Pricing & Negotiating: DITLO Contract

by Bill Cramer, Wonderful Machine

Ditlo is an innovative stock photography company that collaborates with photographers and up-and-coming celebrities to create content that they then license to commercial and editorial clients. It may be too soon to say whether this is a viable business model, but I admire them for trying it. Ditlo (which stands for Day In The Life Of) is the brain child of Bruce Kramer of Kramer Creative Group, which owns Artmix CreativeArtmix BeautyGlue, as well as Ditlo.

The way it works is that Ditlo finds interesting people who are trending in the news (whether they’re athletes, actors, musicians or chefs) who are willing to do a photo shoot specifically for stock. Ditlo matches up the celebrity with a photographer. Ditlo fronts a portion of the production costs and they provide art direction for the shoot. When the pictures sell, Ditlo pays a royalty to the subject (that’s the innovative part), they pay any other out-of-pocket costs, then they split the remainder 50/50 with the photographer.

My first impression was that it was a little weird that we’re now paying B-List celebrities to give them publicity. After all, the pictures will either be used editorially or commercially. If they get used commercially, the subject is going to get paid for use of their likeness anyway. And if they’re used editorially, isn’t that that something they normally pay a publicist to get for them? I guess it’s possible that when I wasn’t looking, the balance of power in our celebrity-crazed culture has changed the rules on me. Alrighty then, maybe this is just the new normal.

But if you’re going to go down this road (or any other), you’ll want to understand the agreements you’ll be signing. I’m sure that Mr. Kramer is an honorable man, but he’s a businessman none the less. Here’s the Ditlo contract (in italics) and my comments:

This agreement (“Agreement”) is entered into as of this ____ day of _______, 2012 by and between The Ditlo, LLC, having an address c/o 2332 South Centinela, Suite C, Los Angeles, California 90064 (hereinafter “Company”) and _______________, having an address of ___________________ (hereinafter “Contractor”) in connection with Contractor’s provision of services and grant of rights as set forth herein.

1. Services: Contractor shall perform services as a photographer in connection with the photography shoots produced, arranged or in which Contractor is engaged by Company during the Term which are set forth on Schedule A, and as updated from time to time by Company (each a “Shoot”). Contractor shall additionally be responsible for editing, re-touching (upon request by Company) and delivering to Company the photographic images from the Shoots (each an “Image”) within four (4) days after each Shoot. Contractor’s services shall be performed with diligence consistent with industry standards. Additionally, after Company has posted Image(s) from, or information related to the Shoot on www.ditlo.com Contractor shall use commercially reasonable efforts to promote Company and the Project in all of Contractor’s social media networks including but not limited to Facebook, Twitter, Pinterest and Instagram.

2. Term: This Agreement shall be in full force and effect from the date set forth above until terminated by either party upon thirty (30) days written notice to the address first set forth above. Notwithstanding the foregoing, the terms and conditions of Sections 3, 4, and 5 shall survive the expiration or termination of this Agreement.

3. Contractor Compensation: Provided that Contractor is not in breach of this Agreement and has fully performed Contractor’s services, as full and complete compensation thereof and grant of rights contained herein, Company shall additionally pay Contractor a royalty equal to fifty percent (50%) of the Net Revenue received from the sale, use, licensing or syndication of the Images by Company including sales of the Images to the talent in such Images. Company shall provide a statement and pay any amounts due at the address listed above on or about thirty (30) days after the conclusion of each calendar quarter in which sums are received by Company. For the purposes of this section, Net Revenue shall mean the gross amounts actually received by Company from third parties from the sale, license, or exploitation of the Images after deduction of (i) any amounts paid to talent in such Images; (ii) refunds, returns or allowances; (iii) any VAT, duty, levy or other fee or tax withheld, deducted or paid to Company; (iv) shipping charges, insurance charges, services fees or any other out of pocket costs associated with the delivery or access to any Images including but not limited to printing and framing costs; and (v) commissions or other payments made to third parties in connection with the production, sale and exploitation of such Images including but not limited to amounts paid to agents, third party sites, or the subject of such Image. Except as expressly set forth herein, Contractor shall not be entitled to any additional sums in connection with the Shoot, the Project or the Images.

