Documenti di Didattica
Documenti di Professioni
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eBook Edition
RIGHTS
STrATEGY
2012 13
INDEX
Preface
By Dr. Sascha Pres
To Our Readers
By Stefanie Brandt
Licensing Compact
PREFACE
By Dr. Sascha Pres, Lawyer (IP/IT/Media law), Gentz & Partner, Germany worldwide, for example by globally operating digital platform providers. But the coin for worldwide distribution of digital goods and services has two sides. Whereas such distribution broadens the commercial basis of the exploitation of the content on one hand, on the other hand the content providers face a rather complex legal framework of national provisions and regulations in each country for the licensing
Dr. Sascha Pres
and for the distribution and provision of digital goods and services to users online. Therefore the accurate acquisition of a sufficient set of intellectual property rights (IPRs) relating to the content is one of the key requirements for a commercially successful distribution of content. In this respect we currently still see - throughout the media markets -a rather wide uncertainty of the market participants (rights holders likewise licensees) in particular with respect to the scope of individual digital IPRs and the necessity to grant a license or to obtain a license for a specific type of use of the content. However, in Europe we see in this respect a first edging of light in form of the current efforts taken by the European legislative bodies. The European Commission has recently adopted a proposal for a European legislation to harmonise and ease the system of multi-territorial licensing of rights in musical works for online use. The proposed directive, which is only one of the first steps in the European Commissions Digital Agenda as launched in 2010, shall at once ensure a better functioning of collecting societies throughout the European Union and improve the access to and the offering
As of the present opportunities provided by digital information technologies, in particular by internet and mobile platforms, creative content today trespasses the borders of exploitation as they were commonly known before in the analogue world. Nowadays a creative idea or story, which aims to be successful, must be subject to a wide range of different forms of commercial exploitation. Content, which is published in a printed book, may today not only serve as a basis for the creation of audio-visual content such as feature films or TV programs, the content may at the same time be used for storytelling in computer games and be distributed as an e-book in a verbatim or enhanced application like version. Furthermore such content even functions in advertising environments to attract users to reveal their attitude or preferences in respect of specific products or services. In this regard, content is currently encountered in any forms of digital goods and services, such as ebooks, applications, digital music, videos or games, which are commonly distributed
of more music to users online. In this regard, one might stay curious about new Digital Agenda related legislative proposals, which will definitely have a major influence on the development of the media markets in the upcoming years. The articles and interviews featured in this compendium Rights & Licensing provide a deep
insight of media experts understanding of the current situation in the media markets, reflect the latest developments with respect to the licensing of various kinds of content and therefore form a comprehensive collection of licensing knowledge, which can be used as a valuable tool in the daily business.
Dear Reader, The Frankfurt Book Fair is not just the biggest marketplace for rights and licensing. With the Frankfurt Academy, it also provides a knowledge platform for the latest trends and developments.
International Rights Directors Meeting, 9 October 2012 The Rights Directors Meeting 2012 will take a fresh look at international rights markets and show you how to increase your sales by addressing not only larger rights markets, but also the smaller ones. Speakers from all over the world will present the latest developments in their local markets and share their success stories. StoryDrive Conference Frankfurt, 11 -12 October 2012 Publishers are teaming up with film producers, brands are becoming co-producers and screenwriters are emerging as creators of multi-media experience worlds. The 2-day conference will demonstrate how you can best market content and provide concrete recommendations for succeeding in the crossmedia rights business. The best of both worlds: Publishing meets merchandising, 12 October 2012 From books to t-shirts, characters to stuffed animals and vice versa. In the intensive three-hour programme Publishing meets merchandising, rights and licensing professionals from the publishing and licensing industries will discover how to successfully do business with each other. Rights Express Learn about Rights from the Experts, Wednesday, 10 October 2012 The Rights Express" is a half-day intensive training. International experts share their knowledge and expertise with beginners. The seminar will cover rights opportunities for both trade publishing and educational, academic and professional publishing. At the end of the seminar there is room for a discussion.
Did you know that as a reader of Frankfurt Academy Quarterly you are entitled to a 10% discount off Frankfurt Academy tickets? To register for the conferences please enter the promo code FAQ10BK, select the reduced price and get ready to expand your knowledge.
LICENSING COMPACT
Excerpt from Licensing Kompakt by Stefanie Brandt, published: June 2012. Gabler Verlag, Wiesbaden.
What is licensing?
Licensing is not just another trend from the USA that eventually spilled into Europe. But the precise origins of licensing, of doing business with licensed themes, cannot be traced, and to date there is very little literature about it. What we do know, however, is that as early as the Middle Ages, licenses were granted to tax collectors, who were then permitted to collect money from the faithful on behalf of the Vatican in exchange for paying licensing fees to the church. We also know that as early as the 18th century, two women of British nobility made their names available for use on cosmetics and received a share of revenue in return this is more or less how licensing works today as well. 1 The licensing market has always been greatly influenced by the USA. The US is, after all, the birthplace of the film industry and dominates that industry to this day. The US entertainment industry is also seen as a leader in the licensing business. For example, producers of the first two animated films of all time, Alices
Wonderland (1923) and Oswald The Lucky Rabbit (1927), acquired all subsidiary rights from the creator Walt Disney and awarded them to third parties in the form of licenses. 2 Even though Walt Disney only participated
in the commercial success of his characters to a small extent back then, he is now considered one of the pioneers of the licensing business. His first film Steamboat Willie (1928) featuring the now famous character
Mickey Mouse was, in fact, refinanced with revenue from royalties. Back then, Mickey Mouse appeared in
the form of a comic strip in daily newspapers, in book form, and more. And film producers were also on the lookout early on for opportunities to cover their production costs through profitable partnerships. This likely also had something to do with the fact that there was no public television in the USA. The exploitation of ancillary rights has played an important role since then sometimes even surpassing sales of the original product, such as books or film productions. Today licensing plays a big role in all sectors of the consumer goods industry and the service sector. Companies use licensed themes, celebrities or brands of others to make their products more attractive to end consumers. In the field of childrens and young adult books, in particular, almost nothing works without a license. Parents are familiar with the discussions that ensue when their kids demand SpongeBob bed sheets or only want to eat the breakfast cereal that boasts images from the hit film Spider Man on the packaging. And of course they can only eat it with the matching utensils. Its not surprising then that licensed themes that originate from (childrens) television programmes are currently among the most successful. In addition, more and more companies are deliberately building their own brands so that they can also license them to partners from other industries whether its for financial or trademark-related reasons, e.g. to expand into new target audiences or to supplement a product portfolio. And, as already mentioned, Hollywood & co. rely on licensing revenue to refinance their costly TV and film productions. But their licensing activities arent just limited to toys and memorabilia. Often its also about options that are very closely related to the original product (in this case, film), like DVDs, radio dramas and books, video on demand, video games or mobile
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cf. Battersby, Simon (2010), page 19 cf. Maltin in: Bll (1996), page 29
apps. Licensing agreements are commonly concluded for all of these applications. But even at large events that are marketed to a tee by the media, like the Olympic Games, NFL (National Football League) matches or concert events like Rock am Ring, were confronted with licensing when we reach the souvenir stand, if not earlier. And the official biographies or fan calendars of our favourite stars also qualify as licensed products as does the famous Hard Rock Caf Hotel in Las Vegas, by the way. Perhaps its surprising that there are also less obvious licensed products available commercially. Many brands and fashion labels employ licensing in a discrete way: Adidas, Benetton, Armani and Boss produce many, but not all of the products that feature their own logos. Instead they license the perfumes, sunglasses, shoes, umbrellas, travel accessories and more from their collections to other companies and neither manufacture nor distribute these products themselves. Its a similar story with the major international toy manufacturers. Of course Mattel doesnt manufacture a product like a Barbie piano itself! And other well-known toy manufacturers, like Hasbro, LEGO, Playmobil, Bandai & co. also award licenses to manufacturers in other product categories where they themselves are not active. They even have their own licensing departments and/or work together with external licensing agencies. Its no surprise that the North American licensing market is by far the largest in the world (Figure 1). But in the European markets like Great Britain, France, Germany and Italy, licensing has also become an indispensable part of the consumer goods industry. In short, licensing is anything but another new marketing tool purportedly for a few (specialised) industries, like the toy or clothing industry, and certainly not just a trend that now has reached Europe. Rather, licensing has long been used around the world professionally for nearly all consumer products and services to boost sales for licensors, licensees and the retail market as a whole.
