By Julie Kessler Roach, Esq.
NARIP Atlanta Board Member

The 2014 USC Institute on Entertainment Law and Business (IELB) was the opportunity of a lifetime. It’s the best and most well-run conference of its kind. Speakers ranged from top-level executives at major corporations to private practice attorneys who represent high net worth celebrities and members of the media. These are the movers and shakers of the entertainment business! USC Gould School of Law and the Beverly Hills Bar Association have hosted IELB for over 50 years. The legacy of excellence continues, and it sold out once again this year.

Attendees receive a digital download syllabus (and a CD-ROM or full 150-page binder) packed with PowerPoint presentations, sample contracts, articles, and valuable analyses, as well as landmark court decisions that are changing the face of our business. In fact, I’m still working through the syllabus a week after the conference; this material will be a resource for years to come. The breakfast, coffee breaks and lunch were all great times to network with other attendees, speakers, and event organizers. Special thanks to Bruce Ramer, Mark Halloran, Mary Ledding, Leeanna Izuel, and the Planning and Syllabus Committees for putting together such a wonderful conference.

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L-R; NARIP President Tess Taylor, Planning Committee Co-Chair Mary S. Ledding, luncheon keynote speaker Sir Howard Stringer, Co-Chair Mark E. Halloran and USC Gould School of Law Executive Director Leeanna Izuel[/caption]

Here are highlights from the sessions I attended.

The Industry: Trends, Fads and Transformation (Part IV)

IELB kicked off with Jeffrey Cole (USC Center for the Digital Future) who delivered the opening keynote for the 4th year in a row (back by popular demand), summarizing key recent developments and giving us a peak into the future.

Networks like ABC, CBS, and HBO are going over the top to provide content via an online subscription service rather than just through conventional television or cable, and more cable companies are moving toward this model as well.
Subscription service and cable rates hinge on the exclusivity of their content.
Cole suggested a business idea (seconded by other speakers during the day), which is a need for an aggregator who organizes multiple cable and satellite subscriptions for consumers, enabling an easy way to manage these in one stop. A great business idea!
Movie theaters are here to stay despite screens disappearing, and going to the movies is still the best first date experience. Cole joked, it serves a double purpose. First, watching a movie together is two hours you don’t have to talk. Second, after the movie you now have something to talk about.
Cable and satellite now reach over 100 million households, accelerating the trend toward Day & Date and the ability to see a new release on a specific day. Suggested price point: $49.
Cole predicted that Star Wars 7 set for release in December 2015 will gross over $1 billion even if it’s “lousy” but if it’s great it will become the highest grossing film of all time. Star Wars transcends all ages.
Original programming makes a subscription service a major force (Amazon’s “Transparent” and Netflix’s “Orange is the New Black” and “House of Cards”).
Bigger budgets in TV are blurring the line between film and TV, with Netflix sporting a budget of $100 million. TV is also more attractive to major talent than before when actors were hesitant to jump ship from the big screen to the small. Academy award-winner Kevin Spacey says, “nothing as satisfying as [acting in] House of Cards.”
Despite many new players in the business, the major players are still Apple, Amazon, Google and Facebook.

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L-R: Chairman & CEO of The Jackal Group Gail Berman, Amazon Studios Director Roy Price, Gang Tyre Ramer & Brown's Tara Kole (moderator), Xbox Entertainment Studios President Nancy Tellem and and NBC Universal EVP of Business Operations Cable Entertainment Beth Roberts[/caption]

Television: Are Contents and Deals Becoming Unplugged?

Moderator: Tara Kole (Gang, Tyre, Ramer & Brown, Inc.)

