Author Archives: Simon Pulman

Five Qualities of Next Generation Entertainment Platforms

By Simon Pulman, Partner

If your only exposure to TikTok is seeing the occasional funny video pop up on Facebook or watching your nieces studiously rehearse one of Charli D’Amelio’s signature dances, then you could be forgiven for wondering what all of the fuss about a potential ban is about. Likewise, if you’ve heard of Fortnite but you have no idea how Twitch works, you might not be aware of the degree to which Twitch is disrupting the audience for traditional television and even live sports.

Irrespective of whether TikTok survives (at least, in its present form), the impact that it has had on the future of entertainment consumption is immeasurable. And likewise, having fended off competition from the likes of Mixer, Twitch is poised for further extreme growth. Both platforms have lessons that those in traditional media would do well to heed when seeking to identify (or perhaps create) the next major media platform.

1. They Are A Culture And A Language: TikTok is not merely a video sharing platform. It is its own discrete culture and language that is impenetrable to those who are not on the platform. In essence, TikTok is an extreme evolution of “meme culture,” and without familiarity with the various “trends” that move rapidly through TikTok and the key creators and personalities who often create them, it is impossible for a viewer to understand many TikTok videos in isolation. Like all languages, TikTok builds upon itself, as users create videos that mimic, parody or comment upon an existing popular video. None of this is explained to the user upon joining the app. It has to be absorbed and understood by interacting with videos. This means that for Gen Y and college students, it is simply essential for them to be on TikTok in order to communicate with and relate to each other. It’s the concept of tuning into an old broadcast “watercooler show,” just amplified exponentially.  Likewise, Twitch has its own “language” in the form of “emotes” that viewers can post in chats while watching videos. Like memes, emotes require an understanding of context and meaning – and a shared understanding of emotes can create a common bond between the user base.

It is not an exaggeration to state that TikTok in particular is the single biggest communication and culture platform for Gen Y, and accordingly, is also the easiest way to mobilize young people. If TikTok still exists, it could have a significant impact on the upcoming US election – which is perhaps why President Trump is so keen to shut it down. We have already seen the influence of TikTok in action when TikTok users apparently reserved tickets to Trump’s June rally in Tulsa Oklahoma, falsely giving the impression that the event was a sellout. TikTok content is also highly shareable, meaning that content can live and spread off of the platform. This helps to bring new users into the platform. Compare with Quibi, which launched with zero sharing or social capability whatsoever, and a rigidly old-world walled garden approach.

2. They Have Their Own Stars: To millions of teenagers, the biggest celebrities on the planet are not actors or pop stars, but rather two sisters from Connecticut – Charli D’Amelio and Dixie D’Amelio. The D’Amelio sisters built a presence on TikTok at an astoundingly fast rate (at the time of writing, Charli alone has almost 86 million followers and over 6.6 billion “likes”). The D’Amelios have parlayed that platform into myriad commercial endorsements (Charli has her own drink at Dunkin Donuts) and, in Dixie’s case, a singing career. Likewise, within the world of Twitch, the likes of Ninja and Pokimane are bona fide stars, often attracting millions of fans for their “streams.” Like the D’Amelios, big Twitch influencers monetize their profiles in multiple ways, ranging from traditional product endorsements, to sponsored content, to Twitch “donations” whereby fans can simply donate cash to the influencers to thank them for their content (and for a moment of fleeting recognition).

These new influencers operate differently to celebrities of old. While they still have managers and publicists, and seek to curate a brand, they are generally more open about their personal lives because “authenticity” is highly valued by their audiences. With that said, several influencers have publicly articulated their struggle at maintaining a distance between their public persona and private life, most recently Twitch streamer Pokimane, who has been unfairly accused of concealing that she has a boyfriend in order to maintain her fanbase. Maintaining a level of distance can be difficult for influencers whose livelihoods depend on interacting regularly and directly with fans. Indeed, there are many “gossip accounts” that focus on the rumors surrounding influencers and their personal lives.

The challenge for traditional entertainment executives is that the new era of talent does not necessarily need to crossover into traditional media. While it was recently announced that Addison Rae Easterling has accepted a role in “He’s All That” (a reimagining of the Rachael Leigh Cook/Freddie Prinze Junior romcom), most TikTok influencers, and certainly most leading Twitch influencers can make more money, more quickly simply sticking to their core platforms (or other media that they can exert more control over, such as podcast).

