Social Media and Negotiating Celebrity Endorser Morals Clauses

In the non-celebrity category, take the aftermath faced by big-game hunter Bob Parsons, CEO of GoDaddy (the Internet domain-name seller) after he posted a vacation video of his successful hunt for an elephant in Zimbabwe, complete with a view of him standing astride his dead catch. He later defended his hunting prowess by saying it was necessary to cull the herd for the well-being of farmers, and that: “Each year I go to Zimbabwe and hunt problem elephant. It's one of the most beneficial and rewarding things I do.” But the uproar was not stifled. The video was eventually pulled off YouTube, although it isn't too hard to find on other sites with a few mouse clicks. This all earned him PETA's “Scummiest CEO of the Year” and allegedly caused GoDaddy to lose over 20,000 domain-name maintenance accounts when competitor NameCheap launched a campaign to donate $1.00 to Save the Elephants for every account moved from GoDaddy to NameCheap.

Morals Clause a Must

What does all this mean to corporate counsel? One thing to do when hiring a celebrity endorser is to be certain the contract includes a “morals clause” that permits termination of a contract if the endorser decides to use Twitter, Facebook, LinkedIn, YouTube, etc., to tweet, post or upload offensive comments and materials. Know, however, that celebrity agents are well aware that their famous clients are apt to say the craziest things as their real personalities are revealed. So they're very careful not to let contracts be terminated for bad behavior. Instead, the company who hired the celebrity can only pull the advertising while it continues to cut checks. That hurts. So include a serious morals clause in every contract, and if the agent objects, you've got a litany of recent examples to show why your concern is real. A good morals clause might read:

If Artist has committed or commits any act which is a felony, or a misdemeanor of moral turpitude, or commits an act which offends the community or any segment thereof and/or public morals and decency that may, in the reasonable judgment of the Advertiser, cause a diminution in the value of the Advertiser's commercial association with Artist and which is of sufficient magnitude to require, for commercial reasons, the discontinuance of the Commercialization of Artist's Persona hereunder, then Advertiser shall have the right to immediately terminate this Agreement on written notice to Artist.

While ancillary provisions need to be added, it's this kind of broad clause that's necessary in today's social media world. Then there's the problem of getting some celebrities to cooperate in an advertiser's marketing program that includes posting comments from the celebrity, whether as Tweets or more lengthy comments on other social media sites. Often, an agent will propose that the advertiser write the Tweets and submit them to the agent for approval by the celebrity before they're posted. After all, celebrities are so busy with their own tweeting that they simply don't have the time to deal with Tweets supporting their endorsements.

But beware. While that may be a business solution, it may also require disclosure that the Tweets were pre-written and not necessarily the true thinking of the celebrity. Under the Federal Trade Commission's Endorsement and Testimonial Guides, if you put words in someone's mouth or keyboard that are not their own, you've got to tell consumers. (For more, see the two-part series, “Interpreting FTC's New Endorsement Guidelines,” in the Dec. 2009 and Jan. 2010 issues of Entertainment Law & Finance.) That doesn't make for very persuasive copy. So tell agents that you'll give the celebrity some talking points you hope they'll include in Tweets and posts, and reserve the right to approve whatever they write.

When Execs Behave Badly

Now the reverse. The Hollywood community was up in arms following Bob Parsons' posting. A number of celeb sites opined whether stars should boycott GoDaddy. Conversely, the view also seems to be that what's good for the goose is good for the gander, and that celebs should be permitted to terminate endorsement contracts (and receive all the compensation promised) if the company's executives behave badly.

As some have asked, is it good for GoDaddy endorsers Danica Patrick and Jillian Michaels to be associated with the killing of elephants? This so-called “reverse morals clause” is nothing new and rarely finds its way into endorsement contracts. But that may change as posting-happy CEOs can't seem to help themselves with controversial statements. Alternatively, agents will insist on a reverse morals clause to counter the advertiser's request for one, hoping to reach a compromise where both are dropped from an agreement. But that's a mistake for corporate counsel. Your company is paying. Insist on a one-way clause covering the celebrity and not company executives. Few, if any, agents will actually walk away from a deal over a reverse morals clause.

For Twitter, LinkedIn, Facebook and Google+ followers, click here to subscribe to Entertainment Law & Finance at a special introductory rate of $319. This offer is valid for new subscribers only.

By now, you'd have to be living in Antarctica not to have read about insurance giant AFLAC firing Gilbert Gottfried, the voice of the AFLAC duck, over insensitive jokes he made on Twitter following the Tsunami in Japan and its aftermath. The comedian simply went too far for the company's taste and off to pasture went Gottfried and his quack. But did everyone also notice in the last year how Gottfried was not alone in his insensitivity, and more so how it's not just the celebrities who are hired by companies but also the executives who hire them that are guilty of Tweetocide?