Panelists: Gail Berman (Chairman & CEO of The Jackal Group), Roy Price (Director, Amazon Studios), Beth Roberts (EVP, Business Operations Cable Entertainment, NBC Universal), and Nancy Tellem (President, Xbox Entertainment Studios)

Producers and content creators are still figuring out how to monetize content (back end, ads, and ubiquitous content providers).
Creative control for the creator is a major deal point in negotiations.
Short form content is always desirable.
It’s all about CONTENT which lasts forever whereas providers come and go. The best way to differentiate is to have exclusive quality content that people can’t get elsewhere.
Providers can also differentiate from others via marketing practices and recommendations, word-of-mouth is most effective.
Panelists noted a shift from providers licensing content to owning it.
On the culture clash between Silicon Valley and Hollywood, Amazon’s Roy Price put it best. First, no one goes to lunch in Tech Land. Also, once a movie is launched (or released) it’s as good as it’s gonna be in Hollywood. Conversely, in Silicon Valley, a new product on launch day is “as lame as it’s gonna be.” Such a product can still grow from a puppy into a “big dog.”

The Now and Future of Movie Theaters

Moderator: Mary S. Ledding (Institute Co-Chair)

Panelists: John Fithian (President & CEO, National Association of Theater Owners), Nicolas Gonda (Co-Founder & CEO, Tugg Inc.), and Veronika Kwan Vandenberg (President, International Distribution, Warner Bros. Pictures International)

China is an important growth market, as are Latin America and Russia.
International box office (especially China) is rising but domestic is stable.
Advancements are being made in movie theaters to enhance the movie-going experience such as luxury cinema, immersive audio, High Frame Rate (HFR), High Dynamic Range (HDR), 4D (especially in Korea and Mexico).
Industry admissions per capita (the average number of times a person goes to the movies per year): US 3.7, China 5.0 (which has grown astronomically), Korea 4.6 (where they love 4D. In the U.S., Hispanics are the best movie goers. This fast-growing population goes to the movies an average of 6 times per year. In the U.S., 1 in 5 households are Hispanic with 1 in 3 predicted by 2050.
India and Japan are tough markets for US movies, mainly because local product dominates (especially in Bollywood where it is 95% of the market).
Super hero and action movies like Transformers perform extremely well in China
Avatar is still the all-time international industry Top 20 release.
American comedies are a tough sell internationally, but the Event Comedy Film has emerged as a hugely successful genre overseas (Ted, Hangover, Horrible Bosses, We’re The Millers). These films have universal concepts and are socially relatable which is key to international box office success.
The digital revolution: in 2008 we had two methods of delivery, major film studios now have 15 methods including 3D, IMAX, 4D. Kwan Vandenberg says a film like The Hobbit could have up to 250 different versions.
Independent films can secure theatrical screenings through crowd-sourcing, where the screening does not happen unless a quota is filled. This builds social capital.
A word-of-mouth recommendation has the impact of 200+ TV ads.

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L-R: Liner LLP's Stanton “Larry” Stein (moderator), Davis Wright Tremaine's Elizabeth A. McNamara, Greenberg Glusker's Bert Fields and Glaser Weil Fink Howard Avchen & Shapiro's Patricia L. Glaser[/caption]

Litigation Hot Button Issues: Individual Rights and IP Rights

Moderator: Stanton “Larry” Stein (Liner LLP)

Panelists: Bert Fields (Greenberg Glusker), Patricia L. Glaser (Glaser Weil Fink Howard Avchen & Shapiro LLP), and Elizabeth A. McNamara (Davis Wright Tremaine LLP)

This discussion focused on defamation, rights of privacy and publicity, and copyright, touching on recent court decisions.

Obsidian vs. Cox: In this case the 9^th Circuit issues a blogger-friendly opinion that gives bloggers the same 1^st Amendment privileges as news reporters.
NY Times v. US allowed. This decision held that the publication of classified Vietnam War information was a matter of national security. It also held that bloggers are allowed to publish stolen material (unknowingly taped without permission by a 3^rd party). The 1^st Amendment protects the blogger in spite of how the information was obtained. An actionable claim still exists against the illegal taper, but there are no grounds to exercise any right against the media who published the information.
Bert Fields’ client Tom Cruise is plagued with unpleasant stories from the press. Says Fields, telling the press (who rarely give much time to respond) that a statement is not true before publication helps prove the “malice” element of a defamation claim, so best practice is to respond quickly if the media sends a letter before publishing. Sometimes it’s easier to get a defamatory statement modified than completely taken down.
Discovery in a defamation case gets in the public domain and can be extremely intrusive for the client, potentially even more damaging than the original story.
Discussion of California SLAPP Statute (Strategic Lawsuit Against Public Participation) Motion. SLAPP functions as a motion to dismiss, with attorney’s fees awarded if the lawsuit is found to be legitimate