It concerns me that if Ditlo decides that the photographer is in breach of the agreement, they don’t have to pay the commission. Does that mean that if the photographer promotes the project on their Facebook page, but not on Twitter, they might not get paid? The commission should not be contingent on anything. Certainly, if the photographer takes the advance and doesn’t produce useable pictures, they should have to pay the advance back. But if Ditlo makes a profit, the photographer should share in that profit. I would be inclined to cross out the words “Provided that Contractor is not in breach of this Agreement and has fully performed Contractor’s services,”

The contract is vague about what the statement will say. I would insert the clause, “the company shall provide a statement detailing the gross fee and each individual expense item deducted from it.” This should be no extra trouble for Ditlo since they have to keep track of all of those costs anyway in order to arrive at the net fee.

It doesn’t specifically say that the photographer will get an advance and whether the advance will count against the commission.

4. Grant of Rights: For the compensation to be provided herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Contractor hereby grants Company the worldwide, perpetual, irrevocable, exclusive, sub-licensable and unencumbered right in any and all media now known or hereafter developed to print, sell, license, transmit, and syndicate the Images to third parties including the l right to display, publish or include the Images in advertisements or promotions of the Company, on the Company’s website(s), social media pages, inclusion in future book(s) and gallery show(s). Notwithstanding the foregoing, it is acknowledged and agreed, that any sale or license of an Image to the subject of the Image shall require Contractor’s agreement on the 2 terms of such sale or license. Further, Contractor acknowledges and agrees that the talent featured in such Images shall have the right to use, display and publish the Images in which they are featured solely for their own promotional purposes on their personal websites and social media sites only, but not in any way for commercial or advertising unless Contractor and Company agree in writing.

Exclusive license forever concerns me. I think that it would be reasonable for the license to be exclusive while Ditlo is actively promoting the photos. But after a while, if the photos drop off of Ditlo’s website, the photographer should be able to market them on their own without paying a commission to Ditlo.

5. Miscellaneous: Contractor acknowledges that Contractor is an independent contractor and not an employee of Company and that as an independent contractor, Contractor has no authority to, and shall not in any way attempt to, obligate, or create any liability on behalf of Company. Contractor acknowledges that Company is not your employer, Company will not provide worker’s compensation, unemployment compensation, state disability or employment benefits to Contractor. Contractor further acknowledges that Contractor is responsible to pay social security, income or other taxes and agree to indemnify Company and hold Company harmless therefrom, and from any claims or liability for worker’s compensation, unemployment compensation or state disability coverage related to Contractor. Company, its successors, assignees, and licensees, shall have the right, but not the obligation, to use the Works and the results of the services provided under this Agreement, your name, and biography, for any and all purposes and uses in connection with the exploitation of the Images or the Works, in any and all media, now known or hereafter devised, throughout the world, in perpetuity. In the event of any question of Company’s performance of its obligations hereunder or other claims related hereunder, Contractor agrees that Contractor will not seek injunctive relief against us and/or our affiliated companies or any of their agents, licensees, distributors, assigns or partners, and that your relief, if any, will be limited to a claim for monetary damages and you do not have the right to terminate or rescind this Agreement. All remedies, rights and undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right undertaking, obligation or agreement of either party, except as expressly provided herein. This Agreement is governed by the internal laws of California and each party hereto irrevocably and unconditionally consents to the sole and exclusive jurisdiction and venue of the courts located in Los Angeles County, California for any action to enforce, interpret or construe any provision of this Agreement, or other claim or controversy related to this agreement or otherwise between the parties. The parties additionally hereby irrevocably waive and defenses of improper venue or forum non conveniens for any actions brought in those courts. The execution of this Agreement has not been induced by any representations, statements, warranties, or agreements other than those expressed herein. This Agreement embodies the entire understanding of the parties, and there are no further agreements or understanding, written or oral, in effect between the parties relating to the subject matter hereof. If any portion of this Agreement is held to be invalid, illegal or unenforceable by a court of competent jurisdiction, such finding shall not affect the remainder of this Agreement, and such affected provision shall be enforced to the furthest extent permitted by law. Except for updates to Schedule A by Company, this Agreement cannot be modified, except in a writing signed by both parties. This Agreement can be executed in any number of counterparts and by facsimile or pdf, which when taken together shall be construed as one original document.

