Digital Hollywood: Web Delivery Complicates Rights, Compensation Issues

5 May, 2010 By: Chris Tribbey

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SANTA MONICA, Calif. — It was relatively easy to handle licensing deals when all you had to worry about was TV and home video. But the Internet, and now mobile video, has added layers of complexity to who pays for what and who gets what share of the profits, a Digital Hollywood panel discussed May 5.

“Increasingly, you have to consider all the digital rights far in advance when dealing with licenses,” said Jonathan Ford, EVP of digital acquisitions and distribution for ContentFilm International. “As the market changes, you have to look at all the transactional models.”

Chris Jacquemin, head of digital media for entertainment agency William Morris Endeavor Entertainment, said there are now three core ways to monetize content for the Internet: Ad-supported, transactional and licensing. “The kind of content we’ve been focused on is talent-driven, but we’re also looking at categories where there’s aggressive marketing,” he said. “What kind of package will you bring to home video? What’s the mobile applications we can bring? Look at how to take content in it’s primary form, how it lives on the Internet, and bring it to other categories.”

Besides praising the Web as a prime spot for more money off studio catalog content, he suggested that the Web is a great place to launch something new for TV and home video, an opinion backed up by Michael Kernan, CEO of Internet content company NuMedia Studios. He pointing to Seth MacFarlane’s Cavalcade of Comedy, which started as a censored Web series, with Burger King as the advertising partner. 20th Century Fox Home Entertainment would later release an uncensored version of the series on DVD and Blu-ray Disc.

“If you can launch something off the Web, it becomes more lucrative, and it depends on the content itself,” Kernan said. “Had we not thought ahead, decided on uncensored for the packaged home video releases, we would have [missed out].”

Keith Quinn, SVP of creative development and production for Paramount Digital Entertainment, said the problem with Web content, compared with TV content, is “they are on a dollar-by-dollar basis, the return on investment isn’t the same. Nobody makes 23 hours of Web content, like ABC does on TV.”

He added that Paramount has been aggressive finding new distribution partners because “that’s incremental revenue.”

Often, trying to decide who keeps the rights to something — the creators or the distributors — depends on who’s going to squeeze the most money out of the content, panelists said.

“We try to retain for the distributor as many rights as possible, so it can go across multiple platforms,” Ford said. “You have to figure out who has the best opportunity to monetize the content.”

He said that for new distributors, such as Microsoft with Xbox and Amazon, reserving TV rights doesn’t make sense.

“The idea of cutting them in on a piece of it makes sense,” he said

Pam Schechter, VP of business affairs for NBC/Universal’s digital and cable entertainment division, said she’s seeing advertisers increasingly demanding a “bigger piece of the back end.” And in the end, it’s either the audience or the advertiser that’s going to have to pay.

“We have overhead,” she said. “We have a huge infrastructure that helps distribute and market the content, and that’s not covered by ad revenue. Sorry.”

Jacquemin said that marketing products directly in the content, especially for the Web, is becoming increasingly popular. He pointed to the mentioning of parenting products mixed into the dialogue of the Lisa Kudrow Internet series “Web Therapy.”

“It’s a great way to get marketing exposure for the project, and drive revenue back into the project,” Jacquemin said. Quinn pointed to Sprint and its branding in the TV series “Heroes.”

Kernan pointed out that some writers may not be too keen on that idea.

“Sometimes advertisers have some great ideas, developing something that way, though writers don’t really like to be told how to fit in brands,” Kernan said.

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