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- [00:00]
Sean Cannell
Hey, before we jump into the show, I wanted to give you a heads up that my free YouTube strategy class is available right now on demand@thinkmasterclass.com on the class, I reveal the one YouTube strategy we use at Think Media to generate over 330,000 views every single day. So if you're new to YouTube, this will help you start right and avoid mistakes. And if you're a YouTube pro, this training will help you multiply your your growth. This class is 100% free and you can watch it now on demand@thinkmasterclass.com now let's jump into today's show. There is massive opportunity to make money with brand deals and sponsorships for creators. In fact, you don't even need a big audience to do it. Brands are sponsoring big creators, but also micro and nano influencers. And it's a very lucrative opportunity. But there's also a lot of pitfalls. Picture this. You spend weeks crafting the perfect sponsored video. It performs brilliantly, bringing in thousands of new subscribers. But then months later, you discover that the brand has repurposed your content into ads running everywhere without paying you a penny more. Worse yet, when you check the fine print in your contract that you signed, you realize you legally gave them permission to do this. Well, today, Tyler Chow, the creator's attorney, reveals the predatory contract clauses that are legally stealing content from unsuspecting creators and how to protect yourself before it's too late. Tyler is back on the Think Media podcast. She is the creator's attorney and she is a former Hollywood insider who spent 15 years at Disney, Skydance and major law firms before walking away to exclusively represent creators. And she is the expert. She helps creators like you and business owners build six and seven figure businesses through smart contracts, IP protection and brand deals. And her own YouTube channel is a powerful resource for creators as well. And Tyler, welcome back to the show.
- [02:03]
Tyler Chow
Thanks so much Sean for having me. It's always a great time when I come talk to you.
- [02:07]
Sean Cannell
Well, Tyler, I'm excited to jump into this. I wrote down four specific issues and I'm sure we will delve into some others as well. But number one is perpetual royalty free usage rights. Brands can use your content indefinitely without additional payment. Explain kind of what this means and why this is such a big deal for creators that are getting taken advantage of.
- [02:31]
Tyler Chow
I mean, Sean, I will say that that sentence that you read was what made me leave Hollywood behind when I started my own YouTube channel two years ago and I met creators and I fell in love with my fellow creators. I realized how awful the language in some of these brand deals are. They're literally saying to a creator, I'm going to pay you $500. You're going to make content for me, and I'm going to own that forever, and I get to use it on my own O, which is my own and operated, you know, my, my websites, my YouTube channel, my Instagram forever, and I will never have to pay you another dime. And most. And that is actually very boilerplate language that's in the ownership provision of a brand deal. What creators don't realize is they can negotiate that. They can say, well, no, you get to use it for three months or six months or a year, how, however long you want them to use it. And they don't realize that you can actually ask for usage rights. So let's say you agree to a brand deal for $1,000. Usage Rights says to the brand, I will let you use this for an additional 30 days on your own. O and O and it will be 10 to 30% of the base rate. So the brand will have to pay you an additional 100 to $300 for every 30 days extra they don't want to use. This is actually pretty customary. But for smaller creators who are just starting out, they don't even know to ask for this. They don't know that they can ask for more. And so they just sign. First of all, they're probably just so excited, right. When you get that first brand deal, oh, my God, somebody wants to pay me, you know, to, for me to, to. To highlight their product in my video. And I've been working on my channel for like a year. And finally I've made it right. It's. It's $500 or $1,000, and you just want to sign it and you just want to do it. But there are so many different provisions in a brand deal that can really trip you up. And I'm hoping your other three questions will cover it. But definitely usage is one of them. And most creators don't know that they can say no to that language, as in perpetuity or perpetual use or worldwide unlimited use forever. You need to limit that.
- [04:47]
Sean Cannell
Yeah. So tell me your thoughts on some of these tips to clarify this. One thing to always ask in conversations would be what usage rights are included, and that would be in the contract. But if you're having a meeting, is it perpetual? And if it is perpetual is probably something to avoid.
- [05:04]
Tyler Chow
But you want to negotiate, you probably shouldn't agree to that. You should say, how long would you like to use my content for like, that should be the question, right, that creators ask the brands, how long would you like to use it for? And are. You know, my usage rate is this. It's very accepted to say to the brand, my usage is, you want extra usage, it'll be 10 to 30% of the base rate. So whatever that base rate is, and we use the thousand as example, it'll be 100 to $300 extra for every 30 days. It's always the measure of time, is usually every 30 days.