Licensing basics
Licensing There is no universally accepted definition for the term licensing to be found in literature. This may be because, in practice, the terms licensing and merchandising are usually used interchangeably. Merchandising is regarded as the umbrella term for all promotional activities within the marketing mix that create or boost sales. 7 This also includes products furnished with a brand and/or the design of a licensed theme that are given away for promotional purposes rather than sold, as well as products produced by the licensor for this purpose and sold individually or in a package along with its product, 8 e.g. a beer glass that you receive with the purchase of a case of beer. Also included are displays, special placement, promotions and similar activities that are primarily evident in the retail market. Licensing also serves to promote sales
cf. Tomczak/Reineke in: Meffert/Burmann/Kirchgeorg (2008), page 18 cf. Meffert/Burmann/Kirchgeorg (2008), page 18 ff. 5 cf. Meffert/Burmann/Kirchgeorg (2008), page 22 ff. and cf. Bll (1996), page 150 ff. 6 cf. Schfer (2003), page 15 7 cf. Pepels (2002), page 533 8 cf. Lucci (2010), page 17
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and is viewed as one aspect of merchandising in the overall context of a companys sales promotion activities. 9 Furthermore, definitions of the term licensing also differ from each other generally based on the perspectives of different disciplines. For example, there are distinctions between the way the term is defined in standard dictionaries and how it is defined from a business management, legal or communications perspective. In short, we can define the term licensing as follows: Licensing is the right of the licensor to commercially exploit the subject of a license by manufacturing and selling any goods and services that relate to or could be linked to the licensed theme. It is specifically the right to identify goods and services with the licensed theme and to promote them as such. Branding can be expressed in the form of symbols, words, characters, design, names or a combination of these elements. This makes it possible for the licensee to design its products in a way that identifies and distinguishes them. The subject of the license (licensed theme) is acquired by a licensee, which generally provides monetary compensation to the licensor in return. In a legal sense, licensing results from the exclusive right of the copyright holder to exploit and market his or her work in all its components. If he grants this right to a third party, its called a license. In some cases, e.g. in publishers agreements, one licenses a work in conjunction with goods and services that are not directly related to the primary work under the term ancillary rights. 10 From the perspective of the licensor, licensing is a way to increase or maintain its market position, and, of course, to increase revenue. By acquiring a licensed theme, the licensee, in contrast, implements a marketing effort that is often less expensive than it would have been to create its own brand from scratch because it focuses on a theme in which the licensor has already invested and generally will continue to invest. 11
Licensed theme
To permit use of a licensed theme for goods and services, a licensor or an authorised (licensing) agency transfers individual rights of usage to a licensed theme to a licensee. The licensor, however, remains the owner of the licensed theme. The licensed theme is the core of the licensing business. Theres no clear definition of how or what something must be in order to be considered a licensed theme. Above all, a potential theme must have some relevance for end users since it would otherwise lead to poor sales. A licensed theme can be a brand, a person, a film, a TV series, a book, an event or even an individual character, to name a few examples. The licensed theme is often also referred to as (intellectual) property (IP). In practice, the terms licensed theme, license and brand are often used interchangeably. This is technically not completely accurate, especially since acquiring trademark rights is subject to certain conditions.
cf. zu Salm in: Bll (2001), page 128 cf. Pepels (2002), page 459, cf. Pepels (2002), page 459, cf. Saldsieder (2008), page 26 and cf. Bll (2001), page 22 11 cf. Brooke/Skilbeck (1994), page 47
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Each theme is based on something created by a person or a company that is protected by copyright, trademark, title copyright, design patent, utility patent or other right. Under special legal protection, they retain a right of exclusivity, i.e. the sole right to exploit this creation. Licensed themes are used to influence the demands of the end user and to increase sales. The financial value of a licensed theme is determined based on its name recognition, image and popularity within the target audience. 12 Theres also the positioning or identity or personality of a licensed theme. The positioning is a kind of target image that the licensor tries to deploy in all of its communication activities, including the design and the licensed products distribution channels, in order to shape its character and to rise above the competition in the process. 13
The positioning should be credible and not too artificial to allow the end user to build trust and esteem for the license, which, in turn, increases the value of the license. 14 Ideally a license will be equipped with socalled added value, an added benefit that especially sets it apart from comparable themes and products in the eyes of consumers and leads them to purchase your product. 15 The clearer the positioning of a licensed theme and the more coherent and consistent the message sent out across various communication channels, the greater the chances are for success in the market. Its difficult to design a license on the drawing board, since many unforeseeable variables come into play, e.g. sudden trends or changing consumer preferences. Changes in general economic conditions or the prevailing mood of the population can influence the popularity of a particular licensed theme. Since a licensed theme has a certain personality, it has the ability to stir up emotions among consumers. The greater the (positive) emotional power 16 of a licensed theme, the more valuable it is for the licensor, as well as for the licensee using it.
Licensor
The licensor, also known as the right holder, is the owner of a licensed theme. He or she owns all legally traceable rights to the licensed property and is therefore entitled to either commission a (licensing) agency to exploit usage rights to a licensed theme or to sell individual rights to said licensed theme. Of course the licensor may also sell all rights to his or her licensed theme.
cf. Zatloukal (2002), pages 22-23 cf. Engh (Bcher, 2006), page 74 and cf. Meffert/Burmann in: Meffert/Burmann/Kirchgeorg (2008), page 361 14 cf. Schindler (2008), page 12 15 cf. Meffert/Burmann/Koers (ed.) (2005), page 9 16 cf. Schindler (2008), page 21
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The authorship of a licensed theme, on the other hand, cannot be sold. This remains with the creator of the licensed theme, the copyright holder. However, author and licensor do not by any means necessarily have to be a person or a company. The author may have granted the licensor the right to sell his or her work. Frequently licensors will commission a licensing agency to negotiate or even sign licensing agreements on their behalf. In this case, a so-called agency agreement will be concluded between the licensor and agency. This defines the scope of the rights the agency will assume on behalf of the licensor. The agency negotiates licensing agreements with licensees according to the terms of the agency contract. However, these contracts will sometimes be signed by the licensing agency on behalf of the licensor. There are also licensing agreements that are negotiated by the agency but signed by the licensor.
