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Software Development, Media and Entertainment Contracts

The business of entertainment is the profitable production, marketing and dissemination of creative works. This industry has five branches: movies, television, live theater, music and print publishing. The media and entertainment law is body of principles governing activities within the entertainment industry. Despite the lack of a universally accepted definition of what media and entertainment lawyers do, lawyers practicing in the entertainment industry operate with certain principles that distinguish their work from that in other areas of law. As a general proposition, the scope of media and entertainment law contains four basic elements: (1) the case law and statutory schemes of various other legal disciplines that relate to the entertainment industry; (2) certain federal statutes that regulate entertainment-related business activity; (3) collective bargaining agreements in the entertainment industry; and (4) the application of entertainment-related business practices and economic principles to the above three elements.

The entertainment industry has traditionally controlled the creation and distribution of books, music, film, theater, radio, television, and electronic broadcasts through the legal device of intellectual property and contracts. The industries have created and controlled the international market for entertainment products by determining which artists and productions received exposure to the entertainment audience. The audience in turn picked their favorite artists and productions, and the industries generated profits for themselves and the successful entertainers, while discarding the artists, products and productions that were not profitable. This system existed over most of the last century; however, a technological revolution is underway that is reshaping entertainment businesses as we know them. The entertainment industries are now reacting to the use and misuse of computer-delivered digital entertainment and its uncontrolled distribution over the Internet.

The third device used by the entertainment industries to control content creation and distribution was contracts. Creators are often contractually required to convey full ownership of their copyrights to the business entities with whom they also contracted. In exchange for gaining royalties and exposure to the audience, talent frequently had to agree to grant their exclusive services to one business and convey or waive other valuable exploitation rights.

Exclusive Services by Talent

Exclusivity of personal services was the norm of entertainment in the last century. For example, in the film industry's famed studio system, writers, directors, producers and actors were bound to work exclusively for one studio by contract. The studio heads determined which films talent worked in and which of the contracted talent got star treatment. Control of the artists was maintained through exclusive long-term contracts. This, in turn, led to the adoption of specific laws which sought to limit the contractual rights of the entertainment industry, such as the limitation on the number of years a personal service contract could be enforced, or the minimum compensation talent must be guaranteed in order to be bound to exclusivity. Even with specific federal laws limiting contractual enforceability, the entertainment businesses could, and did, dictate the contract terms to the talent they engaged. Why did artists agree to such terms? Perhaps the answer is as simple as supply and demand. There was an ever-increasing pool of talent that wanted to work in the entertainment industry but only a few doors at which they could knock for entry. Those who opened the doors could set the terms that permitted admission.

Control of Accounting and Royalties

The entertainment industries also adopted a variety of business methods that further benefitted their bargaining position. For example, television producers began to operate under "deal memos," which set out the basic points of talent's compensation but deferred many particulars to a "standard terms and conditions" rider. By "standardizing" many of the terms, show business executives tried to limit the negotiations of deal points to only a few items. Yet another even more subtle technique was used by the record industry. Most recording contracts never clearly stated what dollar compensation per recording was to be paid to a new artist. Instead, compensation was stated as a percentage of either the retail or wholesale price of the record, less a series of deductions, offsets and holdbacks ranging from the type of recording medium and packaging to deductions for recording advances and reserves for returns. Recent artist objections to this type of contractual obscurity has led some record companies to promise shorter, simpler and more understandable artist contracts in the future.

Because of the unequal nature of the bargaining positions between creative talent and the industries that controlled access to the audiences, contracts tended to favor the business entities over the artist, at least until the individual's celebrity or star power had grown sufficiently to warrant deferential treatment. Entertainment contracts further reinforced the right to control the content and distribution of the entertainment by typically giving the publisher, producer or broadcaster the right to accept or reject the artist's creative efforts and the right to option future works on a first-look or first-right-of-refusal basis. Thus, relying in part upon the once relative rarity of the tools used to create and duplicate the entertainment products, and using exclusive contracts and copyright ownership, the entertainment industries historically controlled the creation of entertainment content and its distribution. They priced the products as a commodity with relatively consistent prices being charged for records, film admissions, VHS rentals, and the like. The system would likely have continued in much the same fashion but for the changes that began to occur because of new, less costly, and more widely available technologies used for the creation and distribution of entertainment content, and the development of computer digitalization and the Internet.

The Firm can provide a full spectrum of contracts for protection and exploitation of intellectual property in the entertainment industry. We can assist our clients on business and marketing issues and strategies (including risk management), the protection and exploitation of creative works (including trademarks and copyrights) litigation management, and other intellectual property.