Tag: Entertainment Industry

Automating Entertainment: Writers Demand that Studios Not Use AI

When the Writers Guild of America (WGA) came with their list of demands in the strike that has already grinded production on many shows to a halt, chief among them was that the studios agree not to use artificial intelligence to write scripts. Specifically, the Guild had two asks: First, they said that “literary material,” including screenplays and outlines, must be generated by a person and not an AI; Second, they insisted that “source material” not be AI-generated.

The Alliance of Motion Picture and Television Producers (AMPTP), which represents the studios, rejected this proposal. They countered that they would be open to holding annual meetings to discuss advancements in technology. Alarm bells sounded as the WGA saw an existential threat to their survival and that Hollywood was already planning for it.

Writers are often paid at a far lower rate to adapt “source material” such as a comic book or a novel into a screenplay than they are paid to generate original literary material. By using AI tools to generate an outline or first draft of an original story and then enlisting a human to “adapt” it into screenplay, production studios potentially stand to save significantly.

Many industries have embraced the workflow of an AI-generated “first draft” that the human then punches up. And the WGA has said that its writers’ using AI as a tool is acceptable: There would essentially be a robot in the writers’ room with writers supplementing their craft with AI-generated copy, but without AI wholly usurping their jobs.

Everyone appears in agreement that AI could never write the next season of White Lotus or Succession, but lower brow shows could easily be AI aped. Law and Order, for instance, is an often cited example. Not just because it’s formulaic but because AIs are trained on massive data sets of copyrighted content and there are 20 seasons of Law and Order for the AI to ingest. And as AI technology gets more advanced who knows what it could do? Chat GPT was initially released last November and as of writing we’re on GPT-4, a far more powerful version of a platform that is advancing exponentially.

The studios’ push for the expanded use of AI is not without its own risks. The Copyright Office has equivocated somewhat in its determination that AI-generated art is not protectable. In a recent Statement of Policy, the Office said that copyright will only protect aspects of the work that were judged to have been made by the authoring human, resulting in partial protections of AI-generated works. So, the better the AI gets—the more it contributes to cutting out the human writer—the weaker the copyright protection for the studios/networks.

Whether or not AI works infringe the copyrights on the original works is an issue that is currently being litigated in a pair of lawsuits against Stability AI, the startup that created Stable Diffusion (an AI tool with the impressive ability to turn text into images in what some have dubbed the most massive art heist in history). Some have questioned whether the humans who wrote the original episodes would get compensated, and the answer is maybe not. In most cases the scripts were likely works for hire, owned by the studios.

If the studios own the underlying scripts, what happens to the original content if the studios take copyrighted content and put it through a machine that turns out uncopyrightable content? Can you DMCA or sue someone who copies that? As of this writing, there are no clear answers to these questions.

There are legal questions and deeper philosophical questions about making art. As the AI improves and humans become more cyborgian, does the art become indistinguishable? Prolific users of Twitter say they think their thoughts in 280 characters. Perhaps our readers can relate to thinking of their time in 6 minute increments, or .1’s of an hour. Further, perhaps our readers can relate to their industry being threatened by automation. According to a recent report from Goldman Sachs, generative artificial intelligence is putting 44% of legal jobs at risk.

© Copyright 2023 Squire Patton Boggs (US) LLP

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Not So Fast—NCAA Issues NIL Guidance Targeting Booster Activity

Recently, the NCAA Division I Board of Directors issued guidance to schools concerning the intersection between recruiting activities and the rapidly evolving name, image, and likeness legal environment (see Bracewell’s earlier reporting here). The immediately effective guidance was in response to “NIL collectives” created by boosters to solicit potential student-athletes with lucrative name, image, and likeness deals.

In the short time since the NCAA adopted its interim NIL policy, collectives have purportedly attempted to walk the murky line between permissible NIL activity and violating the NCAA’s longstanding policy forbidding boosters from recruiting and/or providing benefits to prospective student-athletes. Already, numerous deals have been reported that implicate a number of wealthy boosters that support heavyweight Division I programs.

One booster, through two of his affiliated companies, reportedly spent $550,000 this year on deals with Miami football players.1 Another report claims that a charity started in Texas—Horns with Heart—provided at least $50,000 to every scholarship offensive lineman on the roster.2 As the competition for talent grows, the scrutiny on these blockbuster deals is intensifying.

Under the previous interim rules, the NCAA allowed athletes to pursue NIL opportunities while explicitly disallowing boosters from providing direct inducements to recruits and transfer candidates. Recently, coaches of powerhouse programs have publicly expressed their concern that the interim NIL rules have allowed boosters to offer direct inducements to athletes under the pretense of NIL collectives.3

The new NCAA guidance defines a booster as “any third-party entity that promotes an athletics program, assists with recruiting or assists with providing benefits to recruits, enrolled student-athletes or their family members.”4 This definition could now include NIL collectives created by boosters to funnel name, image and likeness deals to prospective student-athletes or enrolled student-athletes who are eligible to transfer. However, it may be difficult for the NCAA to enforce its new policy given the rapid proliferation of NIL collectives and the sometimes contradictory policies intended to govern quid pro quo NIL deals between athletes and businesses.

