Template for Content Provider Agreement

I recently contracted with a builder to do some work on the Hyperica hyperport, and created a new provider agreement for the project.

At the start of the project, before we had negotiated any terms, there were a bunch of options to pick from. The ones that were relevant to our project are included in this agreement, and might be relevant to yours, as well.

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Most of it should be self-explanatory. Here are some explanations for the more technical parts:

EIN or SSN

In the United States, most companies have an EIN — an Employer Identification Number — provided free by the IRS through a quick-and-easy online application. An EIN allow companies to hire employees and open bank accounts. If a company is a single proprietorship — which most freelance designers are — a Social Security number serves the same purpose.

The reason you need this information is that content design is a business expense, and you will be deducting it from your taxes. If you get audited, the IRS will want to know who you paid the money to. If you pay more than $600 to a particular designer, you will also need to file a 1099 form at the end of the year.

Outside the U.S., you should replace this part with your local equivalents.

Work and delivery schedule

Sections 1 and 2 of the agreement are where you spell out what you expect from the designer, and when.

Be as specific as possible here. The vaguer you are, the more likely it is that there will be room for misinterpretation. Do you need OAR files? IAR files? Regions of particular sizes? Buildings? Other types of content? The template includes some of the things that people usually forget about, including sketches for the proposed build, a palette of colors and materials, and a navigation plan for the build.

Set up a schedule of when you expect everything delivered.

For large builds, it’s best to do this in phases, with payment linked to successful completion of each phase. That way, if a project is going completely wrong, you’ll know early on, and can cancel the agreement and find another provider before you get in too deep.

Rights and licenses

Sections 3, 4, and 5 spells out all the rights and licenses involved.

To start with, you need to have the provider make sure that they have the rights for all the content they’re providing you, either because they’re creating it from scratch, or because they have the proper agreements for the third-party content they’re using.

If you have any doubts at all as to where your provider is getting their stuff, ask them to start with a blank slate of public domain images, scripts and objects. The Linda Kellie collection is a good place to start.

Having proper provenance is particularly important for schools and corporations who might be attractive targets for content infringement lawsuits. You can also provide your creator with a budget that they can use on the Kitely Market, which does an exemplary job of protecting creator rights.

This part should be non-negotiable. If a creator can’t guarantee provenance of content, or be willing work within a limited selection of pre-approved, safe content, you should get another creator.

What you can negotiate is what rights you will get to what the creator builds. If at all possible, ask for “work for hire” or “all rights.” In the U.S., “work for hire” means that, for all effects and purposes, you created the content yourself. You own the copyright, and you can do anything with the content that you want. In jurisdictions where “work for hire” contracts aren’t legal, you want to default to an “all rights” contract which is almost the same thing. In particular, it means the creator can’t reuse the stuff they built for you with other clients.

But maybe you don’t care if your content is unique. Say, you’re hiring someone to build a classroom. Do you care if a school on the other side of the planet has the same exact classroom? If you don’t care, ask the creator for a discount in return for more limited rights. You get to save money, and the creator gets to resell the same work to other clients.

Finally, Section 5 also covers some other rights-related issues. For example, even if you have a “work for hire” contract with the creator, you may allow them to take pictures of the work — or actual copies of the work — to use in a portfolio. That way, future customers can see the kinds of things this particular creator has done in the past.

This section also covers attribution. Some creators just want to get paid. Others want to see their names up in lights. Discuss this up front so that nobody’s feelings get hurt. You might also get a discount if you agree to put the creator’s name or logo in a prominent location on the build.

Payment schedule

Sections 6, 7 and 8 cover how much the creator will get paid, when they get paid, and how they get paid. Being clear and specific about this up front will save a lot of headaches down the line.

One thing you might want to spell out is who pays the fees for any money transfers. As a general rule of thumb, the customer pays any fees associated with sending the money, and the vendor pays any fees associated with receiving the money. So, for example, with a wire transfer, the originating bank might have a fee to send the wire out — the customer pays this. Then, when the wire is received, money may be taken out by the intermediary and destination banks — the vendor covers that part. Similarly, for PayPal transactions, the charge comes out on the vendor side — there is no fee to the customer for sending the money.

