Cardi B's License Agreement

Entertainment attorney Julia Holt joins the Contract Teardown to discuss a license agreement between entertainment superstar Cardi B and an innovative alcohol brand.

Holt notices some themes in her analysis:

1. Cardi B has A LOT of power in the relationship,
2. That power is reflected in some long-winded, artist-friendly terms, and
3. Few artists have that power, but they can still rethink how they earn.

 

EPISODE LINKS

Review the contract here: https://www.lawinsider.com/contracts/3GFFTrJdUS7

GUEST LINKS: LinkedIn | Julia Holt Law

Interview Transcript

Mike Whelan In this episode, entertainment attorney, Julia Holt walks us through Cardi B’s license agreement. So let’s tear it down. Hey, everybody. Welcome back to the Contract Teardown Show from LawInsider. I’m Mike Whelna. Today I am hanging out with Julia Holt. Julia, how are you today?

Julia Holt I’m great. How are you today, Mike?

Mike Whelan Very good. I’m excited because we are going to talk about a document that is super relevant to me being a super famous influencer and online personality at the level of Cardi B. I am often called the Cardi B of contract. So. So this is super relevant. We’re talking about a license agreement that involves Cardi B. Tell us what this thing is, Julia. When are we going to see this kind of document?

Julia Holt So we’re going to see this kind of document when artists are involved with an endorsement or sponsorship deal. This document is the agreement Cardi B had with Whip Shots, which is an alcohol infused whipped cream product that she is promoting.

Mike Whelan Yeah, I’m just lingering on the idea of me as the Cardi B of contracts. And if I were what kind of alcohol infused products would I support? Well, Julia, before we dig into this document, tell us about you. You’re in New Orleans. Tell us about your practice.

Julia Holt So I have my own entertainment IP startup practice, and I’ve been having my own practice for about a year now. I was an entertainer for about ten years working in the music industry, in the film industry. And now here I am advocating for entertainment professionals and creative entrepreneurs.

Mike Whelan Perfect. All right. You’re the right kind of nerd for this thing. So let’s dig into it. I’m going to start at the beginning with this license agreement. You mentioned that it is Cardi B and this company, if I’m understanding their relationship correctly, this company wants to go say, this is Cardi B’s favorite alcohol infused whipped cream product, as if there are several of them. And so they are trying to dictate terms in terms of how they can speak about that relationship. And my understanding kind of broad picture, what we’re doing here.

Julia Holt You got it right. That’s exactly what’s going over.

Mike Whelan Well, let’s jump in to the substance of it. I’m going to go to 1.1 license grant. As with a lot of these sections, I mean, there’s a lot of text here – we’ll talk about the relationship later. But it is clear that the person who drafted this really wanted to get some control over how Cardi B’s name was used. Tell me about Section 1.1 and the grant of this license.

Julia Holt So this is basically stating that anything that’s now used as promotional tools, whether it’s billboards, social media, television, all of that is covered in this agreement. And this is going to allow Cardi B to give approval over those types of promotions.

Mike Whelan Yeah. And it says that the licensee is going to be solely responsible for retaining a PR agency to manage all of the PR. And so it’s interesting how they’re even they’re really trying to professionalize this. Right. And I don’t know anything about this particular company, but I assume this is a fairly small company. This screams that Cardi B is saying, you know, we do not play with small timers. You need to go run this like a professional, a professional relationship. When I jump down to two and the approval is again, a fairly long section where she you know, her lawyers are saying, you don’t just get to go use my name. Talk to me about the approval section and how they’re creating limits on the use of the name.

Julia Holt Yeah. So anything that comes out of this deal, any type of promotion. Cardi B has to approve, and she can’t allow anything with her image on any video, any type of flier that goes out. She needs to be willing to see a copy of that and they have to make adjustments if she doesn’t agree with what she’s promoting. And this also states that, like she has to approve of the media outlets on which everything is released as well. She can’t just have it to something that doesn’t match her brand, and that’s the control that the lawyers wanted her to have. And I think it’s very artist friendly on her behalf to be able to approve of everything that goes on her limits. And we don’t see that very often. A lot of company control happens with these type of deals.

