In the article and in exercise 1, I identified the key terms of any digital rights management analysis.  In this exercise I am focusing on what to aim for when negotiating the terms of a license.
 
But as a prequel to that I should first clarify the difference between a license and an assignment.  I have thrown the word “license” around liberally in this discussion so I think it is important to confirm that everyone understands what I mean.  If you own the copyright in something – a photo, a play, a digital artwork, a novel, a song – and you wish to sell it or give someone else rights in it, you can either assign or license the copyright.

Assignment means that you divest yourself completely of the copyright.  You sell it outright, in the traditional sense of the word “sell”.  It becomes the new owner’s property to do with as they will, and you never get to see it again.  A license on the other hand is an allocation of a specified right to use the copyright, while you retain the copyright yourself.  The difference is analogous to the difference between renting and selling a car.

It goes without saying, that if you are in the business of creating original copyright, you should never assign it, other than in the most dire circumstances (eg someone offers you a shitload of money).  Far more effective to split it up and sell off rights of use to various bits of it (which is really the whole topic of this discussion).  It’s common sense really; if you retain the copyright you can sell usage rights over and over for as long as you shall live and then your next of kin can go on doing it for another 50 years after you die (not that you care at that point).

And that philosophy should be carried over to the licensing deals you do (that is, hang on to as much as you can).  As the licensor (and looking at it from a purely commercial perspective) your job is to hang to as much as you can while extracting the most money from the licensee and their job is the reverse – pay as little as they can for the most they can get.

In a practical sense this means:

• Limiting the term - the sooner you get it back the sooner you can sell it to someone else.

• Limiting the territory - limiting the deal to one or two territories leaves you free to sell the same right to someone else in other territories.  There’s a further practical consideration here, which is that most distributor’s/licensee’s expertise and contacts are limited to the territory they operate in.  If you give them other territories, they will probably just sub-license to other distributors/licensees based in those other territories.  You might as well do the deal direct with the other territories and avoid the middle man ticket clipper.

• Limiting the categories of rights granted – the more rights you retain the more deals you can do with other people.  And as with territory, licensees/distributors want to grab as many rights as they can, even if they don’t have particular expertise in dealing with those rights.

You can also look at licensing non-exclusive rather than exclusive rights (leaving you free to license them to others at the same time).  This is a superficially attractive option, but usually impractical.  Hardly anyone is interested in non-exclusive rights, and once you have given a non-exclusive license to someone you have nullified your ability to offer non-exclusive rights to anyone.

Finally, I would add the rider, that given the complexities involved there is no substitute for getting good quality legal advice at the start of a project and before you have locked yourself into an “all media now existing of invented in the future throughout the universe in perpetuity” type of deal!