o Must prove likelihood of success on the merits without any discovery

o This is a substantive right and applies to federal court

o Meant to prevent frivolous lawsuits and protect 1^st Amendment rights

Problems arise when publications claim they have a source, but won’t disclose it in discovery, or that the story is a matter of “public interest.”
Garcia v. Google allows copyright protection of a performance for an actress under transformative use and stops distribution of entire film. This is a special circumstance where the actress had not signed an agreement denying her injunctive relief.

Domain Names v. Trademarks: Conflicts and Resolutions

Moderator: Thomas A. White (Artist Rights Consultant)

Panelists: Akram Atallah (President, Global Domains Division, ICANN), Monique Cheng Joe (VP, Trademark Counsel, NBC Universal), and Stephen J. Strauss (Fulwider Patton LLP)

This panel was a flashback from my Internet Law class in law school, but provided a best practice and real-world strategy piece to what I learned in class. The discussion centered on top level domain names and what can be done to protect your domain name.

1300+ global top level domains create choice, competition, and innovation.
Disputes and trademark infringements are common, the panel offered a few ways to address these:

o The Trademark Clearinghouse (TMCH) is an effective way to police and protect your trademarks. Registration is only $75 or $100.

o Uniform Rapid Suspension (URS) is one way to enforce domain name trademark rights, but the only remedy is suspension and the action is brought with the National Arbitration Forum (NAF) or Asian Domain Name Resolution Centre (ADNRC) and not WIPO.

o Uniform Dispute Resolution Policy (UDRP) is a good way to enforce your domain name trademark rights because the remedy is cancellation or transfer of the domain name, but the plaintiff must prove bad faith. These actions are brought in front of WIPO, NAF, or ADNRC.

o Post Delegation Dispute Resolution Process (PDDRP) is another way to enforce domain name rights.

o The WHOIS directory domain name searched and registrant’s email, but this is hard to police and sometimes inaccurate.

Go Daddy has 80% market share of registrars.
It would cost Fox over $13 million to register and enforce the domain names in which it has a trademark right.

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L-R: Kevin Lyman (Creator, Vans Warped Tour, CEO, 4Fini), Marc Geiger (Co-Founder Lollapalooza, Worldwide Head of Music, WME Entertainment), John Boyle (Chief Growth Officer, Interim CFO, Insomniac Events), and Todd Cooper (Greenberg Traurig, LLP)[/caption]

Music Festivals: From Woodstock to Coachella

Moderator: Todd Cooper (Greenberg Traurig, LLP)

Panelists: John Boyle (Chief Growth Officer, Interim CFO, Insomniac Events), Marc Geiger (Co-Founder Lollapalooza, Worldwide Head of Music, WME Entertainment), Kevin Lyman (Creator, Vans Warped Tour, CEO, 4Fini)

Panelists conveyed that the festival economy is healthy and growing internationally with plenty of opportunity, but not without challenges.

