Contract Review: Custom Solutions From SmartMoney

This contract is from the custom publishing arm of SmartMoney. I'm not a lawyer, this isn't legal advice, and make sure you negotiate, because there are some terms in here that I'm betting you'd want to change. I'll review the clauses that I think might be of interest. Warning - every now and then I find a contract that seems so odious that I indulge in sarcasm and ranting. This is one of those cases:

• Clause 1 This would seem like standard "You're going to do this and the assignment schedules become part of this agreement" wording, but there's a killer sentence at the end: "However, should Consultant receive an offer to work on other projects that may be competitive to SmartMoney’s business, then Consultant must get approval from SmartMoney before accepting such assignment." Huh? Since SmartMoney is technically in the custom publishing business, you have to get flipping approval to do something that would be competitive, otherwise known as writing for any other custom publisher? No where in the agreement does it specify what SmartMoney considers its business to be. Could that include writing an article directly for a company that SM (notice the intentional allusion to pain games) might want as a client? Check their site and notice some of the work they do: magazines, newsletters, annual reports, booklets, bulletins, and web sites. To me, that's a "that goes or I go" statement, as they're trying to control your income and business without any promise of future work.


• Clause 2 It gets better and better, or not. You must perform all the work demanded "in an acceptable manner" to get paid. Also, "In the event the Materials are not accepted, SmartMoney will pay Consultant a reasonable kill fee, the amount of which shall be determined by SmartMoney in its sole discretion." That's right, it's totally up to them, even though they could deem it unacceptable because you delivered it on a Tuesday. There's no definition of the acceptance process or how long they can delay it.


• Clause 3 a) They want WMFH, which isn't surprising because, after all, they want to own your custom publishing time and prospects. They can do anything they want with what they accept. You have to wave moral rights.
  
  b) They also want "the sublicensable worldwide right to use Consultant’s name, biography and likeness in connection with the publication, use, advertising and promotion of the Materials, SmartMoney, its Custom Solutions division or its clients’ use of the Materials, and to make such other promotional use as SmartMoney, its licensees, successors or assigns may determine." In other words, your name, background, and image become a commodity that they can use again and again to promote themselves and anyone they sell the rights to, even if you would not want to be associated with said organization, product, or cause. You cannot ask to have your name withheld if they butcher your writing, yet they don't have to give you credit at all.
  
  c)You have to warrant that "SmartMoney’s exploitation thereof [of your writing] will not violate or infringe the copyright, patent, trademark, right of privacy or any other right of any person or party or be false or libelous or defamatory." That isn't just saying that your writing won't infringe copyright or be defamatory, but that their use won't be. There have been cases where people successfully sued for libel because of the way materials were used, even though the materials themselves were fine. You can't determine context, but the way I read this, you are warranting their use, which includes the context in which they use your work. Now for the indemnification: "Consultant hereby agrees to indemnify, defend and hold SmartMoney, its partners, affiliates, trustees, directors, officers, employees and agents harmless from and against any and all claims, demands, damages, costs and expenses (including reasonable attorneys’ fees and expenses) arising out of or related to a breach of Consultant’s representations, warranties and obligations hereunder or in any way to any of Consultant’s services provided hereunder..." Notice that you're not just indemnifying for a breach of the warranties, but for anything that would arise out of the services you provide, which means if they get sued and someone cites your article, you could find yourself indemnifying them. This is really bad.


• Clause 4 This is one of those idiotic confidentiality clauses so strictly constructed that technically you could not tell a source the subject matter of the article you are writing. When you stop working for them, all materials that they own, you must return. As you've done WMFH, I think that means every copy of any article you've written for them. If there is "a violation or attempted or threatened violation of this provision, SMARTMONEY may apply for and obtain, without any requirement to post a bond or other security, an injunction to restrain such violation or attempted or threatened violation..." Boom, an injunction because they think you might reveal confidential information. It doesn't matter whether it's likely that they'd do this or not, because you're bound by it should someone in the company decide to make use of the clause.


• Clause 5 You can't try to get any employee or client to leave. If you do, or if there's a threat that you might, they can again get an injunction to stop you.


• Clause 6 If the non-disclosure isn't enough, here's a gag clause (first time I remember seeing this in a publishing contract): "Effective with the signing of this Agreement, Consultant agrees to make no statements relating to SmartMoney, its affiliates or the project Consultant is working on orally or in writings which impair or disparage the reputation of SmartMoney or its clients." In other words, your opinions are now censored.


• Clause 9 I think this contract was adopted from one meant for more general services: "Consultant will comply with all federal, state and local laws regarding business permits and licenses that may be required to carry out the work to be performed hereunder." You'd need something like that if someone was doing building or renovation. But not for writing, so it doesn't apply. And, contractually, they cannot make you attend staff meetings. At least something in the contract is appealing.


• Clause 10 The contract is construed under New York State law, which is good in terms of the interpretation of libel, et. al. But if there's a contractual dispute, you have to go to New York courts.


• Clause 11 This is the entire agreement, so nothing that an editor says or writes to the contrary of any clause has any force. Similarly, don't expect any term that you include on your invoice to have force - and that means how quickly they have to pay.


• Clause 12 You cannot tell anyone that this agreement even exists and you cannot tell anyone about the services you are providing to them. "Without limitation, Consultant agrees that Consultant will not issue any press release or other information concerning Consultant’s services." Sounds like that means you cannot mention them as a client in your marketing.

Niche Newsletters Attract Advertisers

Wonder why such magazines as Stuff and Cargo have taken a beating? According to this LA Times piece (requires free registration), they're being pushed out by emailed newsletters like Thrilllist.com:

Thrillist is one of dozens of electronic mailing list services. Some have been around for years but new ones have been popping up recently, godsends not only for Friedman and people like him but also for advertisers.

The services, most supported by ads, reach audiences most magazines only dream of. The median household income of Thrillist subscribers, for instance, is $107,000, dwarfing Sports Illustrated's median of $63,605 and Maxim's of $65,710.

Those demographics are startling. The LA edition is already reaching over 24,000 subscribers and they're launching a Las Vegas version. These high concept service vehicles - each providing a specific take on information, often with an "insider's" slant - have got a business model that leave magazines in the electronic dust. They don't have costs for printing and only nominal ones for distribution. There's lots of research, but high end writing isn't at a premium. They only need one advertiser in an issue, as their overhead is low, and their readers don't seem to mind the ads. And they can deliver results:

After a Thrillist e-mail mentioned Astor & Black, a tailor that makes inexpensive custom suits, $100,000 worth of suits were purchased in a matter of weeks, the company said. DailyCandy said an e-mail about a movie screening prompted 8,000 RSVPs.

The email list publishers are slugging it out and competition is strong, so don't expect to enter these particular slices of the market easily - and most of them have had years at this. But if this works for these niches, why not others? If you're going to spend time on your own interests, maybe you can find a way to develop something that, over time, could turn into a business. Here are some hints that I deduced from the article:

• You need an associated web presence so people will ask for the newsletter.


• Find a well-defined niche where the population doesn't naturally churn. For example, wealthy people in LA work as a target market. Parents of infants might not, because they grow out of that particular need quickly, so your subscribers are of limited duration.


• Be respectful of the readers and don't overload the newsletter with ads. They may not mind one, but get obtrusive and you'll lose them.


• Build the audience first and then go for advertising. If you try to make money immediately without investing, advertisers will have no reason to deal with you.


• Look for people that consider their time extremely limited - whether it objectively is or not. They'll want information in a condensed fashion.


• Market the web site first to build audience, and then go for the newsletter. An audience has to be able to find you somewhere.