Moreover, as an attorney who has negotiated many deals to hire Twitch influencers for “traditional media,” it is important to note that new media influencers, and their reps, value different things to traditional talent and are not always prepared to agree to otherwise accepted “industry norms.” For example, we typically see a lot of pushback against “options” in TV or anything that could lock the talent in for an extended period of time. Additionally, the concept of providing free promotional services (including by social media) as part of the engagement is totally foreign to influencers used to being paid on a “per post” basis.

3. They Are Broadcast Platforms: While platforms such as Instagram and particularly Snapchat have leant into the concept of users sharing content with people that they already know, TikTok and Twitch are broadcast platforms on a massive scale. They operate on a “one to many” model, whereby an individual user can theoretically reach millions of total strangers all across the world from their own home. TikTok in particular is probably the biggest and most effective broadcast ever built, with its “your page” discovery algorithm allowing hit videos to potentially reach billions of users. Many Gen Y users want to experience stardom above all else, and while TikTok’s incumbent “stars” (such as the D’Amelios, Addison Rae, the inhabitants of Hype House, and now Bella Poarch) certainly have a leg up, TikTok remains the only platform in the world where a user can potentially acquire half a million followers in a day. Twitch is a harder platform to crack, and many streamers labor away streaming for few viewers. However, there are still opportunities to rapidly grow a userbase on Twitch – especially around the launch of a new game. For example, multiple Twitch users gained over one hundred thousand followers in the month following the release of the hit battle royale game “Fall Guys,” with the user “MrKeroro10” gaining almost 400,000 users.

4. They Are Highly Personalized. At first glance, there may be little that seems to differentiate TikTok from predecessors such as Vine, or its many clones. It’s a platform for short videos, right? Well, yes and no. The strength of TikTok is actually in its algorithm, which by tracking user behaviors and habits in many ways (some no doubt concerning to privacy advocates), is simply the most accurate recommendation engine ever created in a media app. As a result, within a few hours of using TikTok, the algorithm will learn an individual’s preferences – whether that’s music, cooking, dancing or humor. Thus, while it is likely that most TikTok users will see videos from the megastars (Charli, Addison Rae, etc.) at some point, it is not unusual for the “for you page” of two users to be completely different.

It’s quite fascinating to see the differing approaches of two media companies through 2020 so far. Quibi bet on extremely expensive, traditional television or film content chopped up into smaller chunks and, presumably, aimed at a broad audience. TikTok focused on serving up an endless stream of short, user generated, highly personalized content. It’s not a secret that one company’s approach was more successful than the other. Media companies need to accept that the future of media is personalization – which is perhaps why Netflix has invested so heavily in a diverse range of scripted and unscripted content, often internationally focused.

5. They Can Create New Hits – And Revive Old Ones: The power of TikTok to create hits and stars (it is now the essential driver for creating new music hits) is well documented, as is the influence of Twitch in popularizing new video games. However, both platforms have the capability to revive catalogue titles as well. On TikTok, a popular influencer posting a lipsync to a scene from an old movie, or a dance to an old song (which will inevitably lead to thousands of copycat videos) may lead to millions of users discovering that piece of content for the first time -essentially introducing it to an entirely new audience and increasing its value significantly. For that value, media companies may wish to advise their legal departments to be judicious in policing content that could arguably be infringing (whether TikTok videos are sufficiently “transformative” to be fair use is a discussion for another day), because the halo effect of trending on TikTok could be significant.

Disclaimer: While our firm does not represent either Twitch or TikTok, we do represent multiple clients active on both. We also represent Triller, a TikTok competitor.

The Entertainment Industry in 2020: Four Legal and Business Issues For Consideration

By Simon Pulman and Briana Hill

1. AB5 Brings Uncertainty: The new California Assembly Bill 5 (AB5) became effective on January 1, 2020. Originally created to codify the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), and to address the increase of misclassification of workers as independent contractors, the drafting of AB5 is so broad that it greatly expands the definition of “employee” in a way that potentially reclassifies most independent contractors as employees. This has huge potential repercussions for many companies doing business in California, including those in the entertainment industry (which has traditionally been extremely reliant on independent contractors), as companies may now need to provide full employment benefits to individuals previously characterized as independent contractors.

