Business Musings: Disney, Omnichannel, and Contracts (Licensing)

Because I got behind on the news in the spring, and because, due to the busiest fall I’m going to have in more than a decade with all of my work and deadlines, I am writing my weekly blogs weeks in advance.

Which means that, unless something truly catches my fancy (enough that I will sacrifice sleep and deadline pages over it), I will remain behind on current news.

By the time I write about many things, they’ll be long in the past (one hopes).

However, many are just continuing on.

Such is the case with the big Disney kerfuffle in the spring of 2021. As some of you know, Alan Dean Foster went public in November of 2020 that Disney had not paid him the royalties owed on many of his projects. Those of you younger than 35 probably have no idea, but Alan Dean Foster was the go-to franchise guy for a decade or more. If you wanted a good book in someone else’s universe, Alan was the guy. He wrote the novelization of the very first Star Wars movie in 1977, back when the movie was titled Star Wars: A New Hope, without any weird numbering.  He wrote the novelization for Star Trek: The Motion Picture. He wrote a kazillion billion of these things, and they were all good.

The fact that Alan was no longer getting royalties on his tie-in work—royalties on work that had earned out before a lot of Disney execs were born—was pretty serious. It was worse for him and his wife because they were dealing with major health issues.

He fought for himself, had his agents fight for him, did everything right and to no avail. No one would even answer his letters. He went to the Science Fiction and Fantasy Writers of America grievance committee, and Disney wouldn’t answer them.

It wasn’t until the grievance committee asked Alan to go public that things started to change. Because what Disney didn’t know is that Alan has his own fanbase. It’s large and influential.

Read his very frustrated letter here.

Once public, the news spread on social media, under the hashtag #DisneyMustPay. Pretty soon, more and more writers let it be known that Disney was ignoring them too.

Disney was pocketing the money. They had even sold off pieces of these properties and were not informing the licensees of an obligation to pay the writer.

SFWA set up a Disney Must Pay Joint Task Force, with the Authors Guild, Authors Guild, Horror Writers Association, National Writers Union, Novelists, Inc ., Romance Writers of America, Mystery Writers of America, the International Thriller Writers, and Sisters in Crime.  Task force members include Neil Gaiman, Tess Gerritsen, Mary Robinette Kowal, and Chuck Wendig. (In August, the Task Force expanded to include creative teams that work on comic books and graphic novels.) The point of the task force is to identify and guide writers (and other creatives) who might be owed money. And guess what? Lots and lots of writers were owed money. (If you’re one of those writers and creatives, go to the website writersmustbepaid.org and fill out the form.)

News organizations from The Wall Street Journal and The Hollywood Reporter picked up the story, and finally Disney was shamed into paying Alan Dean Foster, James Kahn, and Donald F. Glut, who wrote the first three Star Wars tie-ins. But the fight continues for other writers.

In May, Mary Robinette Kowal issued this statement on behalf of the task force:

Since we launched the Task Force, progress has been made; we are pleased that a few writers have been paid. However, we do notice the
difference in how the lower profile writers are being treated. We should not still be having the discussion about honoring their contracts.

Note she did not say that she was surprised that lower-profile writers were treated differently. Those of us who’ve been in the business a long time, and that includes Mary, know that lower-profile writers get treated like dirt all the time. The news, in this instance, was that the big names were being treated like crap too.

And yet…not surprising. For a long time, it’s been a thing in the U.S. TV/Film industry to stop paying the “little people” like writers who are owed money.

(You will note Disney is still in the news for failing to honor contracts, this time Scarlett Johansson’s suit over Black Widow. It has Disney scared and trying to do major damage control. This is something to watch. Also note that the issues in the Black Widow case are different than the issues in the Alan Dean Foster case, but one thing is similar. Disney prefers to say I’m sorry rather than follow the contract. {Or not even apologize at all.})

One of the things going on in the Foster case is something that has happened in the film/TV industry a lot. It has long used the fact that an organization got subsumed or purchased by another organization to ignore existing contracts.

