Strategies for the Acquisition of Rights to Produce New Entertainment Content

Source underlying rights, original idea or rights to make derivative content from an existing rights holder.

Commission and own rights to new creative (e.g. scripts, music, art direction, costume, etc.)

License rights to any source content (e.g. recorded music, stock footage, trademarks)

Own and control the copyright of the new content created which includes all intellectual property rights.

Concept creation and acquisition of necessary rights to produce and own copyright to new intellectual property FOCUS OF THIS LECTURE

Development/pre-selling to finance content

Production

Exploitation

Original ideasDerivative/adapted ideasNew ideas developed by owners/employeesPitches of new ideasSpeculative scripts based on original ideasCommission creators to come up with new ideas/conceptsInvented or based on real eventsCreate new content by adapting existing and copyrighted material (based on derivative rights)

Sources of underlying rightsStrategies to access rightsPublishers print/games/webDevelopment companiesProduction companiesIndie ProducersStudiosLive theatre companiesCreators

Internal Development Team (in-house)Co-ventures with creative producersCreative that walks in the front door with spec scriptsReach out to owner, option/purchase Bid for it in an auction

Properties derived from the literary/print world:

Books, short stories and illustrated booksMagazine articles/magazine brands Newspaper storiesInternet storiesComic books

Legit theatreNew content in a new mediumNew theatre production based on existing production/scripts/music designMovies and TV programs:Filmed content into plays or booksRe-make in the same language as originalRe-make in a new languageSequels, prequelsTV to movie, and vice versaRe-purpose material existing content for new uses/platforms (e.g. Wings TV Channel is based on USAF archives)

Format rights (e.g. Fear Factor and American Idol)Local versions of variety/non-fictionScripted: e.g. UK version of Law and Order

Toys and consumer products

Characters from video games

Experiences like theme park rides (e.g. Pirates Caribbean)Life rights, living and deceased (often tied to a book).Established franchises E.g. Star Wars, James Bond, Harry PotterMajor franchises are controlled by large entertainment firms who created them or bought controlling rights (e.g. Disney bought Marvel for $4 B and LucasFilm for $4B). Studios rarely license derivative rights to competitors.

Public domain (free): published works older than 50 years from death of Author (Canada). In the USA most content produced before 1923.

Historical events (e.g. 911) and news itemsPolitical people/orgs in the public domain (e.g. film about Obama, Mormon religion in Book of Mormon)Stories about people that are deceased but not protected by trademarks (e.g. Joan of Arc easy, Elvis - hard)Re-make of original material in the public domain (e.g. Alice in Wonderland, Grimms Fairy Tales)Public domain rights are often combined with copyrighted material (e.g. Rights to a Non-fiction book on a public domain topic)

First step is to determine who actually controls the rights:

Agents/managers/entertainment lawyers who rep talent and properties (living and dead). Cdn example is Westwood Creative Artists http://www.wcaltd.com/

Live theatre licensing agents, e.g. Samuel French http://www.samuelfrench.com/Disney http://www.disneytheatricallicensing.com/

Creative directly, i.e. writers, directors, actors, authors, producers who often solicit content producers.

Production companies, studios, theatre companies and other entities who control content.

Production companies, studios, theatre companies and other entities who control content.

Book, magazine and comic book publishers, eg. Penguin/Random House http://www.penguinrandomhouse.biz/rights/

Estates for classic literary properties as Babar and talent such as Jimi Hendrix e.g. Experience Hendrix LLC http://www.jimihendrix.com/us/experience-hendrix-llc

Format companies (e.g. Endemol http://www.endemoldistribution.com/content/titlesearch-formats.aspxAnd e.g. Freemantle http://www.fremantlemedia.com/Production/our_brands.aspx

Broadcasters who own content (e.g. CBC, BBC control vast libraries)

Consumer product companies

Foundations and institutions: Smithsonian, National Geographic and Jacques Cousteau Foundation Archives (mix of public domain and copyright protected)

Good IdeasNot so good ideasCopyright protectedAre rights accessible?Fit between idea and organization/peopleFinanceable and makeable ideaUnique conceptExclusive rightsPositive market response

Rights not avail, messy or too costly.Dont trust partnersContent is un-financeableToo small or too bigNothing unique/weak brandAlready shoppedNegative market response

Acquire all rights needed for market exploitation today, tomorrow. One never knows where markets/tech is heading.

Where rights are reserved and not available, understand the implications on new content being created (i.e. If you cant get a specific right).

Ensure rights are internet/digital ready that can ride the roller coaster of tech change.

Acquire rights for the least cost up front to reduce risk.

Utilize contingent payment methods where possible, i.e. options, pay-as-you-go and based on future success metrics v.s. big payment up front.

Manage contractually the approval rights of parties controlling rights and limit/eliminate the need to ever having to ask for permission.