The contract specifies that the photographer will indemnify Ditlo. This is reasonable. If the photographer does something wrong, and Ditlo gets sued, the photographer should (have insurance to) cover those costs. However, by the same token, if Ditlo does something wrong that gets the photographer sued, they should indemnify the photographer.

It doesn’t specifically say that you can use the pictures in your portfolio, website and for other self-promotion (including gallery shows), which it should.

Here’s the contract:

Click to enlarge.

 

There Are 10 Comments On This Article.

  1. Thanks for the article Bill.

    You make some very valid points regarding the contract; nothing I’m opposed to ammending.

    So everyone is aware, ALL production costs are fronted by ditlo.

    While cutting the talent in may seem unusal it is already happening and I suspect will be the norm in the future (no different then residules for actors) . In addition vesting the talent has been helpful with the promotion of the shoots.

    Unlike Getty who pay a flat fee for a buyout to create stock, ditlo will share the potrntial revenue in purpertuity.

    In addition the images also reside on ditlo in purpertuity.

    If anyone has any qustions or would like to shoot for ditlo please feel free to contact me directly @ bruce@ditlo.com

    Bruce Kramer

  2. I first saw this being done in India at Images Bazaar. I’m not sure if the actors get residuals however.

  3. I completely agree with the red flags pointed out in this article. The biggest one for me is the “net revenue” part of the compensation. I personally would only sign a deal for a gross revenue commission after legitimate shoot and other expenses were paid. This little term (net revenue) is why no movie in Hollywood ever seems to make a profit. Here’s a list of some potential “costs”.

    1. Mr. Kramer’s Porsche payment
    2. Staff Friday sushi parties expenses
    3. Steak dinner costs (for potential clients of course)
    4. Country club costs (for making deals with potential clients)
    5. Lakers Tickets (for sealing the deals with potential clients)
    6. New iPads, iPhones, and all those other things a business “needs”.

    I can go on and on and on… I personally could make any business operate in the red while everyone involved would be living the good life. Dreaming up “expenses” to not pay off royalties or to show a loss is what this country was founded on. Don’t be fooled by the 50% split. Trust me. It’s not going to be anywhere near that for the photographer.

    • Do I know you Victor?

      Not sure why I am responding to such an idiotic comment other then I can’t help self.

      http://ditloarchives.com is no different then any other syndication platform such as Corbis, Getty or Trunk. Use fees and Syndication sales have nothing to do with company expenses. It’s a simply formula: Client pay $1,000.00 for an image > subject gets $250.00 > photographer gets $375.00 > ditlo gets $375.00. The check I write to the subject and photographer are called Coat of Goods Sold. 1-6 are called Expenses.

      No different then the talent my other companies represent. They get their percentage of he creative fees and we get ours.

      Perhaps the language is not to your liking. I apologize it made you suspicious.

      BTW My Porsche payments (I actually have no payments), Sushi lunches from Nobu, Steak @ Cut, Soho House Membership, not a big sports fan and Samsung gives me products are paid from my 50% remaining after the 25% to the subject and from my other businesses.

      Feel free to contact any of the photographers we have worked with before you make idiotic accusations.

      Buce Kramer

  4. I know the topic of this post is the contract, but I am trying to understand the commercial value of these photos as stock. I viewed a few galleries online, and the work is nice. I just don’t see these images being licensed for anything other than editorial use. Can Mr. Kramer give some examples of how the photos have been licensed?

  5. Photo editor abroad

    Bruce I have a question – I am a photo editor so I’m coming from a production point of view. 1) Do you think it will be hard to gain the talent numbers to agree to being shot and quickly so to keep growing your files as fast as possible 2) will you work within a photo call type of visual set up to keep the costs reasonable – and if so will you want to break from that type of set up (ie: studio) and shoot them more creatively ? Like conceptual trunk archive material ? Just thinking initial costs to outlay vs the profit

    • Hi Photo Editor Abroad,

      1)-We have more shoots then we can handle. We have done over 300 and have 100 scheduled and are in the process of closing a few deals that will increase the flow and level.

      2)-We intend to stick with our formula. there is clearly an appetite for raw or reality type imagery.

      BK