While there are certain statutory exemptions, the exemptions do not cover traditional entertainment job categories.  There is currently very little guidance as to how the law will be interpreted and enforced, and how it will interact with guild rules. It is incumbent on all studios, producers, networks, and other entertainment companies to watch developments closely, and to consult with knowledgeable counsel when in doubt.

2. Continued Evolution in Streaming: The rise of streaming platforms has dominated the film and episodic programming business over the past few years. 2020 is poised to bring the most significant year of change yet, as new platforms such as HBO Max, Quibi and Peacock will join the recently launched Apple TV+ and Disney+, and incumbents such as Netflix, Hulu, and Amazon. Each of these platforms is targeting a slightly different position in the marketplace, and the economics for content producers vary on a platform-by-platform basis based on the rights and territories that each discrete platform is presently seeking to acquire.

From a deal-making perspective, it is possible that the increased competition will put pressure on platforms to offer greater transparency into the performance of their content and potentially more meaningful participation for creators in the upside of successful series and movies. Additionally, it will be interesting to see if Netflix blinks with respect to its (to date) steadfast insistence on dropping all series on an all-at-once “binge” model, given the plaudits and positive buzz that Disney+ has received for releasing episodes of The Mandolorian on a weekly basis. Finally, Quibi is a truly interesting new entrant that is planning some fascinating creative experiments with short form and interactive content, in addition to providing producers with a business model that is arguably more favorable than some of its competitors.

3. Exclusivity Reigns in Podcasting: 2019 was a year of huge growth and continued maturation for the podcast industry. Mainstream coverage of the industry expanded significantly, many major celebrity names launched podcasts for the first time, and a number of big media conglomerates entered the space or materially increased investments in their podcast divisions. The maturing of the podcast industry has had notable effects on the business side of this burgeoning medium. Participants at all levels in the value chain have started to stake a claim to ownership of, or participation in, podcast rights and revenues. Moreover, the deal-making has become much more sophisticated. Prior to 2019, the dominant podcast distribution model was very simple – make your podcast available on as many ad-supported platforms as possible, and split revenues between stakeholders (usually the creator and the production company or network) (often in a straight 50/50 configuration). This began to change during 2019 as certain companies grew and engaged more experienced representation, and entrants such as Spotify and Luminary started to lock down exclusive rights to content.

Expect the podcast content arms race to heat up in 2020, as high-profile shows and creators commit exclusively to platforms in exchange for sizeable minimum guarantees. However, platforms that offer podcasts in combination with music (such as Spotify, Apple, iHeart, and Pandora) would appear to be best positioned in the market versus pureplay podcast subscription outlets because of their existing subscriber bases and the value proposition of bundling music with podcast (and, indeed, expect 2020 to be the year of the “music podcast”).

4. Gaming Grows: As Netflix Chairman and CEO Reed Hastings famously opined, Netflix is primarily competing with Fortnite rather than with other SVOD platforms. Expect 2020 to be a huge year for gaming, with the release of several big titles (such as Cyberpunk 2077 and The Last of Us 2) being followed by the impending launch of much-anticipated new consoles Playstation 5 and Xbox Series X in the fall.

The continued growth of gaming will fuel a corresponding growth in esports and “game-adjacent content culture” – the creation, consumption and interactive fan participation in content around the culture of videogames, via platforms such as Twitch, Mixer, YouTube and Instagram. All of the next-generation gaming platforms will include built in recording and streaming capabilities allowing gamers to easily create media and engage with other users. While this arguably implicates copyright issues for rightsholders, many of the game companies have taken a permissive stance regarding streaming (and other activities, such as creating derivative works), believing it to be helpful to their business – although distributors must also be cognizant of other issues such as right of publicity.

Additionally, as discussed in a previous blog, expect a flurry of announcements during 2020 and beyond with respect to entertainment extensions of videogame properties – most notably film and TV adaptations, but also podcasts and graphic novels. A significant portion of these will probably involve the original game developers and/or publishers in a meaningful way, as rightsholders understand the importance of maintaining a strong and consistent brand across platforms.

Other sectors of the entertainment business should ignore gaming at their peril. For more, we recommend reading “7 Reasons Why Video Gaming Will Take Over” by Matthew Ball.

