Miami - July 6, 2020

Introduction: Definition of the VAOD Concept

In order to describe the Visual Art-On-Demand (VAOD) streaming mobile app platform model, one could say that such a platform lists and visually displays certain categories of artworks, licensed by artists to the platform on a non-exclusive basis, including but not limited to photographs, videos, digitized paintings and other digital, born-digital and digitized visual artworks. Such a platform enables its subscribed end-users to browse, view (in-app), access, watch and display the digital image and/or visual representation of such artworks, for their personal use only, on both their smartphone and smart/connected TVs (e.g. at home).

The platform may also enable its subscribed end-users (as further detailed below under section 4.2) to (a) purchase and download a copy of the computer file (medium) containing the digital image and/or visual representation of an artist’s artwork, and (b) (sub-)license, on a perpetual basis and for personal use purposes only, the digital image and/or visual representation of the artwork contained in such purchased and downloaded computer file (e.g. in high resolution/quality jpeg or png format).

Many Clients ask us how they can structure a comprehensive and ironclad contract between them (VAOD Streaming Platforms) and artists; here are the four main structuring elements which must absolutely be addressed in such a contract:

1) Artist’s Intellectual Property Rights In Artworks Visually Displayed on VAOD Streaming Platform

The Agreement should expressly provide that the platform acknowledges and agrees that the artist shall at all times solely and exclusively own and retain (while artist’s artworks are listed on the VAOD platform and thereafter) all rights, titles and interests, including all related copyrights, moral rights, trademark rights and other intellectual property rights, statutory or otherwise, in the artworks (including all digital images and/or visual representations thereof as contained in computer files stored by the platform on servers for and on behalf of the Artist) created and/or owned by the artist, clear of all judgments, claims and encumbrances. In other words, the artist reserves all rights not expressly granted to the platform under the agreement.

2) Purpose of the Agreement & Scope of Services

The VAOD platform and Artist typically enter into an agreement in order to determine the terms and conditions under which (i) Artist will grant the VAOD platform a non-exclusive, worldwide, perpetual license to host, list, transmit, stream, distribute, sub-license, and promote the artist’s artworks on the VAOD mobile app platform; (ii) the VAOD platform may, for and on behalf of artist, host, store (a copy of the computer file containing the digital image and/or visual representation of each artist’s artwork), list, transmit, stream, distribute and promote the artist’s artworks on/from the VAOD mobile app platform as well as collect revenue from its subscribed end-users; and (iii) the platform and the artist will share revenue generated and collected by the VAOD platform from its subscribed end-users.

3) Scope & Grant of Non-Exclusive Artwork License

Artist grants the platform a non-exclusive, worldwide, perpetual license to host, list, transmit, stream, distribute, sub-license, and promote the artist’s artworks on the VAOD platform:

(i) in digital/electronic format only;

(ii) on a recurring subscription basis to all subscribed end-users so that they may (a) access, watch and display all artists’ artworks, for their personal use, on both their smartphone and smart/connected TV(s); and sometimes

(iii) by enabling such end-users to download one or several copy(ies) of the computer file containing the digital image and/or visual representation of an artist’s artwork as selected by such end-users on the VAOD Mobile App Platform (as further discussed below under section 5.2) in accordance with both:

(a) a computer file transfer agreement, which Artist authorizes the platform to execute, for and on behalf of the artist, with any subscribed end-user; and

(b) a non-transferable, perpetual, unlimited access and personal-use sub-license agreement (in relation only to the digital image and/or visual representation of Artist’s Artwork contained in the purchased and downloaded computer file) for the sole purpose of visually displaying artist’s artwork on end-user’s smartphone and/or smart/connected TV(s).

The license granted by the Artist to platform should also include the right for the platform to specifically use and display the digital image and/or visual representation of artist’s artworks on the platform’s website, social media accounts or on any other related marketing material, and for the platform’s commercial purposes only.

4) Revenue Sharing

4.1 Subscription-based User-Centric Revenue Distribution Model

The new emerging trend is the use by platforms of a user centric payment system (UCPS) under which (as opposed to Premium revenue sharing model) the money paid by one end-user only goes to the artist(s) whose artworks are actually liked, accessed, viewed and displayed by such end-user on his/her smartphone and smart/connected TVs.

Under such subscription-based user-centric revenue sharing model:

(i) the artist typically receives (on a monthly or quarterly basis) revenue in proportion to the number of times each end-user presses the ‘like’ and ‘add to favourites’ buttons in relation to the artist’s artwork,

and

(ii) a certain percentage of each subscribed end-user’s subscription fee payment is distributed directly and only amongst the artists (a) such subscribed end-user viewed the artworks of, and (b) in relation to whose artworks the end-user pressed the ‘like’ and ‘add to favourites’ buttons.

4.2 Purchase by subscribed end-users of files containing the digital image and/or visual representation of artists’ artworks

The agreement can provide that the Platform may facilitate the execution and implementation of file transfer agreements between any artist and subscribed end-User only and strictly as a third party intermediary and agent.

It has to be made clear that the platform shall not be responsible for (i) the inappropriate use by subscribed end-users of downloaded files, or (ii) any other action (after the file has been downloaded by the subscribed end-user) by subscribed end-user consisting (without limitation) of (1) selling the digital image and/or visual representation of any artist’s artwork; (2) using the digital image and/or visual representation of any artist’s artwork in any marketing material; or (3) editing, copying or manipulating the digital image and/or visual representation of any artist’s artwork for financial gain) taken by subscribed end-users.

The Parties should acknowledge and agree that by purchasing any file, subscribed end-users do not acquire any right, title or interest in or to the digital image and/or visual representation of artist’s artwork (contained in the purchased and downloaded file) or any associated copyrights. Subscribed end-users should only be granted the right to visually display and use such digital image and/or visual representation of artist’s artwork for personal and non-commercial purposes only.

As a facilitating intermediary and agent which is only a third party to any file transfer agreement between any artist and subscribed end-user, the platform typically collects a broker fee percentage from each subscribed end-user who purchases and downloads a file containing the digital image and/or visual representation of an artist’s artwork listed on the VAOD Mobile App Platform.

Dr. Ariel Humphrey