legal and contractual issues
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Legal Services Technology, Media and Communications Group
Frames 2002
Live Entertainment :The Big Ticket
Key Legal Issues
March 15, 2002
By Ameet Hariani, Partner
© 2002 Andersen Legal India All rights reserved. 3
Outline of the Presentation
• Industry Overview
• Legal and Contractual Issues
• General Issues and Emerging trends
• Recent Developments
Live Entertainment: An Industry Overview
© 2002 Andersen Legal India All rights reserved. 5
Various Types of Live Events
• Corporate Events– Product and brand launches– Conferences– Exhibitions– Corporate celebrations
• Live Entertainment – Celebrity appearances– Music concerts– Variety entertainment shows– Fashion shows/beauty contests
© 2002 Andersen Legal India All rights reserved. 6
Various Types of Live Events
• Branded Events– Promotion and management of Brands
• Televised Events– Events specially created for television channels
• Sports Events– Focussed around a sporting event
• Concept Events– Concept conceived by Event Management Company
• Hybrid Events– Mixture of two or more of the above
© 2002 Andersen Legal India All rights reserved. 7
Key Industry Players
• Event Management Company (“EMC”)
• Corporate client
• Sponsor
• Celebrity/live entertainment star
• Agents/ celebrity management companies
• Advertising agencies (as either creative content creators or media buyers)
• Performers (emcee, dancers, etc)
• Equipment suppliers
• Event location owners
• Technical team and Stage crew
© 2002 Andersen Legal India All rights reserved. 8
Size and Growth of Industry in India
• Size of Industry in 1991 – Rs 20 million
• Size of Industry in 2001 – Rs 1.5 billion
• Growth rate of Live Entertainment segment – 30% per annum
• Projected growth to a size of Rs 5.6 billion in 2006
Source: FICCI Report, Indian Entertainment Industry, 2002, prepared by Arthur
Andersen
© 2002 Andersen Legal India All rights reserved. 9
Revenue Streams
• Sponsorship receipts
• Ticket sales
• Advertising revenues
• Licensing/assignment of IPRs – Television, Music, Video and
Internet
• Exploiting brands created
• Merchandising
• Product Endorsement by Celebrities and Stars
Legal and Contractual Issues
© 2002 Andersen Legal India All rights reserved. 11
Key Legal Issues
• Leveraging and Exploiting IPRs created through live events
• Ownership, licensing and assignment of rights relating to:
– Televised Rights
– Audio & Music Rights
– Video and VCD Rights
– Internet Rights
• Ownership and licensing of Brands for Live Events
© 2002 Andersen Legal India All rights reserved. 12
Key Legal Issues (contd.)
• Performers Rights and Moral Rights
• Enforceability of Personal Contracts
• Prevention of ‘boot-legging’ of performances and piracy
• Regulatory approvals and permits
• Insurance
© 2002 Andersen Legal India All rights reserved. 13
Key Contractual Issues
• Clearly defined rights and obligations between the Parties
• Ownership, assignment, licensing of intellectual property created
• Defining territories for distribution of audio, video, music rights
• Payment terms
• Representation and warranties
• Indemnities
© 2002 Andersen Legal India All rights reserved. 14
Key Contractual Issues (contd.)
• Events of default to be defined
• Penalty for delay/ default – but beware of statutory provisions!!
• Remedies in case of default, failure or delay in performance
• Non-compete – but beware of statutory provisions!
• Termination triggers and consequences
© 2002 Andersen Legal India All rights reserved. 15
Legal and Contractual Issues
Issues relating to Celebrity/Star
• Performers Rights over live performances
• Moral Rights – right of attribution, right against false attribution,
right to object to prejudicial alteration of broadcasts and
recordings of performances
• Non-compete and existing impediments on celebrities/stars
• Formulating efficient tax structures for international artistes
© 2002 Andersen Legal India All rights reserved. 16
Legal and Contractual Issues (contd.)
Issues relating to EMC/Sponsor
• Non-performance by celebrity/star
– Personal contracts – not assignable; enforceability of
– Performance by representative, impossibility of performance due to illness, etc.
– Liability as to damages for show cancellation, refund of tickets, etc
• Non-performance because of technical glitches
– Remedies open to EMC
– Loss of reputation of EMC
• Delay in performance
© 2002 Andersen Legal India All rights reserved. 17
Legal and Contractual Issues (contd.)
Issues relating to EMC/Sponsor (contd.)
