Tax Reporting (1099) Changes

While we’ve all been distracted by things like the attempted coup, it seems that there was an important change in tax reporting that you need to be aware of. Many of you have hired independent contractors and have issued 1099MISC forms to report those payments; this year, it’s different.

If you had payments to independent contractors in 2020, more than $600 to anyone, you need to report those on a new form, called 1099-NEC. Here is the IRS flyer with the full information (pdf), but the short answer is that the 1099-NEC must be provided to your vendors by January 31, 2021 and reported to the government by that same date!

If you have been hired as an independent contractor, you should received your 1099-NEC from your client(s) by January 31, 2021 as well.

It gets a bit more squirrel-y when it comes to payments to attorneys: we can get both forms for the money we receive. It just depends on what kind of payment we get–settlement or payment for our fees.

If you paid a settlement, for example, to an attorney on behalf of a claimant, then you need to report that whole amount (“gross proceeds to an attorney”) on the revised 1099MISC in BOX 10 (it used to be box 14). You must also report that whole amount on a 1099-NEC in BOX 3 sent to the claimant! See the bottom of page 2 and top of page 3 of the pdf I linked to above for examples.

However, if you hired an attorney (like me) directly and paid more than $600 in attorney’s fees to that attorney (or firm–even attorney corporations must have their payments reported), you need to report that on the new 1099-NEC in Box 1.

Leave it to the IRS to make an already complicated system even more so. 😉

Oh, and in some states, these changes mean you need to send information to states differently. You should check your own situation, to be sure. The vendor track1099.com has a tool to check, but best to check with the tax authorities in the states involved.

If you have questions about these new processes, you should contact your CPA for best advice.

Ah, the Case Act

Assuming that Trump actually signs the huge bill that includes the CASE Act, something that has not yet happened as I post this (and, knowing how crazy he is, it’s not a for-sure thing he will), the much-touted bill will become law. **UPDATE 12.28.20: he signed**
What does it change in copyright law and what does it mean for the average creator? Here’s my take…

First, the CASE Act changes nothing in existing law except that, before, you absolutely had to have a timely registration to get any statutory damages but you can get some without it under CASE; also, you can file a claim without having your certificate as long as you have filed an application for registration. For statutory damages, if you choose to use the small claims system without a timely registration, you can get very limited ones—up to $7500 per infringement but with a maximum per case of $15,000. That maximum limit means, for example, if one infringer used 3 of your photos, you can’t get more than $15K total, even though 3 x $7500 is more than that. As for the application/registration issue, you can file a small claim as long as you have applied for a registration and that application has not been refused. Under existing law, you must have a certificate in hand (or a refusal) to file suit. Under the CASE Act, if the registration application is later refused, the claim is dismissed but can be re-filed later (for example, if the registration is later fixed and then approved, file again). 

Besides those changes, the existing copyright law is left pretty much as it was, only added to with the small claims system regulations. For example, you can still get actual damages and the infringer’s profits attributable to the infringement in the small claims system, you still own the copyright from the moment of creation, the exclusive rights are still the same, the statute of limitations doesn’t change, etc.

What do you give up if you use the small claims system? Besides procedural things like the number of witnesses, discovery limits, etc., which are all lawyer stuff, really, here are the things people need to know they are giving up if they choose to use the new system:

  • The constitutional right to a jury trial
  • Increased damages for willful infringements
  • Appeal in the regular courts (there are appeal-ish procedures, in the small claims system, but no appeals or re-litigation in regular court)
  • Attorney’s fees, except for bad faith situations (notoriously hard to prove up) and then generally limited to $5000.

Also, you can’t bring claims for CMI removal or false assertion (§1202 claims), in the small claims system. That is a big deal, in my opinion, since you’d be giving up a minimum of $2500 (and up to $25K) per violation, and attorney’s fees, if you chose to use the small claims system. While this may change down the road (the bill requires study of issues in three years, including probably the §1202 one), for now, you have to let go of those claims. That is walking away from money.

