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December, 2005

Analyzing the OnRequest assignment contract

ASMP has previously reviewed and commented on the so-called custom stock business model and contract being used by OnRquest Images. OnRequest has recently expanded into the assignment photography world, and we have now received and reviewed its assignment photography contract.

It is very difficult to evaluate the “deal” offered by this contract because the most crucial pieces of information are missing: The details that are specified in the separate Assignment Sheets referred to below, the compensation that OnRequest is taking and, most importantly, the kinds of fees that OnRequest will actually negotiate. Once a photographer signs the agreement, there is a confidentiality clause that prohibits disclosure about virtually everything relating to the arrangement, the clients and the assignments, so we may never receive reliable information on the most critical aspects.

You can see a copy of the contract here. We have the following comments for consideration by ASMP members. Since you can read the full contract, we will only comment on those aspects that we particularly want to bring to your attention. Please note that there are several apparent typographical errors, including places where words seem to be missing, so there may well be revisions and corrections coming in the near future.

First, it should be noted that the details of assignments, including the fees, are not reflected in this agreement. This is a blanket agreement, and the details of individual assignments are covered by separate “Assignment Sheets” (Paragraph 1).

Client relations. OnRequest decides which photographers to offer specific assignments to. That photographer (or those photographers) then makes an estimate of fees and expenses. If a photographer’s estimate is accepted, OnRequest then informs the photographer (Paragraph 2.a). However, OnRequest, not the photographer, negotiates the specific terms of the assignment, which are included in a separate Assignment Sheet. After, and only after, the Assignment Sheet has been accepted by both the client (“Customer”) and the photographer, the photographer “… may communicate directly with the Customer regarding artistic direction of the Assignment and the needs of specific shots” (Paragraph 2.b).

If the client wants to license any rights beyond those covered by the Assignment Sheet, OnRequest has the exclusive right to negotiate additional rights and licenses, with no apparent input from the photographer. That is, the photographer has no say in the negotiations. This provision of the agreement (2.c) ends with a sentence that appears to to be incorrectly written, so we cannot comment on its meaning.

The agreement specifies that the photographers are responsible for providing all equipment, materials, facilities, transportation and support staff. It also requires that ALL expenses have to be approved in writing before the assignment and included on the Assignment Sheet (Paragraph 3.a).

Deliverables. The full shoot, including out-takes, seconds, similars, etc. has to be delivered to OnRequest (Paragraph 3.b). In addition, the photographer has to provide all “relevant” model and property releases in OnRequest’s form. Unfortunately, there is no way to know when a release is “relevant” except through hindsight, so in effect, there is a requirement that the photographer obtain releases from all subjects and property owners. The failure to provide them results in the photographer’s responsibility for “all direct costs and expenses incurred as a result of such failure.”

In the event that OnRequest and the client decide that the photographs are not acceptable because of the photographer’s “failure,” the photographer may be required to re-shoot the assignment without any additional fee (Paragraph 3.c). Unfortunately, there are no standards or tests provided, so OnRequest and the client have virtually unrestricted discretion to decide whether a shoot is unacceptable. Similarly, they have the discretion to give the re-shoot assignment to another photographer.

OnRequest has no obligation to return digital files (Paragraph 3.d). While it has a theoretical obligation to return film within 30 days of receipt back from the client, there is no liability for a failure to return the film, so the obligation is non-existent as a practical matter.

Future licensing. OnRequest has a “right of first refusal” to license secondary uses for 5 years following the date of the shoot (Paragraph 3.e). In a real-world context, however, this probably is the practical equivalent of an exclusive right to license the images from the assignments: Every time the photographer and/or his stock house has a chance to license one of those images, they have to stop and give OnRequest the opportunity to exercise its “right of first refusal” before they can complete the deal. This would kill most marketing opportunities, as a practical matter. It is also unclear just exactly what the right of first refusal really is and how it would work if it were exercised.

Payments. The terms dealing with the timing of payments (Paragraph 4) seem favorable to both OnRequest and the photographer. However, the way they are put into practice may end up favoring only OnRequest. OnRequest gets a deposit from the client of one-half of the costs set forth on the Assignment Sheets. However, there is no obligation to pay any of that deposit to the photographer at that point.

OnRequest then receives the balance of the costs before releasing the photos and licenses to the client. It is obligated either to pay the fees to the photographer upon the transfer of the photos and licenses to the client or, in default of that, to “guaranty payment to the Artist of all sums due under the Assignment Sheet within 5 days of the Assignment Sheet (sic) being completed (in whole or in part) by the Artist” (Paragraph 4.d). The language of the last part is less than a model of clarity. However, we read it as saying that, even though OnRequest has been paid in full by the time the work is completed, it is obligated only to “guaranty” payment to the photographer (whatever that may mean) within 5 days of (presumably) completion of the assignment, but not necessarily to pay the photographer within any given time frame.

