Entertainment and Creator Contracts Should Define Ownership and Secondary Uses First

Hello! I am Noriaki Asato, representative attorney of Legal Agent.

Businesses involving video, music, illustration, manga, VTubers, games, streaming, social media, events, merchandise and fan communities continue to expand.

In these fields, creative works and characters may represent the core value of the business. Creator contracts therefore need to address not only remuneration but also copyright, moral rights, secondary uses, revenue sharing, credits, modifications, AI use and use after termination from the outset.

If the parties proceed on the simple understanding that the creator will “make,” “post” or “appear in” something, later business expansion may become difficult.

Distinguish an assignment from a licence

The first question in a creator contract is whether the creator will assign copyright in the deliverables or grant a licence to use them.

With an assignment, the company acquires the relevant rights and can generally secure a broader range of uses. With a licence, the rights remain with the creator and the company can use the work only within the scope agreed in the contract.

The appropriate structure depends on the business. A licence may be sufficient for a one-off advertising illustration. By contrast, a character IP, game asset or deliverable intended for long-term brand development may require a broad licence or an assignment.

Define secondary uses specifically

Secondary uses are particularly important in entertainment projects.

The original work may later be used in videos, social-media posts, advertising, events, merchandise, overseas releases, books, games, animation, NFTs, AI training, short-form clips or archived streaming.

If the contract does not anticipate these uses, the company may need to seek additional permission from the creator. The parties may then also need to negotiate additional fees or revenue sharing.

The contract should identify the media, territory, term, sublicensing rights, permitted modifications, remuneration and credit requirements for secondary uses.

Address moral rights and modifications

Even when copyright is assigned, an author's moral rights cannot be transferred under Japanese law. A company that expects to edit, crop, translate, process, combine or regenerate a deliverable using AI may therefore consider obtaining an agreement that the creator will not exercise those rights within an appropriately defined scope.

This should not be treated as unrestricted permission to make changes that materially harm the creator's name or the integrity of the work. Illustrators, musicians, writers and VTuber model creators may have particularly strong interests in how their work is modified.

The contract can make the relationship more stable by defining which modifications are permitted and which require the creator's prior approval.

Address AI use expressly

The use of creator deliverables for AI training or AI generation has become a significant issue.

Illustrations, voices, text, video, 3D models and character settings may be entered into AI systems to generate similar materials. Creators may have serious concerns about their style or voice being reused in this way.

If the company anticipates AI use, the contract should expressly address training, generation, internal use, commercial use and disclosure to third parties. Undisclosed AI use may have a substantial effect on both the contractual relationship and the parties' reputations.

Check obligations under Japan's Freelance Act

Where an individual creator is engaged as a freelancer, the parties should consider Japan's Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators, which took effect in November 2024, alongside the intellectual-property provisions.

The Act frequently applies to work commissioned from individual creators. It generally requires transaction terms to be disclosed in writing or electronically, and the payment date must in principle be set as early as possible within 60 days after receipt of the deliverables. Ongoing engagements may also be subject to additional rules, including restrictions on unjustifiably low remuneration and advance notice of early termination.

A contract alone is insufficient if purchase-order practices and payment cycles do not follow it. Reviewing the contract and the operational commissioning process together is the more practical approach.

Conclusion

The first task in an entertainment or creator contract is to design ownership and secondary-use rights.

If the parties do not clarify assignment or licensing, secondary uses, revenue sharing, moral rights, modifications, AI use and post-termination use, rights clearance may become a bottleneck after the business begins to grow.

LegalAgent advises on creator agreements, VTuber agreements, character licensing, video production, music use, merchandise programmes and AI-use provisions. Entertainment businesses need contract structures that respect creative work while preserving the flexibility required for future development.