Due to the popularity of the original Napster and other early file sharing services, a large segment of the population believes it should not have to pay for the rights to digitally download music, movies, or other forms of Internet accessible entertainment. The Recording Industry Association of America has led the fight to stop the wholesale theft of intellectual property rights from its members. According to the RIAA's website, global music piracy causes more than $12.5 billion dollars in economic losses every year and the loss of more than 71,000 jobs.
Love or hate Apple, the company created an easy to use device, the iPod and set an unofficial price point of $.99 for each entertainment segment that is downloaded. In 2007, Radiohead provided fans the opportunity to pay whatever a fan wanted for the right to download their songs. Recently, Linkin Park was a driving force behind another pay what you want effort for non-profit Music For Relief that supports the Haiti relief effort. This business model may work in some cases, but the free rider dilema where too many people don't want to pay a fair price for a product or service is still a challenge that social media content providers must confront.
Amazon recently tried to replicate Apple's business model and industry position in the book business with their price point of $9.99 per Kindle download. However, major publishing house, Macmillian has refused to accept Amazon's price point and a legal dispute may be in the works.
As an active user of social media, I am fully aware of the cost of content creation and usage. Most social media websites are financially supported by advertising. Some have paywalls that offer a teaser before requiring a user to pay and others are fully subscription based. In the pornography industry, there are group subscriptions where belonging to one site automatically enables you to access other sites with your subscription or provides a reduced rate for membership.
The newspaper industry is on life support and it appears that Senator Cardin's proposal to allow newspapers to become non-profits has not been embraced by the marketplace. In contrast, Rupert Murdoch has been preaching about charging for his newspaper's content. As a Wall Street Journal subscriber, I believe the paper is one of only a couple of news organizations in the world that offers content that its users are willing to pay a subscription premium for. However, if I was offered a flat fee to access premium content for 25 of my most visited social media websites, I may be willing to pay for it if it was priced correctly. This subscription model would be based on the way cable companies offer premium channels on top of their basic packages.
There may be antitrust issues if a group of the most popular news organizations/social media content providers formed an entity and began offering their content in a pooled subscription. The Sports Broadcasting Act enables professional and collegiate sports leagues to package and sell pooled broadcasting rights. Even though member teams/schools are individual entities, Congress has carved out an exemption for this industry.
Why can't Congress carve out the same type of exemption for news organizations and/or social media and/or entertainment entities that would enable them to pool their resources? If professional sports leagues and NCAA member schools enjoy this type of special exemption why can't the news and/or the social media/entertainment industry also receive a special exemption under the law?
The bottom line is that content creation is not free and imaginative business methods must be utilized that may require new laws or a rethinking of some of our current laws. I believe now is the time for the business, legal, and political community to come together to draft a plan that accounts for this change in how people view, price, and protect intellectual property. To learn more about these issues you may contact me www.shearlaw.com
Copyright 2010 by the Law Office of Bradley S. Shear, LLC. All rights reserved.
Showing posts with label Entertainment Law. Show all posts
Showing posts with label Entertainment Law. Show all posts
Sunday, January 31, 2010
Tuesday, October 6, 2009
Details In The New FTC Endorsements and Testimonial Rules May Curb False Product Testimonial Claims But It Will Create Confusion
The Federal Trade Commission just released its final guidelines governing the use of edorsements and testimonials in advertising. Implementing updated rules for the first time since 1980 is a great idea. A lot has changed since the Carter administration. In particular, the Internet has supplanted television, radio, and printed newspapers as the most important media communication tool. However, upon closer review of the new rules, it appears that some of the rules are beneficial, while others are ill conceived, difficult to enforce, and create more problems than then solve.
I recently reviewed the text of Federal Register Notice 73 FR 72374 that was published last year. This notice discussed proposed changes to the regulations governing endorsements and advertisements. The new guidelines published in 16 CFR Part 255 are subject to go into effect on December 1, 2009. Under the new rules, bloggers will now have to disclose if they are receiving monetary incentives or payment in kind to write about a product or service. Additionally, celebrities will now be required to disclose if they have any economic ties to a product or service if they promote a product it on a talk show or via social media. I am in favor of the spirit of these rules because it will inform consumers about any possible conflicts of interest by those who are giving testimonials. Unfortunately, the rules appear to be intentionally broad and ambiguous and therefore they may cause more problems than they solve.
In addition, as part of the overhaul, there is a less publicized rule regarding celebrity endorsements that I like to call the Entertainment Lawyer Employment Act. Under this new rule, if a celebrity stars in an advertisement and reads a script that misleads the public about a product or a service, the celebrity may be personally liable along with the company who hired the celebrity. This new rule will force entertainment lawyers to include language in endorsement deals that requires advertisers to cover any attorney fees an endorser may incur related to the endorsement.
16 CFR Part 255 states, "[t]he addition of new Section 255.1 (d) and the new examples featuring celebrities, does not create new liability for celebrities, but serves merely to let them (and their advisors) know about the potential liability associated with their endorsement activities." I have to disagree with this assertion because it opens the door for celebrities to be held personally responsible for the information in their paid endorsements.
