New York attorney and SAI contributor Jeff Sanders is a partner at Roberts & Ritholz LLP. Here he weighs in on the emerging fight between various video distributors over digital rights.
How is digital distribution disrupting the world of film and television distribution? My firm represents content owners (film and video producers), traditional distributors (studios, networks and DVD companies), digital distributors (web and mobile platforms) and investors. An unmistakable and unsurprising trend in 2007 was a rapid increase in the number of web content deals. These included:
- The digital component of traditional film/television deals
- secondary licensing of traditional video content to digital distributors and production, and
- finance and distribution deals involving content created primarily for online and mobile.
Unlike the traditional film and television businesses, the economic, operational and intellectual property standards for these deals are, for the most part, unsettled. This turns what, five years ago, would have been a simple licensing deal into a festering morass of aggravation that takes months to close (if at all). It also, however, makes for an engaging exercise in charting new territory.
Over a series of posts in the next few weeks, I will identify some of the recurring, unsettled issues involved in digital exploitation of video content. Any feedback, observations, war stories and any other wisdom that sheds light on where the various industries are headed is welcome.
Digital Content Issue # 1: Is it Television or Home Entertainment?
Hypothetical Scenario: An independent producer’s film screens to critical and audience acclaim at the Sundance Film Festival. The producer’s agent strikes multiple seven-figure deals, one with a studio, which will release the film in theatres and on DVD, the other with a television network. As the lawyers work through the deals, the conflict between the network, which claims that web-based digital distribution is part of the ever expanding definition of “television,” and the studio, which contends that digital distribution is subsumed within “home entertainment.”
In my practice, a variation of this scenario was repeated at least a dozen times in 2007. For the most part, the conflict was resolved in favour of the distributor that came earliest to the production and paid a bigger licence fee for its primary platform, sprinkled with some accommodation for the less advantaged (or less generous) network or studio. Where the network paid the larger licence fee and/or came to the project earlier, the studio might get a limited pay-per-view download right, after the first television run. Where the studio was the dominant and/or earlier financier, it might salvage a limited right to offer streams of the film after a holdback for theatrical and DVD releases.
We think it would be interesting to hear from distributors (both conventional and digital), producers, and investors. What were your experiences, and has anyone identified any standards?
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