An artist investment agreement is a contract between an investor and an artist where the investor provides funding to support the artist’s career in exchange for a share of proceeds from any future sales of artworks. As the art market grows, this type of deal is becoming more common as a way for emerging artists to fund expenses and for investors to participate in the potential upside of an artist’s early career. When structuring an artist investment agreement, there are several key provisions that should be considered like specifying revenue streams covered, revenue share percentages and duration, mechanisms for recouping investment costs before profit sharing begins, ownership and resale rights for artworks created during the contract term, and more. Properly setting up the deal terms allows both the artist and investor to align their interests and participate in the art market growth.
Defining what revenue streams are covered under the artist investment agreement
The investment agreement should clearly spell out what forms of revenue related to the artist’s creative output will be covered under the deal and eligible for the profit sharing terms. This typically includes proceeds from sales of physical artworks, but may also cover licensing fees, royalties from derivative works, appearance and speaking fees, workshop revenue, and other earnings streams related to the artist’s creative efforts. Defining the scope helps prevent potential disputes later on regarding what is within the agreement’s scope and subject to profit sharing calculations.
Specifying what percentage share the artist and investor will take from eligible revenues
One of the most important provisions is setting out what share of applicable revenues each party will keep. This typically begins with having an initial recoupment period where the investor is paid back their total amount invested; once this cost is fully recovered, ongoing revenue is divided according to the profit-sharing percentages. A typical split ranges from 50% to 70% of profits going to the investor with the remaining amount retained by the artist.
Setting the duration for the investment agreement and any renewal provisions
The contract term is an important aspect defining how long the artist and investor are bound to the deal, both in terms of the investor’s recoupment period as well as how long profit sharing remains in effect. Most agreements last from 3-8 years initially, though longer terms are possible to give the investor more time to recoup costs and participate in the artist’s development. Provisions also often allow the parties to agree to renew the contract if it proves to be a mutually beneficial arrangement.
Establishing copyright, reproduction, and resale terms for artworks made during the contract period
The agreement will typically address the intellectual property rights for any works the artist creates during the time funded by the investor’s support. This includes provisions granting the investor reproduction and exhibition rights for artworks created under the agreement, but which leave the artist with ownership and authorship rights. There may also be clauses surrounding artwork resales – agreements could give investors a further share of any future profits if initial works greatly appreciate in value and are resold later on.
A well-structured artist investment agreement allows both emerging artists and art investors to formalize a mutually beneficial financial arrangement supporting an artist’s career development. Key provisions around revenue scope, profit shares, duration, and IP rights help align incentives and define the opportunity for investors to participate in the art market while funding artists’ growth.