Well-intentioned they may be but the Government’s proposals to tackle online piracy are unlikely to achieve its objective of reducing unlawful peer to peer file sharing by 70-80%.
The Government proposes to legislate to require Ofcom to impose obligations on ISPs to:
“notify alleged infringers (subject to reasonable levels of proof from rights-holders) that their conduct is unlawful; and
collect anonymised information on serious repeat infringers (derived from their notification activities), to be made available to rights-holders together with personal details on receipt of a court order.”
Perhaps in anticipation of criticism from rights-holders that these proposals do not go far enough, the Government has proposed that Ofcom be given backstop powers to impose further obligations on ISPs to put in place technical measures aimed at preventing or restricting unlawful file-sharing. These might include blocking, bandwidth capping or shaping and content identification and filtering. The Government will be consulting on the “trigger mechanism” by which these backstop powers will become exercisable. In essence, it is suggesting that if, at the end of the period of 12 months after which the Ofcom code imposing the notification and data collection obligations on ISPs is operational, 70% of infringers who have received a notification have not ceased the infringing activity, the backstop powers should be used.
Good news for producers, broadcasters and other rights holders then? It may appear so but rights holders need to peer beyond the surface and check out the icebergs beneath.
Identifying infringers and gathering evidence are pre-requisites for the notifications on which the rest of the proposals hang. In its consultation paper “Copyright in a digital world – What role for a Digital Rights Agency?”, issued earlier this year, the Government itself acknowledged “To identify an infringer might well require examination of computers. There are considerable difficulties in identifying downloaders where, for example, illegal downloading has occurred at an internet café or other area where there is public access. In the P2P area for example, infringement is established on the basis of identifying the IP address of uploaders not downloaders”. In the same consultation the Government states “The standard of evidence required from rights holders should be as high as can reasonably be demanded.”
How many rights-holders will have the resources to identify infringers and gather evidence to the standard required? And will they want to if the only outcome is a letter notifying infringers that their conduct is unlawful (a fact of which many accessing sites with names like The Pirate Bay can hardly be unaware)?
Enforcing the second limb of the proposals regarding “serious repeat infringers” (however this may be defined) is even more burdensome with rights holders facing the prospect of financing two sets of court proceedings - one to get a court order for disclosure of identity from the ISP and another for infringement of copyright. As the Government itself stated in the consultation mentioned above, “the cost of bringing an action can run into thousands of pounds very quickly, with estimates in the region of £6k-£10k having been quoted at various times by rights holders”. And surely the determined infringer against whom the proposals are aimed will be able to circumvent the data collection measures by frequently changing IP addresses or ISPs?
Some rights holders will no doubt be thinking that all they need to do is sit tight for 12 months and await the inevitable failure of the notification and data collection measures. The Government will then have to activate the backstop powers to force ISPs to address the issue through the technical measures, right? Wrong. The Government has made it very clear that the backstop powers will be introduced only if the notification and data collection proposals have been fully implemented by rights holders and ISPs along with other measures which the Government expects rights holders to initiate such as consumer education and new business models. Rights holders appear to be between a rock and a hard place – if their pockets aren’t deep enough to fund the identification of and court actions against infringers and consumer education and they don’t embrace new business models they will forfeit the technical measures which some think offer the only real prospect of reducing the impact of unlawful file sharing on the content industries.
And shouldn’t rights holders be asking why, if the Government wants to reduce unlawful file sharing by 70-80%, it would be satisfied with a 70% reduction in unlawful activity limited to those who have been notified. The Government has clearly suggested this for ease of measurement but given that the number of persons notified will, in practice, be likely to represent a very small percentage of the UK unlawful file-sharing universe, it leads to the anomalous situation where a minimal reduction in the incidence of unlawful file-sharing overall (as opposed to those notified) would justify the Government in declining to impose further obligations on ISPs.
The consultation which the Government plans to issue on the proposals may be the last chance for producers, broadcasters and rights holders to shape policy in this key area – they should not miss the opportunity to respond.
Pamela Forte is a lawyer and founder of niche media law practice Forte Law which advises producers, broadcasters and individual talent. She is a visiting specialist lecturer on copyright and rights related issues at the International Film School, Wales and on Newport University’s creative sound and music course.
© Forte Law 2009
This article was first published by Emap (Broadcast) on 26 June 2009.
Thursday 20 August 2009
ONLINE PROGRAMME DISTRIBUTION:TOP TIPS FOR NEGOTIATING THE SHARE OF AD REVENUE DEAL
Have we seen the death of the programme acquisition licence fee? Successful on-line distribution is key to maximising revenue streams but no-one has worked out how to monetise it. How do you make money from exploiting content on-line when the consumers of that content expect it to be made available for free?
One answer is the advertising-funded model. Nothing new there really – TV has been funded that way for years. What is new is that producers may be asked to forgo a licence fee altogether and take a punt on the share of advertising revenue received by the online distributor.
So when the share of ad revenue programme acquisition deal memo lands in the Inbox how should producers approach it? Here are some top tips to help you navigate those white water stretches of the online streaming licence:
1. Exclusive or non-exclusive? If no licence fee is being offered think long and hard before you agree an exclusive rights deal. What are the commitments of the online distributor which would justify your granting exclusive rights?
2. Licence period. Where no licence fee is being paid it makes sense to keep the licence period short, particularly where exclusive rights have been granted. However, you obviously need to factor into this the ad revenue cycle. Don’t forget that ad revenue may continue to be received by the online distributor after the licence period has ended! The licence should make provision for payment of any share of income due following the expiry of the licence period.
3. Territory. As for any agreement for rights distribution, it is crucial for the territory to be clearly defined. The licence should provide for the online streaming to be restricted to the territory by geo-blocking or other appropriate measures and protected by secure DRM measures to ensure it cannot be downloaded and retained by the consumer.
