When I was 13 years old, I worked, unpaid, for my divorced dad, cleaning carpets on weekends. Whenever I started to slough off, he’d prod: “If you’re going to do something, son, at least do it right.” Rights management is like that. Content owners have to do it, so they might as well do it right. Achieve more.
For this fourth and final installment in our series on Rights Insights, it is time to arm you for the battles to come. Here are six simple pieces of advice, gleaned from experts at RSG Media—the rights-management firm that is the sponsor of this series—and some of its clients, and from consultants and executives at other media outfits.
FIRST: Treat your content rights as a profit-hungry hedge fund.
“CFO’s now are looking at rights as an investment portfolio, which is just a huge mind-shift,” says Thomas Siegman, executive vice president at RSG Media. “At the risk of seeming to be a little bit commercially crass here, they’re looking for the most money, they want the highest return.” Thus, three corollaries are key to this portfolio approach:
Know what you have. That is, conduct an exhaustive top-to-bottom inventory of all the content you own or lease, all the rights attached to it, and the freedoms afforded for selling and reselling your wares.
This can be a daunting undertaking. When Discovery hired RSG Media in 2006 to work on a major overhaul of its rights system, it had to re-enter the terms and intricacies of 20,000 to 30,000 individual contracts. By hand! “It took us about two years. We had to collect everything,” says Greg Fioravanti, a Discovery vice president. “It was a significant amount of work—and it remains a significant amount of work to keep up with the explosion in contracts we have to deal with.”
Know how your rights are performing. This means ensuring you use your rights to the fullest extent, and don’t acquire more rights than you need, and selling your content as far and wide as possible and on new platforms within weeks after they emerge.
One example: “Elemental rights” cover rights within a piece of content, while music has a separate set of rights, with a usage window that often is shorter; this may be why old reruns of Saturday Night Live often leave out the live music performance. By simply replacing the music attached to a TV rerun, you could extend the runnable life of the program significantly. “If the music could easily be replaced in a playlist for playout, then music could be selected for each individual territory without having to edit the program in post-production,” says Karyn Reid, a manager in the media & entertainment practice at Cognizant, a consulting firm. A good rights platform takes care of this.
Search for and plug revenue leaks. The annual rights market is pegged at $600 billion. RSG Media estimates that media companies could collect perhaps $50 billion a year in higher rights fees—if only they knew what they possess and exploited it fully.
SECOND: Deploy your rights strategically.
More than just good housekeeping, the right rights-management system can let a content company stoke more revenue growth, respond more quickly to the fast-changing market and add new services and entire channels in days instead of months. It also can gather hordes of data on viewers’ behavior to better tap into their needs.
“The ability to give someone [on staff] a red light or green light, or have them serve themselves on their own system to say yes, put that program on the schedule, is really where we’re going,” says Discovery’s Fioravanti, the business lead on the project. “Every time we add a new service, we can’t gear up an entire new staff, no economies of scale there. We need automation to grow these new channels around the world. That’s where the ability to automatically calculate the rights really comes into play for us.”
Adds Shiv Sehgal, a senior solutions architect at RSG Media: “In the past, it has all been rights strategy by gut. No consideration of all the various rights issues and opportunities that come into play.” Now, content owners can a use rights-management platform to “get out to new platforms more quickly” and “understand the customer, how they talk about a product, how they interact with content, all with the goal of maximizing the return,” he says.
Disney is seen as one of the best rights exploiters on the planet, and rightly so. It is the one global media brand that has made synergy truly work, creating a content franchise first in, say, animated digital film (see Toy Story or Frozen) and then extending it into myriad adjacent markets: toys, music, books, videogames, home videos, TV spinoffs, iTunes releases, Internet streams, theater tours, ice-skating performances . . . even branded cereals.
It is mind-blowing to think what the Disney machine will be able to do with the seventh “Star Wars” film, “The Force Awakens,” which premieres on Dec. 17th. It is gunning for the opening-weekend record of $209 million set recently by “Jurassic World,” and the billion-dollar mark at the box office is a gimme. The clincher will be how many billions of dollars in extra business Disney can build on top of that.