Here’s the other thing: any party can opt-out, so you could be throwing away at least $100 (filing fee) and likely more (service costs, etc.) often, as your infringers say, “Nope, I won’t do the small claims court—sue me in regular court if you want to bring a claim!” and there is nothing you can do about it. 

But let’s say the opposing party doesn’t opt-out, and it’s a big enough company that it has in-house counsel or is willing to pay an outside attorney to represent it. If you were planning on going without an attorney, you’re going to get your ass kicked, more often than not. No matter how much the powers-that-be try to simplify the system, copyright lawyers simply know more than you and know how to use that knowledge to make the right kinds of arguments to other legal pros (those making the determinations in the small claims system). That means you’ll have to find counsel. If you can only get a maximum of $7500 and probably no attorney’s fees, it’s going to be much harder to find an attorney to take your matter on contingency or your going to have to pay an hourly rate that’ll eat up your award quickly.

I wrote a lot about how I didn’t like the CASE Act, as a litigator and counsel to copyright plaintiffs, in a post more than 3 years ago. My reasons still hold in regards to its final form, today. But if this is the new reality, I will, of course, work within it. As will we all. 

So, here’s what I still recommend for all creatives: apply for copyright registrations as soon as possible after the creation of your works. Just like before, this is still the best thing to do. Post-CASE, it is even more so. If you have a timely registration (effective date is either before the infringement started or the registration is made within 3 calendar months of the first publication of the work infringed—see here for more), and you choose to use the small claims system, the maximums increase to $15,000 per infringement and $30,000 total per claim. That’s double the amount available if the registration is untimely. 

Most importantly, a timely registration gives you much greater leverage to negotiate a settlement without filing a claim at all because your opponent knows you can file in regular federal court where the maximums are as they have been ($30K non-willful, $150K willful, per infringement and no maximum overall total, possible attorney’s fees). Also, you don’t have to give up your CMI-related claims (which, by the way, are not dependent on timely registration, see more here). When it comes to settlement negotiations, those timely registered factors and the CMI-related ones give a creative a much stronger starting position, which will generally result in more settlements, less litigation, and lower attorney’s fees (contingency fees often go up when any sort of litigation starts). More money in your pockets.

Now I know lots of creatives see the CASE Act as a good thing, and I get where they are coming from. It sounds great and it does open a door to getting some money that didn’t exist before. But I still think the downsides are significant. I also know that when I talk to other copyright lawyers who actually litigate, their positions have been much like my own.

As in all things legal, talk with your own attorney to learn what may be the best for you.

10 Things to Do in Lockdown: Holiday Thanks Edition

2020 has been a shitshow of a year. Many creatives have faced serious hardships, others have been more lucky, but overall, no one has had what they’d likely call a “good year.” Part of what weighs heavily on creatives is that all this mental darkness impedes creation. We all feel stuck, particularly now in the holiday season shut down by all the (necessary!) lockdowns. While there is good news with the vaccines, we’re still in for a few months of dark, and in the middle of winter, to boot.

With all that in mind, I thought I’d share a list of 10 things you can do right now, while we’re still in lockdown-mode, to jump-start the little grey cells into creative thought, or at least to shake off some of the lockdown blues.