- [05:41]
Sean Cannell
So negotiate time limits. What we're separating is usage fees from creation fees. And, and then watch out for phrases like perpetual, which equals forever, or like royalty free, which means no future payments owed or worldwide, meaning they could use it anywhere. So that, so you even think about like they just get your content but then blast ads globally on it. And watch out for in all media known now or hereafter devised, which they can use on platforms that don't even exist yet. So they can either future media and of course at a higher level, because one of the tips would be hire a contract lawyer even once, which could save you thousands of dollars spotting bad clauses or helping you negotiate. And you help creators usually that are more established, that are able to afford paying you. But that's what's kind of cool about AI is these days you could, you know, throw a contract into like ChatGPT and say, hey, what are the red flags? Or what should I be aware of? And, and, and that can make you a lot more savvy when it comes to a negotiation. And then don't be afraid to walk away. I know as a new creator, micro influencers, nano influencers, as you're getting those first few deals, like you kind of want to take anything, but you just never know. Your future is bright as a creator and everybody starts at zero and everybody starts also broke and probably working your day job trying to like do your, your dream job. But you want to have a vision for your future and just be careful that somebody doesn't get your. Like, just imagine this. Like, imagine you holding a silver play button. Imagine you holding a gold play button, but you gave away your usage rights to your influence and your likeness years before when you were just getting started. And now a brand that's maybe changed and you don't even like the direction they've gone, but they're now still using your likeness. That's happened to mainstream celebrities, hasn't it, Tyler?
- [07:33]
Tyler Chow
Oh, yes. So there was an example with, you know, Simu Lou, who is you know, now a very famous Marvel star. But when he was starting out in Hollywood, he did a bunch of stock footage. And you know, like, I've heard the stories, it was $500 and he signed away perpetual rights. And so now that he's a huge Marvel star, these, they're like stock footage houses, right? Are like selling them to different places and they're using that footage and he can't stop it. I mean, I bet he probably could go to them and buy it back, but it's, they're probably, you know, probably saying it's going to be very, very expensive. And so maybe that's not worth it to him. But you make a really good point. When you're first starting out, you think, oh my God, like I'm never going to be a huge YouTuber, but everybody does start at zero. You know, it took Mr. Beast like 10 years before he got, I don't know, like, I don't know, maybe not like, but five years before he got to like 10,000. Right. So it's like you, you could get there, but what you don't want is for your name and likeness to be out there. Associate exactly with a brand that you might not even like anymore. And that's either shady or doing, you know, bad things. And your, your name and likeness is literally attached to it forever.
- [08:50]
Sean Cannell
Yeah. And you know, this kind of thinking, musicians have understood this for a long time, that really the usage rights and the licensing is where the money is. Like, a band might get $2,000 to write a jingle, or they just might write their song and put it on streaming and barely make any money. But if it a cool song and a soda brand wants to pick it up, they might make $30,000 to license it for six months of TV use. And so similarly, there's also UGC creators listening to this, where you are the asset. I, I know a person who went to our church years ago, was a model and she did a, a paid shoot of some kind photography and her photos, because of her look and her vibe, I started seeing them everywhere. They were on like buses, they, I mean they literally, it became like this massive. But she just had a perpetuity, like barely made any money and they just were continued to be used. Well, that's what a UGC creator is. These days. People are looking for people with all different looks. Not supermodels. They're looking for like just, you know, your average guy working in his shop, like moms that are representing people to, to represent brands. And so they, they could be Taking your likeness, you're like, okay, cool, I'm getting paid a thousand dollars to create a video as a UGC creator. Well, if you give away perpetual rights, you could be getting $10,000 more for six months of paid usage. Am I thinking about this? Right? When we think about even the example and what's been happening in the music industry really kind of since the beginning.
- [10:23]
Tyler Chow
I mean, you're exactly right. Musicians have known this for years, right? That they could go do a show and get paid, you know, at a nightclub or something, get paid, you know, a couple hundred dollars. But the ability to l license their music and sell it is something that is very, very valuable. And I have heard that same story, right? I had, I had a client who didn't know that they were signing their rights over forever as an, as a UGC content creator. And her mom said, are you selling diet pills? Because I'm seeing these ads on Facebook. And she was like a healthy, you know, like, creator, and she would never be a part of that. But because the platform she signed up for, she just, she just sold her like a video, right? She didn't actually know where or how it was going to be used. And that's a scarier thing, right, is when you're just selling it to a platform and you don't actually know how your video is going to be used. And she hired me to try to stop them from that usage. And I actually had to go look at the terms of service for that platform. And we did actually figure out that they did need to come get her approval first to. To say, we're going to give it to this brand, we're going to sell it to this brand. Are you okay with it? And they just didn't do that. But that's a creator that, you know, went after protecting herself. She actually actively said, okay, I'm not going to take this lying down. I'm going to figure out what my rights are. So I think as a creator, you should always try to figure out what your rights are. I do like your idea about putting. I mean, look, I would much rather creators come to an attorney and have us review their contract, but I know it's not always possible, but if you are going to feed your contract through ChatGPT, please take out your name and the brand's name and how much you're getting paid. Like, put out, like identifying information out of it because they're training on it. Right? You can certainly take that out as you're cutting and pasting it. And so that they don't get that information.
