These days, rights holders are facing some difficult decisions. Normal distribution rules no longer apply in the online space. Reny Montesinos (pictured), executive director of the L.A. office for Compact Media Group, shares his thoughts on handling multiple licenses and contracts in the multi-platform age.
The old model of rights transferred under license was pretty clear cut. With online distribution services you have a large number of ‘broadcasters’ making content available via streaming or as a direct sales outlet. This means increasing costs in terms of multiple digitalization for formats ranging from mobile phones to IPTV. Keeping track of these licenses and sales is fraught with issues, especially as clips are freely available via YouTube and peer to peer networks. The natural cycle from broadcast to sell-through has been shortened considerably.
It’s no wonder many new technology companies complain they are having difficulty securing content while rights holders decide how to monetize it. Some of these concerns can be addressed in the contract:
- It’s key to limit exposure in terms of the length of contract and try to offset the costs of digitalization for any particular format that is not standard.
- Payment cycles, transparency and audit provisions are essential.
- Push for a minimum rate and check there are no hidden exclusivity provisions or the ability for a number of free giveaways or reduced royalty rates unless you are in full agreement.
- The online space provides a gateway to personalized information that traditional monitoring systems have to sample – gaining access to this information may increase traffic to your site.
- Who will be making these deals – the production company, sales agents or distributors? More people in the chain will reduce payments and extend payment cycles.
- Negotiate for key positions on sites/services – research has shown that many online consumers do not go past the first couple of pages of information (especially on mobile applications).
- When doing deals with aggregators, be especially wary. While there are considerable advantages to doing a deal with one company to supply content across markets and service providers, it makes accountability and raising issues with individual companies harder. For key content, it’s worth doing direct deals and driving traffic to key providers to raise revenues.
- Make sure that these deals do not cross over your primary license with the broadcasters. Ambiguous clauses in the primary contract may seem clear in terms of when you can grant secondary licenses to third parties, but in the current age of catch up, multiple transmissions and on-demand (all covered by the primary license) may inhibit licenses across the global medium that is the online space.