  1. Go to an art museum online. Looking at other creative work is usually inspiring for artists and doing this can get your grey cells working on new and fantastic ideas for your own work.
  2. Watch a great visual movie. A film with fantastic direction and/or cinematography can inspire. Maybe you’ll see something that you could try to re-create in your own way, as an homage and a personal project.
  3. Draw something. Even if you’re not a visual artist or think you can’t draw, trying to is great for your creative brain. Do something abstract, or play with color–just make something visual. Doing this analogue is best.
  4. Get a buddy (or a couple) and play Add-A-Line online. To do this, you draw something (a doodle of any kind is fine), then you “hand” it to the next person who adds to it (their “doodle” must connect with yours somehow), then it goes to the next person (or back to you), etc., and you keep at it until the page is filled. I encourage doing this non-digitally as much as possible—that is, draw on paper, scan it, send to the next person who prints it, adds their stuff, scans, sends to the next person…rinse, repeat. 
  5. Try to re-create some art someone else has made. THIS IS NOT FOR YOUR BOOK or any other public medium but rather just an artistic exercise. Don’t be sharing the result with anyone in part because you don’t accidentally want to trod into infringement territory, but mostly because this is a personal, internal exercise. Trying to do what someone else has done will force you to think outside of your own head and open you up to new techniques. This works for musicians and writers just as much as for visual artists. Overall, this can result in new thinking about your own work.
  6. Take an evening walk (masked, of course), or drive if you must, and look at the holiday lights. Walking is highly encouraged because the physicality (exercise) is good for your brain as well. Do this, if possible, with your partner/family/COVID pod people but if you can’t do that, how about facetiming with someone distant while you do this?
  7. Organize a virtual group show. Get colleagues (especially from different disciplines) to all contribute work centered on one theme (like a one-item theme, where every work has to incorporate the same item somehow) and plan a party/opening to show the work. This is a great thing to do with clients too who have their own creativity to show. And it’s easier to do online in many ways (although I also love this in the real world, when possible).
  8. Do something personally scary(ish). Jump out of a plane (with a mask and a parachute, of course) or learn to rock-climb, or ski the hardest slope, or catch-and-release a spider, or give a speech (virtually, for now), whatever. The idea is to face something (reasonable—don’t go completely nuts) that scares the bejesus out of you so that you push your boundaries and vulnerabilities. When you do something that scares you and come out the other side of the process, you learn that you can do more than you know.
  9. Make something in your usual medium, but with some significant limitation–like if you’re a photographer and use multiple lights usually, only permit yourself to use ONE light. Or write a poem without using the letter “e.”
  10. Volunteer somewhere if you can, safely, or at least make a donation. Creative or not, this is a great way to remind yourself how lucky you are. For example, my boyfriend and I have been collecting food from our new neighbors for the local food bank—and we feel like we’re getting all the benefit from it.  

And, in that last item’s vein, this year my “thank you” gifts to my clients and all of you are donations to the AIGA and NPPF, to help creatives hit by COVID, particularly. It’s been a tough year for so many of us—sometimes the best thing we can do is to throw money at the problem. 

Here’s hoping 2021 is as good as 2020 wasn’t. 

On FB/Insta’s Image Manager Tool

Recently, news broke that Facebook, owner of Instagram, is rolling out a new tool to “protect” photos across both platforms. See https://techcrunch.com/2020/09/21/facebooks-new-rights-manager-tool-lets-creators-protect-their-photos-including-those-embedded-elsewhere/ and https://about.fb.com/news/2020/09/helping-creators-and-publishers-manage-their-intellectual-property/. Call me a skeptic, but I’m not jumping for joy at this. While it looks better than nothing, I don’t trust Facebook to do anything that isn’t in its own best interest. More importantly, photographers need to be aware of what they may be losing and what risks they are taking if they use the tool.

My main concern about this new tool is that photographers will use the takedown part of the process too quickly and potentially hurt their ability to get the money they deserve from these infringements. At the very least, before issuing any takedown, photographers should make sure to capture as much evidence about the infringement, including screenshots and metadata, so that if they decide to go after the infringer, they have the proof they need.

Let me back up a bit because I suspect some readers may really understand the purpose of takedown notices and what they mean. That is, many people are not aware that when you send a takedown notice and the work is removed, you can still sue the poster/user for the infringement; you just can’t sue the ISP/platform (probably…there are other requirements the ISP must follow for this safe harbor from liability). Again, after a takedown notice, you can still go after the actual infringer—the person or entity that posted your photo to the platform.