- [12:23]
Sean Cannell
That's a great tip. Which brings us to number two. We're going through four key contract issues. And Ty, stick around till the end because Tyler might want to cover a few others. But another one is full ownership transfer contracts claiming all rights to created content. So imagine a travel creator collaborated with the tourism board creating 10 videos showcasing local attractions. The contract might include an assignment of rights clause transferring full ownership of all footage. And then later, when a creator wants to use the B roll in some other video or realizes, like, they no longer own their work because the tourism board demands they take down that compilation. So if you're a vlogger, even a photographer, and you may want to repurpose your footage or images later, losing ownership might mean you're not able to use that in future projects, portfolios, or compilations. What are your thoughts there, Tyler, on full ownership transfer?
- [13:24]
Tyler Chow
Well, it's very aggressive and it's very predatory, and so you need to look out for it in the ownership. Or it might say intellectual property. You know, all these provision headings might be different, but you want to make sure that it says this content is owned by the creator. That actually should be the language in there, right? That this video will live on the creator's platform and it will be owned by the creator and the brand has a license right to it for three months. That should be the typical language, but it often is not. Often it starts out with the, you know, the in perpetuity, royalty free. And then they'll have this language that says, you know, full ownership is transferred to the brand. So you just need to watch out for that and know that you can push back on it. Most creators think they receive a contract from the brand and they just have to sign it. And my motto in life is, everything is negotiable. No is a starting point for me, right? And so don't ever just sign a contract when you get it from the brand. The brands know, know that their agreement is very aggressive and positive for them, but not for the creator. And you don't need an attorney to help you fight back. You need to just know these points, right? You need to know what to watch out for. And this is what Sean and I are trying to educate you on.
- [14:49]
Sean Cannell
This is one of the most important conversations we've ever had on the Think Media podcast. And you know what this makes me think of is something I've been experiencing is our company has grown and we've done bigger events and. And it reminds me of even hiring some of our bigger Speakers and then thinking about even what we would do as we've talked to different attorneys and wrote our own contracts. Here's what I think a couple of fears are. One, you're afraid of messing up the deal. Like you're afraid that to your point, you're afraid of pushing back. You're afraid of like, oh, are they going to be offended that I'm questioning them? Are they going to be offended that I push back? But here's what I've learned. Whether it's a brand and the other people we've worked with a lot for our event grow with video live in Vegas is speakers, especially higher level speakers is typically the contracts are radically unbalanced. Like, so we'll get speaker contracts that are like, you can't even post their session. You, you can't share it on social media. It needs. And we're like what? Like the reason we're paying the speaker is because we, we want to and it is no big deal. Typically. In fact, I can't think of a time when it was for us to, to push back on that. But, but it's like they pre write it in to give themselves all the protections. So you, you don't want to be cavalier here, but I think the brand's going to try to get everything they can get. You don't even know that they're going to enforce it. You don't even know that they're even if they got your usage rights, it's not that they're going to use it for the next 10 years, it's just that they could and it would be completely reasonable for you to push back. So my encouragement would just be to echo what you're saying is, I know for me, I just, I'm afraid like, oh, if I question this speaker, they're going to drop out. They're, you know, they're, they're not going to want to come anymore. And so it's like, no, it's not really that and it's probably not even them. It's. They've hired somebody that has just written the contract totally in their favor.
- [16:38]
Tyler Chow
Yes, and that's exactly right, Sean, because as you were, you're going through that, that, that story, I was thinking, you know, the people who are interacting with you on that, on that deal probably have no idea what that's in that contract because the company probably hired an attorney maybe like me to give them a very protective document that will protect them under every scenario. And it is the creator's job to understand what they're signing. And I will say to you, because I represent brands as well as some of the biggest YouTubers in the world, when a creator pushes back, the brand never blinks an eye. They're like, oh, okay, let's make the changes. Or they sometimes think, wow, we are dealing with a professional creator who understands business. And we typically now there might be some company policies where we might not make changes, but most of the time, like Mutual, Mutual Indemnity, which I hope we will cover. Like, the brands really have no problem giving that because that's very customary.
- [17:39]
Sean Cannell
Very good. They know and you heard it. We're dealing with a professional, we're dealing with somebody that's educated, we're dealing with somebody who understands business. So this is the stuff. Even though you want to get to shooting your next video, this is the stuff that you got to know in the creator economy. Which brings us to number three, exclusivity without fair compensation. So imagine a tech creator signs a deal with smartphone accessories company that includes 12 months of exclusivity, preventing them from working with any competitor. They get a one time payment of $5,000. But then during those 12 months, the creator has to decline six other brands totaling over $30,000 in revenue because they signed a deal with exclusivity. And that ultimately cost them $25,000 in lost opportunities, far more than the original deal was worth. And we've seen this and they sometimes sneak this in. So it's so interesting to consider. Oh wow, this I'm about to get a brand deal of a few thousand dollars and depending on the size of your channel, maybe tens of thousands. But if they throw in exclusivity and you can't work with any other brands, that's way more expensive than you realize. And the flip side, if they don't include exclusivity, then a lower number could be very reasonable. Or if they do, you still might do it. Okay, you want to do a year? Well, that's 4x that price. Let's 10x that price. And as you get more established, you start understanding kind of what your content is worth and the opportunity cost of being in exclusivity. And so break this down. Tyler, We've dealt with this a lot at Think Media. It definitely impacts review channels, but it can impact any channel.
