M.E.L.O.N.: Internet Law: Webcasting Agreements

Gone are the days when you have to pay top dollar to go to a concert and risk going deaf just to see your favorite band. Thanks to webcasting, you can watch the concert wherever you want and, sometimes, whenever you want.

What is webcasting you may ask? The simple definition: webcasting is the broadcast of media in streaming format via the Internet.

Although it may never take the place of attending the concert, it is becoming more popular especially with the ever-increasing rise in ticket prices. It also provides a tantalizing opportunity to many who are unable to attend the concert for whatever reason by providing the ability to watch it later.

As with every new technological development, there are complaints about webcasting, such as the poor video quality, the inability to access a site due to excessive web traffic when there is a scheduled webcast and the common refrain that there are not enough big name artists that are willing to do the webcasts.

However, bigger artists are beginning to tap into the webcasting market because it can be lucrative, particularly when the artist’s CD is for sale on the site that is webcasting the event. Artists like Elvis Costello and Bjork have tapped into the webcasting market by allowing television shows like "Late Night With David Letterman" and public radio programs like NPR's "Live Concert Series" to webcast their performances.

Webcasting has also become popular with many performance venues seeking to further capitalize on an artist’s performance. By securing the rights to webcast the performance, the venue is potentially enabling an additional income stream that could be lucrative, depending on the popularity of the artist. Alternatively, the venue may use the webcast for promotional purposes by webcasting without charge hoping to lure visitors to both the website and, ultimately the live performance venue.

Many venues webcast from their website, while others opt to contract out to third party sites specializing in webcasting, relying on outside streaming audio and visual programming expertise and then linking to that site from the venue website.

In recent years, webcasting alone has not been profitable for many websites that had relied on advertising revenue to support the free webcasting. As the advertising revenue has diminished, so has the possibility of directly generating money by providing free webcasts.

When a venue or other producer contracts to webcast an artist’s performance, there are several contracts that need to be drafted.

The first is the Webcast & Ancillary Rights Agreement.

This is the document that gives the venue the right to:

webcast the performance;
use the artist’s name and likeness to exploit the webcast; and,
in some cases, own the copyright in the webcast.

This document also discusses:

the compensation terms,
the duration of the use of the webcast, and
the various warranties associated with a live performance

An attorney negotiating the deal points for such transactions should keep in mind several key areas commonly subject to the heaviest negotiation:

whether the webcast is scheduled or on-demand;
length of time the event can be archived for webcast;
artist approval / artistic control over what is webcast; and
revenue calculations if the contract is not done on a flat fee basis

There is more information on the Webcast & Ancillary Rights Agreement at the end of this post.

The second document that needs to be drafted is the Synchronization License.

This is the license from the publisher to the webcast producer to use the various musical compositions in the webcast. There must be a synchronization license for each song used in the webcast. In many respects, the synchronization license for a webcast is not unlike the license utilized for television or film synchronization.

The third document is the Notice to Patrons attending the concert that the event is being videotaped.

It is essentially a notice to the patrons that by attending the event, they consent to the use of their name and likeness in the footage. The problem with these notices is that they are often of limited value to the producer.

The reality is that a patron basically has no choice but to consent unless they are willing to forego attending the concert and try to get a refund. The notice is more effective if patrons are notified in advance of the ticket sale that the event is going to be videotaped.

However, having the notice in place when patrons enter the venue often will suffice in many cases because most people are not going to care one way or another if they are videotaped at a concert. Notice that I said most people and not all.

Obviously, if you videotape someone doing something that a reasonable person would find embarrassing or if you tape them in a drunken state acting foolishly, they are not going to be happy if they tune into a webcast and there they are looking like a fool for the whole world to see.

This is when problems can develop. In the event that the producer wants to feature footage of people doing things other than just observing the concert, it is better to have them actually sign a release. This is a much safer measure than just relying on the notice that people could say they failed to see or read.

The fourth document that you may need for the webcasting production is the model release.

It is best to have short releases on hand in case you capture footage that you think you may need permission to use (i.e. patron acting silly or yelling at someone at the show). Additionally, if you plan to interview patrons at the show, you will need to get a release from them. It is always better to have blank releases available for people to sign rather than just to rely on the notice that is posted at the entrance to the venue.

The other documents vary depending on the format of the project.

An additional instance for an agreement is if an independent contractor is doing the filming of the footage that will be eventually used in the webcast. In that case, there needs to be a work for hire agreement with the person doing the filming so that he or she cannot claim any ownership over the final product.