However, to pursue an infringement, you need proof. If you send a takedown notice too quickly, you’ll lose your evidence. So, before doing anything like submitting a takedown notice, make sure to capture all the evidence you can—like screenshots of the use and any metadata you can gather. See my article on evidence gathering for more info. Better yet, talk to an attorney to see what your options are beyond a takedown, before pulling that trigger.

By the way, registering your copyrights before you release your work into the wild is always a good idea. However, you may still have a case even if you haven’t registered the copyright at issue yet. For example, maybe the infringer removed your watermark—that would be a violation of a different part of copyright law that doesn’t require registration for you to be eligible for statutory damages and maybe even attorney’s fees and costs (more on that here).

Worse, however, than losing the evidence needed to pursue the infringement is that if you send a takedown notice too quickly, you may not do the research necessary to make sure that the use is actually an infringement and not excused by fair use or some other defense. If you send a takedown notice without doing that research, you can be sued by the user of your photo for submitting a bad faith takedown notice! If that happens and you lose that suit, you could end up paying the other side’s legal fees. Ouch!

So, if you are still using Facebook or Instagram (and I heartily encourage you not to for many reasons, including the facilitation of the downfall of democracies worldwide), you might consider using this new tool. If you do, take care to use it right.

Copyright Registration Suggestion

I’ve written a lot on the importance of registering your copyrights and, no, this won’t be another nag on that topic. Instead, I want to talk about something you aren’t required to do when you register, but which would be potentially very helpful down the line: make copies of your deposit copy uploads.

Often, an infringement defendant will demand proof that the work was submitted to the USCO as a deposit copy in the registration cited. Now, it’s not the plaintiff’s responsibility to provide that proof[1], particularly if the registration is before or within 5 years of the first publication of the work, but it does help shut up a defendant if you can whip out screenshots of your upload pages along with the works so that they can see, yup, that work was indeed included in the deposit copies submitted to the USCO.

Keeping a folder of everything you submit to the USCO for a registration is a great idea, and if you aren’t doing that yet, start. I suggest you keep copies of the titles list (for group registrations), the actual files submitted, any correspondence you get from the USCO (or send in reply), etc. When you get your certificate, make a scan of it and include the whole thing in that folder, too. Making screenshots of things like the upload page(s) and confirmation(s) takes little time but completes that folder[2]. Then, when the infringer tried its “prove the work is in there” you can not only show the list of title names on the certificate, you can show the work as it was submitted. That’ll shut ’em up… at least on that point.

Basically, the idea is to take away as many of the BS defenses defendants try to assert whenever they’re caught ripping off work. For example, use a proper copyright notice on or adjacent to each work you publish on your website and then no one can claim “innocent infringement” (more on that, here). This “is it in the registration” issue can be a big block with some defendants; removing their ability to claim the work isn’t part of a cited registration can significantly help move negotiations forward.

The more evidence you have to support your claims, the more likely your attorney will be able to negotiate a good settlement for you, so it’s worth the minor effort to make those copies, even if it isn’t your legal responsibility to do so.

______________

[1] This point was again made in the recent Iantosca v Elie Tahari, Ltd. No. 19-CV-04527 (MKV), 2020 WL 5603538 (S.D.N.Y. Sep. 18, 2020) where the court noted “It is the Defendant’s obligation, during discovery, to contact the USCO and request deposit copies to be used to rebut the validity of the copyright registration.”

[2] Remember, when you make the screenshots, the metadata about their creation date, etc., will be in those screenshot files, too. More handy proof in case they try to claim you created the screenshot, nefariously, later (and yes, they might).

Estimated Taxes With a Twist

[UPDATED 9.10.20]

It’s almost that time again… time to make your third quarter estimated tax payment to the IRS (and to your state, if it does that). Despite COVID and everything else, the IRS is still expecting you to make your payment by September 15, as usual. That’s next Tuesday.