Every now and then, big organizations get caught selling properties to shell corporations and playing this “we sold it” game, even though, ultimately, the money goes to the same place.

With Disney, though, they acquired LucasFilm which was a different entity when Alan Dean Foster worked for it. And Disney still didn’t pay attention to the contracts.

There was no good corporate reason to do so. Honoring the contracts got them very little—until the press got so bad that they had to do so.

This is the dark side of the omnichannel post I wrote a few blogs back. Yes, I’m urging writers to consider the omnichannel approach for their writing businesses (and I’m delving into it for mine), but other organizations like Disney have already done so.

They’re exploiting all of their intellectual property in a million different ways. (Note that the correct term for using IP is “exploiting.” Telling, no?) They’ve been exploiting IP for nearly as long as the company has existed.

They’ve also been draconian on business, going back to Walt himself. Their business practices are notorious for being cut-throat. Which is why I wasn’t surprised last spring when the #DisneyMustPay hashtag went viral. Disney was always the cheapest company to work for and the one that was the hardest to wrangle a dollar out of.

But as I wrote the omnichannel post, I had another realization. There was something else going on here, something a little more complicated.

Note: What I’m about to write does in no way excuse Disney or discharge it from its obligations. This is just an observation.

A few years ago, I wrote about attending classes at the global Licensing Expo here in Las Vegas. The Expo which, if luck holds and the pandemic doesn’t break us, will happen again in May of 2022, has a concurrent program teaching people about licensing. That’s what I attended.

And one of the instructors, who deals with licensing across brands, mentioned traditional publishing. She called the way it did business insane, and hard to figure out, and told people to avoid it if possible.

Why? Because the contract terms were opaque at best. They did not follow industry standards in anyway.

Standard licenses, such as a license for a bobblehead toy, are not open-ended. They are term limited. If there’s a renewal, it’s called for in the contract under certain conditions.

Standard licenses can run as short as three years or as long as ten. But the idea that a license would still exist in its original form from 1976 onward? That’s foreign to most licensing branches of many companies.

I’m sure that initially, when Alan Dean Foster contacted Disney, he got ignored because they couldn’t fathom what he was talking about.

To make things more complicated, Disney offers standard licenses when it licenses out a book based on one of its properties. I was offered one in 1997 which I did not take, although not because of the contract. I didn’t take it because I had to be onsite for a Disney project and my mother was dying. I couldn’t guarantee that I would be able to spend that April and May in California—and sure enough, I was right. My mother’s funeral was in early May. Even if I had stayed for the entire project somehow, dealing with the family might’ve prevented me from completing the rush job on time.

I still remember the contract terms, though, because they were standard licensing terms, not standard book licensing terms. I would be paid a generous flat fee for two months work, and all of my expenses would have been paid. If the book sold above expectations, I would receive even more money up to a certain amount (not a percentage).

The license ended after four years, but if it needed to be renewed, there were terms for that. My agent at the time, who had gotten me the deal and was quite pissed that I turned it down (it was a lot of money), told me that she couldn’t change the “Disney contract.” She had tried in the past, and had failed.

A year earlier, and I would have taken the deal. Like many other licensing deals, it was realistic and it covered the costs and earnings that I would have made on the project. It was flexible enough to handle increased sales if there were any and it was fair.

The terms of the deal also fit into the company’s spreadsheet. Because corporations like Disney do so many licensing deals, they now have software that covers the terms of the deal, when payments are due, when contracts end, which regions the project gets sold in, and so on.

These are very complex and having a standard way of conducting business makes it easier. Almost every company that licenses out its product has a version of this spreadsheet.

The deal terms are so common that at the Licensing Expo in 2019, several companies sold software for just this purpose.

But, as I said, traditional publishing does not fit into this system. The way they conduct business is weird and wrong in many respects. Because it is, it is easy for any company that owes a publisher money to ignore them.

I can’t remember the last time a traditional publisher sued a company for non-payment of licensing fees or royalties. Traditional publishers do not have the system to keep track of their inventory of books, let alone what the contract terms are, who owes whom money, and who should pay it.

Yes, their business model is a complete and utter mess.