Additionally, if the producer is filming on property that it does not own, they may need a location release to show the inside of the venue or other location captured in the footage.

The following is a discussion of the main provisions that need to be addressed when drafting the first document noted above, the webcasting and ancillary rights agreement.

The webcast and ancillary rights agreement (“Agreement”) is the main form of agreement for a concert that is going to be recorded at a venue and then webcast. For purposes of this article, the following definitions apply: “Producer” is the producer of the webcast; “Artist” is the performer; and “Venue” is the location where the webcast is recorded.

First, recitals need to identify:

the parties,
the project,
the date the footage will be taken, and
the location of the event.

This part of the Agreement should also acknowledge that the Artist has signed a Performance Agreement (which is standard for any performance at a venue.)

The Performance Agreement should be mentioned in this document if the Venue is owned by the Producer. The Performance Agreement discusses the general terms by which Artist will perform at the Venue whereas the webcasting and ancillary rights agreement discusses the terms by which the Producer may record and webcast that performance.

The next provision should state who owns the copyright in the work. Although the Producer will want to own the copyright in the webcast, this provision may also provide that the Producer has a license to create a derivative work.

Often a webcast will include more than just the actual performance footage. It may include interviews with the fans or interviews with the artists. The webcast may also omit certain parts of the performance and only include several songs rather than the entire set list that the artist performed.

The Producer may need a derivative work license from the Artist so that the copyright in the derivative work, the webcast, will be owned by the Producer since the Producer puts together the footage to create the derivative work known as the webcast. This provision should also make clear that the Producer, as owner of the copyright in the webcast, may broadcast, webcast and otherwise exploit the webcast.

This provision may include language giving the Artist approval rights over which songs can be used in the webcast and details the manner in which approval may be given. As mentioned above, the issue of artist approval and artistic control is one of the most heavily negotiated terms in these types of agreements.

Additionally, this provision should note that the Producer may assign this contract without Artist’s prior consent and that in the event of such assignment Artist will not get additional compensation. This provision is important to the Producer in the event of a merger between companies or if the Producer does not plan to webcast the event itself but must contract out with a site that does webcasting.

A compromise is often reached by limiting the right of assignment to parties that acquire a majority interest in the Producer. Most other situations can be accomplished by license rather than assignment.

The next provision should deal with compensation payable to the Artist. This provision may be worded so that the Artist receives a flat fee. However, there are many other ways to compensate the Artist for the right to webcast.

As mentioned, an artist may want to have their performance webcast because it is a powerful promotional tool, particularly for artists who work hard to put on a good show for their fans.

Alternatively, the compensation may be a form of revenue splitting either based on advertising and/or sponsorship revenue or a share of the profits if the webcast is pay-per-view. The compensation may even be that the site will sell the Artist’s CD or other merchandise, splitting the proceeds according to a clear formula. If the site attracts many fans that want to see the concert, it can serve as a promotional vehicle for the CD and boost album and merchandise sales, which ultimately benefits the artist.

The next provision should address the issue of whether the Producer may exploit the webcast in any manner and means including coupling. The coupling provision is particularly important to a Producer of many concerts who may want to compile a “Best of …” type of show. A provision allowing the Producer to couple gives the Producer the right to do so.

This provision should be carefully tailored so that Artist does not unintentionally grant rights to Producer to exploit the webcast in tangible media such as DVD without additional compensation and perhaps in violation of other agreements .

The next provision should deal with the term: how long can the Producer webcast the performance? The webcast can either be scheduled, which means that it can only be webcast at certain designated times, or it can be on-demand which means that users can go to the website and watch the webcast at their leisure.

Often the Agreement will state that although the Producer owns the copyright in the Webcast, they may not have the webcast available for viewing after a certain period of time has elapsed. This provision is another of the most heavily negotiated provisions.

Often the label or artist will want to put a limit on the length of time that the Producer can have the webcast archived on the website. Many artists and labels are uncomfortable with the thought of a webcast being accessible in perpetuity. A two (2) year limit may be an acceptable compromise.

The term may be largely addressed by providing that the content cannot be archived and can only be webcast according to a certain schedule. On the other hand, the producer of the webcast often wants to have the webcast available on demand so that the consumer can view it any time they like. This makes the webcast more valuable to the Producer who may be putting the webcast on the website for free in order to attract people to the website. The option to view at one’s leisure is obviously more appealing than having to tune it at a scheduled time to watch. Additionally, some sites may not be able to handle the heavy traffic associated with a scheduled webcast.