This year, though, there have been twists every quarter. First there was a deferral for first quarter 2020 payments and payments for any taxes owed from 2019. Then, you had to pay all those taxes as well as your second quarter estimated taxes in July. Now, the Mango Mussolini has declared that all workers, including the self-employed, can skip paying payroll/self-employment taxes, for now.

For the self-employed, not having to pay 15.3% (self-employment tax is both parts of FICA) sounds fabulous! But, contrary to the spin on this move, this is not a good thing.

What isn’t being made really clear is that this is only a deferral of the payment of those taxes, not that you won’t owe them eventually. Trump claims he wants to make these cuts permanent, but that would gut Social Security and Medicare and be incredibly harmful to people who already rely on those systems as well as those of us who haven’t yet aged into them. It is not likely to ever get approval even by his henchmen in Congress, but if he stays in power, he intends to do just that. See this article for more of the gory details.

Also, it may not actually apply to self-employed people, as this article points out, and it starts September 1, so no one seems to know if that means you still need to pay the whole thing for this 3rd Quarter payment or not (my bet is yes, you do).

For the average creative worker, cashflow is probably a big issue right now; so taking the deferral will be very, very tempting. Although I am not a CPA (at all!), I would counsel against giving in to that temptation, if you can. There is an old saying: money now is cheaper than money later. In this situation, paying your full boatload of taxes now rather than taking the deferral is going to save you heartache, bookkeeping hell, and the need to somehow come up with more money later when you might not have it.

For those of you who are employees, you might consider asking your employer NOT to defer withholding your FICA payments. It’s all going to make for real bookkeeping nightmares down the line but, just like for the self-employed, better to have that money already paid than to have to come up with the tax equivalent of a balloon payment later.

Times are tough for so many of us and it is easy to be seduced into making short-term choices that hurt in the long term. This scheme is just such a seduction. Don’t be fooled. Cut back on other things (like Netflix, etc.) if you need to, but pay your tax bill in full next week, if you possibly can.

One Thing to Save Your Business

If you could do one thing that you know would save your business, would you do it? Of course you would. There is such a thing–an easy one, in fact: back up your computer and project drives.

Taking care of your data and your projects should be your number one priority. If you lose your files, you will have angry clients (at best) and you will lose money because you will have to recreate whatever you lost. Remember, time is money. 

I just went through this. Over the weekend, my computer died. My trusty MacBook, that has served me so well for the better part of a decade, turned into a brick. We’re talking a power issue—possibly a fried motherboard—who knows. It won’t make so much as a peep or ding, much less actually turn on, despite the various tricks tried by me, Apple, and my tech-savvy brother. It is so dead, that recovering anything from its drive is probably going to require an expert and lots of money. 

Dead-dead-dead-y-dead. 
The MacBook is dead, long live the new MacBook.

Okay, you get it. 

Anyway, I would be so terribly screwed…except that I regularly back up. I’m religious about it and it totally saved me here. Every week, I back up on two separate outside drives plus I have some things backed up to the cloud with every change, too. So, instead of losing a ton of data (like client files…eeek!), I lost very little—like a couple of screenshots, it seems. 

So yeah, I’m still out the cost of a new MacBook and my Sunday was all about trying to fix my old one, then getting a new one (thank heavens Apple delivers via courier here!), then doing the migration from one of the drives. Still, I’m up and running, mostly normally, this Monday. Whew.

More importantly, my clients will be virtually unaffected by the failure. That is both a client management issue, like it would be for anyone in any business, and an ethical one for us lawyers (I have a duty to protect my clients’ files/data). 

If you are not backing up regularly, start today. Best practice is the 3-2-1 system: three back-ups, on at least 2 separate media (2 different drives, 1 drive + cloud, whatever), and 1 copy kept off-site (the cloud can be this). Then, do it every week at minimum. 

