So you are thinking of licensing your content for profit. Great. You have just stumbled on the guide for your next steps. In this article, we will consider what content is, why you need a content license agreement and finally, key clauses in a content license agreement.
What is Content:
Content is a broad term but for the purposes of this article, content will be defined as high quality, useful information that conveys a story or idea presented in a contextually relevant manner with the goal of soliciting an emotion or engagement. Delivered live, pre-recorded, or written, content can be expressed using a variety of formats including text, images, video, audio and/or presentations.
Why Do I Need a Content License Agreement:
You might at this point ask yourself, “why do I need a content license agreement?”. What are the advantages of entering into a content license agreement?
A content license agreement guarantees that the interest of both the licensor and the licensee are safely taken into account. Some of the advantages of a content license agreement are:.
- The licensee would have easier and quicker access to promotional materials as he/she would be utilizing the established intellectual property of the licensor.
- The licensee would be saved from the effort of having to pool together and gather resources for the purposes of research and development of content towards promoting his/her own products or services.
- The licensee will be in a position to generate revenue off the intellectual property of another.
- The licensor would be able to profit from his/her content.
An example of a popular licensee of content is Over-The-Top (OTT) platform, Netflix. Although Netflix produces a lot of good shows per year, there are very few shows in which Netflix owns the Intellectual Property.
Therefore, no matter how good ideas you have or how big your position in the market is, entering into a content license agreement is very beneficial in terms of marketing and promotion.
Key Clauses in a Content License Agreement;
- License Clause: This clause grants the licensee the right to use the content of the licensor for a period of time and under the terms which will be determined by the parties.
- Content Clause: This clause will state expressly the specific content the licensee wants to license to the licensor.
- Scope: This clause covers the exclusivity of the rights granted. If a license is exclusive, it means the licensor cannot license that piece of content to any other business. The licensee must ensure that this exclusivity is clear to the licensor. The licensor might also want to guard against the licensee sublicensing or selling said content to any third parties. If such occurs, they are in breach of the licensing agreement which may result in legal steps being taken.
- Territory: This clause simply states the region in which the licensee is allowed to use the content in. The licensee might want to ensure a very wide reach, at best an unlimited reach.
- Use of the Content: The agreement can explicitly state how the content should be used and on what platforms the content should be used. The agreement can also state that such content should not be used in any manner that is obscene, scandalous, blasphemous or is any manner derogatory to any person alive or dead.
- Ownership of the Content: The licensor may, based on the content licence agreement, include terms around the attribution of ownership of the said content. Here, the licensor may request that the brand of the licensor be listed on the content together with a shortcut to the website of the licensor .
- Alterations of the Content: The agreement might specifically state that any modification of the content of the licensor by the licensee belongs to the Licensor.
Alternatively, you could also use the content licence agreement to make it clear that the Licensee cannot change the content in any way.
- Length of the Content Licence: This clause stipulates the duration of the license granted. If the licensor chooses to license the content indefinitely, the licence can still be revoked if the other business breaches the agreement. This could occur, for example, in situations where the other person uses the content for reasons not licenced for, or if they do not acknowledge who created the content when asked them to do so.
- Licence Fee and Payment: Do you want to be paid? This should be made clear in the agreement. For some licensors, asking for a link back to their website will be sufficient compensation. However, other businesses may expect to be paid. This may be:
- a flat monthly figure;
- a one-off payment; or
- based on the number of views.
The content licensing agreement should also state what the payment terms are, including:
- how often you will invoice them; and
- when you expect to receive payment.
Marketing and Promotions:
This is a clause peculiar to content license agreements. This provision ensures that no party, especially the licensee, uses the name or the business logo of the other party in any publicity act or reveals their association to the public without the prior written consent of the other party. The condition of such a clause is that it facilitates a party to learn and track the usage of such party’s name and the business logo by another party in the publicity act. It puts a condition on the consenting party that such a party shall not withhold consent for any unreasonable cause.
Liability: This clause states that the licensor is not responsible for any outcome as a result of the use of the content by the licensee. e.g. the content not being suitable for their business requirements; or any of their customers relying on your content to make business and legal decisions.
The content license agreement should, therefore, include clauses to exclude liabilities in certain situations and limit liabilities in others.
Precautions While Signing the Content Licensing Agreement:
Minimum Performance guarantee:
If the Licensor is granting an exclusive license to the Licensee, and the revenue of the Licensor would solely depend on the performance of the Licensee. Therefore, it is beneficial for the Licensor to include a minimum guarantee performance clause that will force the Licensee to perform to a certain benchmark, or if not then the Licensor will have the right to terminate the agreement.
Parties can ensure that the negotiation and signing of a content agreement go smoothly by discussing certain purely contractual aspects like performance guarantee in the term sheet initially because it might have to be discussed with a particular team or management of the Licensor.
To summarise, the grant of right is the most important and distinct clause in the content license agreement, with that said, other clauses such as consideration, term, representation and warranties, obligations, should be drafted with uttermost detail for a smooth and good business deal between the Licensor and Licensee.
Kaeto is an Associate at Olisa Agbakoba Legal. She has 8 years of extensive and diverse experience in contract management, legal drafting, regulatory compliance, research, administration, customer service, presentation, Negotiation, ICT skills, project management, marketing, and general management skills.