Brands, Rights & Content in a 360 Degree world Cliff Fluet, Lewis Silkin

Brands, Rights & Content in a 360 Degree world Cliff Fluet Partner Media & Entertainment Lewis Silkin LLP 5 Chancery Lane Clifford’s Inn London EC4A 1BL 4 March 2009

Our 360 degree view … Brands, advertising & marketing Sports Mobile Media & Entertainment

Brands, advertising & marketing

Sports

Mobile

Media & Entertainment

Mediascape Now Now Then TV Production Music Radio Sports Marketing & Regulation Sponsorship Retail Online Direct Sales Brand Protection/Exploitation Software Data Protection Hardware Publishing Marketing Services Advertising New Media Interactive Computer Games now Then

Now

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

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

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 …

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.

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 licence Content licence Assignment of Agency Creative Content owner Agency Client Content Owner

Content licence

Content licence

Assignment of

Agency Creative

Established Business Model for licensing 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 Songwriter Search Agency Advertising Agency Music Publisher Brand Owner Record Company 1 2 3 4 5

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

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

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 £ £ £ £

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

Changes in Mindset Realisation of where the value lies Lessons from the music industry Royalty gravy train BBH / Leap Brand Owners now talking direct to content owners Brand owners more savvy Ease of content creation

Realisation of where the value lies

Lessons from the music industry

Royalty gravy train

BBH / 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

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 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

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

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)

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

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

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

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

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?

Any Questions?

Thank you

Cliff Fluet, Lewis Silkin [email_address] FRUKT Sessions #004 Coming October 2009 Email to register your interest: [email_address]