Business Case Scenarios

Hypothetical Scenario: Media Commercialisation

Aussiemedia Corporation was founded in 1976 by a small group of TV producers, writers and directors to deliver innovative TV, video and film productions with educational, lifestyle and entertainment value. They have always had a philosophy that seeks to treat their creative contributors with respect and fairness.

They have also produced a lot of coffee table books based on their shows. They now own a substantial library of still images, moving images, background research and scripted stories. This material is cataloged in a simple database with categorisation mostly at the asset level but some is also are broadly categorised at the topic, scene or individual photo level.

Because of the unique breadth of the material and the fact that the same topics are covered repeatedly over the course of 25 years the company gets many requests from researchers, universities and learning content developers requesting access to the material. The board of the company has decided it wants to unlock the value of these assets by making them available to new emerging online digital markets in Australia, America, Asia and Europe.

Much to their horror they quickly realise:

    * they have very few of the required rights for these markets for these new usages and the costs of obtaining the rights could be very high;
    * the costs of digitising and cataloguing the assets are very high;
    * they have no reliable way of forecasting the demand for individual topics or products so cannot budget what to spend in preparing the material for market or how much to pay for specific usage rights for the material they don't own;
    * There is no pool of the necessary in-house expertise in digital media conversion, production and commercialisation.

These factors threatened to cripple their commercialisation plan meaning the material would not become available and may decay over time through the lack of a budget for their digitisation and preservation.

They examine a number of alternatives:

1.     The company takes over an experienced digital media production company with 10 staff for $2million and an annual expense budget of $1.5 million. It then proceeds to prioritise, catalog, digitise and productise the works. They decide to buy the rights up front, budgeting $100,000 in external costs for each themed product to research and pay for required rights. They can only afford to produce 5 themed areas a year at first, until revenue start to flow. Therefore they pay in total $500,000, of which 50% goes to legal and discovery costs, and 50% in payments to rightsholders.

2.     Digimedia, an experienced digital media production company, approaches Aussiemedia to do all of the work, on a basis of no cost to Aussiemedia, and to provide it with 35% of all licensing revenue. Digimedia then proceeds to prioritise, catalog, digitise the work. As part of the agreement it gives Aussiemedia online access to the complete database of all digitised assets and the expanded catalogue of the works at scene/photo level. Digimedia also reaches agreement with IP Forensics who will analyse each selected work and its components, their relative contribution to the overall work, and identify the required matrix of rights and the current rightsholders. IP Forensics does not charge for this service but will take 5% of all downstream licensing revenue. IP Forensics then negotiates (on behalf of Digimedia and Aussiemedia) with each rights holder to have them bind their rights together to enable them to deliver the work for different types of media, different types of markets and different usages and varying levels of copyprotection. The rightsholders agree to share the downstream revenue for each project/product/component that their work is a part of. They agree to pool 15% of each component's revenue. Therefore Digimedia receives the balance of revenue, which is - on average - 45%. Because of the rights binding and work sharing arrangement, Digimedia is able to digitise all of the archive over the course of two years. Revenues start to flow within 3 months of commencement.

There are a number of variations to these two scenarios. But all come down to variation on:

   1. Contract work to external workers vs perform it in house with full time staff;
   2. Work for current fee vs work for share of possible future revenue;
   3. Pay up front for layers of rights in each component vs agree to share of possible future revenue.

More information can be found at the camera forum .