Licensee
The licensee acquires usage rights to a licensed theme directly from a licensor or a licensing agency in order to be able to apply them (commercially) to goods and services. The products (or services) that result from the use of a licensed theme are designated licensed products. The licensing agreement stipulates the basic permission to apply the licensed theme to the licensed product. After acquiring a license, the licensee actively interacts with three target groups: the trade, the end user, who is expected to buy the licensed product in the end, and thirdly, with the press, mass media and other opinion leaders through its communication activities. 18
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Of course the licensee can also deliver its products directly to end users for example, through its own online shop or company-owned stores. Selling direct also involves physical delivery of goods and qualifies as distribution.
Forms of licensing
There are actually just three basic forms of licensing. However, hybrid forms and/or forms that blur the boundaries among these three types do occur: 20 . Traditional product license The licensee develops a new licensed product that reflects the characteristics of the licensed theme in terms of product and package design and, in certain cases, even in terms of product function. Sometimes just the name of the licensed theme or celebrity is used, and few or even no distinctive design elements implemented. Examples: Winnie the Pooh bed sheets, Twilight puzzle, Harry Potter calendar.
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Source: own model cf. Schfer (2003), pages 31-32 and cf. Bll (1996), pages 289-293
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. Tie-in
In this case, usually a brand manufacturer and a licensed theme work together. The latter is primarily used to promote the branded product and the product itself is modified only slightly or not at all (e.g. on the packaging) as part of the collaboration. Branded premiums may also be tied in with a licensed theme. Such tie-ins are usually limited to a certain (short) time period. Examples: Shrek 2 audio dramas as a bonus product in Ariel detergent packs, McDonalds Happy Meal promotion of Nintendogs, UNICEF fundraiser on Pampers nappies. . Testimonial This form of licensing is often used in advertising. A celebrity or a well-known figure acts as a messenger for a product or a company. This messenger serves to credibly convey the positive features of the product he or she is promoting. The testimonial is used in promotional materials, as well as at public appearances for the product. Example: Michael Jackson as testimonial for Pepsi, Age Age 4 campaign with the car manufacturer Peugeot.
In licensing, distinctions are traditionally made along the lines of the product categories from which the respective licensed products originate, as listed above (Figure 4) also internationally. The transition from one category to another is fluid. In certain circumstances, products can be assigned to multiple categories. There is also a distinction to be made between product licenses and commercial licenses. Product license refers to licensed products that are designed based on the licensed theme (including promotional materials and packaging), while commercial licenses only permit the use of a licensed theme for promotional purposes, e.g. in the form of commercials, ads, giveaways, POS material and PR activities. 21 For product licenses, licensees generally pay royalties based on sales, usually in conjunction with a guaranteed advance. For commercial licenses and collaborations with premiums, on the other hand, the licensee generally pays a one-time flat fee.
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The author
Stefanie Brandt is a publishing executive with a degree in bookselling. After stints as a product manager at a licensing agency and a licensing account manager for a leading fast food company, she founded her own agency BRANDTSATZ (www.brandtsatz.de) in 2008, which specialises in licensing and cross marketing. She published her book Marketinghandbuch Licensing (Marketing Handbook Licensing) in 2011. Licensing kompakt (Licensing Compact) was published in June 2012. Spinger Gabler is the publisher of both titles.
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Bibliography
BATTERSBY, G.J./SIMON, D. (2010), Basics of Licensing How to Extend Brand or Entertainment Properties for Profit, Norwalk. BLL, K. (2001), Handbuch Licensing, Frankfurt am Main. BLL, K. (1996), Merchandising Die neue Dimension der Verflechtung zwischen Medien und Industrie, Munich. BLL, K. (1999), Merchandising und Licensing Grundlagen, Beispiele, Management, Munich. BROOKE, M.Z./SKILBECK, J.M. (1994), Licensing The International Sale of Patents and Technical Knowhow, Brookfield. ENGH, M. (2006), Popstars als Marke Identittsorientiertes Markenmanagement fr die musik-industrielle Knstlerentwicklung und -vermarktung, Wiesbaden.
KAZACHOK INTERNATIONAL LICENSING MAG (2009), Der Lizenzmarkt in Deutschland (Issue October-December 2009), Issy des Moulineaux.
LICENSE! GLOBAL (2011), Top 125 Global Licensors (Issue: May 2011), Woodland Hills. LUCCI, PAOLO (2010), Brand Jam Brand Extension e Licensing. Moltiplicare i valori di marca facendo und sacco di soldi, Milan MEFFERT, H./BURMANN, C./KIRCHGEORG, M. (2008), Marketing Grundlagen marktorientierter Unternehmensfhrung, Wiesbaden. MEFFERT, H./BURMANN, C./KOERS, M. (2005), Markenmanagement Identittsorientierte Markenfhrung und praktische Umsetzung, Wiesbaden. PEPELS, W. (2002), Marketing-Lexikon, Munich.
SALDSIEDER, K.A. (2008) Erfolgsfaktoren des Licensing in der Spielwarenindustrie, Munich. SCHFER, T. (2003), Licensing und Merchandising, Dsseldorf. SCHINDLER, N. (2008), Die Rolle der Markenpersnlichkeit fr die kommunikative Fhrung einer
Marke Eine Analyse aus systemanalytischer Perspektive, Wiesbaden. TLL THE LICENSING LETTER (2009), Emerging Territories Grow in 2008, But Worldwide Retail Sales Down: in TLL The Licensing Newsletter (Vol. XXXIII, No. 5 - March 2009), New York.
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NEw YOrK NEw DELHI CaSaBLanca SO PaULO BEIJInG BUEnOS AIrES FranKfUrT AcadEMy
With its range of conferences, workshops, and seminars, the Frankfurt Academy offers guidance for the media and publishing industries worldwide.
From 10 14 October 2012, the Frankfurt Book Fair will be the meeting place for the industries leading minds. See you in Frankfurt! Publishers Launch Frankfurt (8 October 2012) Tools of Change for Publishing TOC Frankfurt (9 October 2012) International Rights Directors Meeting RDM (9 October 2012) Innovative Teaching and Learning Conference (10 October 2012) StoryDrive Conference (11 & 12 October 2012) Frankfurt Academy Professional Programme (10 13 October 2012) Reserve your space today: www.frankfurt-academy.org
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relate to emotionally: protect your offspring. And this story happens in different places and venues.
