On Rights and Returns

by Joshua C. Nathan

“Content is king,” but if your content is not properly protected and strategically exploited for actual returns, it won’t be your king. Whether you work with content as a creator or distributor, entrepreneur or financier, you must, in all your dealings, have a handle on three critical considerations.

-I-

Know if you have the content rights you need and protect them

From films to software applications, content is often made with original elements and elements that are owned or controlled by others. If you don’t actually have the rights you need to the elements you are using or haven’t properly protected them, your project or deal could be fatally flawed, your venture a house of cards. Learning about right’s problems through cease and desist letters or by seeing others exploit original elements of your content, can be very costly: holding up distribution of products and services, fouling brands and new ventures, disappointing investors and more. Sound content management practices and careful deal-making go a long way to avoiding these problems.

-II-

Know how you can exploit your content rights today and your strategy for how you may do so in the future

Content makes money by reaching audiences and consumers via what are now rapidly evolving media platforms supported by equally dynamic business models. Only having the right to reach your audience or consumers on the platforms they use today will not serve you when they move to different platforms or when business models change to make other platforms more profitable. In recent history, the shifts from: CDs to MP3s, analog to digital TV with on-demand cable service, and DVDs to web streaming, caught many content businesses short. They were delayed in reaching audience and consumers and they lost revenue because deals they had made in the past did not contemplate evolving technology. For many media companies, this meant significant lost opportunity costs, for some it meant going out of business. Predicting what will happen can be tricky but being well prepared for the myriad of things that may happen is very much achievable.

-III-

Know how you will actually realize economic and other returns on your content

Royalties, net profits, percentages of adjusted gross, recoupable advances, revenue share waterfalls, allowable deductions, expenses capped as a percentage of income . . . Whether you are a content creator, distributor or investor, there can be a lot of hurdles between you and your share of the money generated by successful content. There are analogous hurdles to realizing non-economic returns as well. Understanding the details of how and when you and your partners will actually get paid, and realize any other benefits, is essential before you sign off on a deal or venture.

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Make sure content is your king. Know your rights and protect them. Develop a strategy to exploit your rights and make sure you actually realize the economic and other benefits of your work.