Carefully interpreting current NCAA guidance will be central to navigating the new legal landscape. Businesses and students alike should seek legal advice in negotiating and drafting agreements that protect the interests of both parties while carefully considering the frequently conflicting state laws and NCAA policies that govern the student’s right to publicity.

ENDNOTES

1. Jeyarajah, Shehan, NCAA Board of Directors Issues NIL Guidance to Schools Aimed at Removing Boosters from Recruiting Process, CBS Sports (May 9, 2022, 6:00 PM).

2. Dodd, Denis, Boosters, Collectives in NCAA’s Crosshairs, But Will New NIL Policy Be Able To Navigate Choppy Waters?, CBS Sports (May 10, 2022, 12:00 PM).

3. Wilson, Dave, Texas A&M Football Coach Jimbo Fisher Rips Alabama Coach Nick Saban’s NIL Accusations: ‘Some People Think They’re God,’ ESPN (May 19, 2022).

4. DI Board of Directors Issues Name, Image and Likeness Guidance to Schools, NCAA (May 9, 2022, 5:21 PM).

Article By Jonathon K. Hance, Joshua H. Gold-Quirós, and Drew Taggart of Bracewell LLP

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© 2022 Bracewell LLP

Tours in Trouble: Rock Stars and Insurance Recovery

Touring is where profits lie for today’s successful recording artists, with considerable sums expended on venues and staging to bring an artist’s music to his or her fans. But the list of things that can go wrong before and during a tour is almost endless.

That’s why artists, tour companies, and record labels purchase various forms of tour insurance to mitigate the risk from postponements or cancelations caused by a variety of circumstances. Often, those purchasing tour insurance have considerable influence over what harms are covered and the terms under which reimbursement will be provided. Unforeseen disasters can result in losses to the tune of millions of dollars if proper insurance is not obtained and handled carefully.

Three sources of tour insurance claims are particularly important: natural disasters, terrorism, and artist illness. As we outline below, tour profitability depends upon understanding these threats and choosing effective strategies to mitigate them or avoid them entirely.

Coverage for Natural Disasters

Just like any other event, tours planned months or years in advance are susceptible to natural disasters such as earthquakes, hurricanes, and floods. However, even when tour insurance is purchased, receiving coverage for tour cancelations or postponements on this basis is not automatic.

For example, many “non-appearance” insurance policies contain exclusions that could be construed to eliminate coverage for certain kinds of disasters. One such provision is the “adverse weather” exclusion, which commonly excludes coverage for outdoor performances affected by rain, wind, or other similar meteorological incidents. Also common is language restricting coverage to certain enumerated perils and requiring that a covered peril be the “sole and direct cause” of any non-appearance. How such policy language is interpreted in the case of a hurricane or tropical storm, for instance, may make the difference as to whether an artist is compensated under his or her tour insurance policy.

Coverage for Acts of Terrorism

Just as threatening to tour profits as natural disasters are those postponements or cancelations caused by acts of terror. The attacks in Las Vegas during Jason Aldean’s performance, those in Manchester, England outside Ariana Grande’s show, and those at the Eagles of Death Metal performance at the Bataclan club in Paris, France highlight that terrorism is a very real threat to music artists.

However, even if an artist’s tour is insured, acts of terrorism are often excluded unless specifically added by an amendment to insurance policies called an endorsement, which can be quite expensive.  Moreover, terrorism coverage policy language varies, with certain provisions requiring an attack to have taken place, whereas others provide coverage if a tour is postponed or canceled based on the threat of an attack. Still other policies that purport to cover cancellations due to terrorist acts limit coverage based on how long after or how far away from an attack or threatened attack the tour is scheduled to take place. For instance, the Foo Fighters canceled the remainder of their European tour in Spain and Italy in the wake of the Paris bombing in 2015. However, the Foo Fighters’ insurers initially refused to reimburse them for these losses under their applicable tour insurance policies (which included terrorism coverage), apparently because the insurers considered the future shows too far away from the date and site of the Paris attack. After much publicity and costly litigation, the lawsuit was eventually settled on confidential terms.

Coverage for Artist Illness

Tour events are also canceled due to artist illness. Often, an insurer’s response to a claim based on artist illness depends on the nature of the illness and what the artist said in underwriting materials submitted to the insurers.  It is not uncommon for coverage disputes to center around the accuracy of medical reports submitted by artists to insurers. For instance, Linkin Park canceled parts of a tour in 2008 due to their then-frontman’s back issues. Nickelback was forced to cancel part of their 2015 No Fixed Address tour due to polyps discovered on their lead singer’s throat  In both instances, the bands’ tour insurance claims were denied based on alleged inaccurate medical reporting in the underwriting materials submitted to the insurers. And in both cases, the bands were forced to resort to litigation based upon alleged failures to disclose existing medical issues.

