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With every burst of new technology in our wired entertainment environment, the lines among traditional distribution channels blur a little bit more. We're moving from a predominantly aggregated consumer, "push" broadcast model, to a largely personalized combination of "push" and "pull" – what some have called a "narrowcast" model. Commercial brands are increasingly negotiating to align themselves with -- or create -- entertainment content. And traditional distributors, platform owners, and content developers have seen some of their power erode.
Despite all of this change, the entertainment content business models continue to be driven by familiar friends: revenue dependent on advertising, subscription, pay-per-view, or some combination of these. Our law firm continues to advise clients that the future, like the past, will be about planning, negotiating, and structuring new ways to exploit content across a variety of platforms.
We are pleased to be a part of this ongoing conversation, helping our clients to evolve the business models they need to take advantage of new digital platforms. So, and with the caveat that everything depends on whom you represent, let's consider a few legal topics that arise in the creation of content for the Web and digital devices.
Engagement of On-Camera and Other Creative Talent for Original Web and Digitally Distributed Content
Producers and brands are creating more original content for the Web and mobile devices. Studios and broadcasters are hiring producers to create not only long-form or episodic content, but also to create short versions (anywhere from 10 seconds to five minutes or more) for related Web sites and hand-held device distribution.
Where does the television or theatrical film deal end -- and where does the Web or mobile deal begin? More specifically, what is the function of the short-form content? Is it a stand-alone Internet program akin to a traditional television series? Or is it derived from a current production? Is it a clip or promotional tool? Will downloads of the short-form content constitute "television rights" or "video rights?
The Writers Guild of America and the studios strongly disagreed about the issue of compensation -- and residual payments in particular -- for content used on the Internet and mobile devices. Under the new guild agreement, the union maintains jurisdiction over certain content created for new media, as well as content downloaded or streamed over the Internet. The agreement creates a payment structure for derivative works as well as original material created for the Web and mobile devices. In addition, the agreement establishes a limited window within which TV programs can be streamed for promotional use with no residuals paid. To review the new agreement, visit www.wga.org/contract_07/MemorandumAgreement.pdf.
Program or promotion? Whether you're a writer, actor, producer, director, or distributor, you'll want to be clear in your agreements about the purpose and payment structure governing creation and use of short-form Web and mobile content.
Sponsor promo film: We represent on-camera and creative talent as well as various commercial brands in their efforts to create entertaining short films for the Web in which the sponsor's brand appears or is featured. If you are a brand or a producer, you must have an agreement with talent and creative parties that clearly covers the uses for the short-form content. Is the film primarily an artistic venture? Or is it really part of a large advertising campaign? Our experience confirms that actors, writers, and directors will often oppose commercial exploitations to which they haven't specifically agreed. Negotiated compensation and union rules and payments will vary significantly depending on the original and later use of the film. Beyond compensation issues, there are FTC regulations, fair use copyright standards, and broadcast standards for treating content as programming or advertising. Each are impacted by the nature of the commercial use of the film.
Web and Mobile Platforms That Support Existing Film, Television and Other Properties
Publishers, producers, and broadcasters are creating Web sites to support existing television programs, newly released and classic films, and published works by best-selling authors. Do the publishers, producers, or networks control all of the rights necessary to create and exploit these new verticals? With newly discovered ancillary revenue (supported by Web advertising and other revenue streams), the frequently uncontroversial provision granting "all rights in all media" has evolved into a highly negotiated issue. The agreement to create the original work must state clearly the extent of rights granted for these future and ancillary uses; whether the creative party reserves any such rights; and the extent of any payment obligations, limitations on uses, and approvals or controls of both the creative party and the producer, publisher, broadcaster, or other party first engaging the creative party's services or work.
Author/writer-generated uses: Many creative parties as well as producers are mining their archives for potentially valuable writings, characters, and other content that can be repurposed on the Web or other new media. Do these "rights holders" control all of the rights they need to pursue further exploitations?
It is important that clients focus on all intellectual property issues from the earliest stages of a project. Authors, not surprisingly, think like authors; they don't usually think of themselves as trademark owners. Example: one of our author clients published a successful book about health. He accepted an offer from an online publisher to create a Web site and an online newsletter that would repurpose and extend content from the book onto the new platform. We had to determine (among other things) whether he controlled the key trademarks -- including book jacket designs and other trade dress -- needed to move the project forward. Another client granted a studio rights for a motion picture using an existing character he had created. Rights reserved by the writer became crucial to the opportunity later presented to the writer to exploit a digital series of short programs based on the original character. Was digital exploitation of the character part of the motion picture license? In a world where the compensation structures offered for short-form and original digital production are evolving daily, creative parties will fight harder to retain certain rights.
Interactive platforms: To the extent that a Web site or digital platform is interactive, myriad issues exist – including control and ownership of third-party contributions to the creative party's original work, responsibility for third-party content, and more. See discussion below.