Acquiring Videogame Properties for Film and TV: Considerations for Buyers

By Simon Pulman

The videogame industry is now the most profitable individual sector of entertainment, having experienced exponential growth over the past forty years. Great games can quickly generate a large and unusually engaged fanbase, and as a result it could be argued that games will be the single biggest source of major entertainment brands for the foreseeable future. A cursory glance at Twitch reveals tens or hundreds of thousands of viewers concurrently watching streamers playing games like Fortnite, The Witcher, Sekiro, Overwatch and Grand Theft Auto. Even indie titles like Hollow Knight, Stardew Valley and Untitled Goose Game can attract thousands of attentive viewers. The potential to grow videogame properties into multi-platform entertainment franchises is greater than ever.

Historically, television and film adaptations of videogames have been critical and commercial misfires. However, the general growth of gaming, the increased sophistication of storytelling in videogames, and the general demand for IP-based content (driven in part by the emergence of multiple new streaming platforms) has created a perfect storm. Accordingly, we are currently seeing more videogame adaptation deals than ever before, some of which are very complicated and extremely high level.

While the fundamental structure of acquisition or licensing deals for videogame properties is similar to that used when acquiring older forms of media such as books and articles, there are some specific considerations when dealing with videogame properties, some of which are listed below. It is strongly recommended that parties on both sides of the negotiation engage an attorney and/or agent who is familiar with both the film or TV (as applicable) and videogame businesses to negotiate the deal. It will be very difficult to close a deal without an understanding of the gaming world and what motivates its rightsholders.

  1. What is the “Property”? : Up until recently, it was relatively easy to define what a “game” was. Games came on disc, cassette, cartridge or CD sold as physical products through brick and mortar retailers for a one-time payment. Successful games yielded sequels and spinoffs (and sometimes “add ons”), but games were generally released in a fixed form. With the emergence of digital distribution and the concept of “games as a service,” that has gone out of the window. Games are now routinely and regularly patched, updated, supplemented and expanded via a combination of free and paid downloadable content (or “DLC”). For example, the game No Man’s Sky has been updated and expanded so comprehensively since its launch in 2016 that it is almost unrecognizable as an experience from the version released at launch. As a result, it is imperative that buyers understand what they are acquiring – and unless negotiated otherwise for a very specific reason, the “Property” that is granted to the buyer should include all elements, versions, expansions and content relating to a title, for as long as such title is supported. Ideally, all sequels and spinoff games would be included in the rights grant as well (but that is a more nuanced subject that may require some discussion).
  2. Investigate Third Party Interests: While other forms of properties (including novels and podcasts) can have complicated chain-of-title issues, videogames are particularly likely to have unforeseen ownership and/or approval issues complicating the acquisition process. Often the rights in the game may be owned and controlled by a publisher, but sometimes the actual creator or developer may have approval rights or other interests that need to be addressed. Things get even more complicated when dealing with Japanese properties, where there may be one or more intermediaries to deal with before one is able to negotiate directly with the rightsholder. It is important to ask the right questions at the very start of negotiations to be able to identify and address any specific issues.
  3. Discuss Controls and Approvals: While television and (particularly) film producers often view their medium as the pinnacle of artforms, it is important for producers to understand that – in many circumstances – a videogame publisher or developer does not need them. Many videogame rightsholders make millions or billions of dollars solely from videogame sales, which can then be supplemented through the sale of DLC and merchandise. Even independent developers may be able to make a good living through a combination of the right business model and smart engagement with their fanbase. As a result, rightsholders will often be extremely cautious about entering into any kind of arrangement that could tarnish or dilute their brands. No sophisticated rightsholder today would agree to the kind of agreement that yielded the likes of Super Mario Bros. (1993), Street Fighter (1994), BloodRayne (2006) or Tekken (2009), all of which were critically lambasted and bore little relation to their source material.

Indeed, many videogame rightsholders are unlikely to be prepared to enter into a traditional option purchase type arrangement where they are viewed as passive rightsholders without any kind of active involvement or approval. Producers therefore need to think carefully and walk a tightrope to ensure that they make the rightsholder feel invested and comfortable, without ceding control in a manner that could jeopardize their ability to set up and produce the project. Of course, if they can strike the right balance then the dividends – both creative and financial – could be spectacular.