- [19:14]
Tyler Chow
Yes. And that is. I'm so glad you're highlighting this because it's something that most creators don't think about.
- [19:20]
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- [19:45]
Sean Cannell
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- [19:46]
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- [20:32]
Sean Cannell
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Sean Cannell
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- [21:10]
Sean Cannell
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- [21:11]
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- [21:22]
Sean Cannell
To you right away.
- [21:24]
Tyler Chow
And the brands might slip it in there. They might say, you know, you're, you cannot do any other electronic, you know, brand deals. You cannot do any more education. I mean, even broader, right? They might say education and like so many things could fall under education. What you might actually need to do do there is make them list out the brands. Say these five brands are the ones that I, we're going to cover under the, the exclusivity and everything else is fine. Now, I do believe most creators should ask for an exclusivity term of 30 days at most three months. The example you gave of a year is a long time. A year. You know, a creator could have done 10 or 20 brand deals. And if they are a specific type of channel, maybe they only do electronics. Could you imagine if they said, you cannot do any other electronics, you know, sponsorships for 12 months? I think your advice is correct. If they want that exclusivity, they just have to pay for it. You want that? This is a $5,000 brand deal. You want me to be exclusive to you for a year? Basically you're saying to them, I am the face of your brand for a year, then pay me $50,000 or $100,000. Right. You don't want that? Fine. Then we'll say it's 30 days or two months or three months. Right. And so. So it's all a sliding scale, and it's a negotiation that you should have with the brand. And they will respect that because they understand this. They just don't think most creators understand it. And they just try to get away with what they can get away with.
- [23:03]
Sean Cannell
Number four is vague usage rights. So if it's ambiguous, then you might. They might have some unexpected usage. So let's say a cooking creator signed a contract allowing a food brand to use their content across brand channels. They assume that meant the brand social media. But months later, they saw it on product packaging. That happened to my friend that was a model. It like, she ended up on product packaging, billboards, like, all these different places. Which on the one hand was like, kind of cool. It was like, oh, I'm out there. But then it was like, I have no money. And like, oh, man, I lost licensing because I lost so much. Months later, they discovered their face on product packaging. And the brand argued that brand channels included things that weren't just social media channels or not just YouTube. And so vague language could affect everyone. And I like what you said before, too. We have actually done that. What do you mean by let's say creators? Software tools like that. There's music tools. There's like YouTube analytics tools. There's a lot of different tools. There's Adobe, which is editing tools. So they say software is super vague, and maybe their actual competitors are much more narrow. They let's just get the brand names. Like, what do you mean specifically? Let's get fierce clarity in this. Vague language is a deadly trap. What are your thoughts, Tyler?
- [24:21]
Tyler Chow
Totally. I mean, anything you don't understand in a contract now here's the thing, right? Because creators aren't attorneys. They don't know what they don't know. So that's why it's also hard for them to say, well, what am I missing here? Because it might just be silent in the agreement. So I think that's why it's important to educate yourself and watch, you know, think media podcasts or the main channel and really educate yourself on what is it that you need to watch out for? I think anything that seems weird or very over broad. Like for the example you gave, you know, if they were saying exclusive, you know, for every software. Well, which software, right? Like you need to clarify. I think your job as a creator is to clarify everything, right? Or have there or sometimes there are weird terms. I had a brand, it was a national grocery store who said that my client had to turn off monetization for that specific video. And it was a brand new to me. And I just asked them, I said why? Like why do we have to turn it off? And they said, well, because we can't control which ads can. YouTube is going to run on your, on that video. So if you turn off monetization, then we can be sure that like a competitive grocery store won't be shown in that video. And I said, oh, okay. I agreed with that. I said, great, you're gonna have to pay us more because if my client's going to lose the monetization off of this video, you're going to have to cover it. And so we had a whole negotiation and they asked, well, how much does your client use, you know, get in adsense for every video? We gave them the average. And they paid it because we asked, right? Because we. I didn't understand. It's totally okay. Like I, as an attorney for 20 years, you know, I've been practicing law for 20 years, I still encounter things I don't understand. And I will just say, can you explain to me, like why do you have this in there? It's totally okay to ask the brand. I don't understand this. Like what do you mean? What are you asking for here? Can you just explain it to me? And sometimes if you even have it in an email, that's helpful. Let's say it doesn't make its way into the contract. But having it in an email, I mean, some states are holding that some emails are binding now even if it's not in the contract. So just always write it in an email and say, well, what do you mean? And get them to answer you within the email.
