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On the rights trail

Much has been made of the fact that broadcast license fees aren't what they once were. These days, kids distributors and producers have to cut more deals and slice available program and territory rights and windows ever-more finely to make productions pay. And in order to make the most of what they've got, these companies need to know, well, what they've got. Undiscovered windows and expiring license deals languishing on untracked contracts can mean there's a lot of cash left lying on the table. Add to that the plethora of new rights created by the recent explosion of digital distribution channels, and it becomes apparent that no mere mortal, regardless of their Microsoft Office mastery, could possibly keep up.
April 1, 2008

Much has been made of the fact that broadcast license fees aren’t what they once were. These days, kids distributors and producers have to cut more deals and slice available program and territory rights and windows ever-more finely to make productions pay. And in order to make the most of what they’ve got, these companies need to know, well, what they’ve got. Undiscovered windows and expiring license deals languishing on untracked contracts can mean there’s a lot of cash left lying on the table. Add to that the plethora of new rights created by the recent explosion of digital distribution channels, and it becomes apparent that no mere mortal, regardless of their Microsoft Office mastery, could possibly keep up.

That said, slapping down between US$20,000 and US$40,000 on even a modest rights management database and software package to keep the business moving forward isn’t something done hastily. There are a number of considerations to keep in mind, and we’ve polled several distributors on their trials, tribulations and eventual successes to help construct an RMS shopping list.

Know your rights

First off, it should be said that implementing a solid rights management software solution has become imperative for all players on the distribution field, especially if there’s an interest in exploiting digital media rights. While not everyone contends with a library made up of 3,200 half hours like Corus Entertainment subsidiary Nelvana Enterprises, SVP of operations Dale Hancocks says if it weren’t for the company’s Jaguar RMS (see ‘Stacking up the software’ sidebar on page 84), it would have missed out on two key distribution opportunities in the last 24 months.

A good RMS, Hancocks explains, allows distributors to mine the very depths of their libraries, and in Nelvana’s case, it was able to act quite quickly on its joint-ventures with new kidnets qubo and KidsCo.In both instances, the company was able to offer up content such as Jane and the Dragon and Jacob Two-Two as part of an equity contribution. He says that would never have been possible without a reliable RMS in place. ‘If we did not have a system that could handle a quick appraisal of available rights, we wouldn’t have been able to enter into discussions,’ he says. Alternatively, he notes, if the company had had to do the research manually, trolling through files and spreadsheets for available rights, it would have taken so long, the opportunity would have passed Nelvana by.

Such anecdotes aren’t being lost on smaller companies. With just Storm Hawks delivered (albeit the 52 x half-hour series has been sold into 45 countries and has an international merch program well underway) and another toon headed into production, Nerd Corps Entertainment president Ken Faier has been actively researching his RM options. ‘We’re managing sub-distributors and several licensing agents – the need for rights management has become very important,’ he says. And beyond being able to run reports on rights availabilities and conflicts, he’s looking at existing systems in terms of their ability to manage the entire distribution process, from acquiring rights and sales, to client relationship management and tracking screeners and promo materials.

Right now, Faier is weighing the pros and cons of buying off-the-shelf software versus creating a solution in-house. Of the available programs he’s checked out, Comet from L.A.-based Saturn Software (see ‘Stacking up the software’ sidebar below) has piqued his interest.

‘What I like about Comet is that you can start off pretty small and not pay US$100,000 for a setup, whether you have two shows or 200.’ He figures it would cost between US$30,000 and US$40,000 to buy readymade software to meet the needs of his roughly 85-employee company. The pros include the tech support Nerd Corps would get in buying established software. The cons include the fact that the package would still require a good degree of customizing to suit the Corps’ needs, and annual maintenance fees would augment the overall cost of the system. He also believes that in-house design is a solid option because the company employs software developers full-time who have already built process management software for the animation team. Either way, Nerd Corps will be installing a system sooner rather than later.

Biting the Bullet

Speaking of which, Decode Enterprises director of sales Josh Scherba’s advice to smaller companies out there that haven’t implemented some kind of RMS is to get something ASAP. The Toronto, Canada-based company committed to installing Comet four years ago, and Scherba feels it was almost too late, even though the library then was a fraction of its current 1,000 hours. He notes, ‘Even once you’ve got a database installed, when will you find the time to go back and enter data from old contracts? It’s almost like you can never catch up, and will be missing out on windows that are opening up.’

Prior to biting the bullet on Comet, which carried a hard cost of more than US$20,000 to install and didn’t include maintenance or special modifications, Scherba and Decode learned the hard way. Once MS Excel had reached its limits some eight years ago, the distributor commissioned a software developer to create an in-house solution – something Scherba does not recommend. The programmer had limited knowledge of how the business worked, so the system never ran smoothly; it quickly reached its capacity and that of the programmer’s to make adjustments. When it came time to make the switch to Comet, transferring captured data, and entering the stuff that was missed entirely, proved to be the biggest hurdle – would that it was smooth sailing from then on.