While some companies talk about their customers, for the game developer Rovio Entertainment they are fans. The mission statement of Rovio, as Paul Chen pointed out in his presentation at the StoryDrive China conference which was held on May 29th and 30th, 2012 in Beijing, is Delighting our fans!. Rovio was founded in 2003 by three young Finnish guys. Until 2009 they had developed 51 games but all for other people and none of them really took off. In 2009 the company was close to being shut down, when the first version of Angry Birds was released on iTunes on Dec 11th. By February 2010 it became number one on the iTunes charts in the UK and the US. Since then, Rovio has released three more versions; the last one, Angry Birds Space, as recently as March 22nd, 2012. While the classic version took 167 days to hit the 10 million download mark, the latest one took only three. Today, there are 25 million active users daily. While the games are free, there is advertisement Other innovative partnerships include NASA. The space agency helped with the development of Angry Birds in Space. And even the TV cartoon In order to raise brand awareness, Rovio partners with all kinds of other companies, among them airlines and retailers. For the third version of the game, it entered a partnership with the US film studio 20th Century Fox and developed a story around a film which was obviously about birds. The film titled Rio was set in Rio de Janeiro, and the delivery of the new game and a short animation film one month before the feature films release turned out to be strong marketing for it. While at the beginning of the Angry Birds story the focus was on the game, today it is more on the story and character development. We engage very much with our fans, we are active in getting quick feedback through social networks and so on, and we also mix animation styles New characters are introduced through short animation films.
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series Simpsons featured Angry Birds in a recent episode. Since China is the second biggest market for Rovio with 120 million downloads, it is not surprising that Rovio also started integrating elements from Chinese culture into the game, in order to delight its Chinese fans. So in 2011 there was a moon festival version and, as Chen pointed out, through this story, tens of thousands of people outside China heard for the first time about this
important Chinese holiday. In 2012, Rovio followed up with a version that celebrated the Chinese year of the dragon, and introduced a new character the mighty dragon itself. Of course, revenues from advertisements are only one part of the story. According to Paul Chen, to date 30 % of company revenues come from merchandising and franchising and Rovio aims to raise this percentage to 50%.
Angry Birds is not only one of the most played online game in the world; its also a licensed brand that can now be seen in airlines, theme parks, books, films and even on candy. Licensed products are playing an increasingly important role for publishers today. Watch Paul Chen, General Manager at Rovio Entertainment Ltd., China
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the subsequent negotiations between Odyssey and Random House. There are varying views on this issue, but most publishers would argue that the separate placing of e-book rights to an e-book publisher would constitute direct competition to the print version and in many cases would contravene a noncompetition clause in the author contract. The next question and this is a matter of company policy is how you intend to treat the supply of ebooks as sales of verbatim, or perhaps enhanced content to customers via different channels, or as licensed editions? The majority of larger companies with an e-book policy in place are treating them as sales, and as a result, in many cases the pricing, discount and author royalty policies may not be the responsibility of the rights department. There has of course been considerable press publicity in recent months about the so-called agency model for the supply of e-books to Amazon and Apple, a move by publishers to set e-book prices themselves rather than allow the electronic retailers to set prices at levels that were felt to be too low and resulting in cannibalisation of hardback print sales this had led to some major US trade houses delaying the publication of e-book versions. There has also been much debate, particularly in the United States and the United Kingdom, on the share of e-book revenue to authors, with agents and the UK Society of Authors pressing for an author share of 50% or more of ebook revenue. Obviously there is a need to cover in any author contract a clear provision for royalties on e-book sales and a share of any sublicensing revenue if those rights have also been included.
Munro and Philip Pullmans The Good Man Jesus and the Scoundrel Christ (both from Scottish publisher Canongate), an educational app from Penguin based on Eric Hills Spot the Dog books, Spot Goes to School, and an app based on Hugh Johnsons Pocket Wine Guide from Mitchell Beazley there are many more. Here the publisher normally works to produce the app with a software developer; Apple retains 30% of the price of the app with the balance passed to publisher/developer and a royalty paid to the original author on app sales. When then do e-book rights fall within the remit of the rights department? They may be responsible for broader forms of electronic licensing for example, a book may form the basis for a dedicated electronic product, as with some reference books such as dictionaries or phrase books. Dictionaries may also be licensed to form the basis of spell-checking elements in a word-processing package, or, for example, the latest model Kindle provides access to 250,000 definitions from the Oxford English Dictionary. E-book rights are increasingly being requested as part of more traditional licensing agreements for example, UK and US publishers licensing to each other, or foreign language publishers seeking translation rights in print form and requesting that e-book rights be included as well. Obviously these rights cannot be included unless the licensor publisher or agent has been authorised to handle them under the head contract with the author. In markets that are well advanced with electronic
I would mention here the new and exciting opportunities for enhanced e-books, usually available in the form of apps for smartphones and the iPad. Some of you may have seen the hugely creative version of Alice in Wonderland for the iPad, and there has also been much publicity for enhanced versions of rock star Nick Caves The Death of Bunny
publishing, the would-be licensee may already have an established e-book program in place and the key questions that arise will include that of territoriality can the licensee ensure that his e-book edition will not infringe on the exclusive territories to be retained by the licensor? Another question will be that of the pricing policy of the licensee if the price
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of the licensees e-book is likely to be substantially lower than that of the licensed print edition, the licensor may wish to consider setting a substantially higher royalty rate for e-book sales on the grounds that the author should be entitled to receive a similar level of return as for the print edition. There should be a clear definition of the e-book rights that are being granted (for example, verbatim only or enhanced as well?) and the channels of supply. A more recent development has been the increasing number of requests for e-book rights to be included along with print rights as part of a translation license. Some licensees may have an e-book program in place, but in many cases they are only beginning to think through their e-book strategy. In such cases it would be most unwise to include ebook rights they can always be added at a later date when the licensee has satisfactory mechanisms in place. Any such applications need to be subjected to quite rigorous questioning on matters including pricing, supply channels, what end-users are permitted to do with the e-books and security measures. It should of course be remembered that (by contrast with same-language licensing) such licensees have an additional royalty commitment to the translator. So what then are the key questions rights holders should ask of any would-be e-book licensee?
third-party retailers? . Will e-books be supplied to desktops, laptops, dedicated e-book readers, mobile phones, etc? . Is there any proposed enhancement for verbatim ebooks (e.g. text to speech facility)? . Details of any proposed enhanced e-books (e.g. addition of audio, video material)? . What is the end purchaser permitted to do access, view, download, store, bookmark, annotate, print? Access on more than one device? Would this vary if supply were to be via third- party retailers? . Will the files be DRM-protected? . How will the licensee ensure any necessary market restrictions (e.g. credit card location)? . What payment model is the would-be licensee proposing to the rights holder? Only if these questions can be satisfactorily answered should rights holders consider including e-book rights as part of the license. There are also understandable concerns from authors, agents and publishers about the increased possibility of piracy in the digital environment, particularly in vulnerable markets, although with the extensive scanning of print editions on torrent sites, one might argue that the risk remains comparable with that of print editions. This is a fast-moving area with a high public profile
. Is there an established verbatim e-book program already in place? . Does the licensee have facilities to supply customers directly from its own e-book platform or would it use third-party e-book retailers, or both? . What is the e-book pricing model (e.g. will it be significantly lower than that of the print edition)? . What are the proposed pricing arrangements via
and it is of course difficult to provide hard and fast guidelines. I am acutely conscious that in keeping with anti-trust requirements, I have generally steered well clear from quoting specific royalty rates and shares of revenue to authors. Doubtless norms or at least bands of norms will start to emerge as electronic publishing proceeds at its current pace.
This article was originally published in Off the Page! New Ways to Sell New Rights. 24th International Rights Directors Meeting. Frankfurt Book Fair, 2010.