For a photographer to be reimbursed for expenses, he must submit a request for reimbursement “in accordance with OnRequest’s expense reimbursement policy” (Paragraph 4.e) Unfortunately, we do not know what that policy says or where to find it. In addition, OnRequest has the right to require any additional documentation, including receipts, that it may deem necessary.

Aftermath. Paragraph 5 says that the agreement can be terminated by either party upon 30 days’ notice. It also says that photographers may work with OnRequest’s competitors (i.e., this is not an agency-exclusive agreement). However, in light of earlier provisions such as the right of first refusal, terminating the agreement and working with other agencies may be more complicated in practice than this language would make it appear.

Paragraph 6 says that photographers may not work directly with clients for whom they shot an assignment through OnRequest for a period of 6 months after completing that assignment. There is language that says that, for these purposes, different divisions within a given company will be considered separate clients; however, in that case, the burden is on the photographer to prove that he was not solicited to do the later work by a representative of the division for whom he did the earlier assignment. That is, he has to prove a negative, which any lawyer can tell you is virtually impossible.

Insurance. The next provision (Paragraph 7) places an absolute obligation on the photographer to carry at least $1,000,000. in general commercial liability coverage, plus workers’ compensation and employers’ liability coverage as required by applicable law. While carrying at least $1,000,000. in liability insurance is something that ASMP believes that all working photographers should do, we have to wonder how many actually have that coverage.

Warranties. The Representations and Warranties section (Paragraph 8) imposes unreasonable and unworkable burdens on photographers while placing none on OnRequest. The photographer is required to guarantee that the photographs “shall not infringe on the rights of privacy or publicity, rights of any statutory or common law copyright, trademark or other intellectual property rights, defames (sic) any third party, or violates (sic) any other third party right.” There is simply no way any photographer can know all of those things in advance, much less guarantee them. Most of the violations covered by the guarantees and indemnifications would arise out of acts by the clients, OnRequest or third parties, and those are actions over which the photographer has no control. This sort of warranty and indemnification provision is unreasonable and essentially makes the photographer a source of business liability insurance for which OnRequest does not have to pay any premiums.

The same paragraph contains what appears to be a warranty and indemnification by OnRequest, but it is valueless. It guarantees only that OnRequest has the legal right to enter into the agreement.

Liability. Paragraph 9 (which seems to be missing the word “Neither” at the beginning) attempts to absolve both OnRequest and the clients from any kind of liability to the photographer or, if that is not legally valid, to limit the amount of liability to the fees (but not expenses) payable for the assignment.

The relationship between the photographer and OnRequest is more or less defined in Paragraph 10.a, where it makes it clear that OnRequest is not any kind of agent as far as the photographer is concerned. It also makes it clear that there is no obligation on the part of OnRequest to “secure employment” for the photographer, but simply to “negotiate reproduction rights to Photographs.”

Paragraph 10 continues the list of things for which OnRequest denies liability, including the photographs in its possession. There is conflicting language in 10.b that, on one hand, seems to suggest that OnRequest will accept liability for damage to photographs “caused by its gross and willful negligence,” while on the other hand disclaims all liability for lost or unreturned images. In any event, if OnRequest has any liability for lost or damaged images, that liability is limited to $100 per photograph, with a cap of $10,000, no matter how many claims or images are involved.

The one-sided language continues in 10.d, where the photographer cannot assign his rights and duties under the agreement, but there is no such limitation imposed on OnRequest.

Nondisclosure. Finally, 10.g and h. impose confidentiality and non-disclosure obligations on any photographer who signs the agreement.

Unanswered questions. As we said at the beginning, this agreement is just a shell, and it leaves the most important questions unanswered. First, how and how much is OnRequest being paid? There is no provision in the agreement covering compensation to OnRequest. Since we know that OnRequest is a for-profit operation, that leaves only two possibilities: 1) that compensation is covered in the separate Assignment Sheets that accompany each assignment and that we haven’t seen, or 2) that OnRequest bills its fee to the clients, either directly or, more likely, by adding it on to the photographer’s fee when submitting the fee proposal to the client.

Second, we have no authoritative information on the kinds of fees that photographers are actually receiving from OnRequest assignments, and that is probably the most important question of all.

As with all potential business arrangements, you should get as much information as you can and then make an informed business decision as to whether any prospective relationship is in your best interests. Given OnRequest’s so-called “custom stock” business model, we are skeptical that its assignment photography business would put photographers’ interests first.