Minimize the need to ever have to go back and ask a rights holder for new rights in the future. Todays friends may be tomorrows adversaries. Giving a rights holder decision making powers is giving up leverage.

Be careful not to muddy chain of title by allowing others to introduce elements they own as a back-door tactic to gain access to valued rights (e.g. the first party owns the underlying rights but a second party owns rights to the script used).

Protect against claims of plagiarism and copyright infringement (e.g. Enforce strict rules among creative team to keep the rogues at bay).

Legal documents should be clear to reduce misunderstandings in the future. Right to assign underlying rights is important.

Rights holder grants the producer the exclusive option to purchase rights for a limited period of time (e.g. 1 to 2 years) for an option fee. These provide the producer with a contractual hold on the underlying rights in exchange for a modest advance with pre-agreed purchase terms.

Some arrangements provided for a second or third payment to extend the term of the option.

The option agreement would also include the terms of the purchase agreement (with pre-agreed terms) that is triggered when a pre-condition is met: Payment of a fixed purchase amount, payable at any time during the option period (i.e. payment exercises option)Payment based on a formula (i.e. if a TV program x dollars, if Hollywood feature y dollars, if play z dollars.)

The option and purchase agreement would also specify if its a complete assignment of underlying rights or the right to make limited content.

Original ideas have a blue sky range of available rights nothing has already been licensed. Get every right to reduce downside risk and maximize the ROI. Licensee usually has more leverage with unproven concepts.

Derivative content may be subject to pre-existing grants of rights to others clutter, or even competition. Licensor usually has more leverage. Exclusivity may be limited (say 5 years). Specify exactly what new content can be created (i.e. How many productions and what type).

Options to produce additional content? Rights to invent new characters and stories.Core content produced must be for term of copyright.

Underlying purchased should allow for full exploitation of the new content for the term of copyright, world uses, all media, etc. unless there is a practical reason that this cannot occur. Exception would be if the intention is to produce only regional content (e.g. a play in Toronto)

Exception would be if the license is to make a formatted show for a local market only (e.g. Big Brother Canada)

Exception would be if rights are reserved/licensed to others (ie. The rights to adapt a script to make an English language film cannot conflict with the existing Non-English language film.

Territory of use (usually global but might be limited for live theatre/format.

Term of uses (usually in perpetuity but may be limited for live performances)

Language of use (to dub/version original version versus making original versions in multi languages)

Exclusivity of use (for full term?)

Ancillary rights such as merchandising and licensing rights (i.e. to monetize rights related to the new content created)

Full Grant of Rights the highest level:

Outright grant of all rights: included but not limited to: all media (theatrical, television, satellite, cable, internet, video), all publishing, all live performing rights, ancillary including merchandising and licensing, all internet/telephony rights, for all time, for all uses, all languages and formats, all rights exclusive, all other uses not yet invented, in perpetuity and for the universe (earth, moon, mars, other galaxies, etc) plus the right to sub-license, sub-distribute, sell, dispose or rights and the right to market publicize, along with full waiver of all moral rights, and the right to assign rights, etc, etc, etc.

Media and usesLanguageTerritoryTermExclusive/non-exclusive

Rights defined by MEDIA AND USES:

Media rights (e.g. all forms of TV (including conventional, pay, cable, satellite, pay per view, etc), theatrical, DVD/home video, ancillary and non-theatrical (such as airline)Internet/new media rights (down load: temp, permanent, streaming, VOD free, VOD sub.)Mobile/wireless rightsFormat rights (right to make new format versions)Live theatre or public performance rightsPublishing rightsRe-print rightsRe-release rightsRecording rights

Rights defined by MEDIA AND USES (cont.)Music publishing rightsMerchandising and licensing rightsLikeness rights (and right to use name and image)Publicity rightsMoral rightsAdaptation rights (and right to abbreviate)Right to create new original stories based on the underlying propertyTrademarksRetransmission rightsMulti-media rightsForeign language rights

Rights defined by LANGUAGE

All languages; or Limited to pre-agreed languages e.g. English Language

Original language version only versus the right to dub or sub-title into foreign language versions (usually granted).

Rights defined by TERRITORY All universal or world rights; or

Limited to certain countries or territories such as Canada only, North America only or based on industry standard definitions to limit rights to some form of cultural boundary like Francophonie (France, French-speaking Europe and former France colonies where French is spoken.

Airline, ship, military, embassy rights are usually included with base country/flag carrier.

In the case of live performance, rights may be limited to a city or even a single theatre.

Rights defined by TERM

Perpetuity/statutory copyright limit is the typical grant for new content but limited by Copyright protection in practice. Content Producer needs long term rights as the exploitation deals they enter into are likely also for long term rights.

Limited term in the case of live productions.

If limited, what pre-agreed options exist to extend term (perhaps based on success metrics).