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Creating an app
Creating an app requires all sorts of personnel, which would include engineers, writers, graphic artists, interactive and interface designers, sound engineers, etc. Therefore, hiring a developer is necessary, as most publishers are not set up for this. If you use a developer, he could take care of organizing all this, but you would still be paying for the costs so you have to be pretty sure that you are going to earn back your investment at whatever selling price you plan to use. In a recent article on apps in Publishers Weekly, it was pointed out that Walt Disneys success in animated films (another e-adaptation), such as Cinderella, Sleeping
Beauty, etc., was in large part due to the fact that all the underlying material was in the public domain! No
rights problems. He was therefore free to create products that he would own outright. Owning all the rights enabled him to create merchandise (dolls, toys, games, lunchboxes, etc.) based on the films. So, when you are considering creating an app or licensing one, the first thing you have to do is check your contract and make sure that you read the fine print! Some contracts specifically exclude certain electronic adaptations and grant others, and some can even be shared by both author and publisher.
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In order to understand what was necessary, I asked to speak with the developer myself to see what it was she would need for the adaptation into the foreign language and what would be involved. She, of course, expected to be paid for the adaptation, which would involve some reformatting since the translated text would be longer than our English one, providing the foreign publisher with the navigational buttons, etc. Because this was the beginning of our voyage in these digital waters, we did not ask for any money toward the development costs, as it looked as though we were going to cover our costs with the sales of the app which we have since done by more than double the development costs. And the licensing publisher would have to pay the developer for changes they would need for their version of the app. The developer was very cooperative. We arranged for the foreign publishers to deal directly with the developer, supplying her with the translation and paying her directly for the adaptation. She also gave them instructions on how to set it up in the Apple Store in Germany and France so that they would receive the income from the German and French apps. We agreed that we would share the income from those foreign apps and that the income in this particular case would be applied against the advance paid on the book. Apparently this sort of arrangement setting up the translation for an app separately and not from the originator of the app is not the norm. For example, if you had an international company, they might elect to set up all apps at the Apple Store and then divide up the money and pay back their international partners. We, however, felt the accounting would be complicated, but with certain books and apps, I could see where that might be preferable particularly if you had a brand involved such as Harry Potter. I understand that the author is selling e-books and apps in all languages from her Pottermore website but Ive read that she is also sharing some of that income with her publishers.
Bro 2 Go, which is what we called the app, went on sale in 2009 and has sold some 20,500 copies currently
selling between 60 and 90 copies per week at $2.99. The German edition went on sale in October 2010 and has since sold some 18,300 copies, selling at about 2,000 copies a month at 0.79. The German edition is certainly doing much better I dont know if this is because the guys in Germany need more help or because of the lower selling price! You can figure out the revenues, as these apps are sold in the Apple Store on a 70/30 basis same as music in the publishers favor. Theyve earned out their development costs, which were about a third of ours. It was a success for Riva, the German house, which also published the print edition and got it to the number one position on Amazon Germany, with the second book in the series The Playbook, coming in at number two! We recently had a case where we were approached by someone who wanted to license an illustrated popular science book for an app, which he was planning on pricing fairly high only a dollar or two off from our ebook. While we had the rights to do so, we decided in the end that it would not be worth it. We would make more money by selling our e-book than we would by splitting the revenue with the creator of the app.
Enhanced e-books
The same principles would apply to enhanced e-books another e-adaptation. At S&S, we have issued several, although there does not seem to be a big demand for them. We are still trying to figure out if there is a feasible market for these books. Again, you would have to be sure you have the e-adaptation rights. If you
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dont, the author may wish to agree to such adaptations, but then you would have to own all the digital rights to the enhanced material. We published a book on 9/11 that contained news footage that we were able to obtain from our CBS colleagues. As you may know, Simon & Schuster is part of the CBS Corporation. Otherwise, there would have been more fees involved. There is also the work and time of the in-house staff to consider. This has to be taken into account when you are thinking about these adaptations. The most we have sold of any enhanced e-book is 2500 copies! At present, we are looking at small numbers but bear in mind, I am speaking about general trade adult books. I would think childrens books might better lend themselves to this format. It was recently announced that Penguin had created an enhanced e-book of the 1957 classic
On the Road by Jack Kerouac with all sorts of additional material, including recordings of the author reading
early drafts of the book, photos, etc. Apparently the family of the author had given approval for the inclusion of the material, so here again you would not have a rights problem. I heard bits of those recordings on the radio and it was fascinating to be brought back in time by Kerouacs voice.
Games
Games are the number one bestseller in the App Store. We had a good deal of success with a crossword puzzle app. It was only visible on the site for a few weeks before it was superseded, but we are now planning an upgraded version! I suppose it is fitting that we should be successful with a crossword puzzle app, since the first book published by Mr. Simon and Mr. Schuster back in 1924 was a crossword puzzle book that sold for $1.35 not very far off from the price of an app today! What would they have thought of this digital era? I think they would have embraced it, albeit cautiously, just as they embraced the mass market book during the years of World War II, when such books were printed to fit into the pockets of military uniforms and sold for 25 cents a copy! Hence, the creation of the mass market imprint Pocket Books, which still exists today. Some people felt that the mass market paperback was the beginning of the end of literature! We have seen the results that was not the case. The hardcover did not disappear! It created a wider market for literature for those who might not have been able to afford the hardcover. Now, however, the fate of the mass market paperback is a bit up in the air, as the price of the e-book version is now very much in competition with the mass market edition.
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over 425,000 apps in the store and unless you know the exact title of the app, it will certainly take you a while to navigate through them all.
This article was originally published in Expanding Markets: Rights in Brazil. Apps to the World. 25th International Rights Directors Meeting. Frankfurt Book Fair, 2011.
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Customized Prices
Our home market is Scandinavia. That is to say, it is a very small market with 3 to 10 million inhabitants in each country who own approx. 1 to 1.5 million iOS devices and an equal number of Android devices. In other words, it will cost you the same to produce a book, an audio book or an app for this small market as for the big markets say, Germany. This is an important premise for rights managers to understand.
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Whenever you try to sell digital rights e-books, audio books, web-solutions or apps the price has to be adjusted to the size of the market. If not, it is cheaper to go looking for something else. In other words an app is worth only as much as its potential revenue like every book.
Ecosystem
Furthermore, there are some structural problems concerning apps. How can you make your app visible in the narrow sales channels of the app store with more than 650,000 apps now available? How can you sell apps at a reasonable price that covers your development costs when these apps are surrounded by fancy apps that cost 0.99 cents? The short answer is you cant. E-books, on the other hand, have their own ecosystem: Amazon, iBooks and thousands of bookstores that display your book among other books with local prices. An e-book priced at 18 euros is inexpensive in Denmark; whereas a fancy childrens app priced at 4 euros is expensive in the Danish app store.
