he past two decades have seen an explosion of video distribution services and content providers. Measurement began with the need to ascertain audience size for ad sales purposes, first by mid-20th century over-the-air broadcasters and their advertisers and ad agencies. Then, this essential monetizing requirement was passed on to the late 20th century competitive cable networks, coupled with the corollary cable, satellite and telecommunications systems delivering all of these signals, known as multichannel video programming distributors (MVPDs), of which there were hundreds, now consolidated into a mere handful. More recently, in this century, these more traditional providers have been joined by a seemingly endless array of “over-the-top” (OTT) providers streaming programming via the web. These distributors, and their producers, subscribe to numerous measurement services, the most well-known being AC Nielsen, as it has been providing measurement data for the industry since such information became necessary in the 1950s, and now including several competitive data and measurement providers, like Rentrak, comScore, Quantcast, Wakoopa, and Networked Insights. The data obtained is not only useful in order to demonstrate how popular certain programming is, but also, due to digital technology, it now provides information that allows measurement data subscribers to optimize their own services to meet consumer preferences. While video measurement data is valuable to the obvious industry participants: television networks, MVPDs, OTT providers, and their advertisers and sales agents, it is also valuable to content producers and talent who want to know what leverage may or may not exist with respect to their relationships. Thus, players across the industry may find themselves negotiating agreements with video measurement service providers.
The issues that arise when negotiating agreements for measurement services are complex and often unique to that part of the business. So, while it may be tempting to sign the “standard terms” provided by the service with which you are negotiating, most video measurement services will negotiate some of their terms if you can convincingly demonstrate why certain changes are crucial for your client, but will not significantly affect the measurement service, even with respect to its MFN provisions with others. The following are some key terms that may require negotiation.
Confidentiality and Use:
Measurement services will want to restrict as much as possible the universe of people permitted to see their data. After all, once the data becomes public, it is hard to charge for it. The information these services collect and analyze is shared with customers pursuant to a license – meaning the information is not sold to the customer outright, but remains the property of the measurement service.
A typical standard term in a measurement services agreement will permit the customer to reveal information only to specific internal users with authenticated account usernames and passwords that are controlled by the measurement service. For most customers, this limitation is unwieldy and requires modification. For example, the agreement should clearly state that if an identified user is no longer employed by the customer, a different user can unilaterally be authenticated in the former employee’s place.
Also standard would be the measurement service’s effort to restrict the supplied information to identified employees on a “need to know” basis. While generally widespread dissemination will not be permitted, one can negotiate for blanket permission to include the fewest restrictions possible, particularly with respect to the creation of other work product such as memos, slide presentations and spreadsheets incorporating the data, which will be disseminated more widely internally, perhaps even across the board. Accordingly, even if there are restrictions on who can see raw data, if possible, the agreement should ensure that authorized users are free to share data internally as incorporated into other work product.
Because measurement services often sell to industry parties that are likely to be working with each other, or on opposite sides of transactions, e.g., advertisers and networks, ad agencies and their customers the ad buyers, the measurement services often prohibit sharing of data among these parties (as a way to ensure that each industry participant remains a paying customer). However, it is likely that one can get a measurement service to agree that its data can be shared with counterparties that subscribe to the same measurement service, and it is important for each of these customers to ensure that the measurement service’s contract permits this type of sharing. The success of negotiating this term will likely depend on the specific measurement service’s relationships and practices in the advertising space, but forgetting to ask for counterparty sharing may result in the inability to have your client and its customers work together going forward.
Data transmission also can be restricted to a certain territory, for example, the United States only. Some agreements may go further and attempt to limit the purpose for which the data can be transmitted within that territory, e.g., only with respect to video consumers within the United States. Customers with international operations should be sure their agreements permit internal and external disclosure as needed for content distribution or advertising sales purposes.
Furthermore, for customers using external servers, i.e., cloud storage, to maintain their data, it will be important to build a technical exception into the agreement to permit third parties to hold the measurement service’s data. The service will likely require that that such a third party arrangement include the same confidentiality agreements as are required by the measurement service itself has with its customer.
Many companies also routinely engage third-party consultants or advisors who may wish to analyze the measurement data. This should also be explicitly negotiated for, if the agreement otherwise prohibits it.
Finally, some customers may desire to issue press releases about the success of their content, or include certain information in their disclosures to investors that incorporates data obtained from the measurement service. Absent specific terms permitting these types of disclosures, the customer may violate the agreement by doing so. Therefore, it is advisable for such customers to carefully draft exceptions to confidentiality allowing minimal disclosures in press releases, or permitting certain information to be publicly released, or at least released to investors. Such provisions should also address whether the name of the measurement service can be used in the press release.
Modifications and Terminations of a Service:
Video measurement service providers are constantly making changes or modifications to their services, and agreements will usually permit the service to do so without the customer’s consent. Often they are technological improvements to the customer’s benefit – but not always. Measurement services will even seek the ability to terminate outright certain services in their discretion. Both of these provisions are usually non-negotiable, because measurement services will want the discretion to modify or terminate services or aspects thereof that are unprofitable. Such changes can raise several issues, but there are ways to minimize the effect of modifications or terminations of a service.
Modifications Requiring Customer Action
Modifications may require the customer to take certain action, such as update certain third party software or hardware in order to continue using the service, or requiring the customer to change its internal architecture. Customers should include a provision allowing termination of the agreement, or of the particular service (in the case of multiple services offered by a single company), if the customer does not wish to make the change.
When a Modification Makes a Particular Service Undesirable for the Customer
Sometimes, a measurement service can modify its service in a way that so significantly diminishes its value to the customer that the customer no longer wishes to subscribe. The customer should seek to reserve the right to terminate its subscription to the applicable service in such situations. As a fallback position (in situations where the measurement service offers a range of products), the customer could ask the measurement service to agree to apply the fee for the terminated service to a different service in the product line. The measurement service may accept this because, in contrast to the termination discussed above with respect to modifications requiring customer action, there would be no decrease in the measurement service’s revenue.
Unilateral Termination of a Service
In the case of a unilateral termination of an agreed-upon service, customers should be aware that the agreement may seek to force the customer to apply the fee from the terminated service to a different service in the product line. The customer should seek the ability to terminate the service without a further obligation.
Provisions requiring the measurement service to provide technical support, and manuals describing the services – including revisions for any modifications to services – may be very helpful. As measurement services often use proprietary software, a customer may need technical assistance to take full advantage of the data it is licensing, especially at the outset of the relationship. And in the case of a service modification, a customer will want to avoid any interruption in normal operations.
Data obtained from measurement services is typically anonymized. However, depending on its form, there may be privacy concerns. Particular attention must be paid if data is being collected from children, being transferred across international borders, or being collected from mobile devices. Enforcement from various federal and state agencies (as well as private causes of action) has created a latticework of interlocking privacy regulations, which is beyond the scope of this blog post. At the very least, if not in the original draft, customers should seek indemnification from the measurement service with respect to third-party claims arising from violations of the privacy laws arising from the measurement service’s collection of data.
Many additional terms in agreements for measurement services, such as termination provisions, removal and destruction of data, limitation of liability, representations/warranties, and insurance provisions, are common to all data licensing agreements. Although not addressed in detail here, each of these provisions raises concerns unique to the context of measurement services, so it is advisable to consult an attorney even for customers with experience negotiating data licensing agreements in other contexts.
In short, agreements for video measurement services should be negotiated to reflect a customer’s intended, real-world use of the data, and to limit any potential negativeeffect on the customer’s business operations.
Filed in: Legal Blog
November 29, 2016