In the circumstance when the Artist is signed exclusively to a record label, the recording contract and any ancillary agreements must be reviewed and considered. The record company might insist that the webcast be scheduled to air at certain designated times rather than being on-demand. The reason behind this is the record companies’ fear that if people can watch the webcast whenever they want they will not be as likely to buy the music.

This is of particular concern if the record label is trying to sell a CD of the same live performance. All of these concerns are the subject of negotiations between the parties depending on the goals of the Producer, the expectations of the Artist and the position of the record label.

The next provision in this Agreement should state that Artist’s performance is a work for hire. By including this provision, the Producer is ensuring its ownership in the webcast copyright. By limiting the Artist’s participation to a work for hire, the Producer is attempting to avoid any unnecessary conflict over rights that may arise in the future.

If Artist is signed to an exclusive recording agreement it is not always possible for the Artist to grant such rights to the webcaster without the record label’s consent. Many recording agreements define the exclusive recording commitment of Artist in very broad terms.

Next, there should be a warranty provision. It should provide that Artist acknowledges that it is not entitled to any additional compensation aside from the payment discussed earlier and the Performance Agreement. It should also state that Artist warrants that none of the songs that it is going to perform will infringe third party’s copyrights. Lastly, it should warrant that Artist is free to enter into this agreement and that no additional payment is due to AFM or AFTRA.

The Agreement should also contain a Name and Likeness Release Provision. This provision gives the Producer the right to use Artist’s name and likeness in connection with exploiting the webcast and in connection with the webcast. It also gives the Producer the right to use certain biographical information with regard to promotion. This provision should also discuss whether Publicity shots will be necessary. Lastly, this provision may state that the Artist will help Producer procure licenses from side artists who will be performing with Artist.

The next provision should state that to the extent Artist owns their own music, they agree to grant synchronization, mechanical and performance licenses. A negotiating point here may be whether or not these licenses should be granted on a gratis basis. Such a determination really depends on the structure of the deal and compensation scheme worked out with the Artist.

In the event Artist does not own its own songs, then this provision should also state that Artist will use its best efforts to procure the necessary licenses for Producer. Again, depending on the compensation structure, this may or may not be done on a gratis basis.

In all probability, if the Agreement is done on a flat fee basis, the Producer should try and include this provision as part of the package and have the licenses granted gratis. However, if the Producer is not paying up front and the Artist is sharing revenue, then it is more likely that the Artist will not want to give up the gratis license.

In a perfect world, it would be best to get these licenses ahead of time. However, the reality tends to be that it is difficult to secure such licenses ahead of time because of time constraints and because often Artists are not sure what songs they are going to perform until they get up on stage.

Many times, Artists do not even know whether they intend to “cover” another Artist’s song. It is best to have a provision that if the Artist “covers” a song that may ultimately be used on the webcast, that Artist will be responsible for the cost of the license and that Artist will indemnify Producer for any potential claims brought by the owner of the composition that is covered by Artist.

Lastly this provision should indicate that if the Producer has to pay for the licenses, Artist will use its best efforts to negotiate a license fee that is acceptable to Producer. However, if this is the case, the Producer will want to reserve the right to have final approval over which songs to include in the webcast.

The next provision should deal with the relationship between the Artist and the Producer and state that Producer and Artist are independent contractors and not employees of each other. This provision should be included to avoid any future lawsuit for incident or injury that may result during the taping or performance.

The next provision is the forum selection clause. Obviously the drafter of the Agreement wants the forum to be most convenient to their client. Usually the forum should be where the Venue is locatedwhere the event took place or since it is likely the most appropriate venue to resolve disputes arising out of the performance or taping of the performance.

Lastly, there is the integration clause which should state that this Agreement, the Performance agreement and the Synchronization license are the only agreements between the parties and that no agreement may be modified unless in writing by both parties.

by Anthony Berman, Esq. and Jennifer Marone, Esq.

edited by Howie Cockrill, Esq.

Comments

Thanks for all the useful information. (Web cast Agreements.) I am negotiating with a a small production studio in NYC, and the information you have provided lays out a game plan for signing agreements that will hopefully create a prosperous and healthy business relationship.

Posted by: Alan Lupiani | May 10, 2008 at 09:16 AM

Posted by: Alan Lupiani | May 10, 2008 at 09:17 AM