Entertainment Actors Authors Directors Law and Legal Definition

The personal service agreement is a primary legal instrument in the entertainment industry. This agreement is negotiated between an artist and a company that manufactures, promotes, and distributes the artist's goods or services. The agreement often binds the artist to produce for one company for a certain period of time. Personal service agreements are often governed by statutes, and are often the subject of litigation because they restrict the rights of artists to perform or create for any entity except the company with whom they have contracted.

U.S. copyright law contains provisions specifically directed at the entertainment industry. For example, the songwriter—or the copyright holder, if the songwriter has transferred the song's copyright or created the song as a work for hire—decides who can first record a song for publication. However, once the song has been recorded and published, the copyright holder may no longer limit who may record the song. If a song's copyright owner has previously granted permission to someone to record a song or if the songwriter has recorded and commercially released a recording of the song, the copyright holder is required by copyright law to grant a license to anyone else who wants to record that song. This is called a compulsory license. A licensee who records a song under a compulsory license is required to follow strict statutory guidelines for notification of its use and reporting sales and royalties to the copyright holder. The fee for a compulsory license is set by Congress at a few cents per recording manufactured, and is adjusted for inflation every few years.

Another primary contract in the entertainment industry is the contract for rights. This contract often involves a transfer of copyright ownership or a license to use certain creative property (e.g., a song or photo).

Many times, a contract for rights is combined with a personal service agreement. The agreement will often state that any work created by the artist during the term of the agreement is considered a work for hire. The company with whom the artist has contracted often receives automatic ownership of the copyright to a work for hire. For a work for hire to exist, the artist must either be an employee of the company or create the work pursuant to a valid written agreement—and even then the work must fall within a few specific categories defined by copyright law.

A license is a contract through which the artist or copyright holder grants certain rights to another party. For instance, a novelist might grant a license to a film studio to create a screenplay based on a novel. A license specifies the fee or royalty to be paid to the artist, the exact scope of use of the copyrighted material, and the time period for which the company may use the material, as well as any other conditions the parties agree to attach to the license.