for a film or television project is based on a person’s life, the producer should obtain a life rights agreement from the person (or, if deceased, his or her heirs). Through a life rights agreement, a person gives someone else permission to tell his or her life’s story and agrees not to sue that person for defamation, invasion of privacy, or other potential claims. There are several unique provisions to consider in life rights agreements, including exclusive rights to the story, requiring the person to participate in marketing efforts, additional adaption rights, and other terms.
Are Influencers Required to Disclose their Relationships with Brands?
The Federal Trade Commission (FTC) publishes guidelines and regulations governing endorsements, including those by social media influencers. Influencers must disclose if they have any financial, employment, personal, or family relationship with a brand. This includes a brand paying you or giving you free or discounted products or services. Even if you were not asked to mention the product, disclosure should be made. Likes, tags, pins, and similar tactics are considered endorsements.
Importantly, the influencer has the obligation to disclose, not the brand or agency that hired the influencer, so influencers must follow the FTC guidelines for every post.
When and How to Disclose
Disclosures should inform the influencer’s audience of the relationship to the brand or product in a way that is clearly visible and easy to understand. The disclosure should be placed with the endorsement message itself and not on a profile page, at the end of posts/videos, or on a page that someone has to click to get to. The influencer also must use simple and clear language and avoid vague or confusing terms and abbreviations. The FTC offers resources on its website to help influencers comply with the rules.
Influencers cannot lie in their endorsements. They cannot claim they tried a product or service when they did not pretend to have liked it, or make unsubstantiated claims about the product or service.
How Can Companies Use Influencers?
Companies can use influencers to market their products/services in various ways. Influencers can provide endorsements, review products, give away products, speak at brand or industry events, share content, and engage in other activities. It is important to document what the influencer is required to do in an agreement to protect both parties’ rights.
Influencer Services Agreement
A services agreement sets forth the terms of the engagement between the influencer and brand. Contract terms may vary, but common provisions include:
- Required activities and deliverables of the influencer, including metrics to gauge success
- Term of the agreement
- Exclusivity and non-compete
- Content requirements (timing, language to include/exclude, approval and editing rights)
- Content usage (how content will be used and whether it can be adapted)
- Intellectual property rights
- Termination rights
- Obligation to comply with FTC rules
A sponsorship or endorsement agreement allows a company to use a person’s name, likeness, and reputation to promote a service or product. Typically, these contracts are given to celebrities who are seen as influencers. While compensation is important, both parties should also pay attention to their respective expectations and obligations. Companies may require celebrities to do ads, commercials, public appearances, post to social media, and engage in other activities. The brand may have editorial control over what the celebrity can and cannot say and how content is edited, as well as over images portrayed in advertising or merchandising.
As with influencer services agreements, there are usually exclusivity and non-compete provisions preventing the celebrity from not only endorsing a competing product but also ensuring he or she is not seen publicly using a competitor’s product. FTC disclosure rules also apply, so the celebrity is obligated to disclose the endorsement relationship.
Celebrities and influencers should take care that they are comfortable with the sponsoring brand, its values, and its expectations, to avoid locking themselves into a deal they find objectionable or that would damage their own reputation.
Who Owns Content Created by an Influencer?
When companies work with influencers, the influencers will typically create content to help promote that product or service. This raises an important copyright issue. Copyright law protects original works of authorship that are fixed in a tangible medium (i.e., written down or recorded). A work automatically receives limited copyright protection when it is created and set in a fixed form. Registration is not required, although there are significant benefits to registering a copyright with the U.S. Copyright Office.
The owner of the work is typically the author or creator of the work. However, an exception to this is the work-for-hire doctrine. This provides that the creator does not own the copyright to a work if the work is either prepared by an employee within the scope of employment or the work is specially ordered or commissioned, falls into one of nine types of works listed in the statute, and the parties expressly agree in writing that it is a work made for hire.
In the context of influencer marketing, contracts are particularly important. Absent a contract, the influencer may have full rights to the content he or she created, even if the brand compensated the influencer for the particular post. As a result, influencer and sponsor agreements must specifically address copyright issues. The agreement should detail what kind of content will be created, how it will be used and the rights of the parties. The contract should also specify that influencers cannot use third-party content without permission, to avoid claims of copyright infringement.
What Is a Multi-Channel Network (MCN) Agreement?
A Multi-Channel Network (MCN) agreement is between an influencer and third party who offers to run the influencer’s YouTube or Vimeo channel to build followers and monetize it through ad revenue. The third-party may offer a host of services, including video production, co-branding and sponsorship agreements, and targeted marketing campaigns. While this can be lucrative, it is important for an experienced attorney to review the terms, as it can have a substantial impact on the influencer’s success.
Influencer and endorsement deals can offer substantial benefits, but there are legal risks. Relying on experienced legal help can help ensure a successful arrangement.
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