- [26:40]
Sean Cannell
This is some genius tips and I want to take it a little bit deeper. But if you've been getting value out of this episode, definitely subscribe to the Think Media podcast wherever you watch or listen for additional content like this. Tyler's been a regular guest on the podcast as well as other episodes that'll help you grow your channel, start your channel views, subscribers, monetize. That is what the Think Media Podcast is all about. And like rate, share or review wherever you watch or listen. You mentioned a few other areas and that's what I'd like to cover and throw some different topics at you, but the one you mentioned was basically indemnification, right? And there's, there's mutual indemnification or one sided indemnification. Do I have that right? What are we talking about here?
- [27:26]
Tyler Chow
So normally when a creator gets a brand deal, it will have Indemnity in there, but it's usually for one side. It protects the brand, right? So if you say something bad in your video and the brand or everyone gets sued, you, the creator are on the hook to pay the legal fees for the brand, which just is insane, right? Because you're the same little creator and this is a big company, you're going to cover their legal costs. So you have to make sure that Indemnity says mutual. Right? I always use FTX as an example, but let's just go with it because it's a good one, right? So ftx, its CEO defrauded millions of users and customers. The creators who sponsored FTX also got sued when everything went down. Now I'm hoping they had Mutual Indemnity in there, because what the mutual Indemnity will say, if the brand does something wrong and we all get sued, the brand will pay for the creator's legal costs. And then something else that's even more powerful that most creators don't even know to ask for is a cap on liability. If you have a cap on liability, that means if your brand deal was for $1,000, that is all you will ever be responsible for. You can't be on the hook for six figures in brand, six figures in legal costs, you will be on the hook for the amount of the brand deal. And I would say if you can't get anything else in a contract, please get a cap on liability. Right? In addition to what the other things we talked about, the limit and the usage. Most creators don't really understand what Indemnity is. You know, it means that you will take care of the other person, the other party. If there is A lawsuit.
- [29:07]
Sean Cannell
I want to go into a lightning round, a few other ones that we could hit. Are you ready?
- [29:13]
Tyler Chow
Sure. Let's go.
- [29:14]
Sean Cannell
Approval rights over edits and so brands sometimes reserve the right to edit your content however they want after it's submitted. Maybe you got the video on your channel, but if they're going to be using the content in some way, they might chop it up and ultimately make it look cheesy or unprofessional, but your name and likeness is on it. So you want the ability to at least negotiate approval rights on any final edits of your name in face. What do you think, Tyler?
- [29:38]
Tyler Chow
Well, I think that's really important distinction. It's actually one that most creators aren't even thinking about. Right. It depends on if you're limiting the usage. Right. In the usage, you should say, you get to use my video as is. You don't get to edit it, you don't get to cut it up, you don't get to change it. Right. Because if you change it, you're right. If you, they take like 10 seconds of it, it could really change what the original content was about or what you said. Right. And, and I think attached to this is our changes, right? Like, like a brand might, you might, you might submit the video to them and they say, well, we want these 10 things changed. So you need to really limit the rounds of changes that you will give them because they can't come back to you eight times and say, you got to make, you know, every single time you have to make changes. Typically I give brands, you know, when I'm negotiating these on behalf of my clients, one to two rounds of changes because that should be enough to capture everything you need from the content. Right. You shouldn't get eight rounds of changes because my client could have been doing other brand deals during that time. Right. That they were doing the eight rounds of changes for you. So if you want beyond now, what you could ask for is beyond two rounds of changes. It'll just be extra costs that you have to pay to my client.
- [30:58]
Sean Cannell
Yeah. So to go a little bit deeper on that one, that's like, that takes me all the way back to just lessons I learned as I was running, being a freelance videographer. And I early on did not specify how many revisions there were. And sometimes I was like, my goodness, they just kept coming back with, oh, can you change this scene? Oh, can you change this? Can you update this? And so I learned to specify it. So that's also called scope creep, right? Or unlimited revisions. They might Ask for a tweak, a reshoot too. And this speaks, this is lessons you learn where it's like, you know how hard it is. You got ready, you, you got dressed, you put your makeup on, you did all your stuff, a reshoot. Now you're, you're days later and you're just editing. You, you know, you didn't even take a shower, you're in your pajamas and they're like, oh, can you just reshoot this scene? It's a big deal. And, and if you get extra pay, well, for sure. So. But if you don't actually get extra pay, it could be a massive headache. And so to your point, limit revisions, maybe one or two rounds are included and then clarify the extra charge. Any other things on scope creep?