Making Money and Protecting Yourself in Podcasting: Three Considerations for Unscripted Podcasts

The market for unscripted podcasts –from true crime, to sex and relationships, to sports and pop culture – is exploding. With top podcasts bringing in five figures in revenue per episode and opening the door to multiple ancillary opportunities including merchandise and live touring, what do podcast producers need to know to protect themselves and their commercial opportunities? Here are three quick recommendations:

  1. Secure Releases: It is best practice to obtain signed release agreements from everyone who appears on your podcast prior to them appearing or making a creative contribution. Whereas in the past it might have been possible for part-time podcasters to take a looser approach to securing signed paperwork, the podcast business is now becoming more sophisticated, and buyers are becoming more rigorous and demanding. Distributors, advertisers and financiers will begin requiring standard releases in the same way that Netflix or HBO requires releases when acquiring a documentary film. Releases will also be required in order for you to obtain errors and omissions insurance, which will help insulate you from legal liability in the event that a claim is filed against your podcast. And even if a third party does not require releases, obtaining releases upfront will help mitigate your legal risk. Make sure that you obtain a release from your attorney that is appropriate for the kind of podcast that you are making.
  2. Consider Vetting: Unscripted podcasters should consider working with an experienced first amendment attorney to help vet their podcasts and anticipate legal issues. This is particularly true if you are making statements and allegations concerning individuals who are not public figures (e.g., they are not celebrities or politicians). The potential risk is especially acute for podcasters operating in the true crime space, where stories often unravel in real time and there is a strong possibility of receiving incomplete or inaccurate information and thus making false or defamatory statements concerning a member of the public. An attorney will help review your scripts and ensure that you present information in a manner that is less likely to get you sued. Podcasters in the true crime space should also discuss with their attorney what to do in the possibility that their research and materials become subpoenaed as part of an active police case – in which event, the podcaster could be required to turn over materials and even act as a witness in court.
  3. Think Derivatives: Much of the money in podcasting at the moment arises from derivative rights – the ability to take the podcast into other avenues such as publishing, live touring, live stage, interactive, and especially film and television. Like their scripted brethren, unscripted podcasts are frequently being acquired by tv and film studios and producers – both to be transposed directly as documentaries and other unscripted formats, and for adaptation as scripted productions. Accordingly, it is important that podcasters are prepared in order to maximize their upside in the possibility of a sale. That means – at minimum – securing signed agreements with all contributors and collaborators. You may also want to consider securing life rights and/or exclusivity from your primary subjects. While this can slow down negotiations at the start of the podcast process, it does also ensure that you have maximum leverage when entering into negotiations with film and TV producers (whilst mitigating the risk of being circumvented by a competing project concerning the same subject matter – which is very possible when the subject matter relates to matters of public record, such as a historical event or crime). Your representatives will be able to discuss what is appropriate in order to protect you and your career in the event that your podcast takes off.

Learn more about CDAS LLP Podcasting here.

Protecting Diverse Content: 4 Deal Suggestions

The homogenous nature of Hollywood’s output has been a source of frustration for some time, especially taking into consideration that the stories it has been telling (largely told from a white, cis male, heterosexual, US-centric point of view) do not reflect the composition of the world or its audience. The entertainment business has made some progress recently, with the likes of Black Panther, FX’s Pose and Atlanta, Netflix’s To All The Boys I’ve Loved Before, Always Be My Maybe, Dear White People and Orange Is the New Black, Killing Eve, Hulu’s Shrill and HBO’s upcoming Euphoria, all of which feature diverse casts and generally include women and people of color among the core creative team.

However, we are not there yet. Per UCLA’s 2019 Hollywood Diversity Report, only two of ten lead actors in film are people of color (2.2 of 10 in broadcast TV), while only 1.3 of 10 film directors are female. Transgender actors are virtually invisible in lead roles on television.

This is not only important in the name of fairness, equality and an accurate depiction of the world we live in. Diverse stories also perform well commercially. Per the same UCLA report, “Films with casts that were from 31 to 40 percent minority enjoyed the highest median global box office receipts….films with the most racially and ethnically homogeneous casts were the poorest performers.”