A backup plan is just like insurance: we hope we may never need it but, boy howdy, we’re glad it’s there when we do. 

Your Creative Business is (surprise!) a Real Business

Yesterday, I read a tweet about how artists must see themselves like start-ups—they are in business and must treat their business as, well, a business. While the author was referring to musicians, the point is absolutely true for all artists—writers, photographers, designers, et cetera. 

Self-employed does not mean you don’t have a job or that you are not in business. In fact, it’s the opposite. You are more closely tied to your business than regular employees. Being self-employed myself, I know whereof I speak (I’ve not had an actual employer since the 20th century). There is a special intimacy between the worker and the work and the money it brings in that doesn’t, or at least doesn’t usually, occur in employees. 

I think for artists, that intimacy may be even deeper since, generally speaking, you are expressing something inside you in your work. Or at least trying to, when you can, even when you’re making commissioned work. 

Sadly, though, too often that intimacy includes a mingling of Artist and Artist’s Business, especially in the financial sense. This, dear readers, is a really bad thing.

From a legal perspective, it can make for lots of issues. For one example, mixing the personal and the business can affect any corporate veil you may think you have because you have an LLC or incorporated. When the finances are mingled and corporate formalities are not followed, someone suing you has a much better chance at getting to your personal assets (“piercing the corporate veil”). 

More importantly, though, if you don’t treat your business like a business, there will come a day when it will bite you in the butt—like when you are trying to get credit for some major purchase, like a car or, more importantly, real estate.

When you want to buy a house (or even rent one in some places), proving your income and your business’ viability is crucial. Self-employed folk generally have to provide extra documentation to prove they are a good risk.  We have to provide P&Ls, balance sheets, and bank records. Since we all try to get our taxes down through deducting every possible business expense, (self-employment tax is a pain) our tax returns might show we make less than we actually do. If you’ve been claiming some personal expenses as business expenses, this will be even worse (and it’s illegal). 

Now, with COVID, it’s even harder to get a mortgage if you are self-employed. Fannie Mae has imposed extra hurdles to make sure potential borrowers aren’t faking it. I know because I have just been through this.

My partner and I had been pre-approved for a loan larger than what we ended up asking for; but we just learned that we had a real chance of not getting the loan we needed because of those new proof requirements. The requirements are changing often right now and, lucky us, the newest changes happened just as we went into contract. Surprise! On top of the usual pile of documents, I needed to prove that I had more business in the pipe, so to speak, and that my business has income fluctuations throughout the year, and that those trends are fairly consistent over time. Holy cow!

Now, I’m religious about my bookkeeping and records-keeping and keeping my business and personal finances truly separate (not to mention my firm’s trust account separate from it all, too) so, luckily, I could produce the extra reports and statements necessary. Short answer: we got our loan. But I know too many artists who do not take the time to keep things separate or to even do some effective bookkeeping. Yikes! Those artists would be totally screwed. 

Keeping accurate business records and keeping them and your accounts separate from your personal ones, is vital. If you treat your business like a business, your records will be there when you need them. Don’t beat yourself up if you haven’t been doing this—just start now. 

Control

I know… I suck… I haven’t been keeping up with posting here. In my defense, my boyfriend and I are in the middle of selling his condo and buying a house. In San Diego. In the middle of a pandemic. Which brings me to the theme of today’s post: you can’t control others but you have control over what you do.

Real estate transactions are one of the most stressful things in life. Several articles like this one point out that home buying ranks above planning a wedding, becoming a parent, or even losing a job, for being stressful. In San Diego, like other very expensive places, I think it is even more so. For example, we looked at a 1300 sq. ft. house the other day that was priced at $825K (like most properties here, it will likely sell for more, but not from us); its ceilings were practically falling in and its floors were warped from water damage, amongst other problems. Almost a million dollars for a fixer-upper. INSANE!