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New Strategy
Our revised strategy is to license our content to developers who are more than welcome to shape our content in any way they want. L&R is the second largest publisher in Denmark and we offer a wide range of books. However, no app developers have shown an interest so far. They dont believe in the product.or perhaps they can earn more money creating apps for banks and supermarkets. This fact tells us that revenue for book apps is small in the local app business. It also tells us that apps should be aimed at big markets this is probably the only way to make real money with them. Therefore, publishers in small countries or smaller publishers should try to sell their content either to specialized app publishers or ordinary app developers. If they dont believe in the product neither should you. L&R still wants to be a part of the app game and to collect more data about the app market, because the company plays a role in the digital publishing business. Therefore, we are building partnerships with other publishers like the pro-active Oetinger Verlag in Germany. We are localizing their apps and trying to release them in Denmark. We are very excited about this partnership because it embodies all the perspectives mentioned above: low-cost, but high-end apps for a small market with minimum of risk for us. And thus we are still in the market and can collect valuable data about the level of quality and quantity of the book app market. And the next time we develop an app, we can ask a number of publishers to join us and buy a license, thus co-financing the application and lowering the risk and the costs.
Answers
I would like to try to answer some of the questions posed in the program for this event: Developing and successfully selling mobile applications benefits from international cooperation, as apps can be costly and need to be marketed widely to defray costs. What has worked? Can you make money on apps? Are apps just hype? We dont know yet, but we do know that there are no alternatives for publishers in small markets or small publishers, other than to license either the application software, license their content or license and localize the entire book application. Smartphones and tablets will dominate the digital book market and built-in reader applications on these devices will get more and more advanced. We think the e-book is the best, most flexible and most costefficient way to enter the digital book market. Apps are for bestsellers only the advanced and inexpensive e-book is for the mass market. This brings us to another essential question from the program: Which digital platforms exist and should we include digital rights in our license arrangements? From a publishers perspective, you should include all digital rights in your license arrangements. Most digital departments have a very small staff and no time to negotiate and buy specific digital rights. Even the standard five-year term of book contracts causes big problems. How will you manage the rights of thousands of titles as e-books a few years down the road? It is not possible agents come and go. Publishing houses come and go. How do you want your publisher to build the long tail in digital business with five-year
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contracts? The term of the license has to be longer in the future at least for backlist titles. Furthermore, the e-book has an eternal life and it is essential for us as publishers to be able to trade digital rights independently from physical rights in the future at least as long as print-on-demand technology is as immature as it is today. A digital license should cover all digital editions as long as they dont alter the original work. Less paperwork equals a better margin. This is a byline but if agents and publishers dont start to structure digital licenses (audio books, e-books and apps), I fear that publishers and agents will end up neglecting the authors rights. Or the value of translated literature will decrease because managing rights will become too expensive.
Conclusion
To conclude, our experiences with apps have changed our focus from developing to licensing since the risk is too high and the revenue too low at this point. You have to see this conclusion in light of all those small digital departments working their butts off to make money on digital book products like audio books, ebooks and now also apps. We hope the licensing model will enable us to have a presence on the digital platform, keep us up to date with technological developments and collect valuable data for further development of digital content. It is important to stay on the launching pad. We invest time and money in the enhanced e-book, but keep an eye on the app book as well. Thus, our final conclusion is: A digital publisher must stay flexible and constantly reevaluate its digital publishing strategy. We hope the licensing model is the answer for today and tomorrow and after that we might have to find a new strategy.
This article was originally published in Expanding Markets: Rights in Brazil. Apps to the World. 25th International Rights Directors Meeting. Frankfurt Book Fair, 2011.
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Interview with James Kay, partner in Sheridans Solicitorss (UK) film and TV department
James Kay is a partner in Sheridans Solicitors (UK) film and TV department. His practice centers around the monetization of intellectual property rights with particular focus on the production, financing and distribution of feature films and television programs. His clients include Oscar winning producers, private equity houses, tax advantaged investors, government institutions and talent. On May 29th he gave the keynote speech at Story Drive China, the first all-media platform in Asia exploring new forms of collaboration and business models across media boundaries.
transmedia: TV, music, publishing, film, consumer products, gaming, gambling, live shows, online content, telephony, home entertainment, format sales, tape sales, etc. Any of these elements or any expression of an idea in a transmedia campaign creates intellectual property rights. These rights are the energy used to make money. In general you can distinguish two kinds of
James Kay holding key note speech @ StoryDrive China, Photo: Lao Du
transmedia campaigns; the so called reverse engineered transmedia campaign, where you already have a successful creative product like a film and build the campaign around it afterwards, or an organic campaign where you start out with an idea and build it up as transmedia campaign right from the start.
Q: Your keynote was entitled From value chain to value world: New dimensions of media exploitation. What are the new developments you are watching in the media field?
Transmedia or spreadable media have become extremely popular. As to the concept of transmedia I would like to refer to the definition of Henry Jenkins: the art of storytelling across multiple platforms where each element makes a distinctive contribution to consumers understanding of the world of the story in question. In my presentation, I have specified the different elements which all together make up The idea of the mothership can be understood as a place where all the different types of content exist together; it is the whole which keeps all the elements mentioned above together. The idea
Q: In reference to transmedia you also quoted the idea of the mothership could you elaborate on what this concept means?
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with transmedia is that there are lots of different types of creative content. It is not just the film, but the whole world which is created around it and will be exploited.
Q: In your position you advise not only the investors and producers, but also the creators; authors for example. How important is the protection of intellectual property rights in its current state for the media industry?
Q: You introduced four (potential) models of monetisation in a transmedia campaign, which are these?
They are the uplift model, the locked box model, the local percentage model and the fee model. In the uplift model producers of a film will take some percentage of the increased sales of a book after the film comes out; this is a kind of crossover of revenues. This is a rather simple and common model in the non-transmedia model. In the locked box all the revenues from exploitation of the transmedia campaign end up in a locked box and people share the revenues of the pieces of content in whatever way they agree on. The key here is that you have to develop a good system to reward the various creative contributions not only in terms of the monetary profit which is generated but also in terms of lets say brand value or reputation. In the local percentage model each of the local transmedia elements are essentially a profit center of their own. The provider of services for that local item is rewarded by a percentage of the revenues from that item and the balance is given to the originator of the transmedia campaign. In the fee based model the provider of any creative element of the transmedia campaign simply receives a fee and does not share in the revenues of the whole. The uplift model and the fee-based model are fairly common now, but the locked box model could gain some ground in the future. In any campaign, it might be suitable to use more than one of these models according to the specific situation. No, digital copyrights can also be protected. But if you talk about piracy, I think the key to combating piracy is first of all accessibility. People must be able to access the content, if they resort to piracy it is either because they cannot get the content or If you look at it from the side of the investor, people are not going to invest in content, a film or a TV production, because something is culturally desirable or valuable, that is why in Canada or France there is so much state support for the arts. The real way to attract investment is to create positive financial opportunities. In the UK and I think also in Germany there are tax advantages and tax incentives to invest in content like for example film and television productions. This is how investment is attracted. It is absolutely critical, because the only way to make money is by owning the right to something. If you own a right it makes it exclusive, it makes it valuable and usable. Only if you have a right you can turn an idea into money. If you do not own it, anybody can use your content.
Q: Could an adjustment of any kind in the field of intellectual property rights turn into a creative and financial boost for our society?
Q: Are you seeing new challenges in the protection of intellectual property rights through digitalization and the fact that digital content can so easily be spread via the internet?
