Glossary
Contract Terminology for Photographers
Please note: these terms are correct and complete to the best of our knowledge but are intended for educational purposes only and do not qualify as, nor should they substitute for, professional legal advice.
"All media known or unknown" - a contract term designed to escape paying for every use of a photograph. It is acceptable to have one fee that covers several media, such as print and Web, or Web and CD-Rom, (see "rights package") but each use should be specifically listed. To claim the right to use an image in any media format NOT specifically listed conflicts with the Copyright Law's intention (se "copyright" below). To claim the right to reproduce the photograph in a media format as-yet-undeveloped is just silly. Why would a photographer ever want to grant that right away?
"All rights in perpetuity" - a contract term which equates to work-for-hire (see below). Work under a contract which uses this clause, and you are agreeing to, in effect, share your ownership (copyright) in anything you create while being paid by your client. Your client will have equal access to, and use of, your images. Not only can they do whatever they want with your images, without additional payment or even permission, but they can even compete with you by reselling your images for a lower price than you would charge.
Assignment - an agreement between a photographer and a client whereby the photographer shoots to the client's specifications and agrees to certain uses of the image(s), in return for a fee plus reimbursement of expenses. All assignments should be confirmed with a contract (see below).
Business Plan - For the small business owner, a business plan is a set of documents that describe who you are, what you do, how you intend to do it, and what you need in order to accomplish your goals. Financial institutions or independent investors use business plans to evaluate the potential for success when you come to them for loans. More importantly, a business plan should work like a road map for your future.
Contract - a legal document that lays out in writing the obligations of each party signing the contract. In order to be most enforceable, a contract must have three things: 1) it must be a "meeting of the minds" in other words, both parties must agree to the terms. If one party is pressured into signing, it is labeled a "contract of adhesion" and can be argued to be invalid; 2) there must be an exchange of goods or money in return for services rendered; 3) both parties must sign the contract. By implication, every contract must be negotiable. Otherwise, it is a one-sided contract and therefore a contract of adhesion.
Copyright - the legal concept that once an original expression of a creative process is fixed in a tangible medium, that expression belongs to the creator (not the person paying the fee) who has the exclusive right to control and authorize its reproduction, distribution (by sale, rental, lease, or lending), public display or performance, or derivation. (US Code, title 17, sec. 106)
Copyright infringement - a use other than one specifically authorized by the copyright holder
Copyright registration - the act of paying a small fee and submitting a copy (copies) of your work to the US Copyright Office for registration. The copies are kept on file and in the public record to reference for any future disputes and for assessing any penalties.
Cost-of-doing-business (CDB) - this is the amount of money that is required for you to operate your business, regardless of your number of clients, and is generally expressed as an amount per day. To find your CDB, add up all of the factors that make up your overhead (see below), and divide by the number of days you are "open for business" in a year. 250 days is a standard number (5 days x 52 weeks - 2 weeks vacation), but not very generous. Remember, this is what it will cost you EVERY day and may or may not include your salary (depending on how you figure your overhead), yet you cannot expect to earn income every day, unlike a salaried employee who earns a regular paycheck. (see also the EP CDB Worksheet in OutreachEP Handout 1)
Creative fee - this is the fee that a photographer charges for concepting and creating images and takes into account creativity, experience, degree of difficulty, specialized equipment, and perhaps usage (although usage may be a separate line item). This term reflects photographer's desires to be paid based on our experience, our ability, and on the benefit gained by the client from using the fruits of our creative processes, rather than simply on how long we work.
Day rate - an out-of-date term that use to signify the minimum amount a photographer would be paid when shooting for an editorial client, with additional money owed if multiple images were used or if images were used particularly large (see "space rate"). The term has come to mean the flat rate that photographers are offered for shooting for a publication, and disregards experience, ability, degree of difficulty, and benefit gained by the client. When being paid solely for our time, it can also lead to arguments over full and half days, and even hourly rates. Most day rates are barely enough to cover our CDB (see above), never mind make a profit. As professionals, we should be compensated for our creativity (see creative fee above) and for the benefit gained by our clients from using our images (see space rate).
Delivery memo - an important part of the paper trail (see below) that should accompany any image that leaves your files. It officially places your image(s) in the care of another person and binds them to abide by your Terms and Conditions (see below). It also enables you to keep track all of your images and know their location at any given time. (see also the EP Forms section for sample delivery memo EP Subscription required)
Embargo periods - a period of time often requested by publishers during which you agree not to re-license an image. Embargoes can be complete, meaning no re-sales whatsoever of the image or any similars, or they may be limited to only competing publications, or by geography, for example. Limited embargoes are a legitimate request for assigned work (see above), especially for news and event coverage, but embargoes for stock sales (see below) are simply trying to claim exclusivity (see below) that should instead generate additional compensation for the photographer.