4. Rights licensed. You need to define clearly the rights being licensed. If not, you might restrict your ability to licence rights to other distributors. Don’t accept vague definitions such as online rights – there should be a full definition set out in or annexed to the deal memo. The URL from which the Licensee is permitted to stream the programme should be limited to a specified URL or URLs.
5. Minimum guarantee. Ask the online distributor to guarantee a minimum level of advertising revenue on which you will receive a percentage share, especially if you are being asked to tie up rights on an exclusive basis.
6. Recoupment of production costs. Try to agree that all or a proportion of any unrecouped production costs can be deducted from ad revenue before the distributor takes its share or for an enhanced percentage of ad revenue until production costs have been recouped.
7. Gross or net revenue? You will clearly be better off with a share of gross revenue but the distributor is likely to insist on net. Do not accept vague definitions. The definitions should be detailed and in the case of net revenue you need to ensure that all deductions are proper and reasonable and directly linked to generating the revenue (rather than contributing a princely sum to the distributor’s office overheads!)
8. Payment terms. The licence should specify when the online distributor will account to you for payment and provide for detailed and accurate statements (showing all receipts and deductions) to be provided to you on specified accounting dates so that you can check whether you have been paid the correct amount. A provision for interest on late payments is advisable even though a statutory right to interest may exist - a reminder in the contract can be a deterrent to late payment.
9. Books and records and rights of audit. The licence drafted by the distributor may well omit these essential provisions for the distributor to keep complete and accurate records relating to the exploitation of rights and to allow them to be inspected and audited so you will probably need to ask for them to be included.
10. Options. Licensees are fond of including options to extend the term on the same terms for a further period. Don’t commit yourself to a renewal unless you’re sure this deal is going to work for you. Or if you do, use it as a bargaining counter to get that minimum guarantee or enhanced share of ad revenue until recoupment.
Pamela Forte is a lawyer and founder of niche media law practice Forte Law which advises producers, broadcasters and individual talent. She is a visiting specialist lecturer on copyright and rights related issues at the International Film School, Wales and on Newport University’s creative sound and music course.
Disclaimer: The above tips are general guidelines and should not be regarded as a substitute for legal advice on any particular agreement.
© Forte Law 2009
This article was first published by Emap (Broadcast) on 23 June 2009.
One answer is the advertising-funded model. Nothing new there really – TV has been funded that way for years. What is new is that producers may be asked to forgo a licence fee altogether and take a punt on the share of advertising revenue received by the online distributor.
So when the share of ad revenue programme acquisition deal memo lands in the Inbox how should producers approach it? Here are some top tips to help you navigate those white water stretches of the online streaming licence:
1. Exclusive or non-exclusive? If no licence fee is being offered think long and hard before you agree an exclusive rights deal. What are the commitments of the online distributor which would justify your granting exclusive rights?
2. Licence period. Where no licence fee is being paid it makes sense to keep the licence period short, particularly where exclusive rights have been granted. However, you obviously need to factor into this the ad revenue cycle. Don’t forget that ad revenue may continue to be received by the online distributor after the licence period has ended! The licence should make provision for payment of any share of income due following the expiry of the licence period.
3. Territory. As for any agreement for rights distribution, it is crucial for the territory to be clearly defined. The licence should provide for the online streaming to be restricted to the territory by geo-blocking or other appropriate measures and protected by secure DRM measures to ensure it cannot be downloaded and retained by the consumer.
4. Rights licensed. You need to define clearly the rights being licensed. If not, you might restrict your ability to licence rights to other distributors. Don’t accept vague definitions such as online rights – there should be a full definition set out in or annexed to the deal memo. The URL from which the Licensee is permitted to stream the programme should be limited to a specified URL or URLs.
5. Minimum guarantee. Ask the online distributor to guarantee a minimum level of advertising revenue on which you will receive a percentage share, especially if you are being asked to tie up rights on an exclusive basis.
6. Recoupment of production costs. Try to agree that all or a proportion of any unrecouped production costs can be deducted from ad revenue before the distributor takes its share or for an enhanced percentage of ad revenue until production costs have been recouped.
7. Gross or net revenue? You will clearly be better off with a share of gross revenue but the distributor is likely to insist on net. Do not accept vague definitions. The definitions should be detailed and in the case of net revenue you need to ensure that all deductions are proper and reasonable and directly linked to generating the revenue (rather than contributing a princely sum to the distributor’s office overheads!)
8. Payment terms. The licence should specify when the online distributor will account to you for payment and provide for detailed and accurate statements (showing all receipts and deductions) to be provided to you on specified accounting dates so that you can check whether you have been paid the correct amount. A provision for interest on late payments is advisable even though a statutory right to interest may exist - a reminder in the contract can be a deterrent to late payment.
9. Books and records and rights of audit. The licence drafted by the distributor may well omit these essential provisions for the distributor to keep complete and accurate records relating to the exploitation of rights and to allow them to be inspected and audited so you will probably need to ask for them to be included.
10. Options. Licensees are fond of including options to extend the term on the same terms for a further period. Don’t commit yourself to a renewal unless you’re sure this deal is going to work for you. Or if you do, use it as a bargaining counter to get that minimum guarantee or enhanced share of ad revenue until recoupment.
Pamela Forte is a lawyer and founder of niche media law practice Forte Law which advises producers, broadcasters and individual talent. She is a visiting specialist lecturer on copyright and rights related issues at the International Film School, Wales and on Newport University’s creative sound and music course.
Disclaimer: The above tips are general guidelines and should not be regarded as a substitute for legal advice on any particular agreement.
© Forte Law 2009
This article was first published by Emap (Broadcast) on 23 June 2009.
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