Mike Whelan Yeah. And even though there are, you know, exceptions to this one sentence that I found fascinating, it says licensees shall have no right to pass through rights granted in the licensed properties to third parties, including retailers without licensors prior written approval. That’s super interesting to me because I’m imagining a situation where I go into a liquor store and don’t know where this is sold exactly, but I go into a liquor store. You’re used to seeing kind of posters or cutouts with famous people standing next to the product and whatever. It sounds like she’s saying, okay, even if you’re going to go sell it That’s where my face being in front of people really matters. This ability to limit third parties is really strong.

Julia Holt Yes, absolutely. Like no one can use her likeness, her name, without any type of approval. She needs to have a copy of it before anything is disseminated.

Mike Whelan What you see a lot as we go through the contract stuff that we’ve talked about before, we had a previous episode I mentioned to you where we talked about Shaquille O’Neal’s relationship with Papa John’s. So I would encourage you to go back and and watch that episode as well. Some of the sections that we talked about there that we’re not going to go over here are things like the licensor obligations and the compensation and the term and those things. Something that I wanted to point you to though, was down in 12. Let’s say the relationship has ended, right? Whatever the term is, for some reason, either the term is wrapped up or there was under the termination section, they agreed to end it. If I look down in section 12, it’s called post termination rights. 12-1 says upon expiration or termination of this agreement, licensee shall promptly pay licensor for the accrued royalties and will immediately cease using the licensed property for any purpose, provided that licensee shall have no obligation to remove any materials containing the license property from the social media accounts. But they can’t repost reshare pin highlight otherwise post things beyond the terms. So it sounds like they’re sort of balancing the reality of the permanence of the internet, right? That we know some things are going to still be out in the in the ecosystem. You know, you can go on these what’s the app called where you jump in a time machine and go back in and see old post like it’s always going to live there. They’re allowed to have that there. What do you think about this section. Obviously, she’s going to get paid for accrued moneys, but how they’re using the properties after the term.

Julia Holt I think this part is really interesting to me as well, because it’s saying, well, if we don’t have a relationship with each other, no, you can’t reshare the stuff that we’ve done or share like some bloopers of stuff that we’ve done before that I hadn’t had a chance to look over. Like, you need to take those things down or you just need to leave what you already have because we no longer have a deal here.

Mike Whelan Yeah, that’s an interesting relationship, right? And not it’s almost like they’re treating the retweets as a derivative product. Right. Like again in the in the Shaq episode we talked about, you know, derivative products also need approval. You can’t just take this interview, like you said, and put bloopers up or repurpose in a blog post or whatever. They’re treating retweets, just any kind of exposure as a derivative product. Don’t use that. I think that’s interesting how that’s adapted to sort of the Internet context. Well, let’s jump down finally to schedule A, I’m going to jump down to number eight, a guaranteed minimum royalty. This is fascinating too. Subject to the licensor doing what she’s supposed to do. The licensee will pay a guaranteed minimum royalty in quarterly installments and each contract period as follows. First of all, this is a sign that I am not, in fact the Cardi B of contracts because I don’t have this section. Listen to this. You have to pay $550,000 in CP 1, $1,100,000 in CP 2, $1,650,000 in CP 3. The guaranteed minimum royalty due to licensor in connection with CP 1 shall be satisfied by the payment of an advance. I mean, this lady is making cash. What do you think about section eight in here?

Julia Holt Yeah, I think this is something instead of just giving the artist all the money upfront for doing the deals, structuring it by year or in certain quarterly payments, that’s ideal, you know, to allow the business relationship to go for a longer period of time instead of someone just like ditching the project. So that’s one side of it. But also the fact that, you know, that’s a lot of money, that’s something that an artist. Yeah. Like dream of having, you know, just like, oh, I’m going to go promote this product and then I don’t have to do too much. Like in regards to promoting the product. It’s a commercial here or there. It’s a promotion online. It’s some billboards, but like, you know that makes or breaks a year for an artist having some kind of sponsorship.