If the creator wants to have these fees paid by the customer, they should be included in the total cost of the project and spelled out up front.

Legalese

Sections 9, 10, 11, 12, and 13 are pretty standard for this type of contract. The vendor agrees that they’re an independent contractor, not your employee, indemnifies you against any costs associated with problems that they have caused — such as copyright infringement. It spells out the country whose laws apply, who will cover legal costs if there’s a problem, and, finally, says that there are no side agreements.

That last section is worth paying attention to, by the way. It means that, after the contract is signed, you can’t say, “Oh, by the way, I forgot this one thing — can you do it?” without adding it to the contract and re-signing it. Otherwise, you’ll end up with a situation where the creator will insist that you never said anything, and you’ll say that you put it in an email, and the creator will say, “Oh, yeah, I forgot all about that — I was just going by the contract.”

Because they will.

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The agreement is licensed CC0, for anyone to use, edit, or distribute without restriction.

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maria@hypergridbusiness.com'

Maria Korolov

Maria Korolov is editor and publisher of Hypergrid Business. She has been a journalist for more than twenty years and has worked for the Chicago Tribune, Reuters, and Computerworld and has reported from over a dozen countries, including Russia and China.

  • I really believe that most virtual world creators undervalue the use of contracts. We all have heard over and again how someone was asked to do a job and then the customer added more work to the build. Or that the creator did not create what they were asked to do. A contract is the best way to keep all agreements in an organized way.

    • I think a lot of folks are scared by the idea of contracts. They think that if they make a mistake creating a contract it will create a ton of problems for them or that it means that they’re serious about their business, or that a contract is too much of a pain and will scare away their partners.

      But a contract is just an agreement of who’s going to do what, for how much money. By writing it down, you’re making sure that there are no misunderstandings.

      Even when there’s no cash payment — ESPECIALLY when there is no cash payment — an agreement is critical.

      I’ve heard of numerous cases where creators did a bunch of work for free for a grid in return for land or exposure or what have you, then got shut out of the grid, and the grid kept all their work. And I’ve also heard the flip side — someone pays a creator way too much money for something, they don’t get what they expect, and they’re forced to pay even more money if they want to do anything with it, because the creator owns the rights, not them.

      A nice, clear written agreement right up front also helps to weed out the scammers. There are folks out there who try to get something for nothing. And one way that they do that is by promising the moon, but in vague, non-specific terms. Then, when it comes time to deliver, “What? I never said that. You must have misunderstood.”

      • One of the issues that I have run into is that there are far too many that want to run there VR business just like a RL business but, they don’t want to provide a real name and file as a real company in the proper sense. In my opinion, if you don’t want to provide real information, you don’t want a real business. Keep it real and you can expect a real result.

        • It happens because people get painted into a corner. They start out with an avatar doing all sorts of crazy, kinky or whatever stuff in virtual worlds. Why not? They then start selling crazy kink accessories. Then they move into general purpose clothing and avatars, and next thing you know they’re building corporate conference centers for enterprise clients — still as their kinky avatar. Revealing their real names will forever link their real-world identity with all the wild and crazy stuff they got up to in-world. Oh, noes!

          Of course, nobody cares. Everyone is too busy worrying about their own deep dark secrets without worrying about yours.

          But I do strongly recommend that people who are starting to do work for money, start setting up a separate, parallel, RL identity in addition to their pseudonymous one.

          Have the RL identity hire employees and have the avatar be just one of those employees. Transfer all the clients over to the RL design firm. Over time, phase out the avatar — the avie can go back to the sexy games — and just use the RL identity for all business-related stuff.

          And remember — when you create your company listing on Linked In, don’t say “virtual worlds.” Say “immersive simulations and training environments.” Just a pro tip there! 🙂