Rights defined by EXCLUSIVITY

Exclusive rights ensures no direct competition or confusion in the marketplace.Exclusive rights are needed to in-turn license exclusive rights in sub-territories.

Exclusive perhaps for a set term, then non-exclusive thereafter (ie. on a hot property, underlying rights holder may provide a window before any new content is licensed.

Exclusive except for pre-determined pre-existing uses (common for derivative rights from franchises).

Rights grant: media uses, term, territory, language and exclusivity (as described in earlier slides).

Chain-of-title review/legal opinion/warranties (to make seller actually owns the rights). I.P. Properties with long histories may have compromised rights due to errors/legal disputes.

Access to related agreements to determine if underlying rights really are free and clear and that the party licensing the rights really owns them.

Reps and warranties from rights holder. In extreme situations, grant of rights may be conditional on a positive Legal Opinion from and Entertainment Rights Lawyer with valid errors and omissions insurance.

Fixed Purchase Price (e.g. $50,000) or Variable Purchase Price (e.g. $50,000 or 2% of the production budget whichever is greater. When paid? Often first day of principal photography.

Entitlements to future royalties and other forms of Contingent Compensation: Referred to a Back-end.Based on gross receiptsBased on adjusted gross receipt or net profitsBased on uses vs. receipts vs. units sold (or some combination)Are up-front fees advances against backend royalties?Any Agents Packaging fees with a back-end entitlement? (e.g. ICM, CAA) You hire their people, you get their packaging deal (US/Hollywood practice)

Does the underlying rights holder have approval rights to any elements:CreativeConsultativebusinesspublicityjoint sharedWhat other writers/creative can be hired.final sayHow approvals are exercised?

Credits: type, size, placement, linkage with other creditsProduction and publicity/advertisingRight of underlying rights holder to withhold credit (ie. pull their name?)

Reversion/turnaround provision what happens if development initiative fails? Can creator re-acquire rights i.e. do they automatically revert?

Are additional services of creator required (such as consulting, writing, producing, publicity, guest/cameo, services)? The touch of the creator may help new content including a positive endorsement both to get the content financed and as promo with the end consumer. Will the creator agree to attend pitch meetings to sell the new content?Are additional services pay or play to allow for creator to be dismissed in the event of conflicts?Entitlements to receive profits from other works (i.e. What if new content re-vitalizes a dormant brand?)

Options for other works (e.g. next project) to compensate aggregator for investment in I.P. Brand/goodwill value. Range here is:No options one-off deal.First right of negotiation First and last right of negotiationPre-agreed business terms within option period (i.e. a la carte pricing based on content produced).Carte blanche to produce/assign rights for unlimited new content (i.e. does the licensee step into the shoes of licensor)Does creator get travel & perks and attendance at awards events?

Content Producer initiates and an inquiry to determine who controls targeted rights and are they available.Offer is made in writing via email with phone follow up.Information may be exchanged (like underlying agreements) that are shared after a Non-Disclosure Agreement is signed by interested party.Deal concluded via emails or in sometimes via draft agreements.Draft agreement is prepared (if negotiation was via email) and negotiated between lawyers.Execution of agreement to confirm acceptance and payment of consideration.Press release to trade or communicated only to targeted funders (e.g. broadcasters or distributors).

Next step is often to commission a writer to create some document to help sell the new content (e.g. pitch document or treatment). Rights need to be acquired by the producer to this work (all rights/in perp).

When scripts or screenplays are commissioned, these are often under guild collective agreements (e.g. Writers Guild of Canada) and the assignment of rights is included in the guild contracts.

Everyone that goes near the creative must provide a full grant of rights or release to their contributions (e.g. story editors, directors, actors, art directors, music composers, film editors, special effects, etc

Strict discipline and procedures are needed to ensure no cracks or need to go back and ask later

Public domain/non-copyrighted/trademark free, is pre-cleared/free, e.g. Beethoven composition (not recording) filming The White House.

Rights or clearances are needed for all pre-existing copyrighted material used in the new content.

Source music (e.g. The Who Song/theme song on CSI TV series), synchronization rights to a) composition/song and b) the actual recording.

Stock footage (e.g. clips of aircraft landing or historical footage used in documentaries) On screen artwork, logos, trademarks, names, likenesses, people interviewed, etc.

Written and legally binding agreements for all commissioned creative and source content.

Pre-clear any issues with legal counsel. More expensive to not film than have to edit out later or be held hostage by rights holder later.

Content need to produce a clean chain-of-title for funders, broadcasters and distributors with all rights held in prod co. who makes the new content.

In film and television Errors and Omissions insurance is used to lessen infringement risk. The insurer (eg. Chubbs) uses a lawyer to review content (script stage and finished content stage). Buyers and key creative get added to the E&O Policy.

Questions and Open discussionCreated by Steve Ord, Sept 2015