Sell digital rights with a ‘use it or lose it’ provision

With an absence of defined standards for remuneration for creators in the digital age, individual artists need to exercise due diligence in informing themselves about royalties, licensing fees, and multiple revenue streams to augment compensation for their services or products, says a panel of entertainment association representatives. Discussing pricing rights for the digital and online marketplace at Insight's Entertainment Industries Summit in Toronto, panellists noted the common challenge among actors, writers, musicians, creators, and producers of identifying new revenue streams and ensuring they do not sign away their rights without ensuring appropriate payment for their work. "We are in an artist-centred management structure that we have never had before," said Tony Tobias, the panel's moderator and president of Pangaea Media and Music in Toronto. "The value chain has bent into a circle, and the artist is in the center, but it's no good if they don't understand the variety of revenue streams. It's a question of they do or they die."Artists have to view themselves as brands and not just members of cultural industries. "They have to look at the anatomy of all of their rights," said Tobias. "It's about selling music and not just (units) of CDs. An artist needs to create an Excel sheet and look at their sources of revenue. They should calculate how many CDs they have sold, advertisements they have on their website, royalties they received from SOCAN, t-shirts sold, and ringtones."Warren Sheffer, a partner with the law firm of Herb & Sheffer and an intellectual property specialist, said that provisions should be made in contracts setting timeframe in which purchased intellectual property rights need to be exercised. Broadcasters should not by default purchase rights from producers or creators if they don't intend to use the work. "If you are not going to use the rights (to the work), don't buy the rights," he appealed.As broadcasters are threatened by the expansion of digital media, they protectively have producers, authors, and creators sign over their rights, said John Barrack, national executive vice-president and counsel for the Canadian Film and Television Production Association. "The discussion of rights now dominates every aspect of every conversation we are having," said Barrack. "Broadcasters are seeking to grab rights such as merchandising, which goes well beyond what we have ever seen before and they are doing this out of fear. They are afraid that they will be out of business because we (producers) don't need them. Rights are grabbed and then not used. It's use it or lose it. Grabbing rights for no additional money is just not acceptable."With the rapid commoditization in communications, there is a shift where information is fast becoming free of charge, observes Trevor Doerksen, chief executive officer and co-founder of Calgary-based MoboVivo Inc., the first company to sell television programming online in Canada."You have a situation where consumers pay $2 to see a television program that took $200,000 to produce, but people will pay $5 for a ring tone," said Doerksen. "Information is a commodity that is moving from cheap to free. The phenomenon started happening long ago. The television show that was produced at a high cost will move from $2 to being free."Business basics apply to producers and creators who produce either primarily for new media platforms or who have their work migrate to new media through distribution agreements. They don't have to re-invent the wheel when looking to monetize new media content. "It's still simple," added Doerksen. "The user pays for it directly, or by subscription, or there are advertisements."And industry associations are helping the cause of those behind the content. "It's part of our mandate to recognize new media," says Patricia McCutcheon, national organizer, digital media at the Alliance of Canadian Cinema, Television, and Radio Artists. Indeed, the Independent Production Agreement negotiated by ACTRA contains a "new media" section that covers 2007 through 2009 and ensures additional revenues make it into the pockets of its members whose work is featured in digital platforms. Jumping off the tail to monetize new forms of contentPrior to the session on digital rights, another panel examined the challenge of monetizing new media content in this country. It's an expensive proposition in Canada, and one that forces content developers to look beyond Canadian borders to meet their technology needs and steer away from doing business with major players like Rogers Communications Inc. and Bell Canada."There are no competitive rates for e-commerce in this country at all," said Kevin Leflar, founder, president, and chief executive officer of OfficialCommunity, a web property dedicated to online community commercialization for established recording artists. "That is a sad statement, but it is reality. We are a small market. We are on the back of the tail of the dog that is wagging it."Leflar, who has sought technology partners in locations as far away as Asia, said the actual cost structures associated with running a web property that is e-commerce enabled are prohibitive if new media creators choose to play ball with domestic technology companies.Chris McCracken, vice-president of broadcasting and media assets for the Canadian Football League, said the lack of standard measurements for viewing digital content, such as Nielsen ratings in television, does not provide content developers with a compelling argument to offer their content at a premium to advertisers."How do you monetize something that is free in the first place?" asked McCracken. "We won't charge viewers to view games on broadband that they can see on television for free. However, we need accurate and deep metrics to sell content that we produce. We need to land somewhere where there is a consistent rating system."

Sell digital rights with a ‘use it or lose it’ provision

Broadcast | October 25, 2007

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