As I said, none of this excuses Disney. For generations, they’ve been known to strong-arm people who work for them. What happened to Alan Dean Foster, and what the task force is fighting, is part of a long string of bad behavior on Disney’s part.

But I couldn’t help thinking about all of the licensing that Disney has done over the years. I know they have a system to renew and maintain those licenses. Had traditional publishers who now have books in the Disney system used standard licensing terms, I’m sure those books would have found their way into the Disney spreadsheets.

I can’t believe that Disney would have ignored every one of LucasFilm’s licenses. In fact, as I think about it, all Disney would have had to do was wait for the term-limited license to end, and then refuse to renew. Again, standard business practice.

What does this mean for the writers caught up in the DisneyMustPay mess? Nothing. Disney must pay them. Disney owes them money. It’s that simple.

But this means something else for writers running their own businesses, writers who are not at the mercy of their idiot traditional publishers.

As you set up your licensing business, you’re going to want to follow standard licensing agreements. Not only are they better for all involved, they’re also clear and easy to follow.  It won’t guarantee that you won’t get into a Disney situation. Chances are you will, particularly with a corporation that believes in asking for forgiveness instead of asking for permission.

(And believe me, as I wrote that line, I know the irony of the word “forgiveness” when dealing with Disney. They don’t even ask for forgiveness. If forced, they’ll make someone they owe whole. But they won’t ask for forgiveness. Forgiveness means admitting a mistake, which they will not do. Witness the Black Widow case.)

A standard agreement also puts both sides on notice. If something goes wrong, there’s a way to remedy it. If your agreement falls outside of the way things are done, you will be fighting for every single thing, and explaining yourself over and over and over again to the latest corporate minion, instead of telling that minion to check the contract, a contract and its terms that would be easy to find.

I’ll wager the contracts for most of the traditionally published writers that the task force is dealing with are almost impossible to find, given how much consolidation there’s been in traditional publishing. I’ll wager that when the properties were sold like LucasFilm to Disney, none of the publishing contracts with the writers went with that deal.

Then there’s the problem of the publishing contract with the writer. That contract is usually not with the corporate entity, like LucasFilm, but with the actual book publisher—who is the one with the LucasFilm contract.

A LucasFilm contract is relatively easy to prove though, because they were very hands-on. They had to approve everything and did. So if the writer was meticulous with their records, they would have the contract and the letters from LucasFilm for the approvals.

But many licensors were not hands-on, and that’s more of a problem. Big corporate attorneys, like those for Disney, are paid to make the problems disappear. Sometimes, if the problem is a pesky little writer, the best way to make that problem disappear is to ignore the writer. If that doesn’t work, tie the writer up in court.

Unfortunately for Disney, someone handled this interaction poorly and the entire issue became a viral hashtag. If you’re one of the “lower-profile” writers, make sure you’ve contacted the task force.

If you’re a writer who is thinking about licensing your work various places, though, as a licensor (which makes you the equivalent of Disney in this scenario), make sure your agreements follow the standard format.

It won’t prevent problems in the future. Some organizations are adept at creating problems that benefit them. But having a standard licensing agreement when you are doing business with others will mitigate some of the problem.

Writers who work in traditional publishing, particularly tie-ins, don’t have the luxury of crafting their own agreements. I didn’t know until 2019 that there was a standard form for these things, although you’d think I should have.

If I didn’t know, then most writers don’t know that either.

However, indie writers can make sure that their agreements are the best they can possibly be—with an eye to success and an eye to the worst kind of problem, which is the kind that Alan Dean Foster (and others)  had to deal with.

By the time this piece appears, I hope the Disney problems will be resolved. I doubt that they will, but you never know. Right now, the task force is handling this beautifully. I know that will continue in the future.

Sometimes, just putting a little sunlight on a problem makes the offending party find a solution quickly. Sometimes. I hope this is one of those times.

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“Business Musings: Disney, Omnichannel, and Contracts (Licensing),” copyright © 2021 by Kristine Kathryn Rusch. Image at the top of the blog copyright © Can Stock Photo / lineartestpilot.