Employee - a status that for photographers means you do not own the copyright to your images. Most, if not all, employment contracts stipulate that because the employer is paying your salary and all of your expenses, they own the copyright to any images you create while working for them. However, in exchange, you do receive a regular salary, with benefits, sick days, paid vacation, and a retirement plan - all options not available to you as an independent contractor (see below).
Estimate - another important part of the paper trail that lays out, in writing and before the shoot, the exact parameters of a prospective job, the ultimate usage of the images(including size and number of insertions, media format, circulation or print run, any geographic limitations, exclusivity, and length of use), and the fees you will be charging. If both parties agree to and sign the estimate, it becomes a contract (see above).
Exclusivity - a description of rights granted which refers to your ability to re-license the image to another client. If you grant your client exclusive rights to an image, you are agreeing not to re-license that image to anyone else. Exclusivity can have limitations of time, geography, or topic, for instance, but in all instances any grant of exclusivity should receive additional compensation.
Fair use doctrine - the part of the US Copyright Law which states that certain uses of otherwise copyrighted material are not considered infringements. These "fair uses" cover the free-sharing of information for scholarship, research, teaching, and news reporting, among others, but also must take into account the use's effect on the, "potential market for or value of the copyrighted work" (US Code, title 17, section 107).
Incorporation - The most complicated form of doing business, but worth the additional trouble and expense if your business generates enough income to make the services of an accountant and lawyer worthwhile. Incorporation can provide some tax advantages to small businesses. The business is taxed separately from the owners and/or stockholders. Incorporation can also provide a "corporate shield" against personal liability. Corporations must be registered with your state government.
Indemnification clauses - these clauses within contracts ask one or both parties to release the other party from responsibility should a certain act occur. Indemnity clauses usually read,
" ...agree to indemnify and hold harmless..." As with warranties (see below), we need to be very careful that what we are indemnifying against we actually have control over. When signing a contract, you never want to pledge yourself to a certain action in response to another action or event over which you have no control.
Independent contractor - a non-employee (see employee above) who is hired by a company for a specific project or time-frame, to complete a certain task. Unless stated otherwise in the contract between contractor and company (see work-for-hire and all-rights below and above), the independent contractor retains the copyright to all works created while working on behalf of the company, per Copyright Law. Independent contractors do not get the benefits of being an employee of the company, such as access to insurance and benefit programs, paid sick or vacation days, or even regular paychecks. They do, however, set their own hours and make their own business decisions. Therefore, as independent contractors, freelance photographers need to maintain control of their copyrights in order to maximize income and to offset the added expenses of being self-employed (see below).
Invoice - a bill. Invoices are requests to be paid for services rendered. They are the last step of the paper trail and lead to the conclusion of the contract. Standard business practices are to pay all invoices within thirty days. Many photographers request payment sooner, within 21 or even 14 days, while many businesses try to pay on 45, 60, or even 90 day schedules. As with all parts of a contract, the amount of time to pay is negotiable, but should be stated clearly in your Terms & Conditions (see below).
Liability clauses - a clause in a contract whereby one party agrees to accept responsibility, legal and/or financial, for a certain action(s). As with warranties and indemnities (see above and below), we want to be careful not to accept liability for any action over which we have no control. Then, because accidents do happen even when we have control, smart businesspeople, especially sole proprietors (see below) have liability insurance to protect them financially in the event of a mistake.
License (noun) - because we as copyright holders have the sole right to control the distribution of our work by, "sale, lease, rental, or lending", a license is a contract which grants the right to use an image in a certain way, in a certain place, for a certain period of time, to someone else. A license should specifically state how large the image may be used, how many times, in what specific media format(s), and for how long. It should also state any exclusivity (see above) restrictions, or should state "non-exclusive". All rights not specifically granted remain with the copyright holder, and a clause to that effect should also be a part of any license.
License (verb) - to license an image is simply to grant a license (see above) for its temporary use. As photographers, we should license images for use, not sell them outright.
Model release warranties - a warranty (see below) that, in effect, asks us to guarantee that the client will never be sued for using an image of a person or thing. As with any guarantee that is beyond our control, this is an unreasonable request. As part of a contract, we might reasonably be asked to provide a signed release from the subject on request, and even to testify on the client's behalf should a case go to trial (provided we are compensated for our time), but we should not be asked to warrant that over which we have no control.
