The Hardest Part - Broadcasting & Cable

The Hardest Part

For all the tantalizing promise of Internet TV, the basics of tracking content and charging for it are getting exponentially more complex.
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By Dennis Kneale

Tim Taylor must have data deluge on the brain. As head of broadcast and media IT at Sky in Britain, he oversees mission-critical infrastructure that is the lifeblood of the business: a rights-management system for acquiring, selling, scheduling, clearing, distributing, and replaying hours of programming beamed out by the direct-satellite giant to 6.5 million set-top boxes and millions of laptop, tablet, and smartphone screens.

"There are thousands of different permutations where we're allowed to show rights on what platform and on what service," Taylor says. Myriad "elemental rights" cover music, actors, directors, and more, while other rights dictate which shows can air on pay TV or linear TV, via satellite, online or cable, on demand or live, in which regions and territories and at what time of day, and for how many days and how many plays. "You can multiply all these things out to tens of thousands of combinations, actually."

Especially in the past decade, the challenges and pitfalls of rights management, a $600 billion-a-year business, have multiplied in complexity and risk like never before. Markets around the world have opened up for U.S. programming, and the Internet lets millions of people access thousands of programs on dozens of new platforms anywhere, anytime. A mundane chore has become one fraught, befuddling task.

The Ultimate App Attack

Evolving technology and market needs are about to make rights management even more complicated. HBO and a spate of other networks have begun to break apart from the local cable systems that deliver them in a bundle, serving individual viewers on-demand via the Internet. Next up comes the Ultimate App Attack: Instead of entire networks on-demand on your iPad, Xbox or Roku, individual shows will go up on the Net on their own. Never mind an app for ESPN—the network now offers an app solely devoted to NBA games.

"What happens next when viewers just want Game of Thrones and don't want to pay for the rest of HBO?" says Thomas Siegman of RSG Media, the rights-management outfit that is the sole sponsor of this series of columns on Rights Insights. [For a video on the firm's take on this issue, see: http://www.broadcastingcable.com/video/2882].

"Instead of CBS, they'll buy C.S.I., like individual boxes of cereal. So you'd better know who you're selling to, and what they're buying, and when and where. Sellers of shows now have to go through seven billion customers to figure out what they want to watch."

The whole pursuit is made even more nettlesome by content owners' increasing expertise in exacting higher fees. "Content creators are getting quite a bit savvy, figuring how to slice up content in smaller bits and make money from it," Taylor says.

A rights management executive overseeing music for many TV shows at one giant content owner says the music publishers "used to give us beautiful, clean, all-media worldwide perpetual rights, but now they're asking a lot of questions" and holding back rights to sell to still more platforms. "The perception is we're making tons of money from things like YouTube, when that's just not true," this executive says.

In the digital age, the value of content rights becomes the value of the entire asset—the rights, in essence, are the product on sale. "The rights are the asset, and that absolutely makes it a different business," says Peri Shamsai, Ernst & Young's global advisory lead for broadcast and cable. "Rights management is, unequivocally, one of the most complex areas to manage for media companies. So complex, because most of the terms we manage under are a hundred years old."

Rights management has roots in century-old law in the music industry. Shamsai, who worked at music giant BMG when Apple's iTunes launched more than a decade ago, says seven separate rights regimes governed every song to be sold (make that "licensed"), rights for publishing, recording, producing, sampling, etc. Thus, managing a hundred thousand songs required navigating among 700,000 variables.

Now, she says, a film typically carries a thousand times as many rights as a song, for "every person who signs a release, every single piece of music, everything," Shamsai says. Rights managers today, she observes, have to deal with 115 years of history that define and form the foundation of the rights structure. "We're stuck with it."

Hell-bent on Upgrading

The content companies she advises are hell-bent on upgrading their rights-management technology to unlock new fees, expand to ever more digital platforms, and adopt each new one quickly and smoothly. By some estimates, content companies are leaving $50 billion a year on the table in uncollected rights fees [see my column "Hidden Fortune"].

Sky's old system required programmers to check each show's rights by inspecting checked boxes and pre-text fields on a screen. Its new system provides clearances instantly and automatically without human intervention, linking Sky's in-house scheduling system to RSG Media's rights platform. "The integration with our scheduling systems was the key for us, because it allows us to do stuff efficiently, to be able to use the content in every possible permutation we're allowed to use it, exploiting it to the fullest degree," Sky's Taylor says.

It's good for the company, but it's also good for the viewer, and that is an important consideration in rights management that often gets lost in the fray.

"At the end of the day, it should be about not frustrating the end user, the consumer, the viewer," says Karyn Reid, a consulting manager in the media and entertainment practice at Cognizant. "People now expect to view content no matter where they are, no matter what the device, and in many cases they are willing to pay for premium content."

We always hear that content is king, especially now in the Net era, but a better way to think about it may lie in her point: It's the customer who is king. Rights management, nettlesome and overwhelming as it has become, is the means for serving the customer—and for making sure to exact the highest return for doing so.

Dennis Kneale, a former anchor at CNBC and Fox after two decades at The Wall Street Journal and Forbes, is a media strategist in New York.

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