Following Comcast outbidding Disney for the purchase of Sky, a European satellite broadcaster, the next deal on the horizon seems to be a merger between CBS and Viacom. This comes hot on the heels of Disney’s acquisition of 21st Century Fox, and AT&T’s acquisition of Time Warner. With traditional players in the industry bulking up to counter the rise of streaming video giants such as Netflix, Amazon, Apple, and Google, the market for original content is changing in ways that will impact business and consumers alike.
- Branded VOD Services and Rising Costs to Consumers
Fewer companies having greater control over their product, including many beloved franchises, could mean rising costs for end users wishing to access the same variety and quality of content. Disney, for example, has withdrawn from its output deal with Netflix starting with its 2019 releases, in preparation for the release of its own streaming service. With the acquisition of Fox, Disney has added the Marvel franchise to its own considerable intellectual property holdings, which include the Avengers and Star Wars. AT&T, owner of, among other properties, Game of Thrones and Harry Potter, has recently announced plans to unveil its digital streaming service in late 2019. This model, pursued more broadly, would essentially create a handful of brand-specific streaming services. This has the potential to result in higher costs for the consumers who wish to access a wide variety of content. In the years to come, the traditional cable subscription may be remembered as a bygone bargain. Continue reading
Under the Writers Guild of America Theatrical and Television Basic Agreement (the “Basic Agreement”), credited writers for television motion pictures, including episodic programs, are entitled to receive compensation for the reuse of their work, also known as residuals. Television residuals were first negotiated by the Writers Guild of American (the “WGA”) in 1953, under the theory that a rerun of an existing program reduces employment for new products. Consequently, residuals are payable for the reuse of a writer’s material, as opposed to the original exhibition. Though initially limited to programs made-for-television and to five rerun payments, residuals expanded over the years not only to include home video, pay television, cable, new media, and others, but also to payments in perpetuity.
Whether or not a television writer is entitled to receive residuals is ultimately governed by the WGA’s credit determination. Per the Basic Agreement, if the guild accords a “Written by” credit to a writer, such individual is entitled to receive one hundred percent (100%) of available residuals, while a writer that is accorded a “Teleplay by” credit can claim seventy-five percent (75%) of available residuals; if the guild accords only a “Story by” credit to a writer, he or she is entitled to receive twenty-five percent (25%) of available residuals. Furthermore, for an episodic series, if a writer were entitled to Separation of Rights and “Created by” credit on the series, such writer would be entitled to a residual on the creator sequel payment minimum payable for each episode of the series produced beyond the pilot. Continue reading
On September 18, 2018, after months of intense negotiations with various music industry groups and lobbying interests, the United States Senate unanimously approved the Music Modernization Act (now renamed the Orrin G. Hatch Music Modernization Act, “MMA”), clearing what many believe to be the last major hurdle required for the MMA to become the most significant piece of music copyright legislation to be signed into law in almost two decades. The Senate version of the MMA will now be sent back down to the House for reconsideration (the House approved an earlier version back in April 2018 and is expected to approve the Senate version) before being signed into law by the President.
As with the House version, the Senate version of the MMA combines three main pieces of legislation, which accomplish the following: Continue reading
On September 18, 2018, the Senate unanimously approved the Music Modernization Act, now renamed the Orrin G. Hatch Music Modernization Act, in honor of the retiring Utah Senator – an avid songwriter who spearheaded the bill. This approval follows its unanimous passing by the House of Representatives in April. Due to changes made by the Senate, the bill will now return to the House for approval before it can be signed by President Trump to become law. Public praise of this significant step has poured out from a variety of major industry players including the NMPA, the RIAA, BMI, ASCAP, the Recording Academy, and SoundExchange. The bill’s supporters have uniformly expressed that such legislation is crucial in the fight for fairness for music creators and that it will also confer benefits on consumers and copyright holders. While the precise details of the alterations that were made to the Act are not yet clear, many changes appear to have influenced by holdouts from satellite and digital broadcasting services, including a compromise proposal from SiriusXM to pay half of the performance royalties for pre-1972 recordings under the CLASSICS Act. As of this writing, it is expected that the bill will pass within the next few weeks, marking the first music licensing reform in over two decades. Continue reading
IATSE, SAG-AFTRA, and WGA have all been in the news this summer with respect to subscription video on demand (“SVOD”) and ad-supported video on demand (“AVOD”) platforms and the impact the continued growth of those platforms continues to have on the entertainment industry.
2018 IATSE Agreement and the Editors Guild.
IATSE leadership reached a tentative deal with the studios and networks in July to replace the prior agreement that expired on July 31, 2018. While the agreement is expected to be ratified in September by the bulk of IATSE members, the Editors Guild (Local 700) has rejected the agreement in large part. Editors Guild members and leadership don’t think that the new agreement sufficiently addresses residuals concerns (as well as other health and safety issues such as sufficient turnaround time), claiming that residuals revenue (which fund the pension and health fund) from traditional avenues of distribution such as DVD sales has greatly decreased in recent years, but the corresponding growth of SVOD content (and revenue) has not been reflected in the IATSE agreement. However, leadership of the twelve other locals that make up IATSE think that the new agreement addresses this concern adequately and are actively encouraging their members to ratify the agreement.
