SAG-AFTRA Influencer Agreement and Waiver: Considerations for Brands and Practitioners

04/01/22
SAG-AFTRA Influencer Agreement and Waiver: Considerations for Brands and Practitioners

It has been almost one year since SAG-AFTRA introduced the Influencer Agreement and the Waiver. During this time, it has become evident that there is room for improvement. 

Influencer marketing is expected to reach $16.4 billion in 2022. “Influencers” are individuals who create content and share it through their social media platforms to influence the opinion and/or purchasing decisions of their social media following. Brand marketers currently dedicate a significant portion of their clients’ advertising budget to influencer-related marketing. For years, the legal framework governing the collaboration between influencers, advertisers and brands has been comparable to the Wild Wild West, presenting multiple legal challenges to navigate.

In 2017, the Federal Trade Commission (FTC) issued its “Guides Concerning the Use of Endorsements” to encourage clear and truthful influencer advertising. Prior to the FTC compliance policies, influencers were not required to disclose to consumers whether they actually liked a particular product, or simply received compensation to promote the product. However, the FTC Endorsement Standards only respond to one of the many challenges that influencer-related advertising presents for brands, advertisers, and the influencers themselves.

Further, social media use itself presents legal challenges for influencer advertising. For example, the use of third-party content without permission, although encouraged by the mechanics of social media platforms, is explicitly prohibited in influencer advertising. The unauthorized use of third-party intellectual property, including photos, videos, and other content that includes third-party trademarks, copyright protected material, and other proprietary rights, exposes influencers and brands to liability. Consequently, brands have been encouraged to narrowly draft influencer agreements and social media campaign terms to ensure protections against reckless influencer actions.

Background

Influencer marketing exponentially grew when the COVID-19 pandemic drew performers to social media as the principal outlet to connect with their audience. As a result, the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) decided to venture into the fast-growing influencer market.

In February 2021, SAG-AFTRA, which is part of the largest federation of unions in the United States (the AFL-CIO), and the Joint Policy Committee approved the Influencer-Produced Sponsored Content Agreement (the Influencer Agreement), governing influencer-produced sponsored content that is created pursuant to contracts between influencers and advertisers. (The Joint Policy Committee “represents advertisers and advertising agencies who have authorized us to collectively bargain on their behalf with SAG -AFTRA and the American Federation of Musicians, on the collective bargaining agreements that govern the use of performers and musicians in commercials.” See www.jointpolicycommittee.org.) With this move, SAG-AFTRA has been welcoming influencers who want to join the union and benefit from the same protections enjoyed by other creatives in the entertainment and advertising industries. Shortly after, in March 2021, SAG-AFTRA released its Waiver for Influencer-Produced Sponsored Content (the Waiver), creating a mechanism for agencies and advertisers that are signatories of the SAG-AFTRA Commercials Contracts to engage influencers under a union approved deal. (The SAG-AFTRA Commercials Contracts are “landmark agreements for a new era, introducing innovative and flexible alternative compensation models to promote growth of union-covered commercial work.” See www.sagaftra.com.)

A Shift in the Playing Field

Since their release, the Influencer Agreement and Waiver have introduced changes in how influencers, brands, and their attorneys negotiate and draft their contracts. By releasing the Influencer Agreement and Waiver, SAG-AFTRA is supporting an important shift towards a legal formalization of the relationship between individual influencers and the brands they work with, as well as more protections for a group that had been largely working outside of established advertising and marketing norms.

Provided the influencer-created content is for digital distribution purposes only, brands can use SAG-AFTRA members to create influencer content expecting to be exempt from SAG-AFTRA Commercials Contract, and the minimum fees associated therewith, because pay can be freely negotiated. Additionally, brands can directly engage under the Influencer Agreement.

The Influencer Agreement

From the influencers’ perspective, the Influencer Agreement is a vehicle to achieve coverage under the union’s pension and health plan. Additionally, it allows brands to engage influencers directly by having influencers act as the production company.