• Controlling and leveraging rights over reproduction, commercial
distribution, and broadcasting, including making available online
• Licensing, merchandising, and exploiting brands created
General Issues and Emerging Trends
© 2002 Andersen Legal India All rights reserved. 19
General Issues and Emerging Trends
A. Structure of Industry
• Small number of dominant large event management companies
and greater number of smaller outfits
• Non-corporate entities
Trends
• Corporatisation as a business - could be encouraged by
granting exemption from capital gains tax, for a limited period of
time
• Corporatisation offers advantages of limited liability and
increased financing options
© 2002 Andersen Legal India All rights reserved. 20
General Issues and Emerging Trends (contd.)
B. Sources of Finance
• Currently all entities are privately held, and privately funded
• Most funding is through loans, privately raised or through
sponsors
• Since most players are not companies, there is no capital
market history
Trends
• Capital markets funding as an option
• Securitization as a way to raise funds
© 2002 Andersen Legal India All rights reserved. 21
C. Diversification
• Global entertainment industry players are diversified
conglomerates
• Would mitigate risk associated with any one type of activity,
e.g., films. Also enable companies to cross-promote their
offerings across several delivery platforms
Trends
• Mergers and acquisitions in the entertainment industry - leading
to consolidation. Diversification of business leading to better
hedging of risks
General Issues and Emerging Trends (Contd.)
© 2002 Andersen Legal India All rights reserved. 22
D. Expansion in infrastructure
• Lack of adequate infrastructure for staging of events
• Sophisticated lighting and special effects equipment required is
hired from abroad. Presently imports are hampered by lengthy
procedure for import of such equipment
Trends
• Lobbying to the Government for improvement of infrastructure,
and for streamlining of import procedure
• Multiplexes having stage/arena for live entertainment
General Issues and Emerging Trends (Contd.)
© 2002 Andersen Legal India All rights reserved. 23
E. Reduction and rationalisation of entertainment tax
• India has one of the highest levels of entertainment tax in comparison to other Asian economies
• Entertainment, being a state subject, the level and nature of entertainment tax varies widely across states, from 0 to 130%*
Trends
• Government should take concrete steps to rationalise the tax structure across states
*Source: FICCI Report, Indian Entertainment Industry, 2002, prepared by Arthur Andersen
General Issues and Emerging Trends (Contd.)
© 2002 Andersen Legal India All rights reserved. 24
F. Television rights, music rights and other revenue streams
• Exploiting televisation of live events as an innovative way to
wean away and retain TV viewership
• Acquisition of music and audio rights in live entertainment
events by music companies
Trends
• Marketing and publicizing events a la films and innovative
revenue streams like merchandising should be exploited.
Globally, these are huge revenue generators, and this can be
replicated in India
General Issues and Emerging Trends (Contd.)
© 2002 Andersen Legal India All rights reserved. 25
G. Emerging sources of content delivery
• Rights in newer mediums like Internet-streaming emerging
• With broadband reaching people’s homes, web-casting, pay-
per-view and video-on-demand may become significant revenue
sources
• Convergence of technologies may integrate mediums as well
Trends
• Alternative revenue streams and non-conventional sources of
content delivery play role in order to be competitive
General Issues and Emerging Trends (Contd.)
© 2002 Andersen Legal India All rights reserved. 26
H. Globalization of entertainment market
• Large portion of total revenues in most entertainment industry
products comes from foreign and overseas markets
• Entertainment delivered via the Internet or satellite can reach a
global audience
Trends
• Consider global audience as market – large Indian community
overseas could be effectively targeted for all live entertainment
events
General Issues and Emerging Trends (Contd.)
© 2002 Andersen Legal India All rights reserved. 27
I. Industry Forum
• The Indian event management Industry did not have an industry forum or self-regulatory body, until very recently
Trends
Event Management Association of India established on November 7, 2001*
*Source: Press Information Bureau
General Issues and Emerging Trends (Contd.)
© 2002 Andersen Legal India All rights reserved. 28
Budget 2002
• Service tax has been made applicable to 11 new categories of
services, including event management
• Import of equipment for re-export purposes has been proposed
on payment of customs duty depending on period of intended
use
Recent Developments
Legal Services Technology, Media and Communications Group
Mr Ameet Hariani, [email protected]
Ms Raksha Kothari [email protected]
Tel No: (22) 216 03 00Fax No: (22) 216 04 00