IATSE Reaches Deal on New Three-Year Contract With Studios, Networks
Editors Guild’s Board Votes Unanimously To Urge Members To Reject New IATSE Film & TV Contract
Hollywood Editors Break with Parent Union IATSE Over New Studio Contract
The Potential Strike No One Wants to Talk About: Streaming and the Future of Hollywood’s Union Crews
Those familiar with copyright law recognize the well-established principle that facts are not eligible for copyright protection. A compilation of facts may be eligible, however, if the selection or arrangement of facts reflects the requisite originality and creativity to warrant copyright protection. In Feist Publications v. Rural Telephone Service Co., the U.S. Supreme Court considered whether a compilation of facts in the form of a directory of customer names, addresses, and telephone numbers is eligible for copyright protection; the Court ultimately determined that the directory at issue, which merely listed all of Rural’s telephone subscribers in alphabetical order, lacked sufficient originality and creativity to be copyrightable. In a recent case, however, the U.S Court of Appeals for the Ninth Circuit determined that a similar list of customers could be – and indeed was – eligible for at least some level of copyright protection.
Experian Information Solutions, Inc. v. Nationwide Marketing Services Inc. focused on what plaintiff Experian – an information services company best known for credit scores and reports – terms its “ConsumerView Database,” or “CVD.” The CVD contains more than 250 million records, each pertaining to an individual consumer, and includes hundreds of data fields, including age, income, and purchase habits. Experian licenses portions of the CVD to various marketing companies for use in connection with marketing campaigns. Continue reading
On July 6, the U.S. Court of Appeals for the Second Circuit affirmed the Southern District of New York’s finding of fair use in Lombardo v. Dr. Seuss Enterprises, L.P., reiterating the protected nature of parody under the fair use doctrine even as it applies to some of the most beloved properties in entertainment – including children’s literature.
As a brief reminder of the facts, Lombardo was a copyright infringement case involving a parody of Dr. Seuss’ classic story How the Grinch Stole Christmas! The dispute centered around playwright Matthew Lombardo’s Who’s Holiday!, a one-actress play about a 45-year-old Cindy-Lou Who, the toddler-protagonist of the original story. Having long since “outgrew” her “no more than two”-year-old days and her wholesome, unflappable belief in the magic of Christmas, the play picks up where the Dr. Seuss tale left off: Cindy Lou has entered a turbulent marriage to the Grinch, borne his child, survived his untimely death, turned to drink and drugs, been incarcerated, and lost her daughter to foster care. A dark turn for Ms. Who, to say the least. Continue reading
The television landscape is changing dramatically. New and major players have disrupted traditional models, as networks and studios explore different approaches and partnerships. Beginning with an overview of the biggest “new” player, the following links provide some noteworthy examples of how the streamers continue to expand, and what everyone else is doing to adapt to the 21st century television ecosystem.
Inside the Binge Factory
According to Vulture, Netflix now makes more television than any network in history, and with a plan to spend $8 billion on content this year, it’s not showing any signs of slowing down. Driven by a desire to scale and grow, Netflix is leveraging its impressive stable of talent and reams of user data to expand into new genres and countries. But considering Netflix’s recent earnings report, which revealed slower membership growth than forecasted, will it continue the pace of this expansion? Vulture’s profile of the streaming giant takes a deep look at the who, how, and why of Netflix’s ongoing success, providing a great framework through which to analyze the future of the company. Continue reading
The U.S. Court of Appeals for the Ninth Circuit this month held that the California Resale Royalties Act (“CRRA”) – a state statute that provided visual artists with ongoing downstream royalties for sales of their works occurring after the initial sale – is invalid as preempted by federal copyright law. The court, in Close v. Sotheby’s, — F.3d –, No. 16-56234, 2018 WL 3322222 (9th Cir. July 6, 2018), decided that visual artists are barred from receiving any ongoing royalties arising from later sales of their work due to the federal “first sale doctrine.” The decision affirms the U.S.’s long-held perspective on the limited nature of certain copyright privileges.
The provision of the CRRA at issue in Close granted artists an un-waivable right to 5% of the proceeds on any resale of their artwork under certain circumstances. Specifically, the CRRA required the seller of a piece of artwork (or the seller’s agent) to withhold 5% of the resale price and pay it to the original artist, or if the artist cannot be found, to the California Arts Council. The purpose behind the statute was to help visual artists capitalize on the appreciation of their work by requiring payments following the work’s first sale. The statute was effective on January 1, 1977 as “the first and thus far only, American recognition of the droit de suit,” or “right of following on” as recognized by France and other civil-law jurisdictions. Continue reading
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