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because they have to pay too much. China is a good example, since the cost to see a film at the box office here is roughly the same as in the UK, about 10 Pounds; so in proportion that is extremely expensive. If it cost only 1 or 2 pounds in China, common wisdom has it that there would be no piracy.
Q: Can you imagine the media world without the basis of copyright?
No. That would be disastrous.
I dont think all lawyers are important, but lawyers who understand the business are. Because at that point they are more than just lawyers, they provide business advice in a much broader sense.
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Interview with Dr. Christian Sprang, Head of Legal Department, German Publishers and Booksellers Association
By Lorenzo Perracino, Reporter, Tech Economy Lorenzo Perracino talks to Dr. Christian Sprang about legal actions against piracy and the need to support creativity in times of increasing digital possibilities.
Q: The book-download portals Library.nu and cyberlocker ifile voluntarily called it a day after a coalition of book publishers managed to get an injunction against the two sites. The sites offered users access to 400,000 e-books and made more than $11 million in revenue in the process. The action against the two sites was the result of a coordination involving several international associations. Can you tell us briefly how it was possible to organize the operation with other partners?
Q: How large is the estimated loss for the publishing market percentage thinks the phenomenon of online piracy has a negative effect on the publishing market?
On the basis of a number of scientific studies, we know that online Piracy is detrimental to the creative sector. It is difficult to name exact figures, but in their study of March 2010 Building a Digital Economy: The Importance of Saving Jobs in the EUs Creative Industries, TERA Consultants established that the entire German creative sector lost 1.2 billion Euros in 2008 to Piracy. Evidence shows that these losses resulted in a loss of 34,000 jobs that year. eBook piracy was then a new phenomenon, and it has meanwhile increased tremendously due to the rise in sales of eBook readers. The book sector will subsequently be faced with an enormous loss of jobs and diversity in publishing if Piracy cannot be stopped.
The activities of the library.nu site affected authors and other rights-holders in many different countries, and illegal content was available worldwide. Therefore, it made sense to work together with individual rights-holders as well as rights-holder associations from a number of countries. The International Publishers Association IPA has members from all over the world and was thus successfully able to co-ordinate activities of a number of its members in this matter.
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Q: A recent analysis by the University of Minnesota has greatly reduced the impact of piracy on the movie studios lost profits, suggesting to fight this phenomenon with better distribution strategies rather than legal action. Do you think that even in the publishing market it is necessary to make improvements and find new channels to encourage the public to purchase, thus discouraging actions of illegal downloading?
Q: Supporters of free file sharing on the Web consider that the internet fosters creativity, encourages the dissemination of culture, while also offering occasions for new writers to emerge, otherwise unable to publish through traditional channels. What do you think about this?
We would agree that the Internet offers a forum for creativity as well as for the dissemination of culture. Of course it also offers opportunities for writers who may be unable or unwilling to give their works to a publisher. But we do not understand how illegal file sharing or other forms of Piracy can promote these aims. The fundamental value of copyright is the choice that it gives to the author: Any author may choose to publish his or her works for free, whether online or offline. Equally, an author may choose to ask for remuneration for the use of his or her work and use a publisher to try to monetise the content. Illegal file sharing does not respect that choice. Content is simply exploited (for large profits from advertising, etc.) by people who have not received permission from the author to do so and dont pay him or her any royalties. This does not foster creativity, or offer authors opportunities on the contrary, it disregards authors choices and takes away any financial incentive for future creativity.
We are not familiar with the paper from Minnesota that you mention. However, there is strong scientific evidence that indicates that illegal availability of copyrighted content on Internet does indeed have a negative effect on authors and rights-holders incomes. It is also clear that some of the figures that have been published to indicate the opposite are seriously flawed. At the same time, it is always in the interest of publishers to make their content attractive to readers and to offer improved products as well as business models that are innovative and exciting for their customers. We are convinced that attractive offers of interesting legal content are an essential part of the fight against online Piracy. After all, enabling access to works to as many readers as possible is what publishing is all about. This is what publishers want to spend their time, imagination and energy doing. But we do recognise that legal action against some largescale infringers is also essential as part of our strategy. Innovative attractive products require significant investment, and that will only be sustainable if previous investments have a chance to be rewarded. Even the best legal offers will be difficult to establish successfully if illegal business models continue to give away eBooks for free.
Q: Many argue that the possibility to download and then read / see / hear an editorial product in digital format does not exclude the subsequent purchase of the physical copy, and then gives proper economic recognition of copyright. What is your opinion?
We agree that previews of books can be an important marketing tool. Publishers regularly use previews to present new products to their
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customers. But the decision, whether to use this marketing instrument, and what to offer in a preview, must remain in the hands of the rightsholders. Calling illegal copies of whole books previews is simply a misrepresentation. Illegal copies are a means of generating profit for criminal organisations, and should not be compared to the marketing tools of the book sector. The free availability of an illegal copy is unlikely to generate many sales. Of course, nobody is prevented from buying content that they already have access to, and in some cases, this may indeed happen.
But those sales will not compensate for the sales lost. Some publishers may in fact choose to offer digital copies of certain products for free and sell physical copies at the same time. This may be a successful business model, and publishers are experimenting with new ideas all the time. But this should be the choice of the rights-holder, and not the decision of someone who has invested neither creative energy nor money in the product.
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Casarotto Ramsay & Associates was founded in 1989 and represents many of the best-known writers and directors of film, theatre and television in the world. On May 30th, day two of the StoryDrive China conference, he held a master class about Story Selling during which he introduced different ways of how to pitch a story. After the event, Rob Kraitt answered some general questions
Robert Kraitt @ StoryDrive China, photo: Ch. Schmidt
about the business environment he works in as well as the changes he has seen in recent years and what he expects to change in the near future.
Q: Apart from revenue and profit goals, what other goals are important for your company?
We want to develop our clients so that they are always working; that they are getting the best opportunities and assignments. We want to be always the first agency in the minds of producers and studios when they are looking for talent. And we want to make sure that the films and TV programs our writers and directors are making are distributed properly so that people get to see them.
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about 10 years ago, they used to spend huge amounts of money to buy books that they never made into films. There are definitely less opportunities today. You have to work very hard now to sell books. If you talk to studios they only go for very commercial ideas that would reach the largest possible audience. It`s more difficult now for literary books which I used to represent before. And the amount of money you can make out of book options is less. Now recently, there was the case of Fifty Shades of Grey which is part one of a trilogy by E L James. It started as a fan fiction using characters from The Twilight Series and is rather pornographic. The material became very popular on the internet especially with housewives. This book was a great sensation, Hollywood got wind of this and there was a big auction. In the end Universal bought the rights and paid millions But thats an exception.
At Casarottos we have a number of agents and each agent has his or her own client list. Some specialize more with directors, but most have a mix. We work very closely together and meet once a week to share the assignments that are coming in and discuss how we can best put our people in line for those assignments.
We have very good connections with producers and studios in America and around the world. We hope that we have the right kind of contact base to maximize opportunities for our clients everywhere. We do work with American agents now and then and it can be quite valuable since its quite a complicated market over there. International opportunities are certainly increasing since international co-productions are increasing.
Q: Is your brands identity internally and externally clearly defined and well known?