Mike Whelan Well, but I was interested in your input on the context because this is Cardi freakin B, right? Like, this is not the everyday Joe. And we’ve seen in other episodes, artists are kind of flailing to figure out how to make money, just how to adapt to to the context that we’re in. We even had a conversation previously about an NFT. Right. Like how to get people to take these songs that were released and invest in these NFTs as an investment product. I mean, here’s an artist just trying to turn fandom into some kind of revenue stream. You and I had talked before about kind of the shifts in the way the Grateful Dead changed, the way concerts made money, the way iTunes changed, the way the music industry, obviously what Napster did with its impact on making money. Artists shifting to live events. You saw this obviously, with the whole Taylor Swift fiasco of how many tickets. I mean, she can charge whatever the heck she wants. Cardi B is doing it this way. Cardi B is capturing it through by turning herself into a brand. But I mean, come on, how many artists are going to become a brand? The vast majority of them are creating a product, a service, really, that creates an atmosphere at an investment. What is your take on vehicles like this for kind of the everyday artist? What lessons are there? If I’m a small, if you’re you right, and you’re advising fairly small bands, getting fairly small gigs on innovative ways to capture money in the current market, how are you thinking about that differently?

Julia Holt Well, you know, I think of a smaller scale and thinking about who your audience is as independent artists, that’s the first thing to address. Like who are the like-minded individuals that you’re trying to reach? You know, what you’re trying to capture. And the way that artists are making money is by going on tour because, you know, streaming doesn’t make anything for an artist. That was a hard thing people had to face during the COVID 19 pandemic. When live events shut down is like that’s a lot of their guaranteed revenue, especially from like festival season being shut down when COVID hit. Like that’s where a lot of artists bank on making money is doing those festival runs. And you know, there are smaller sponsorships or like creating a merch line that’s very important. Artists need to create merchandise and that will make that step revenue for them, selling their records, selling physical copies or something unique. You know, I liked the romanticism of an NFT, but the NFT didn’t really catch on because like there was a barrier to entry. Not many people knew how to get to the NFTs, but the idea of like the user experience of, you know, locking into that fandom, like unlocking a ticket or like a T-shirt or a limited edition item from an NFT was a good idea to me, but it didn’t necessarily work out. I think that there’s a lot more that people needed to happen to think about who their individual audience is to create those type of experiences for their fans to make it unique. And, you know, yeah, blockchain is coming into play too.

Mike Whelan And sponsorship is a means. It’s interesting because you’re seeing, you know, there always were artists and artists went and they made money how they, how they made it. And in this new economy, in this so-called creator economy, we’re at the point where a whole bunch of us are becoming artists in different ways. I mean, I am in a way, you are in a way, in the way you create content and try to teach around your product. What’s fascinating for the people who grew up with the big dreams and they’re just going to move to Nashville or to Austin or whatever, and they’re going to chase it, then they’re going to become Taylor Swift. It’s fascinating because we’re sort of building a middle class of artists in a way that maybe is new. You know, we’ve always had jobbing artists who went and made enough to survive. But the cool thing about the creator economy is there are all these ways to go create kind of a middle class income on, you know, being online, on being creating different kinds of exposure and becoming some kind of influencer. All these companies are desperate for content, and these artists can do it in ways that they just weren’t thinking about before. I think Cardi B is laying some interesting groundwork for that, so I appreciate you sharing that with us, Julia. For people who want to learn more about your practice in New Orleans, reach out to you. Learn more about how they can help artists turn their work into money. What’s the best way to connect with you?

Julia Holt They can visit my website, juliaholtlaw.com. They can find me on Instagram and TikTok as well. But yeah, just go to my website and reach out to me there.

Mike Whelan We’ll make sure to include that information over at the LawInsider website. Just go look at Lawinsider.com/resources. You’ll find this episode and all the others. And if you want to be a guest on the Contractor Tearshow and beat up contracts as we do, just email us we’re at community@ lawinsider.com. Thanks again, Julia. We’ll see you all next time.