- [32:02]
Tyler Chow
You know, just be very specific on deliverables, right? Like when is the date? When do you need it? Are you going to give us feedback in time? Right. I sometimes will put in, you need to get, if there's a tight deadline, and there's always a tight deadline for these brands, right? Like, oh, we need to launch in a week or in five days and the brand doesn't give you any input for two days or three days and then you're scrambling at the last minute, right? You can say if it's time sensitive, you need to give me feedback in 12 hours or 24 hours. Because if you're not, then you're rushing in like basically working for the last 12 hours. And we have lives, we have kids, we have other brand deals that we have to shoot for, right? And so it's very important to always specify with the, with the brand, what are, what are the terms of the deliverables? When do you need it? When are you going to give, give me feedback? You know, like if, like when's that drop dead deadline that, you know, I need to upload this. Because that also matters too, right? They sometimes have very specific times because they're working with five other creators and the campaign needs to all go at the same time. But you're not, you're not talking to those other creators. You have no idea what they're doing. So the brand or the agency is timing everything. So, and sometimes you could be in breach, right, if you don't upload it in time or if you do not, you know, they, they have very specific instructions on what needs to be in the pin comment, what needs to be in the description. Like what, what, what needs to be on screen. Like sometimes the logo for the brand is wrong. Do you have, you've Seen that, right? Like they say, oh yeah, put a logo and they don't tell you what logo and you go find one and then it's like an old logo. And they're like, oh my God, why did you put an old logo? And then you have to edit and potentially reshoot things. And that's when, and I've said this before, Sean, actually don't love brand deals. It's very unpopular. But brand deals are a lot of work. People think, oh my God, I'm getting $500 or $1,000. It's actually ends up being more work than you realize. And you know this, when you have a sponsored video, the views are always less because people will click off of it. So you always have to balance that. Right? I have a client who says to me, I will not do a brand deal under 5,000 do thousand dollars because I know I will make at least $5,000 on AdSense. But because it's a sponsored video, I'm going to make less than $5,000 because people often click off. So you always have to balance that. Right? Like how much should that brand deal be worth? Because it's going to reduce your AdSense. And so just realize that sometimes it's a lot of work to do brand deals.
- [34:38]
Sean Cannell
Okay, I've got actually two more. And then I have one final question for you after you shout out your stuff where people can connect with you. But this has been absolute gold. You know, another interesting one would be moral rights or reputation clause. So if a brand behaves unethically, they might have a scandal, a lawsuit. Sometimes the creator has no way out of association. And so if a tech creator endorsed a garbage, a gadget company and later got sued for data theft, the company and the original video was still up, the brand could actually say, well, you don't have the right to take it down. Where a clause that protects your reputation, these contracts are just saying, hey, we're going to have good conduct on both sides like you guys. If you have no scandals, no lawsuits, you don't do anything illegal, then it's not a big deal. But if something was to happen where being associated with that brand could reflect poorly on you, it just gives you an out to remove content. If the brand's actions damage your image. Thoughts on this one, Tyler?
- [35:36]
Tyler Chow
It's very important. I'm really glad you pointed it out. So you will ask for a mutual morals clause, right? And this will feel good to the brand because it says like, well, if I as a creator do something bad or my reputation goes down, then you can exit this deal. But it's more to protect the creator if something happens with the brand. Let's say it's a health supplement and it gets, you know, and a lot of people become sick after they buy, buy the supplement. And your name and your likeness is attached to that brand. This mutual morals clause will say that you can exit that. Let's say it's a long, it's like a six month or 12 month deal, you can exit it and any videos that you have with their product, you can take down or edit out. Right. I think that's very important is actually that's just important in general that you be able to take down that video after like a year because most of the time it's silent. And so the brand will assume that you will keep up that video forever. And I want to actually go bigger, right, Because I, as fractional CEO to some of the biggest YouTubers, I'm always thinking about their IP portfolio and their library, like how do we sell your channel one day? And so that the videos can be either licensed or sold. You should be able to cut out sponsored content in your video and you need to make sure that that is in your contract. Because what, you don't want the brand to come back and say no, no, we didn't give you permission to take that out. That needs to stay there forever. But if you're trying to sell your library or your channel, you want to be able to give them clean videos with licensed content, licensed B roll, licensed music from Epidemic Sound, I really like them. Things like that you need to be always thinking ahead of, not just right now. I'm going to get $500 from this brand deal. What does it look like five or ten years down the road when I want to potentially sell my channel? And it will happen. I mean, I almost sold one of my clients YouTube channels last year for $35 million. Now that's because he has 12 revenue streams. But I want creators to always think about what is your, what is Your business beyond AdSense and brand deals and maybe merch, those are like the first three. But then what about newsletters and community and actual physical products and affiliates and equity in brand deals? I mean there are so many ways to make money as a creator and it's incredibly cool. I mean it's, it's, this is the American dream you have, you are a startup. You know what, what, what creators don't realize is you are a founder of a very, potentially very successful startup. And you're just, you get started with YouTube and that's the marketing arm. We get very, very good at marketing and we don't even realize it, but your YouTube channel is the marketing arm of your business.