The first six Star Wars films, released before Disney bought the franchise, took most of three decades to gross $9 billion combined at the box office. Disney’s Avengers franchise hit $5 billion—in just two years. The original Star Wars trilogy racked up an estimated $27 billion in licensing fees and product sales, triple its box-office take. Now that Disney owns Star Wars (it paid $4 billion to acquire Lucasfilms in 2012), that multiplier may go even higher.
Yet Disney, rapacious behemoth that it is, developed much of its rights platform internally at a cost estimated at $100 million or more. For all but the largest media titans, the platform is a make-or-buy decision, and buying it is the simpler, better choice. Enter the RightsLogic platform developed by RSG Media.
Sky, the direct-satellite TV service in Britain and a client of RSG Media, can use its rights platform to mine for programming upsides and set up new feeds on the fly. Realizing it had rights to run films in the James Bond franchise an unlimited number of times in a months-long period coming up, it set up a Sky 007 channel to air the flicks 24/7. “That was a wonderful, new revenue source, and wonderful service for Sky’s customers, and it shows how you can be really creative around rights,” Siegman says.
THIRD: Have a strategic rights-management system.
Some media companies can go wrong by regarding their rights-management function as a mere accounting add-on with administrative responsibilities, when instead it should be a distinct, separate platform run for maximum output and profit. “Some people view it as a cost center. It really should be a profit center that allows you to exploit those rights more effectively,” says Peri Shamsai, Ernst & Young’s global advisory lead for broadcast and cable.
The rights gurus at RSG Media suggest three extra pointers: Go granular, think enterprise-wide, and tie it all together. Let’s take a closer look.
Go granular: Every show or other piece of content has a dozen or more separate bundles of rights defining it and shaping its revenue upside: Elemental rights for actors, directors, writers and more, rights for format and sound track, other rights for music and film footage, and rights covering countries, territories and languages; side deals, “rights in” for content licensed from elsewhere, “rights out” for selling to third parties, and still more. Every player platform, moreover, whether it’s Sky on-demand or a new videogame player, requires its own separate rights regimen. A good rights system must keep up with an ever more complex array of contracts and terms.
At Discovery, some 330 video feeds in 40 languages serve some 200 markets around the world. It must track programs that air live (“linear TV”), and by subscription (SVOD), and via Internet streaming platforms, on laptops and tablets and smartphones and more, the variables and iterations surpass one million options. Its RightsLogic platform, developed with RSG Media, is able to track it with automated software.
View your rights through an enterprise-wide lens: Businesses work in parallel silos, sometimes unaware of the intricacies and foibles of their neighbors; people can be turf-conscious and wary of sharing their proprietary information outside their own borders. An advanced platform has to be accessible across multiple departments, from sales to legal to accounting to I.T.
Tie it all together: Use your fully integrated rights platform to tie together data from across your entire enterprise and lift the returns on your investment. Integration of data from finance, accounting, royalties, participations, scheduling, playout, ratings and social media can a constant feedback loop to let you know how the rights you have acquired actually are performing. This is a daunting undertaking. “Robust integration between systems is a must,” says Karyn Reid of the consulting firm Cognizant. Yet the regular TV operation (“linear”) and digital-streaming business often work in separate business units, she notes.
“Many contracts have a link between the linear and digital scheduling rights, which makes it necessary for those teams to collaborate,” says Reid, a consulting manager in Cognizant’s media & entertainment practice. “Rights management and scheduling also can be separate departments, with different goals and performance metrics. Royalties are handled by Finance.” The trick, she ads, is to create “real-time, transactional-based integration to help these teams work together seamlessly.”
Seamlessly. Consultants love that word.
“This is an enterprise-wide technology platform,” says E&Y’s Peri Shamsai. “It touches finance, legal, the licensing group, it touches your content group. Across all organizations, these systems need to be used to be effective.” She adds, though, that “it’s not just technology” at work here. “To manage these exploitations” of rights to their full potential, she says, “you have to train people, standardize processes for capturing and managing data, and set up a fully integrated operating model with processes, policies, systems, data and organization around it.”