Negotiate - to compromise; the process of each side giving up something in return for another. All contracts (see above), by definition, must be negotiable or they are considered one-sided and a "contract of adhesion", and can be invalidated.
Overhead - Overhead is the sum of all expenses you generate to operate your business, regardless of the number of clients, and includes rent, utilities, inventory, equipment and repairs, advertising and marketing, business loans, travel, labor, insurance, training and education, etc.. Keeping overhead manageable is a critical part of operating an efficient and competitive business. As a sole proprietor, you may choose to include your own salary in your overhead or not. If you do, then any money left over after covering your overhead is profit (see below) to use to grow your business. If you do not, then money left over would be considered net income, not profit, and must be divided between paying yourself and growing your business. (see also the EP CDB Worksheet in OutreachEP Handout 1)
Paper trail - the collection of all documents generated for a given job. At the very least, the paper trail for assignments should include: estimate, contract, delivery memo, invoice and usage license, proof of payment, and terms & conditions (see above and below). A paper trail for a stock sale (see below) would omit the estimate, and the contract and usage license might be one and the same, as you are not providing a service, merely licensing the use of an image. Appropriate pieces of the paper trail should be signed by both parties (contract, delivery memo, invoice) and the accumulated paper trail for every job should be archived for future reference. (see also the EP Forms section EP Membership required)
Partnerships - Partnerships are like sole proprietorships in that income is reported through the individual partners; the partnership business is not taxed separately. Liability is also similar. The only reason to have a partnership is to create a stronger business, by combining resources, than you can alone. Good communication is absolutely essential, and all business related issues should be resolved in writing before the partnership is created. Bookkeeping, accounting and tax returns will be more complicated and costly. You should consult a small business lawyer before entering into a partnership agreement.
Profit - Profit is revenue minus all expenses, including salary. Profit is that portion of your revenue that should be used to grow your business. Profit is usually generated as a percentage mark-up on expenses and billable items. For example, if you mark up a $10.00 item by 30%, the client pays $13.00. The three dollar profit, minus any taxes you will have to pay, is money used to grow your business. (see also the EP CDB Worksheet in OutreachEP Handout 1)
Reprints -- Reprints are magazine articles that are reprinted and repackaged by the magazine on behalf of the subject, and then used as advertising by the subjects. Publishers charge many thousands of dollars for reprints as they understand their value to the subject client. As photographs make up a valuable part of any story, photographers should be partially compensated for this use as well. Future reprint rights should be excluded from any editorial assignment contract between publisher and photographer and should be negotiated based on the higher rates for advertising use that they represent.
Revenue - Revenue is your total, or gross, income. It includes creative and licensing fees, billable expenses, and mark-up. If you are a sole proprietor, and will be filing a Schedule C with the IRS, the gross income from your business, minus business expenses and all allowable deductions, is totaled with any additional income from other sources. It is very important that you can compute, at any time, the revenue of your business and be able to distinguish profit and salary from each other.
"Right to assign, transfer or sell" - terms of a contract that allow a client to pass your photos around, or even to sell it in direct competition with you, to affiliated or non-affiliated publications or clients, without compensation. These terms are most common where a publication has multiple editions, say in other countries, or where a publisher wants to share images among many of its magazines, or even into its book division. However, photographers should realize that the right to distribute their images rests solely with them, as per the US Copyright Law, and should charge additional fees for each added use. Offering to bundle multiple uses of the same image into a rights package (see below), is an alternative to this clause.
Rights package - an offer to bundle multiple uses of one or more images into a single fee, usually at a discount from purchasing all the rights separately. For instance, if you would normally charge $600 for a print use and $300 for Web use, you might offer a rights package that charges only $750 if the client purchases both at the same time. Rights packages are a valuable negotiating tool, as both parties give something up, but also gain in return.
Rights transfer (copyright transfer) - a term which means you are relinquishing all your rights in an image(s) and turning them over to someone else. You are giving up your copyright to, all control of, and the right to profit from, your image(s). Some contracts try to claim that by allowing the printing of your image by XYZ, or by being paid for a day's work by XYZ, you are executing a rights transfer to your work. Nothing is further from the truth, unless you sign a contract that says you will. Unless XYZ is willing to (very) generously compensate you for all lost future income from the rights transfer of that image, you should refuse to accept this term in a contract. (For more details on the importance of Copyright, see the EP Copyright Section)
Salary - Salary is the money you pay yourself and/or your employees, and is generally derived primarily from creative and licensing fees. Salary determines your standard of living. If you include profit in salary, you are depriving your business of the money it needs to prosper. If you dedicate profit to your business, but your salary is inadequate, you need to examine the creative fees you are charging clients and/or the number of jobs you are completing.
