Why do streamers who switch agencies keep getting sued?

Disputes between MCNs (multi-channel networks) or guilds and streamers have become frequent. When a streamer moves to another company, the original MCN immediately suing for hundreds of thousands or even millions of yuan in liquidated damages is very common.

The reality is that most such claims can be reduced or defeated with a professional defense.

Our cases

We recently handled six cases of streamers switching agencies in Nanning, covering group streaming and individual streamers. Result: all six won, and the streamers didn’t pay a cent in liquidated damages.

The key: looking past the contract label

Contracts between MCNs and streamers have all sorts of names — cooperation agreement, agency contract, exclusive agreement, partnership agreement… But judges and arbitrators “pierce the contract veil” and judge the legal relationship by substance:

  • If the streamer is subject to the MCN’s attendance management, task allocation and performance assessment, it has the features of employment, the contract is a labour contract, and labour law applies.
  • If the streamer provides content services as an independent party bearing the income risk, it is a cooperation relationship governed by the Civil Code.

Under a labour contract: leaving generally does not create “liquidated damages”; instead, economic compensation for terminating the labour contract may be in issue.

Under a cooperation relationship: whether the liquidated damages are reasonable, excessive or obviously unfair can all be contested.

Four types of key evidence

  • Evidence 1: attendance, clock-in and scheduling records — showing the streamer was directed and managed by the MCN, important evidence of employment.
  • Evidence 2: wages, commissions, social insurance and housing fund records — showing the form of remuneration.
  • Evidence 3: work groups, task allocation, weekly and monthly meetings, team-building — showing the streamer was integrated into the MCN’s management system.
  • Evidence 4: ownership of the streaming account, equipment and studio fit-out costs — showing the property relationship between streamer and MCN.

With these four types of evidence, the nature of the contract can often be recharacterised.

Arguing that liquidated damages are excessive

Even if it is found to be a cooperation relationship, the damages can be challenged as excessive.

  • Article 585 of the Civil Code: where agreed liquidated damages are excessively higher than the loss caused, a party may ask the court or arbitral body to reduce them appropriately.
  • In judicial practice, liquidated damages generally should not exceed the actual loss by more than 30%.
  • Actual loss includes training costs, promotion costs, content investment and loss of goodwill — all of which the MCN must prove.

If the MCN cannot prove actual loss, the damages are usually cut substantially or rejected.

Arbitration or litigation?

Most MCN contracts include an arbitration clause. In that case:

  • assess the arbitral institution’s impartiality (the Beijing, Shanghai and Guangzhou arbitration commissions and the Shenzhen Court of International Arbitration are relatively impartial);
  • if there is no arbitration clause, sue in court directly;
  • if dissatisfied with an award, you can apply to set it aside.

Compliance tips for streamers switching agencies

  • When joining an MCN: read the contract carefully, especially clauses on liquidated damages, non-compete and account ownership.
  • While working: keep evidence of all wages, commissions, clock-ins, work groups and training.
  • When planning to leave: consult a lawyer to assess the risk first; don’t suddenly disappear, and don’t leak trade secrets.
  • When sued: contact a lawyer immediately and prepare defense evidence; don’t play to the MCN’s rhythm.

Common myths

Myth 1: “If the contract specifies liquidated damages, you must pay.” Wrong. Excessive damages can be challenged.

Myth 2: “Streamers are always in a cooperation relationship.” Not necessarily. On a substantive review it may be employment.

Myth 3: “MCNs are big companies you can’t fight.” Wrong. MCNs also need legal evidence to support their claims.

Myth 4: “If I signed a non-compete before leaving, there’s nothing I can do.” Wrong. A non-compete requires compensation to be effective.

Myth 5: “Just settle privately for a small sum.” Wrong. A signed settlement affects later similar cases.

How Wang Xin’s team can help

  • Reviewing streamer–MCN contracts
  • Legal assessment before switching
  • Defending liquidated-damages claims
  • Establishing employment relationships
  • Full representation in arbitration and litigation
  • Compliance for streamers’ personal studios

If you face a dispute over switching agencies as a streamer, contact Wang Xin: phone +86 186-0113-9509, WeChat wang223040.

Quick answers

Must a livestreamer pay liquidated damages for leaving an MCN in China?
Not necessarily. Courts look at substance: if the streamer was managed like an employee, labour law applies and liquidated damages generally don’t arise; if it is a cooperation, excessive damages can be reduced under Civil Code Article 585.
What evidence helps show a streamer was an employee of an MCN?
Attendance and scheduling records; wages, commissions and social insurance; work groups, task allocation and meetings; and ownership of the streaming account, equipment and studio costs.
Is a streamer’s non-compete clause always enforceable?
No. A non-compete obligation requires compensation to be paid to be effective.

This is an English edition of Wang Xin’s original Chinese article, 主播跳槽赔违约金？一毛钱不赔的 4 类关键证据. It explains the law of the People’s Republic of China in general terms and is not legal advice for any particular case; outcomes depend on the specific facts and on how local authorities apply the rules.