Easy peasy, right? Anything but, so Shamsai offers three things to keep in mind:
1) “Start out with the end in mind.” Focus hard on the result you want at the end of the project—what the outputs of the system will look like, what kinds of processes it will enable. “Too often companies start out with contracts and don’t land where they want to land.”
2) “Don’t underestimate the complexity of the data requirements for doing this,” she warns. “Remember the main challenge is capturing and managing clean data across the organization.”
3) “Approach this as an operating-model initiative, not a technology initiative. Some integrations fail because they look only at technology, it’s run from the I.T. group and not adopted by business users.”
FOURTH: Have a rights evangelist.
Every revolution needs a firebrand, and for a major rights-tracking upgrade, it might be especially helpful if this leader were someone from the business side rather than the tech department, some advisors say. The higher-ranking, the better.
“You need executive support long-term,” says Greg Fioravanti, who was the business lead on the Discovery project. “It’s not like this is a one-year project and then you’re done. You build the rights system, you need to feed the rights system, you need to continue to groom the rights system, you need to adapt it as it evolves.” Sounds like trying to herd a gaggle of gremlins.
He also advises rights owners to “make sure that your I.T. partner shares and understands your vision to make sure they can execute on the needs you have.” Don’t just spit out a litany of requirements to your vendor and have him respond with a 300-page contract, because “a significant amount of misunderstanding ensues from there.”
“A better approach,” he says, “is sort of storyboard things and put things into language and concepts the business can understand and test.” Thereafter, “go through an interactive process, with check-in periods, to ensure you’re on the same page as each thing is being developed.”
FIFTH: Know what your opportunities are, and how to create more of them.
By tracking thousands of program rights, a state-of-the-art platform thereby also knows customers’ viewing habits and other preferences. Add a top layer of consumer spending data and demographic details, and suddenly you know a lot more about what your customers want and how to serve them.
RSG Media’s Tom Siegman explains it simply: “The first thing you have to know is what you have. Second thing is who is watching, how and where. And the third thing you need to know is what they want from you. From life. Not what they say they want but how they actually behave.”
SIXTH: Accept the limits of the golden gut. Use data to drive decisions.
The RightsLogic platform automates most rights decisions. A second RSG Media service, the Big Knowledge Cross Platform reporting app, gleans extra insights by blending viewing data with data from myriad old and new sources: Nielsen ratings, NPD, Kantar Media, SNL Kagan, Rentrak, Plan It, Advant, Wide Orbit, GlobalContent Catalog and I-Behavior; as well as “non-linear” sources including Hulu, Google Play, Crackle, iTunes, Vudu, Omniture, Freewheel, Comscore; and social network trackers and data aggregators such as Blue Kai, Acxiom, Ad-Juster and Twitter and Facebook.
What about the Future?
So there you have it, six simple tenets to better rights management in a nightmarishly complex world of content creation gone wild. One might think all this would lead, someday, to a nirvana of simplicity, a one-currency-fits-all system of seamless (there’s that word again) interaction and exchange.
Imagine that, in the future, the entire content business relies on its own kind of digital bitcoin for automatic rights exchange, boiling dozens or even thousands of rights binding every piece of content down to a single, adjustable unit that nets everything out to grant a credit or debit where appropriate at the end of each day, week, month, quarter and year. Technologically, this might be quite doable, a snap. The experts, however, have three words for that scenario: It won’t happen.
That’s because, in rights management especially, complexity breeds complexity—it even creates an incentive for more complexity. As content makers get even better at using software tools to slice and dice their rights for maximum return, the more granular and detailed and fragmented—and complicated—the rights picture will become. That, in turn, ensures a continued role for human workers rather than automated software bots.
“There will always be the need for humans to be involved, there will always be a need for interpretation,” says Greg Fioravanti of Discovery.
“Digital companies forever have said licensing rights has to become more simple, one-stop shopping, one touch-point to license this content,” says Peri Shamsai at Ernst & Young. “The reason why this hasn’t happened in 20 years, since digital hit the media industry in earnest, is because there’s a hundred years of history in copyright law legislating the nature of these rights and how they are managed.”
She gets the kicker quote: “The question is how to address that complexity, and technology is really the answer.” Bingo.
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.