Since the Influencer Agreements under SAG-AFTRA seek to attract influencers that are not union members, there is a path for eligibility. First, the influencer must form a business entity, a corporation or LLC. The business entity will then sign the Influencer Agreement as the producer and “loan out” entity furnishing the services of the influencer as the creator of the sponsored content.

Advertisers and brands must be aware of certain provisions that are crucial when considering an Influencer Agreement under SAG-AFTRA. For instance, the Influencer Agreement does not apply to influencers who work as a group, such as families. The Influencer Agreement allows the influencer to negotiate pay rates directly with the brand, but SAG-AFTRA can provide guidance, if needed. Furthermore, the influencer must retain all right, title, and interest into the influencer-created content and may not assign it to the brand.

Another important consideration is that Influencer Agreements are between SAG-AFTRA and the producer (i.e., the influencer’s “loan-out” entity). This unique requirement does not replace the need for a deal memo, term sheet, or short form contract between the brand and the influencer. In fact, SAG-AFTRA requires a copy of the underlying terms as an attachment to the Influencer Agreement.

Thus, at the deal memo stage of the negotiation between the brand and the influencer, counsel must ensure that the brand is not a signatory member or authorized advertiser. If it is, then, the Waiver comes into play.

The Waiver for Influencer-Produced Sponsored Content

The Waiver allows brands to create influencer content using SAG-AFTRA members by permitting them to freely negotiate compensation without having to consider the minimum fees required by the Commercials Contract. As signatory, the brand or agency is recognized by the union as the employer of the project. The Waiver offers the brand the option to negotiate pay rates and ownership of the Influencer-Produced Sponsored Content as a work for hire. Although the influencer does not have to be a union member, the Waiver, as a union contract, will stipulate working conditions so as to avoid hazardous and dangerous activities, including stunts.

In practice, the brand has the option to proceed with an engagement outside SAG-AFTRA if it is confident that the video does not qualify as a commercial. Audiovisual content that qualifies as a commercial is subject to the Commercials Contract. As a practical consideration, the industry does not recognize certain videos offering purely entertainment content, or “how to” videos, as commercials per se, notwithstanding that they include product placements.

Restrictions Applicable to the Influencer Agreement and the Waiver

At the core of the Influencer Agreement and the Waiver is the acknowledgment that the influencer is the creator of the sponsored content. Brand owners benefit from the content integrity that these contracts provide because influencer-generated content is what drives the success of influencer marketing. Thus, these contractual tools are not available if the content is generated by someone other than the influencer. As a practical matter, the Influencer Agreement and the Waiver only apply to audiovisual content that is “self-produced by the Influencer, through the Producer, and released or exhibited on the Influencer’s and/or Advertiser’s own websites, Social Media, and/or YouTube Channel(s).” See www.sagaftra.org/influencer-agreement.

Other common restrictions include exposing the influencer to dangerous stunts, hazardous conditions, or sexually explicit content. Since influencers have become a significant component of the marketing landscape worldwide, these restrictions also protect the integrity of the brands they represent.

Conclusion

It has been almost one year since SAG-AFTRA introduced the Influencer Agreement and the Waiver. During this time, it has become evident that there is room for improvement. For instance, the disparity in influencer compensation based on race, sex, and cultural background will remain unequal unless there are minimum payment guidelines.

Further, the SAG-AFTRA agreements, although important in balancing the relationship between brand owners and influencers, do not replace the need for carefully drafted terms and conditions. Consequently, brand owners must continue to carefully negotiate key terms, including, without limitation, the influencer’s scope of work and compliance obligations under the FTC Guides, exclusivity provisions, compensation structure or benefit packages, including “free” product, as well as intellectual property ownership, licenses, and other approvals.

about the attorney

Francelina Perdomo Klukosky

Partner

Ms. Perdomo focuses her practice on intellectual property, corporate and commercial matters involving copyrights, trademarks, patents, false advertising, technology, digital media, music publishing, licensing, publicity rights, live events, table-top, and video games. Francelina represents authors, content creators and developers, music publishing, record and production companies in their ongoing business affairs. She often serves as outside general counsel to companies handling a variety of intellectual property and commercial matters.

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