If you read example 4 on 73 FR 72391, you will understand the ridiculousness of the above statement about the rule. The rule places an unfair burden on celebrities and actors to ensure that the content of an advertisement is not misleading. This burden should only be with the company that is making the claim and not an actor. In the example that the FTC provides, a celebrity endorser is pitching a chicken roasting system. During the commercial's taping, the celebrity watches the roasting system cook 5 chickens incorrectly. However, the script calls for the celebrity to state, "if you want the perfect chicken every time, in just 30 minutes, this is the product you need." The celebrity follows the script as required by his or her contract and under the new rules the celebrity is subject to liability along with the advertiser for misrepresentation. The rationale given is that, "a significant percentage of consumers are likely to believe the celebrity's statements represent his own views even though he is reading from a script."
I have no problem with the advertiser being liable for intentional misrepresentations, but holding an actor, celebrity, professional athlete, or paid endorser liable also over reaches. This new rule may force paid endorsers to read scientific journals or memorize the Encyclopedia Britannica to ensure that their statements about products they endorse are true. Additionally, it may require specialized insurance to cover any claims that may arise from a celebrity endorsement. If a significant percentage of consumers in our country believe everything that comes out of a celebrity's mouth we have a bigger problem on our hands that no guidelines will be able to resolve.
If John Madden states, "EA Sports Madden NFL Football is the Perfect Football Video Game," he may be liable under the FTC's new rules for misrepresentation. Every Baltimore NFL fan knows this is a false statement because the perfect NFL football video game would have an All-Time Baltimore NFL team that includes both Johnny Unitas and Ray Lewis playing on the same Baltimore NFL team. Until Madden's NFL football game corrects this problem, Mr. Madden and EA Sports cannot claim that Madden NFL Football is the perfect product without incurring liability under the new rule.
Do you now see the ridiculousness of this part of the new guidelines?
Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.
I recently reviewed the text of Federal Register Notice 73 FR 72374 that was published last year. This notice discussed proposed changes to the regulations governing endorsements and advertisements. The new guidelines published in 16 CFR Part 255 are subject to go into effect on December 1, 2009. Under the new rules, bloggers will now have to disclose if they are receiving monetary incentives or payment in kind to write about a product or service. Additionally, celebrities will now be required to disclose if they have any economic ties to a product or service if they promote a product it on a talk show or via social media. I am in favor of the spirit of these rules because it will inform consumers about any possible conflicts of interest by those who are giving testimonials. Unfortunately, the rules appear to be intentionally broad and ambiguous and therefore they may cause more problems than they solve.
In addition, as part of the overhaul, there is a less publicized rule regarding celebrity endorsements that I like to call the Entertainment Lawyer Employment Act. Under this new rule, if a celebrity stars in an advertisement and reads a script that misleads the public about a product or a service, the celebrity may be personally liable along with the company who hired the celebrity. This new rule will force entertainment lawyers to include language in endorsement deals that requires advertisers to cover any attorney fees an endorser may incur related to the endorsement.
16 CFR Part 255 states, "[t]he addition of new Section 255.1 (d) and the new examples featuring celebrities, does not create new liability for celebrities, but serves merely to let them (and their advisors) know about the potential liability associated with their endorsement activities." I have to disagree with this assertion because it opens the door for celebrities to be held personally responsible for the information in their paid endorsements.
If you read example 4 on 73 FR 72391, you will understand the ridiculousness of the above statement about the rule. The rule places an unfair burden on celebrities and actors to ensure that the content of an advertisement is not misleading. This burden should only be with the company that is making the claim and not an actor. In the example that the FTC provides, a celebrity endorser is pitching a chicken roasting system. During the commercial's taping, the celebrity watches the roasting system cook 5 chickens incorrectly. However, the script calls for the celebrity to state, "if you want the perfect chicken every time, in just 30 minutes, this is the product you need." The celebrity follows the script as required by his or her contract and under the new rules the celebrity is subject to liability along with the advertiser for misrepresentation. The rationale given is that, "a significant percentage of consumers are likely to believe the celebrity's statements represent his own views even though he is reading from a script."
I have no problem with the advertiser being liable for intentional misrepresentations, but holding an actor, celebrity, professional athlete, or paid endorser liable also over reaches. This new rule may force paid endorsers to read scientific journals or memorize the Encyclopedia Britannica to ensure that their statements about products they endorse are true. Additionally, it may require specialized insurance to cover any claims that may arise from a celebrity endorsement. If a significant percentage of consumers in our country believe everything that comes out of a celebrity's mouth we have a bigger problem on our hands that no guidelines will be able to resolve.
If John Madden states, "EA Sports Madden NFL Football is the Perfect Football Video Game," he may be liable under the FTC's new rules for misrepresentation. Every Baltimore NFL fan knows this is a false statement because the perfect NFL football video game would have an All-Time Baltimore NFL team that includes both Johnny Unitas and Ray Lewis playing on the same Baltimore NFL team. Until Madden's NFL football game corrects this problem, Mr. Madden and EA Sports cannot claim that Madden NFL Football is the perfect product without incurring liability under the new rule.
Do you now see the ridiculousness of this part of the new guidelines?
Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.
Wednesday, August 19, 2009
Hollywood Is Trying To Figure Out How To Embrace Social Networking
Great article today in the Baltimore Sun today about how Hollywood is trying to figure out how Social Networking websites effect movie openings. Twitter and other Social Networking websites are great for getting the word out and should be incorporated into every marketing campaign for any business. As demonstrated in the past year in elections throughout the world, social networking when used deftly can be a very powerful tool.
Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.
Copyright 2009 by the Law Office of Bradley S. Shear, LLC. All rights reserved.
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