Now is the winter of our

multimedia dis-content

(Ron Hay is a media and entertainment lawyer and a member of the KNOWlaw Group of the Toronto law firm of McMillan Binch.)

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Multimedia and interactivity capabilities are hot – headlines in industry and mainstream publications alike scream about the latest rage seized upon by entertainment-hungry consumers. This medium was hot in 1993 and 1994, and will continue so for the near future.

Technological advances and applications that are becoming available continue to amaze. Yet buyers of this new media, while initially impressed and dazzled by the bells and whistles, find that this fascination with technology quickly fades. People watch and want to watch programs, not technology.

While everyone seems to be talking about multimedia and interactive capabilities, the fact remains that the genre is still very much in its infancy. No one platform has won over the industry, although cd-rom appears to be emerging as the platform of choice over its competitors cd-i, 3D0, Nintendo and Sega.

Not far behind are the ‘online’ competitors – telephone and cable companies are engaged in fierce battles to become the first to deliver online interactivity to the home.

Regardless of the mode of delivery – the one constant is content – whatever the delivery vehicle, it is the content that drives and will determine the success of multimedia and interactive products.

Content rules

There are three ways to obtain content. You can buy or license it from someone. You can make it yourself. Or you can engage and pay someone to make it for you.

When we last wrote about multimedia in the summer of 1993, we dealt with the myriad of difficulties surrounding the purchase or licensing of somebody else’s work. No doubt the readers of that and similar columns dealing with multimedia ‘legal clearance’ were discouraged. There is even less doubt that those who embarked on compiling the work of others to produce a multimedia product and who have had to track down, negotiate with and pay licence fees for the potentially hundreds of elements contained in a complex cd-rom product today sport graying heads of hair, if they have any hair left at all.

The process is a frustrating one as there is no one-stop shopping for clearances, and few industry guidelines as to what payment will be required for such use.

The use of public domain material (where copyright protection has expired and all are free to use without permission or payment) provides a viable option, but seems more applicable to educational programs such as the music of Bach or the works of Shakespeare. The truly ‘cool’ entertainment product of the ’90s will leave Johann and Bill behind in the dust.

The industry continues to struggle with rights and clearance issues involved in putting together a multimedia product. Given the enormous time commitment to license content for use in a program, the trend is to create or commission product specifically for multimedia application rather than using existing works made by others.

Making it yourself

No doubt there are talented individuals working away in garages and basements across the country who are able to create all aspects of a multimedia program. However, the true industry leaders will require more sophistication and genius than one lone individual is able to provide.

Engaging others

In many ways, engaging others to create content for a multimedia program is no different than engaging individuals to create a film or television program. The final work is a collection of creative input by many individuals, be they writers, directors, actors, animators, composers, musicians or computer programmers. Just as is the case for film and television, a grant of rights must be obtained from each individual who makes a creative contribution to the finished product.

Canadian copyright law requires that a specific grant of rights be in writing in order to be enforceable. The multimedia producer must ensure that contracts are entered into with all independent contractors which grant the producer the rights to make and exploit the product. One exception to this arises in situations where the contribution is made by an employee working in his or her normal course of employment – in such situations, the employer, not the employee, is the owner of such product. Whether the individual is an independent contractor or employee, a waiver of moral rights must be obtained.

Multimedia as an ancillary product

Perhaps you feel that your next film or television project has interactive/multimedia application written all over it. What grants of rights do you need to obtain in addition to the right to produce and exploit your film or program and how much do you have to pay?

A typical grant of rights for a film or television program includes the right to make your project based on the project’s performances, direction, scripts and other underlying property. Such grant may be in perpetuity, or may be limited to a certain term or to the term of copyright. The means of exploitation of the production itself may be limited or may include all forms of communication, now known or yet to be developed. So far, so good.

Merchandising, preparing novels based on scripts, adapting the program for live theater – these ancillary and subsidiary uses require a further grant of rights from the creator. The same goes for multimedia and interactivity. Creating a cd-rom program based on elements of the original production will require a specific grant and most likely will entail additional payments by the producer.

No industry standards

Producers, creators, agents and lawyers alike have had to adapt to this new media. However, while standards have developed to compensate creators for merchandising, novelization, stage adaptation and other ancillary and subsidiary uses, no one standard has yet materialized for multimedia and interactive rights. For the most part, each negotiation is done on a case-by-case basis.

How much?

Occasionally the producer is able to obtain a grant of multimedia and interactive rights for a nominal payment. Other times the creator requests compensation akin to that of other ancillary and subsidiary rights, be it a royalty based on the wholesale or retail price, a flat fee, or a percentage of gross or net proceeds received by the producer in connection with the product. In most cases neither the producer nor the original rights’ holder is sure of what use will be made of the rights requested, and may agree to postpone the actual calculation of such royalties or amounts until a later date.

Right of first negotiation

The producer may be able to negotiate for a ‘right of first negotiation.’ While this allows the producer first opportunity to obtain such rights from the creator, there is no guarantee that the creator will ultimately sign with the producer, and the producer may see the value added to the rights resulting from the success of the original production fall into the hands of a competitor.

Matching rights

A better option for the producer is a right of first negotiation and last match. The parties negotiate for a predetermined period of time, after which, if no agreement is reached, the creator can shop the rights around to other interested parties. However, prior to entering into a deal with another person, the producer has the right to match the terms of that other offer.

Put it off

Why decide now when you can decide later? Multimedia and interactive rights can be ‘frozen,’ so that neither party can exploit such rights without the permission or involvement of the other. Another option is to grant the rights to the producer, subject to the parties successfully agreeing on the price for such grant at a later time. Those parties agreeing to the latter may place themselves in an awkward position by not agreeing to a specific amount, but no doubt do so with the hope that one industry norm will emerge providing guidance with the negotiations at such time when the rights are required.

As you can see, there is still not much to offer in the way of guidance. Stay tuned – no doubt industry practice will soon result in one or two methods of dealing with such rights. Multimedia and interactivity have only just begun to reach their potential. While the battle continues for the favored mode of delivery and distribution, multimedia and interactivity will play a huge role in the film and television industry of the future.

(This article contains general comments only. It is not intended to be exhaustive and should not be considered as advice on any particular situation.)