Brands, Rights & Contentin a 360 Degree worldCliff Fluet, Lewis Silkin

Brands, Rights & Contentin a 360 Degree world

Cliff Fluet

Partner

Media & EntertainmentLewis Silkin LLP

5 Chancery LaneClifford’s Inn

London EC4A 1BL

4 March 2009

Our 360 degree view …

Brands, advertising & marketing

Sports

Mobile

Media & Entertainment

Mediascape

• Now TV Production Music Radio

Sports Marketing & Regulation Sponsorship

Retail Online Direct Sales

Brand Protection/Exploitation

Software DataProtection

Hardware

Publishing

Marketing Services

Advertising

New Media Interactive ComputerGames

now

Then

Now

Then

Overview

• It is clear that much of the value from music will come from the use in brands, marketing and advertising rather than recorded music sales

• Whilst recorded music & compositions have long been the preserve of above the line campaigns, the new landscape means that brands and advertisers will want and need more content

• The revolution in the music industry is well documented; however the evolution in marketing and branded content creates a significant opportunity for content owners

Overview

• The key opportunities

• Where these deals flounder – ownership/control/exposure

• Where these deals flourish – engagement and a 360 degree view

Branded Content

• Generate revenue

• Save costs

• Build and protect brand equity

• Establish association and market positioning

• Endorsement and sponsorship now replaced by brand

evangelists and content …

The real opportunity …

• However, the world of media & entertainment needs to understand that these innovative content offerings, new ways of engaging consumers and the nature of experiential marketing means that brands need music as much as music needs brands.

• The nature of the market means that deals that could not be dreamt of a year ago, are possible now.

• However it requires innovative ways of working, flexibility and openness and transparency like never before in order to unlock their potential.

The old model

Content owner

Content licence

Content licence

Assignment of

Agency Creative

Agency Client

Content Owner

Established Business Model for licensing

Songwriter

Search Agency

Advertising Agency

Music Publisher

Brand Owner

Record Company

1

2 3 4

1. Songwriter’s agreement with music publisher

2. Synchronisation Licence (lyrics and music)

3. Search and clearance services agreement

4. Synchronisation Licence (sound recording)

5. Client/Agency Agreement

5

Established Business Model - cont’d

The Problems:

• Complexity - separate © in the song and the recording of the song means two synch licences are required if an original recording is to be used in the commercial

• Cost - synch licences are expensive! Typically 6 figures and even 7 figure sums are not unknown

• Control – songwriters and © owners place strict limits on the use of the song which may include a right of approval of the finished commercial

New Business Model

1. Publishing Agreement

2. Production Agreement

3. Client/Agency Agreement (including revenue sharing)

4. Exploitation Licences, e.g. ringtones, music on hold, CD’s etc

Songwriter

Advertising Agency

Brand Owner

Production Company

2 3

1

4

£ £ £ £

Changes in Mindset

• Realisation of where the value lies

• Lessons from the music industryRoyalty gravy trainBBH / Leap

• Brand Owners now talking direct to content owners

• Brand owners more savvy

• Ease of content creation

The new world order …

• Beyond music rights, opportunities abound

• Upsell opportunities, brand licensing, format rights and viral marketing opportunities are all achievable

• ‘ownership’ of intellectual property rights reaches to photographs, brands, trade marks and underlying copyrights

The key pressure points of these deals?

• Confusion over rights granted

• Confusion over controls and consents from licensor

• Clearance of underlying rights

• Exclusivity

• Value

Confusion over the rights granted

• Who will own the new material created

• Will the agency retain some level of ownership

• Which rights remain reserved to the Artist and/or Licensor

Confusion over controls and consents

• Deals can range from a licence, an exclusive licence, an assignment or shared copyright

• However, rights are rarely granted unfettered and consents and approvals (which can remain subjective) may frustrate exploitation

• Artists/rightsowners used to licence on use by use/platform by platform basis

Clearance of underlying rights

• Even a full rights assignment is often subject to the clearance of underlying rights

• Examples including talent, photography, commissioned art, designs and formats

• Few cleared at source with a view to promoting brands

• Clearance costs placed upon brands (often unbudgeted)

Exclusivity

• Will be seen as “obvious” to the brand

• Not so “obvious” to the rightsowner/artist

• Understanding the mutual value of exclusivity is key to establishing any premium payable

• Need to understand and explain the category and rationale – preparation to compromise is vital

Value

• Headline “fee” often agreed upfront, in a vacuum

• Necessary costs caused by rights clearance/exploitation will impact on perceived value for money for the brand

• Difficult negotiation will lessen the momentum of any activation and reduce the impact and efficacy for both sides

The way to flourish

• A 360 view of rights, not 100% ownership/control of rights

• Focus on the rights you have, the rights you can get and the way they can be exploited in a 360 way

• Value the deals based upon the rights granted and the activation achieved

The way to flourish

• Both sides to understand the mutual importance of reputation and exclusivity

• Build systems for pre-approval of creative material to manage expectations beforehand

• Engagement at the outset of a deal with regard to the rights to be granted, those to be withheld and whom will bear risks

Any Questions?

Thank you

Cliff Fluet, Lewis SilkinCliff.fluet@lewissilkin.com

FRUKT Sessions #004Coming June 2009

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