- [38:17]
Sean Cannell
Well, I have one more question here and then probably the most question as we land, most important question as we land the plane. But talking about all the financial opportunity, maybe one other legal red flag is payment terms that drag out forever. And I think about there's even brands that, you know, kind of help creators like Carrot, which is a credit card for creators based off following. And sometimes creators like, they really deal with cash flow issues because the problem could be the contract says you'll be paid something like net 90, meaning 90 days after the invoice or worse, no payment timeline at all. So imagine a fashion creator has to wait five months to be paid after delivering the final video. So if there's no clear payment terms like net 30, which would mean a maximum of 30 days after the invoice or any late payment penalties where if anything, you're maybe going to at least earn a little bit more because of the delay. You know, any. My, my stepdad, Phil's company, ics, there was something that I just learned about from, from watching him and my mom running the finances in their business. They would deal with these big contracts working with like telecommunication sites for people like Microsoft and Facebook. But sometimes they'd have these crazy payment timelines and they would be floating physical. They'd be like hard goods labor. They'd be leveraging money to do sometimes millions of dollars upfront and have to wait months to be paid. But this is true for the creator too. You're trying to pay your bills. You got 5, 10, 15 grand that you're counting on how long until you can actually, you think, oh yeah, that money will just clear because I posted that the video. Maybe it's going to be a ways out if you don't actually clarify the payment terms. Any thoughts on this one?
- [39:59]
Tyler Chow
It's one of the biggest problems for creators is getting paid sometimes for these brand deals. And I really push for 50% upfront. And I know people are like, oh my God, you can ask for that and you can. Some agencies and brands will agree to that because they know that there have been some bad actors in the space that have made everybody look bad. And so some of them are agreeing to, to some upfront payment. Now if they won't agree to that, then at least push for 30 days. 15 or 30 days, 60 at most. I think 90 days is a lot. You know, the Analogy I like to use is if you go to Best Buy and you walk up with a TV to the cashier, can you say to them, oh, I'm going to pay you in 90 days? It doesn't work like that. Right? It doesn't work like that anywhere else in the world. But yet that's what they're asking creators to do, is they're getting free content. This is driving business and dollars for them in their. For marketing. And they might have made tens of thousands of dollars off of that video. And yet the creator has to wait three months, five months. I mean, I've had clients come to me where they haven't been paid for a year, and I, you know, and sometimes they rise to the six figures, and they brought it to me, and it took me probably nine months to get this hundred thousand from the brand, and I actually had to draft a complaint and threaten to sue them before they would pay us. And so it's just like, you shouldn't have to hire an attorney like me to go get your brand deal dollars. Brands should just know better. And, you know, I go to war for creators. Like, I will call out these agencies, like, on LinkedIn. I write on LinkedIn every day, and I've done it before. I mean, Captivate's been, you know, pretty notorious for. I called out their CEO in a LinkedIn post, and. And he called me in 15 minutes, John, and we made it right, you know, and so, like, I'm happy to do that. Just reach out to me on LinkedIn and I'll just call them out, because I know creators sometimes don't want to call people out because they're like, well, we don't want to be known as the difficult creator. And I understand that. So let me do it for you. I'm happy to do it. I won't even charge you. I just don't like bad actors who take advantage of creators.
- [42:01]
Sean Cannell
That's why we love you so much, Tyler, why you're such a friend of the Think Media podcast, because you are a champion for creators. Well, I do have one final question that's very important, but if people want to connect with you, follow what you're doing. We'll link everything up in the show notes, and there is a whole series we're doing with you. And so I know that this is a very cerebral episode and there's a lot of information. It's not as maybe exciting as, like, tactics to get lots of views, but this is the stuff, and this protects you. This keeps you safe. This is about longevity. This is about thinking bigger. This is about being built to last. So definitely binge watch our past episodes, which with Tyler, which we'll link up in the show notes. But Tyler, if people want to check you out, follow you, where can they.
- [42:42]
Tyler Chow
Connect so you can Find me on YouTube? Tyler shall the creator's attorney. Like I said, I write on LinkedIn every day. You know, I give advice. Like yesterday I wrote about, I said, if you're get, if you're not getting sued, then you're not doing big business. I know people really fear lawsuits, but realize that as you get bigger, you will take big swings and you'll hit some of your targets. But targets then appear on your back, right? When you're doing big business, you're going to have employee issues. You're going to have people come out of the woodworks, there's going to be PR crisis, and just realize that, you know, Uber and Airbnb did that. They said, we're going to go fast and break things. And the lawyers are chasing after them and they say, you know what, it's fine. The founders will say the profits will cover the legal fees. And it really does, right? I'm not saying go out and break the law. I'm saying sometimes that is the price of success, it's the price of fame, and it's the beauty and nightmare of living in the U.S. yes, sometimes you can sue and you can also be sued by anyone. But don't let that fear prevent you from making content. It's so important to know that you're empowered and that this is the American dream. You no longer have to wait for a studio head to deem your story worthy of being told or give you permission. Right? As creators, we can turn on that camera, tell our story, and millions of people can see it. How cool is that? So definitely look for me. And then my news is I'm actually launching a creator legal community. I've been. People have been asking me for over a year. I have a wait list of a thousand people. I'm actually launching it in the next few weeks on Kajabi. So I will put my wait list below in your description and I hope to see you there. I'll have lives twice a month to answer, you know, creators questions in real time and we'll solve it together and learn from each other.