Self-employed - a term that indicates that you are your own employer and are responsible for your own overhead and salary (see both above), both the employee's and employer's share of all applicable taxes, as well as any liability incurred by your actions. If you are self-employed, and you are hired by another company to complete a project, then you are an independent contractor (see above) in relation to that company. See also work-for-hire.
Sole proprietorship - The most common form of small business ownership. Revenue, minus business expenses and other allowable deductions, is passed through your individual federal income tax return on a Schedule C. The business does not pay separate corporate income taxes, but neither can it protect you from liability. Defaulting on business loans or expenses will therefore be a mark on your personal credit history. Adequate liability insurance is also a necessity. You will still need a business license and might pay other forms of business taxes to your city, county, or state.
Space rate - a rate of compensation tied to how much space (1/4 page, full page, etc.) our photos occupy and preferred by photographers as compensation is directly tied to the benefit gained by a client from using our images. Editorial assignments all used to be billed with the day rate (see above) as a guaranteed minimum against the space rate. In other words, if the day rate were $650, but the publication ran one photo at half page size worth $500 and a second photo at quarter page size worth $300, then the photographer would be due an additional $150 (500+300-650=150) upon publication. In a system where advertising rates are billed based upon how large an ad runs, it is only fair that photographers also be paid for how large a photo runs. If a client gets more benefit by running the image larger, then the photographer should be compensated accordingly.
Spec - abbreviation for speculation, as in "shooting on spec" and means agreeing to create images to a client's specific terms, without a contract or a guarantee of payment. While there is nothing wrong with shooting images to build a stock library (see below) and submitting those for consideration, photographers should not allow a potential client's current requirements to dictate the shoot at the expense of variety and potential future sales, without a guarantee of payment (see "assignment" above). If a client wants or needs specific images badly enough, they will give out an assignment. Shooting on spec rarely turns a profit as the photographer must also cover all the expenses, rather than being paid an assignment fee plus expenses as a minimum against space rate (see above).
Stock sale - the licensing of an image from a pre-existing collection of images, or stock. Stock images may be generated by shooting assignments, or they may be created by the photographer specifically for building a stock library. Residual income generated from stock sales is one of the primary reasons for photographers to retain the copyright to their images. A single image may be re-licensed again and again over the years as a stock image, thereby resulting in thousands of dollars for the photographer.
Success - Success means operating your business in an ethically profitable manner and earning the profit you need to grow your business and maintain your standard of living. It means realizing your potential as a business owner and as an image maker. It means enabling yourself to make a contribution to your community and to your profession, and earning the respect of your peers.
Terms & Conditions - this is the "fine print", the collection of conditions under which you agree to do business with other parties. Your Terms & Conditions should be clearly stated and included on all parts of the paper trail (see above). Therefore, by signing and agreeing to your contract, for instance, a client also agrees to various conditions such as paying within thirty days, or being responsible for your original images while they are in their possession. (see also the EP Forms section for more details and sample forms you can customize for your business. EP Subscription required)
Unauthorized use - the use of an image for which a specific license has not been granted. Remember, a use must be specifically granted, otherwise it remains with the copyright holder. The law is very clear: it is up to the end-user to obtain a license to use a copyrighted work before doing so, otherwise the use is unauthorized.
Usage - how, where, and for how long a copyrighted work has been licensed to an end-user by the copyright holder.
Warranties - these clauses within contracts ask one or both parties to pledge that some act or circumstance will or will not occur. These clauses may or may not be reasonable when the acts or circumstances are within our control, for instance when we are asked to warrant that the photographs will be original and that we are the exclusive copyright holder. This protects the publisher from an unethical photographer who steals another's work and then sells it as his own, for example. However, if we are asked to warrant against anything that involves a third party, for instance, "...will not infringe upon the personal or proprietary rights of or give rise to any claim by any third party", we may end up being held liable for something we could not control and we should not be asked to guarantee that.
Work-for-Hire - a contract term which signifies that all work being done under the contract becomes the property of the person paying for it, not of the creator. It converts the creator's status from independent contractor (see above) to employee. It is an "employee-for-a-day" status, yet almost always fails to compensate us for self-employment expenses such as employment taxes and liability coverage, and for missed employee benefits like insurance programs, bonuses, and retirement programs which the photographer must continue to supply for him/her self. Being self-employed and therefore responsible for all of our own overhead, as well as our own insurance and retirement programs, freelance photographers need to retain control of our copyrights to provide future income and should therefore think carefully before agreeing to any contract which stipulates work-for-hire, all-rights, or rights transfer (see above).