Scherba and his team soon discovered that the reports being extracted from the system could only be as good as the information being entered into it. In fact, a number of execs interviewed for this piece stress that careful data entry, preferably performed by someone who understands contract language and the complex web of rights that can be involved, for example, in negotiating a terrestrial and pay-TV deal in the same territory with overlapping windows, is crucial. (Hancocks puts the task in the hands of Corus’s permissions group as he says rights, ultimately, are derived from a piece of intellectual property, and it’s important to make sure they’re categorized to reflect existing IP law.)

Decode initially had an intern performing the task, but quickly spotted the resulting inaccuracies and realized the report data could not be relied upon. The company then moved to having Scherba and the VP of sales at the time enter the info themselves. This stop-gap measure sucked up too much of their time, and the company ended up hiring a full-time senior manager of operations to administer the info. With all the data passing through the hands of one, knowledgeable person, Scherba is now confident about the system’s consistency and accuracy.

knowing when to upgrade

That said, RM systems and their maintenance are seldom static. As companies grow, needs change, and outright switches are not uncommon. Both L.A.’s MarVista Entertainment and Target Entertainment in London are in the process of moving to new systems. What drove the latter was the July 2007 acquisition of Minotaur International from Virgin Media, which bumped Target’s catalogue up to 5,500 hours that now includes not only kids programming, but also a good chunk of factual and drama content.

Target’s director of finance, Gavin Reid, explains that the company’s previous system, Film Track, was not up to the task, especially when the library’s management was combined with the needs of the company’s growing L&M division (that’s a whole other set of licensing rights to track). The idea was to get one piece of software that could handle both sides of the content business, along with things like materials flow and customer relations.

Reid and his team settled on relative newcomer Rights Tracker, also based in London. It came in at the right price (see ‘Stacking up the software’ sidebar on page 82), and Reid says, along with managing data, it will serve as a powerful marketing tool on the materials side. ‘We have thousands of screeners that make their way around the world, and now we can track who’s seen what and who’s interested in what, record buyers by genre and preference, and tailor emails and marketing accordingly [employing less manpower].’

For MarVista’s part, CEO Fernando Szew says the company’s 2,000-hour library outgrew an in-house-created system. ‘It was taking more people to maintain it than we felt it should,’ he says.

The company began the migration to a software program called RightsMax about six months ago. The data transfer went relatively smoothly, and the new system’s scalability means it will grow as the company does, keeping man-hours spent on maintenance to a minimum. However, the bankruptcy of RightsMax parent company Axium this past January, and subsequent sale of the software entity, has left him a little uneasy. He says the new owner, MPS Group, has promised tech support, but as MarVista’s going live with the system next month and has yet to run into any problems, Szew doesn’t know if the company will follow through. He’s certainly not getting rid of the older backup system anytime soon.

Then there’s the ever-changing industry itself. Both Reid and Szew say they purchased their new RM systems with an eye to choosing the most flexible software possible and recommend that prospective buyers do the same. ‘With the rise of digital media, rights definitions are changing regularly,’ says Reid. ‘Our old system didn’t have much scope for change.’ Similarly, Decode’s Scherba says his company is going through an overhaul right now.

‘Using parameters from four years ago on a new contract is like trying to fit a square peg into a round hole,’ says Scherba. He’s currently supervising the overhaul of Comet section by section and right by right to make it jibe with the contracts he’s negotiating now. Comet allows his team to make some changes, but he finds he’s having to go back to the system’s manufacturer more frequently, and it’s getting a little frustrating and expensive as Decode has to pay an hourly rate for custom programming. ‘We’re at the forefront of telling them what we need, versus the other way around,’ he notes.

Additionally, not everyone defines digital rights in the same way right now, putting more pressure on distributors to make the call – a task that’s daunting regardless of the software’s flexibility. Corus’s Hancocks says although his team completed a recent overhaul of the master rights table (which determines how data gets entered and then reported) without needing assistance from Jaguar’s manufacturer, it was an extremely complicated task.

‘You have to almost predict the future to build a lot of flexibility into your definitions and RM system, and set up tables than can evolve with market practices,’ Hancocks explains. ‘There was no one place we could go to answer tricky questions, and Jaguar and other software providers have no knowledge of the industry in that way.’ In fact, he says wryly, ‘There’s a beautiful opportunity out there for a consultant in the marketplace who understands rights and is on top of what’s happening around the world.’ Enterprising international lawyer-types, he’s talking to you.

About The Author
Lana Castleman is the Editor & Content Director of Kidscreen and oversees all content for Kidscreen magazine, kidscreen.com and related kidscreen events. lcastleman@brunico.com

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