In Australia, Stephanie Rice, Olympic Gold Medal swimmer turned spokesperson for Jaguar, tweeted a decidedly homophobic comment after her team beat South Africa in a swimming tournament. While she later gave an apology for what she tweeted, it was too late and she was summarily dismissed as a Jaguar spokesperson. She learned the lesson that what you may say in private or believe in your own mind does not belong on Twitter (or anywhere else for that matter).

And let's not even get started with the deluge tweeted by Charlie Sheen as he journeys through his final 15 minutes of fame. Sure, it's nice to have millions become your followers. But if they're following just to witness a crash, one has to wonder what goes through the mind of folks like Charlie Sheen, Kim Kardashian (and her rant over a cookie diet that bought her a lawsuit), and those ever-vocal English soccer stars who seem unconcerned over being fined by their league over unfortunate tweeting.

In the non-celebrity category, take the aftermath faced by big-game hunter Bob Parsons, CEO of GoDaddy (the Internet domain-name seller) after he posted a vacation video of his successful hunt for an elephant in Zimbabwe, complete with a view of him standing astride his dead catch. He later defended his hunting prowess by saying it was necessary to cull the herd for the well-being of farmers, and that: “Each year I go to Zimbabwe and hunt problem elephant. It's one of the most beneficial and rewarding things I do.” But the uproar was not stifled. The video was eventually pulled off YouTube, although it isn't too hard to find on other sites with a few mouse clicks. This all earned him PETA's “Scummiest CEO of the Year” and allegedly caused GoDaddy to lose over 20,000 domain-name maintenance accounts when competitor NameCheap launched a campaign to donate $1.00 to Save the Elephants for every account moved from GoDaddy to NameCheap.

Morals Clause a Must

What does all this mean to corporate counsel? One thing to do when hiring a celebrity endorser is to be certain the contract includes a “morals clause” that permits termination of a contract if the endorser decides to use Twitter, Facebook, LinkedIn, YouTube, etc., to tweet, post or upload offensive comments and materials. Know, however, that celebrity agents are well aware that their famous clients are apt to say the craziest things as their real personalities are revealed. So they're very careful not to let contracts be terminated for bad behavior. Instead, the company who hired the celebrity can only pull the advertising while it continues to cut checks. That hurts. So include a serious morals clause in every contract, and if the agent objects, you've got a litany of recent examples to show why your concern is real. A good morals clause might read:

If Artist has committed or commits any act which is a felony, or a misdemeanor of moral turpitude, or commits an act which offends the community or any segment thereof and/or public morals and decency that may, in the reasonable judgment of the Advertiser, cause a diminution in the value of the Advertiser's commercial association with Artist and which is of sufficient magnitude to require, for commercial reasons, the discontinuance of the Commercialization of Artist's Persona hereunder, then Advertiser shall have the right to immediately terminate this Agreement on written notice to Artist.

While ancillary provisions need to be added, it's this kind of broad clause that's necessary in today's social media world. Then there's the problem of getting some celebrities to cooperate in an advertiser's marketing program that includes posting comments from the celebrity, whether as Tweets or more lengthy comments on other social media sites. Often, an agent will propose that the advertiser write the Tweets and submit them to the agent for approval by the celebrity before they're posted. After all, celebrities are so busy with their own tweeting that they simply don't have the time to deal with Tweets supporting their endorsements.

But beware. While that may be a business solution, it may also require disclosure that the Tweets were pre-written and not necessarily the true thinking of the celebrity. Under the Federal Trade Commission's Endorsement and Testimonial Guides, if you put words in someone's mouth or keyboard that are not their own, you've got to tell consumers. (For more, see the two-part series, “Interpreting FTC's New Endorsement Guidelines,” in the Dec. 2009 and Jan. 2010 issues of Entertainment Law & Finance.) That doesn't make for very persuasive copy. So tell agents that you'll give the celebrity some talking points you hope they'll include in Tweets and posts, and reserve the right to approve whatever they write.

When Execs Behave Badly

Now the reverse. The Hollywood community was up in arms following Bob Parsons' posting. A number of celeb sites opined whether stars should boycott GoDaddy. Conversely, the view also seems to be that what's good for the goose is good for the gander, and that celebs should be permitted to terminate endorsement contracts (and receive all the compensation promised) if the company's executives behave badly.

As some have asked, is it good for GoDaddy endorsers Danica Patrick and Jillian Michaels to be associated with the killing of elephants? This so-called “reverse morals clause” is nothing new and rarely finds its way into endorsement contracts. But that may change as posting-happy CEOs can't seem to help themselves with controversial statements. Alternatively, agents will insist on a reverse morals clause to counter the advertiser's request for one, hoping to reach a compromise where both are dropped from an agreement. But that's a mistake for corporate counsel. Your company is paying. Insist on a one-way clause covering the celebrity and not company executives. Few, if any, agents will actually walk away from a deal over a reverse morals clause.

For Twitter, LinkedIn, Facebook and Google+ followers, click here to subscribe to Entertainment Law & Finance at a special introductory rate of $319. This offer is valid for new subscribers only.