From Hollywood blockbusters to daily TV shows to music hits, Media & Entertainment industry ensures we are glued to our favorite entertainment channels and online streaming services. But how often do we think about the overwhelming amount of work that goes behind producing these? Did you know none of this work can start without approved contracts?
The economy of the Media & Entertainment industry is volatile and uncertain. Moreover, entertainment companies often form, reform, and merge, which adds to a lot of transformation and changes. Rapidly changing consumer tastes is another critical factor that can make or break the artists and the companies they are working with. Thus, to tackle this instability and protect the commercial interests of all the parties, the industry heavily relies on contracts and management of ever-changing contracts.
The industry deals with various types of contracts and consequently faces some common challenges in managing the same. This is where advanced contract lifecycle management (CLM) solutions can come to the rescue.
Types of Contracts in the Media & Entertainment Industry
Intellectual Property: The content produced by the Media & Entertainment industry like songs, films, books, etc. are subjected to trademarks and copyrights. The ownership and use of such content or ‘property’ are defined by numerous contractual terms which are often negotiated for months. Both the artists and the entertainment companies compete for more control over the ‘intellectual property’.
Contract for Rights: These contracts allow usage & distribution of a creative property like a photograph or a song by transferring the license or copyright ownership. Hence, the media or entertainment companies can use the work produced by the artists as a hired commodity and automatically enjoys copyright ownership.
Personal Service Agreements: This is one of the most basic types of contracts in the entertainment industry that binds the artists to work with a company for a defined period to produce content. These agreements often prevent the artist from working with other companies until the tenure expires.
Option Agreements: Artists must be safeguarded against poorly drafted contracts. Musicians often sign an Option Agreement that does not incorporate the exit clause, thus, allowing them to exit the deal if the company refuses or fails to release their content despite reserving them to work with that company only.
Freelance Agreements: Media producers often deal with freelance writers, videographers, musicians, and various other artists. They are usually hired for a single to a few projects, and the deal ends after that. In some cases, if both parties agree, the contracts are renewed. Hence, freelance agreements are widespread in this industry.
Technology Agreements: The media industry thrives on technology, especially the newer ones like social media. No technology comes without several types of contracts; each has its own set of terms and conditions, and comes with expiration dates, renewal dates, payment cycles, etc.
Typical Contracting Challenges Faced by the Industry
As we can see, the Media & Entertainment industry deals with several types of contracts and in huge numbers. Hence, tracking these hundreds of contracts simultaneously becomes quite challenging. Having worked with Media and Entertainment companies, Ultria understands the changing needs of the industry and some of the common contracting challenges faced by the industry:
Renewals & Terminations – Due to the absence of a suitable CLM system, companies do not have much visibility into the deadlines, reminders, contract expiration and renewal dates, and any other terms that must be monitored in-depth to ensure maximum contract compliance. Thus, this lack of visibility may lead to poor compliance.
Tracking Key Performance Indicators – CLM can largely benefit from KPIs as they evidently show how successful a company has been in fulfilling its aims. However, CLM includes a broad range of activities, and it becomes difficult for the contract managers to infer a direct link between these activities and their subsequent outcomes, be it positive or negative.
International Compliance – If managing contracts within the boundaries of the country were not tricky enough, media companies, especially news agencies and the ones involved with the film industry, often transfer content across the borders. Hence, it becomes difficult for them to ensure that their contracts comply with international law.
Inefficient Storage Method – Traditionally, the companies store their contracts in a set of folders or flash drives, which makes it difficult to find them quickly and efficiently as and when they are needed. Moreover, this method leaves plenty of scope for losing the agreements.
Maintaining Confidentiality – There is no debate that contracts are confidential documents that are not meant to be accessed by anyone and everyone. With all the burden of other vital tasks, constant surveillance of contracts to avoid undesired access not only becomes an extra headache but is also practically impossible.
How Can Advanced CLM Solutions Help?
The above-mentioned challenges indicate that despite the Media & Entertainment industry being contract-heavy, many companies in the industry are not equipped with the appropriate technology to manage their contracts efficiently. This may lead to both tangible and intangible losses for the companies. However, this can be avoided by adopting an advanced CLM solution. Let us look at how this technology can address the common contractual challenges faced by the industry:
Single Centralized Repository: As mentioned earlier, media & entertainment companies follow the traditional method of storing documents, i.e., saving them in folders or flash drives. This not only makes it difficult to locate them but also increases the chance of losing them. A single centralized repository that is offered by an advanced CLM software solves this problem by consolidating contracts into an organized location. Ultria’s Contract Repository Software provides secure and centralized storage for all contracts. It also enables multi-parameter search, dynamic reporting, and configurable dashboards.
Protection of Confidentiality: An entertainment company’s value lies in the artists they work with and their respective creations. So, it is vital for the companies to maintain the confidentiality and control the access to the agreements they have with these artists. No company would want their contracts to land somewhere they are not supposed to. An effective CLM system with permission-based user roles limits who can view the contracts and determines the extent of access provided to the users, thus, ensuring only the desired audience have proper access.
Increased Visibility: Media & Entertainment industry deals with a vast number of contracts. It is very difficult to keep track of the expiry and renewal dates of each and every contract. Missing even one deadline can cause significant monetary loss to a company. AI tools in CLM solutions like Orbit Explorer by Ultria increase visibility and accountability in the contract lifecycle by setting alerts and reminders for renewal or expiry dates, deadlines, payment dates, and so on.
Milestone & Performance Tracking: The industry deals with contracts having a wide range of obligations and milestones. With an AI assistant like Orbit Protector, appropriate milestones and metrics can be pre-configured for accurate tracking and assessment of contract performance, thus, providing visibility and alerting the parties in case of any deviation or delay in the milestones configured. This immunizes companies against operational contingencies and ensures maximum compliance.
International Contracting Made Easy: International collaboration is made easy and simple with cloud-based CLM software. The centralized repository smoothens the process. Moreover, utilizing the feature of e-signature, a lot of time is saved that would otherwise be wasted in transit. With the help of Analytics, administrators can monitor revenue, expenditure, regulations, and compliance from anywhere in the world. This leads to better compliance and reduces the chances of infractions.
Considering the massive number of contracts and the challenges that come with its management, it can be inferred that the Media & Entertainment industry is in need of an advanced technology that would help them manage their contracts efficiently. AI-led CLM solutions with their benefits would be the appropriate choice for the companies in this industry. With contracting being taken care of to a great extent, they would be able to focus on the other valuable aspects of the business.