With that said, the following reflects some posts from the perspective of rightsholders (such as book authors, or podcast creators) with some suggestions as to how they can help protect their diverse content in the journey from book (or stage, or podcast, or even video game) to screen. We do a huge amount of rights deals on both buyer and seller side, so we’re quite well positioned to offer observations on trends that we’re seeing.

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Five Important Negotiation Principles For Consideration

Don’t Negotiate Your Own Deals. In an ideal world, you would never negotiate your own deals. The first reason for this is obvious – if you’re a creative or an executive, you have to operate in multiple different capacities and wear a lot of different hats. An experienced professional negotiator – whether lawyer or agent – who spends all day, every day negotiating is likely to be more skilled and have more insight into the marketplace than you. The second reason is perhaps less obvious to laypeople, which is the benefit of detachment and plausible deniability. Even if you are a master negotiator, there is always a benefit to having someone else negotiate in your place. You can instruct them to take certain actions with less risk of jeopardizing your personal, creative or business relationships with the other side. You can use them to test the waters with the other side. And, if needs be, you can detach yourself from (or even politely disown) their responses if there is a negative reaction. Your representative is there to help facilitate the deal and relations with the other side – but on occasion you may wish to use them as the “bad guy,” and you should not be afraid to do so.

Don’t Make Gives To Try to Accelerate Deals. Inexperienced negotiators often try to accelerate the pace of a deal by readily agreeing to terms and surrendering positions. While there are exceptions, this strategy generally does not yield positive results. An experienced negotiator will often respond to attempts to push a deal through by slowing the deal down and thus seeking to increase the desperation of the other side to close. If an initial proposal or response has been met with an accommodating response from a party visibly keen to close, an experienced negotiator may respond by making more asks. In the entertainment business at least, absent a very compelling reason to close (e.g., principal photography needs to start, a financing needs to close, or a producer is about to lose an actor) most deals take a certain amount of time irrespective of their complexity or the efforts of one side to be efficient.   Continue reading

Negotiating Esports Content Deals: Looking Beyond YouTube

A major trend over the past fifteen years has been the evolution of major sports teams into true media companies. Whereas previously sports teams’ media presence was limited to appearances during live games on broadcast television, today’s top teams, from Real Madrid and Manchester United to the New York Yankees and Dallas Cowboys, are creating and distributing content via YouTube, Instagram, Snapchat and, in some instances, their own dedicated cable television channels. In doing so, they have grown from sporting organizations into bona fide content producers and entertainment brands. Continue reading

eSports: What Teams and Players Need to Know About Endorsement Deals

The explosion of the professional eSports industry has created significant commercial opportunities for teams and individual players alike. As viewership for tournaments and online livestreams increases, and leading eSports personalities grow impressive social media footprints, eSports is increasingly perceived by certain brands as an important component in their marketing, social media and outreach strategy – particularly because eSports increasingly reach “cord cutters” in the coveted 13-34 age bracket in an era where the average age of a CBS broadcast TV viewer is 58.7 years.

With this opportunity for players and teams comes a host of business and legal issues to consider, and potential pitfalls to sidestep. Here we provide a brief list of some of the things that players and teams should consider when entering into sponsorship and endorsement agreements in order to maximize revenues and protect their brands: Continue reading

Stolen Screenplay Ideas: A Look at Recent Cases

It’s a tale almost as old as Hollywood itself. A new movie comes out and garners some attention and commercial success and, before the first profit participation checks have been mailed (and even if the movie never turns a profit), a lawsuit has been filed alleging that some element of the movie was stolen from an earlier work – and often an earlier work that has never seen the light of day commercially. Continue reading

Embracing the International Television Market: Legal and Business Issues To Consider When Adapting and Exporting Television Formats

PART TWO

This is part two of this blog series. Part one can be found here.

Approvals/Controls

This is one of the threshold questions for producers seeking to adapt formats  – how much control, if any, will the originator of the format have over the adaptation? On one hand, the format originator has a creative and financial attachment to the original show; it is in its best interest that the format is treated sensitively, packaged appropriately and produced at a budget and quality level that will enable it to succeed – because if the adaptation fails, the “brand value” of the format could be tainted for the long-term. On the other hand, the adapting producer and its local production partners are probably best positioned to understand the tastes and culture of the target market and navigate any regulatory issues. Continue reading