Yes, definitely, it has been cultivated over many years. Casarotto has a strong brand identity of being a very high quality agency in terms of the talent we represent. We have a huge reputation in theatre, film and television. And if people look for the best possible talent to write their screenplay or their film they would come to us.
Q: How important is the cooperation with other industries like games or information and telecommunication technology?
Games not so much. Its a very young industry and does not use agents in the same way film and television does. I think it will increase but at the moment its very much in the early days. Right now we are very focused on film and television.
It has changed because its harder to sell books. There used to be a lot of money in Hollywood,
They expect us to provide the right kind of talent and they expect us to be honest and
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I think not much will change for us, since it will still be about who can provide content. TV shows will still be TV shows and films will be films. What may change is where they are shown or what kind of money they make, and maybe what we watch out for in the contracts may change, but at the end of the day you still need someone to write the story and someone to direct it, and these are the people we can provide.
Other agencies in London like Curtis Brown or Independent Talent. But the agents in London are more collaborative than in the US, its a gentlemans business in the UK.
From making films out of books to putting artists faces on toys; UK agent Rob Kraitt encourages distributing content through a wide variety of media platforms; using crossmedia to get the message out to everyone. Attracting all kinds of public. Exploiting content in every possible way. Watch Rob Kraitt, Agent at Casarotto Ramsay & Associates in the UK: Squeezing every drop of content
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would take a while just to get to know the names... . Inflation remains out of control until the PLANO REAL in 1994 with over 80% inflation per month. PLANO REAL was tremendously important for Brazil. It was only after the success of this economic plan that we finally started on the slow and difficult recovery of the Brazilian economy. Getting back to a more or less stable situation, after the over 80% inflation per month one, was a huge relief. . 1998: Brazilian governments first major book acquisition program. The first big, important book acquisition program by the government for the public libraries system was a turning point but only for Brazilian authors. . Relationship with foreign publishers and agents starts to improve. The number of rights for foreign deals negotiated for books in Brazil increased significantly but still, the results were very modest. One of my clients told me back then, that our agency was one of the top five dealmakers, but we were at the bottom of the group in terms of total advances earned. As most of you remember well, it was in the 90s that we all abandoned typewriters and moved to PCs. Eventually the emails took over and faxes became obsolete. The 2000s . Government book acquisition programs increase and become regular. . The Government programs get major attention and start to shape acquisitions and catalogues. After a while, the government starts to buy foreign translated titles, opening the range of possibilities even more. . Brazilian authors get more attention. As a natural
consequence, and as result of the new strength of the publishing industry in Brazil, having a list of important Brazilian authors is now a must for the market. . New incentive to culture laws: Lei Rouanet. The incentive laws encourage cultural projects (books, movies, CDs, expos, etc.) through tax exemption making it easier to publish high quality and highly illustrated titles. . Festival Literrio Internacional de Paraty (FLIP) and other book fairs and literary festivals. The extraordinary success of the FLIP book festival (inaugurated in 2002) inspires a multitude of book fairs and literary festivals throughout the country (over 140 events planned for 2011 alone) north, south, east, west many of these in very small towns. . Political and economic stability allows for major changes in the book business profile. It widens the middle class and removes a major percentage of the population from poverty. This factor alone strongly affects the book publishing business. But we should mention other major change factors, such as the YA phenomenon (Harry Potter, Twilight, and several others). . The increase in sales through the Internet and alternative channels (like AVON, door-to-door, supermarkets and newsstands) is also crucial. In a country as big as Brazil, with so many infrastructural problems, reaching out to consumers is not an easy task. . Advances and royalties paid by Brazilian Publishers no longer remain unnoticed. By the end of the 2000s, the number of active publishing houses in Brazil had increased significantly, and so had the number of contracts. The good news is that we are not just talking
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about quantity now because we can also offer quality, good results and professionalism.
2010 and beyond: Whats in the horizon? E-book, apps, readers, tablets, digital distribution. Finally, the Brazilian book market is waking up to e-books, apps, readers, tablets, digital distribution and all related technologies. Results are still modest (less than 1% of the market), but everyone is confident that the digital book market will boom. E-business is, of course, our primary new target.
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Pocket books are now more popular, but normally we would not split the formats between different publishing houses. Audio-books are not very popular in Brazil and, at this point, it does not look like the situation will change. There are no book clubs (the last one closed 20 years ago), and there is not a lot going on related to serial rights deals. The average first print run goes from 3,000 to 5,000 copies although the big bets can go as high as 300,000 copies for a first print. As for e-books, the market is still very new, but all major publishers are investing aggressively and requesting the e-books on all new contracts and current catalogue. Advances are not affected by inclusion of e-book rights at this moment. Books are tax free in Brazil and so is the paper used to print books. This, of course, helps to keep book prices down. There is more good news: a bill was just approved last month for Congress to extend the tax exemption to e-readers and tablets. No fixed cover price. This has now become a heated discussion in Brazil should books have a fixed cover price, at least for a few months after publication? How should you handle big discounts, consignment sales and distribution? How can you control all the related issues, all the different channels, and make it work for your business? And we are now adding a new question how to deal with prices for e-books? The Special Sales things to consider: The special sales to the government are still mostly for Brazilian authors but there are good opportunities for quality books from authors modern or classic from any nationality. The process is very complicated; there are many different programs (at municipal, state and federal levels), it is time consuming, it includes a big deal of paper work; strict rules; tight deadlines, and fierce competition. For each program, there are normally a limited number of titles that can be enrolled per publishing house (about 20 titles) after a few months, the results are officially announced and the government starts direct negotiations to determine quantities and prices. Numbers vary a lot a selected book can sell from 10,000 to 500,000 copies. Books are sold at very low prices (discounts can go to 90% of normal cover price). The AVON door-to-door sales are only for very commercial titles that are selected and included in the AVON catalogues. No more than 150 new titles are offered to the AVON clients per year, distributed through the 20 editions of the catalogue in groups of 30 titles, more or less. As the final price for the clients is necessarily very low (around 50% of full retail price in bookstores), profit margins for the publisher are very narrow but volume of sales compensates. The edition sold is low cost (no flaps, cheaper paper, and smaller format).
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Sometimes good titles are buried among many new releases (almost 3,000 new books come out every month in Brazil).
. Expanding the Brazilian readership. There is still a long way to go, but there is room for optimism. . Fierce competition amongst Publishers. I believe
. High quality x low retail price: The public wants very attractive editions, appealing covers, excellent translations (always direct from the original edition) etc., but with a low cover price. Pricing is definitely an important issue now that we are no longer just selling to the AA market.
it is better to have high quality competition than a poor concentrated market. So we welcome competition, and welcome good publishers and good authors.
This article was originally published in Expanding Markets: Rights in Brazil. Apps to the World. 25th International Rights Directors Meeting. Frankfurt Book Fair, 2011.
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IMPRINT
Publisher
Project editor
Kerstin Rothkirch
Production editor
Frederik Fensch, Leila Jenkins
Contributors
Marcella Berger, Stefanie Brandt, Christoph Holowaty, Lasse Korseman Horne, Maja Linnemann, Lynette Owen, Lorenzo Perracino, Dr. Sascha Pres, Lucia Riff
Art Direction
Dipl. des. Manuel Rauch www.manuelrauch.com
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