We did find a house we loved and submitted an offer. The owner countered in a totally greedy, irrational, and frankly insulting manner. First, we got pissed; then we remembered that we can’t do anything about how a seller acts. In this situation, we let go of the hurt feelings and walked away. Let someone else over-overpay. Now, we’ve found another and just submitted an offer. It’s likely we won’t get the house because the owners are flippers and will only care about making bank, but we submitted a generous offer with terms that both make it more attractive and yet still protect us in the process. Still, I suspect someone will out bid us and do so without an appraisal contingency and maybe even “as-is” and even without an inspection contingency. We can’t control the other offerors nor the sellers, so we’re not going to worry about it. Either we get this house, or not. 

Leaving off contingencies makes an offer stronger in the seller’s eyes. However, what it does for the buyer is put them in an unreasonably risky situation. For example, the appraisal contingency protects you in case the house is overpriced. An appraisal is necessary so that the loan provider knows it can make money if you default on your loan by making sure it will hold enough equity in the house to make money on a foreclosure. See, if the house is sold at $800K but appraises at $750K, without an appraisal contingency the loan company will only fund up to $750K and you’ll have to make up the difference somehow… like in cash. If you make a large downpayment, a loan company may forego the appraisal and tell you it’s okay to waive the contingency, but that’s because it knows that it’s going to make money selling your house if you default because its loan to you was only $400K (50% down), not $640K (20% down) or more. But you are still overpaying for the house.

If our offer is countered with contingency removal demands, we’ll just say “no” and walk again. We may end up renting for a while, but we will not pay a huge sum for a house without protections in the process. It would not be good for us and we can only control what we do. 

I bring all this up because what I’m hearing from sellers is just like what creatives hear all the time, and what creatives must learn to say “no” to. That is, you’re told “everyone does this” or “sure, the doc says you are assigning us your copyrights but we’ll let you use the work” or “it’s industry standard to have a 90 day pay window,” or “you have to get releases from everyone you shoot at this event or indemnify us against claims if you don’t,” etc. Whenever someone in a financial transaction with you says one thing but the paperwork says another, go with what the papers say. Always. Your clients, no matter how nice, are not on your side. They can’t be—they are negotiating for their best deal, not yours. You can like them, but don’t ever trust their word over what is on the page.

Moreover, the terms they are insisting on are good for them and they do use them, or the terms would not be there. Always. So when they are saying “oh, we never do this thing the contract says we can do” and they won’t take it out, then you know they want to do what they claim they never do, and will if they can.

If your client/buyer tells you “my way or the highway,” take the second option, for sure. Bullying and fear-mongering is pervasive in the creative industries. Threats about not getting work are just manipulative bullshit. You didn’t have the gig and lose it by saying “no,” they just wanted to scare you into accepting a bad deal. Walk away. Use the time to get a better client.

But don’t bother trying to fix them or teach them the errors of their ways. Like the real estate situations mentioned above, you can’t control what your clients/buyers do and you’ll drive yourself mad if you try. But, you can control what you do. 

The first thing is to know where your boundaries are. You can negotiate lots of things, but you should always know what lines you will not cross and respect those limits. You set your own limits; and you should do it before any negotiations so that you know what they are. Write them out like a list if that helps: will never sell copyrights; will only indemnify for my own actions; will not lower my price without getting something in return (besides the gig); etc. Once you have your limits defined, then you can respond rationally to whatever demands are made. So, for example, if a client insists on owning your copyrights created for the project, you can say “No” if you’re line is ownership, or “Not at this price—if you want full ownership, that will cost $X” if you’re willing to sell but for the right value. 

You can use your list for contract negotiations of all kinds: time to pay, deposits, usage license terms, indemnification clauses, you name it. You set your limits. You have that control. Stick to them because they are best for your business

Saying “no” to bad terms and bad deals does not make you a jerk, it makes you a smart businessperson. And, although standing up for your rights and what is best for you and your business is not always easy, it is vital.