Festivals compete for talent and sponsors, with sponsorship increasingly a necessity with the saturation of festivals in North America. Says Boyle, “Sponsorship is your margin.” This creates a talent bidding war, increasing costs. Advertisers look at festivals in a new light and now throw more money at them as they have done with sporting events in the past. Sponsors also want more from the artists themselves now including: media rights for streaming, meet-and-greets, song(s) for company’s Web site, and various rights assignments which are not within the festival promoter’s ability to give, making sponsorship increasingly complex. How brands value music properties is changing. Some brands know what a festival and tour is worth more than the festivals themselves, and there are more in-house positions and music divisions devoted to festivals and valuation of sponsorships within the brands (Pepsi has a 100-person music department).
Festival brand authenticity is important. The festival organizers and founders need to know what the festival represents and stick to that.
Headliners can gross $500,000 to $5M or $750,000 to $1.5M. Mid-level festival headliners can gross $250,000 to $400,000. Headliners can perform 50 to 100 festivals a year. The upper average for major headliners at major festivals is $1M to $3M, but this does not include expenses. There are over 3500 identifiable festivals around the world each year.
These grosses are attractive for an artist, but can be deceiving. A band may not net much once expenses are paid which include 15% to a manager, 10% to an agent, points or fees to a lawyer / accountant (commissions come off the top), taxes, and then costs for gear, various techs, trucks, roadies and production. Then of course a band has to split the net by the number of band members. This makes it far more appealing to be a DJ: net for DJ is just 25% commission and possibly a road manager. It’s much less expensive for a DJ to tour or play the festival circuit.
SiriusXM broadcasts almost all of Insomniac’s domestic festivals and manages clearances. Streaming live in real time is less complex, involving only payments to performing rights organizations and artist clearances (no master use or publishing to deal with). However, if the stream is delayed by even one hour, than it gets into record company territory, and rights issues become more complex.
The radius clause and exclusivity are becoming a major deal point in negotiations.

o   Promoter and artist agree on a geographic span and time period
o   Bigger acts have a tighter radius clause, and are usually paid more
o   2-3 months before show date, 1 month after, and 120 miles is standard
o   Clauses can carve out or include advertised events, after-parties, headliner shows
o   Competitor festivals can be specifically mentioned
o   Playing a festival is a very cheap way to play in front of non-core fans. If an act is good live, they can make lots of new fans very quickly.

Festivals are seeing a rise in camping options as well as an increase in revenue for “glamping” or VIP campgrounds, access and amenities. At Lollapalooza $30,000 VIP packages sell out quickly as the festival experience becomes more immersive. Insomniac's VIP packages are also a hot item and include a private jet to the festival, limo service, a personal concierge and a helicopter from hotel to festival. Says Boyle, "When you do it once, you can't go back!"
Health and safety concerns and liability issues are big part of planning festivals.

o Contracts with artists put liability on artist if they call for a Wall of Death, jump off the stage, leave the stage, or incite.

o Lawsuits determine where the responsibility lands for personal injury. Is it on the band, promoter, or festival? This is key in instances of drug overdoses and death, a real headache for promoters.

o Weather – evacuation plans, stage collapsing, infrastructure issues

o Crowd control

o No agencies used to be in place to rate safety of a festival. It was just the fire marshal. Now there are control centers with 60-80 cameras, there is much more planning and expense.

o There are also issues with local government that require attention.

Rise of DJs on festival circuit. 60% DJs at Coachella.
New independent companies popping up in addition to EG, LiveNation, FSX, C3, Scorpio
Having a festival in China has government issues, cultural issues, and the economy and musical taste must be considered.
There are lots of jobs in the festival industry including sponsorship/brand representation, eco specialists, festival specialists, artist transportation.
Festivals need liaisons to work with the city on municipal concerns (traffic, medical, community relations and communications) as well as build trust with a city. Securing permits is based on how many municipalities are touched.
Festivals consider: 1) POV, audience, 2) Location, 3) Venue (permits, licenses), 4) economics of pricing and offerings.
Festivals profit $10 to $50M – not bad!

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L-R: NARIP's Julie Kessler Roach, Vincent Loris, Tess Taylor and USC Planning Committee / music and entertainment attorney Judith Dornstein[/caption]

About Julie K. Roach

Julie Kessler Roach is a NARIP Board Member and entertainment attorney who practices law to support artists and creatives in the advancement of their careers, and to ensure that their works are respected and protected. She also works for the Georgia Lawyers for the Arts, a non-profit that provided pro bono legal services and educational programming to artists. She enjoys craft beers, live concerts, playing her saxophone and lounging in her hammock Follow her at @JulieKRoach.

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