User-Generated Content
Producers and commercial brands are increasingly soliciting user-generated content (UGC). One of our author clients, in conjunction with his publisher, recently asked fans to create trailers for one of his books. Some of our brand clients have asked their customers to create advertisements. Fans of a television series were encouraged by the producer to write alternate endings to episodes. And fans of an animated series created personal "avatars" based on the shapes and characteristics of the series. UGC raises many issues, but the primary question usually is: Who owns the user generated work? What is the extent, if any, of the license to the user in trademarks or copyrighted work?
An entertainment company or brand soliciting UGC from a Web site should have a Terms of Use by which users acknowledge that they obtain no rights in any existing works or property; requiring users to grant the soliciting entity a license in any UGC; and requiring representations from users that content they create (e.g., via "mash ups" "borrowing" or "sampling") will not infringe third-party property rights. If the soliciting party cannot obtain ownership in the UGC, the Terms should state that there is a limited license to the user for use of the UGC. (Note: deploying some system to identify potential infringements may still be necessary). In any case, rules should be clear about ownership, lest the company expose itself to potential claims from customers or fans seeking to be paid for their work – particularly work later deployed in advertising or other promotional executions. Unsolicited UGC also presents problems, many of which are not within the company's control. These include third-party infringement, defamation, and issues of originality of UGC later used by a company or another party. It may be difficult to rely on an unsolicited user's representations to overcome these problems.
If the third party creating the UGC is hired by a company to create the UGC (such as brands now engaging bloggers to write about products or services), the agreement with the third party must be treated the same as the agreement for any creative third party engaged by the company or brand. The agreement must address questions such as: Who owns the blogger's content? And will the company/brand be able to edit the content and repurpose the blog posts -- perhaps in advertisements or other branded marketing executions? Under current law, if the blogger is an employee, the blog posts will usually constitute "work-for-hire" and the company will, in general, own them. If the blogger is an "independent contractor" the company's employment agreement with the blogger could have language ensuring the blogger's work constitutes "work for hire" owned by the brand.
Brand Integration
Consumer control over how advertisements are viewed (e.g., zapping) has led to new efforts by brands to be integrated into entertainment content. While many brands continue to negotiate with producers and broadcasters for product placements, increasingly, we are helping brands to create other brand integrations as well as their own entertainment properties. A primary issue is: Who has creative control over development of branded content? Our experience -- representing entertainment companies and talent as well as brands -- is that in most cases, brands ask for the right to be consulted on script and character development. Producers, writers, and directors will usually agree to consult with brands in good faith (but not to grant approval rights); all subject to broadcaster approval.
A related issue is whether the brand presence should be disclosed to the consumer. Consumer groups and others have criticized paid product placements as potentially deceptive and unfair due to their stealth nature. Critics say that if consumers don't know a placement has been paid for by a brand, they may be inclined to credit apparently objective representations about a product's performance or other attributes that appear in entertainment content. Critics have therefore called on the FTC to require brands to disclose their role in product placements. While the FTC has so far refused to issue a black-and-white rule requiring disclosure of product placements in television programs, the agency has left open the possibility that it could, pursuant to the FTC Act, require disclosure in cases where a product placement involves "material claims about a product's attributes." In addition, the FTC has required disclosure in a number of contexts (e.g., infomercials, advertorials) to ensure the distinction between advertisements and editorial content. Whether the FTC would require disclosure akin to the disclosure required by the FCC for broadcast programming is an open question.
Conclusion: The growth of digital entertainment content has created many new opportunities for producers, writers, directors, actors, distributors, financiers, and brands. If you are considering a venture involving the exploitation of content in a digital format, be sure to consult with a lawyer who understands not only the intellectual property issues, but also the different business cultures of the entertainment, advertising, and technology communities.
* * * * * * * * * * * * * * *Richard Hofstetter
Richard Hofstetter is a partner and co-chairman of the firm's Entertainment Group. With over 25 years experience as a lawyer for the development, production and exploitation of intellectual property in all media, and its licensing and merchandising, he offers legal expertise combined with a sound understanding of the business realities that impact entertainment clients and matters.
Mr. Hofstetter's practice has particular emphasis in the television media. He represents producers and production companies, performers, writers and creative talent for dramatic and "reality" programs, news and sports, as well as major distribution companies and television networks, and executives in television and other media. His expertise encompasses all aspects of the television industry, including programming for distribution for network television, syndication, cable, public television, animation, children's programming, format sales, international production and distribution, and advertiser and brand integration in the production, broadcast and promotion of programming.
Mr. Hofstetter served as an Adjunct Professor of Law at New York University. He is counsel to the International Academy of Television Arts and Sciences, and is a member of the International Radio and Television Society, the Academy of Television Arts and Sciences, the British Academy of Film and Television Arts, the New York Television Festival Executive Board, and the American Bar Association (Patent, Trademark and Copyright Law, Entertainment and Sports Industries Forum Committee).
Mr. Hofstetter is a graduate of Clark University (BA, 1974) and Rutgers University School of Law (JD, 1979) where he was an editor of the Law Review.
Practice Areas:
- entertainment
- branded entertainment
- intellectual property
- employment and executive compensation
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.