Content Licensing

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Content Licensing

Content licenses grant rights to the trademarked and copyrighted assets associated with a particular property such as main and supporting characters , story lines, weapons, backgrounds, and any other relevant trademarked and copyrighted assets. It is a multi-billion (with a "b") dollar industry worldwide.

Why License?

If I showed you 4 cards with different names on them and asked you to remember those names for 20 minutes, you probably could. If I showed you 40 cards, you'd have a harder time, and if I showed you 400, only an eidetic or a politician could remember them.

This is the situation of the retail goods and entertainment producer: they are just another name among 400 others competing for your attention and memory. But what if these sellers could arrange for their names to appear on 2 cards in the group of 400? That would double their chance of being remembered . What if they could get it on 4 cards? That would probably start improving their chances exponentially, not just geometrically ; in other words, appearing on 4 cards would increase the chance of being remembered six, seven, or eight times, not just four.

This is the core logic of brand licensing: it is so difficult to be seen in the overcrowded market that it takes either massive advertising and marketing budgets or some way to associate your product with one the buyer already recognizes.

The benefit goes both waysnot only does the licensee gain from association with the licensor's known product, the licensor benefits by having its product become even better-known without having to spend money on advertising and marketing. A licensed product is like a free ad for the licensor .

Basis of Rights

Copyrights confer to their owner the exclusive right to

  • Reproduce the work in copies or records.

  • Create derivative works based upon the work.

  • Distribute copies of the work to the public by sale or other transfer of ownership, or by rental, lease, or lending .

  • Perform the work publicly , in the case of literary , musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works.

  • Display the copyrighted work publicly, in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work.

Licensing allows the owner of the copyright to divide and subdivide these rights and lease them to third parties. To create a T-shirt based on a game requires the owner to license: (i) the right to create a derivative work (the T-shirt) based on the original copyright; (ii) the right to make copies of that derivative work (to manufacture the T-shirt); (iii) the right to distribute that work (by selling it); and (iv) the right to display the work publicly.

The right to create derivative works is generally the source of the most revenue. Derivative works, like a film based on a game, are divided (example: the right to make toys) and subdivided again (the right to make plush toys and the right to make injection molded plastic toys may be sold separately). The distribution rights are equally important, allowing licensors to limit the right to make derivative works (the right to make plush toys for sale only in Latin America for a period of two years ).

How It Works

Content is usually licensed for two different kinds of products: entertainment and merchandise. Entertainment licenses allow third parties to create entertainment based on your property across different media. Example: the right to make a film out of the Resident Evil game was an entertainment license granted to the film producers by the property's owners . Merchandise licenses allow third parties to manufacture different consumer products based on your property. Example: the right to make hint books or a board game from a video game is a merchandise license.

NOTE

NOTE

Complexity is added when a party wants to make merchandise or entertainment based on a derivative product (derivatives are new works based on the original copyrighted work). Example 1: T-shirts featuring Milla Jovovich in her costume, which are based on the Resident Evil film, not the game. Example 2: a Buffy the Vampire Slayer game based on the television show, which is a derivative product of the original film.

NOTE

NOTE

The licensor will generally maintain ownership or co-ownership of all derivative copyrights and trademarks created by licensees (in other words, the licensor of the Buffy propertywhich started as a may have acquired ownership of the copyrights and trademarks in Angel, Spike, and all of the other characters and concepts created by the television licensee). A talented licensee, as with the Buffy television series, can make derivative products the core of a property's value.

If this doesn't seem fairwhy should the licensor own the results of a licensee's creativity?it gets fair with the revenue split and associated production (like television shows based on the film) rights. Even though a licensee may not "own" the rights to additions it makes to a property, it can reap the rewards of those creations in two major ways: (i) participation in merchandise based on the derivative work; and (ii) rights to create more products based on the derivative work. Example: even if the Buffy television producer didn't own the rights to the other characters it created, it would still receive a healthy chunk of any merchandising (or other) revenue based on the series (as opposed to the film) and it could have spinoff rights to create new shows based on characters it introduced, like the Angel spinoff.

Figure 7.1. Buffy DVD:The televi sion show, a derivative work of the 1992 film, has created massive value for the property and a slew of mer chandising including

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Figure 7.2. a game, natch

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Figure 7.3. creative merchandise

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Figure 7.4. spinoff TV shows

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Figure 7.5. dolls and other items for the obsessive fan.

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The Licensing Meritocracy

This seems convoluted because it is. A lot of times it is the licensee, not the original creator, who creates a blockbuster property. These licensees are generally compensated with additional rights to leverage that success into more products, as well as appropriate shares of all relevant revenue streams. The competing principles at work are the desire of a licensee who creates a property-enhancing product to share in the ripple value effect created by that product, and the licensor's need to maintain a "clean," easily administered propertythat is, one that doesn't have residual rights lying about in all different corners.

Example: the creators of the Buffy television series probably deserve participation (a cut) in licenses that result from the success of that show, like merchandise, DVD sales, spinoff TV shows or movies. Sometimes, licensees who add major value to a property are also compensated with a share of any increased sales in pre-existing products (known as a "bump"). Example: the creators of the Buffy television series could ask for a share of any increased sales and rental income from the original Buffy movie, because they can logically argue that the bump is caused by their efforts with the property.

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Game Development Business and Legal Guide
Game Development Business and Legal Guide (Premier Press Game Development)
ISBN: 1592000428
EAN: 2147483647
Year: 2003
Pages: 63

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