- [44:32]
Sean Cannell
So you can check out all of Tyler's stuff in the show notes. And I do have one final question this episode for the Legends. Still listening. Smart move, because I know there's a lot of Things we heard in this episode that feel stressful and you even mentioned, you know, brand deals. You don't love them necessarily because they do bring up just a lot of these details and these can be a pain, but speak to the optimistic side of how much money is flowing into the creator economy. Because if we do protect ourselves and if we are safe and we do get this education and we are courageous and we are bold, there's, there's massive opportunity in the creator economy. But specifically the money flowing into brand deals, what you've been seeing lately in terms of maybe micro nano influencers and where this is going, I mean, the Goldman Sachs famous research paper now that's been out for a little while is that the crater economy is going to double between now and 2027 from a $250 billion TAM to a half a trillion dollar industry. I was just in Miami Speaking at YPO and I heard a founder, CEO, kind of genius of a SaaS company go, that's 100% growth. That's wild. They go, do you? They're like, that's, that's a hundred percent growth in two years. That's growing faster than a lot of other industries are. And I was like, that's another way to put it. I mean, it makes sense. But I was like, I had, from somebody that's in the non creator economy assessing the industry, they're like, whoa, that is a big deal. So that is what everybody listening to this can tap into. So, so what's the bright side of dealing with the pain of this? Because if I'm going to deal with.
- [46:06]
Tyler Chow
This pain, oh no, this is where you want to be. I mean, you're a pioneer in this. You've been doing this for so long. But everyone in traditional media, all the studios, all the streamers are looking to us and saying, how do we get into this space? How do we start our YouTube channel? Do we just go buy one? I mean, I had a very famous producer ask me that. He's like, you know, he was a horror, he's a horror producer. And he said, should I just pay buy one and which one should I buy? I said, maybe Sam and Colby, right? They just happened to be my client. And they said, well, he's like, how much? Like $500,000? I said, no, more like 45 or 50 million. Million. And he, it looked like a Mack truck hit him because he just couldn't believe these are the multiples I'm talking about. I mean, look, it's probably even more than that. It's probably more like 75 million. But Hollywood understands, right? You look at the Mr. Beast show on Amazon. That's a $200 million show. I was just in a private dinner with the head of Amazon and they confirmed that a second season is coming because that is the future. Who else has a captive audience the way creators do? No one, right? Hollywood doesn't have that. They have no idea who comes to, to movie theaters. I mean, no one's going to movie theaters anymore, right? But we as creators have such a deep connection to our audience. We can drive eyeballs to TV shows, we can drive dollars to a product. I mean, Unilever has said that this year they will increase their spending in the influencer marketing space by 50%. This is a trillion dollar company, right, that owns all, all the consumer brand goods and that this is this, this is where all the dollars are going, are flowing to. I'll give you another number. Six funds were started in the last 12 months. Two of those funds were creator funds. When you think about that, right? A third of all funds that were created are in the creator space. And I, I hear two or three other ones that are starting as well. The, the, the old kind of VC model doesn't really work anymore. It's about growing these channels. I mean, I believe YouTube channels are the future studios. We're probably gonna have 20 to 50 small channels like Mr. Beast and Good Mythical Morning and Dhar Mann and, and all of these big creators who have a hundred employees of their own. I mean, you look at Mr. Beast in, in, in, in that white paper that was just released, his Holdco is being valued at $5 billion, right? That's more than most companies are worth, right? That's more than Harley Davidson is worth these days. So this is the future. It's incredibly bright. I mean, I, I'll, I'll, I'll give you an example. I have a client who has 25,000 on YouTube. It's a small channel, right? Like in the scope of things. But I was able to do a brand deal for him with Nvidia. Nvidia, okay, is like the biggest company in the world making computer chips. And it's because he's a machine learning researcher, right? When you have an unfair advantage like that and your audience is who the brand wants to reach. Like realize you don't have to have a huge channel to have a huge impact or to make a lot of money. I have a client, a life engineer who has 100,000 or 140 now he'll probably hit seven figures this year, right? You don't need to have massive followers. You need to have a dedicated, loyal audience. And that's what creators are really good at cultivating, because we show up and we give valuable free content to our audience every day and they want to give back. So when you want to do your brand deals, they're ready to buy from you. When you want to launch your own product, they're ready to support you. It's a very powerful thing to be a creator these days. There's probably nothing else. I mean, you ask any 5 year old what's their dream job these days? Do you know it's to be a YouTuber.
- [50:03]
Sean Cannell
Yeah, that's right.
- [50:04]
Tyler Chow
That's it. No, no, no longer a doctor or an astronaut, they want to be a YouTuber. And this is, this is the future and we are here now.
- [50:12]
Sean Cannell
The future is bright for content creators and I'm so grateful, Tyler, for you coming on the show again. And this is one of those episodes, if you got value today, like rate, share, review wherever you watch or listen. My name is Sean Cannell, your guide to building a profitable YouTube channel. This is the Think Media podcast and I cannot wait to connect with you in a future episode.