Sometimes, an artist’s tour is postponed or canceled but the artist and insurers do not agree on the cause. Not surprisingly, this can lead to coverage disputes.  For example, Kanye West’s cancelation of his 2016 Saint Pablo tour resulted in two lawsuits, with West claiming he suffered a “debilitating medical condition” and his insurers insinuating the cancelation was due to drug use and mental health issues (both of which were excluded under the policy). The last of the suits ultimately settled in February 2018, but not before myriad news outlets reported on the parties’ allegations, including leaked details about West’s medical history.

Strategies to Mitigate or Avoid Coverage Threats 

These examples only scratch the surface of the many reasons a tour may be postponed or canceled, and the ways in which this can complicate insurance recovery.  Different strategies should be applied depending on individual challenges, but all involve careful scrutiny of the governing policy language.  The best time for such scrutiny is during negotiation of the policy itself, when experienced counsel can advise on coverage gaps or language that might cause trouble for touring artists.

Also key is carefully shaping the public narrative for any tour postponement or cancelation. This is particularly true in the context of postponements or cancelations where the cause may be disputed.  Effective counsel can assist in rapidly coordinating the actions of doctors, the media, and the artist to ensure a consistent message and head off potential pretextual coverage denials from insurers.

As the Ramones sang, “high risk insurance, the time is right.”

© 2019 Gilbert LLP
This post was written by Benjamin W. Massarsky and Kellyn Goler of Gilbert LLP.

The Definition of Film Fest Success– For Financiers and Filmmakers

The familiar annual rhythm of the major film festivals – Sundance in January, Berlin in February, Cannes in May and so on through Toronto in September – is well underway. And with Sundance and the Berlinale already in the rear-view, and SXSW right around the corner, it’s fair to say the 2019 sales environment looks to be very buoyant.

Although the single-film Sundance sale record was not eclipsed in 2019, the number of films that sold for eight figures was the highest ever, with numerous films racking up paydays in the $10-15 million range. Understandably, press reports out of Sundance tend to focus on these lofty (and once dreamlike) selling prices. It makes sense: the big numbers make great headlines, and the selling price is often the only deal information made publicly available.

But filmmakers – and in some situations, even film financiers – are not always best served by selling to the highest bidder. From a filmmaker perspective, the largest upfront payment, as great a thrill as it may be, does not necessarily translate into the best support for the film or most effectively accomplish the short- and long-term goals of the filmmakers. And even from a financier perspective, the biggest initial return does not always equate with maximizing the profitability of the film and the long-term interests of the financiers.

There are many other deal points that must be considered and carefully weighed. First, what type of distribution is being offered, and equally importantly, what level of support are the distributors promising in the chosen distribution channel or channels.

Is the distributor proposing a “conventional” initial theatrical release, such as might be expected from specialty theatrical distributors such as Fox Searchlight, Focus Features, Sony Pictures Classics, A24 and Roadside Attractions? Or is the buyer a streaming service such as Netflix, which may be offering no (or only a very limited) theatrical release and exclusive availability via their streaming service? Or is the proposed release a hybrid, offering both a substantial theatrical release and distribution via an early streaming release, as is common with Amazon Studios? For each distribution model, there’s a different mix of upfront payment and potential backend, with lots of variations available to a sophisticated negotiator, so the best selling price doesn’t always maximize ultimate revenue.

The level of distributor support for a film is also extremely important. If a theatrical release is involved, is the distributor committing to a minimum number of screens and markets and a minimum marketing spend? Even for exclusive streaming releases, the level of promotional support both in media and on platform can vary substantially. Whatever the distribution model, both the financiers and the filmmakers would like to know that their film is a high priority for the distributor and won’t get lost in the shuffle or suffer from lackluster promotion and advertising. (For example, is the title just another movie in the streaming service library, discoverable only via search, or is it heavily promoted on the home page and even supported by a media campaign, like Netflix’s Birdbox.) Indeed, this may be especially important to the filmmakers – and the director in particular – who may measure success at least as much based on how the film raises his or her profile as opposed to purely financial considerations.

This raises the obvious truth that the interests of filmmakers and financiers can diverge to a certain extent. Financiers may have a greater desire to recoup investment and protect the downside – after all, it’s their money on the line – whereas filmmakers may want to play for the upside as profit participants. As noted, the filmmakers may also be more focused on how the film release will affect their long-term career prospects than the shorter-term financial rewards.

Beyond the major deal points and strategic considerations covered in this alert – and just as importantly, everything not covered – it takes business savvy, industry knowledge and technical legal expertise to get these film sales deals optimally negotiated and properly documented. At MSK, we have the business, management, and executive-level operational experience in the industry which not only enables us to handle film distribution deals but also a wide variety of financing transactions such as production lending agreements, negative pick-up agreements, completion bond arrangements and interparty agreements. We also innovatively manage financial arrangements among producers, equity investors, distributors and other stakeholders. Most importantly, our broad experience and legal expertise enable us to represent both filmmakers and financiers, through every challenge and opportunity presented through the lifecycle of a film. Moreover, because we represent both financiers and filmmakers, we can often help balance their interests and make it easier for them to communicate and work together effectively. It’s our mission to be trusted strategic advisors to our clients, moving far beyond simply negotiating and drafting or reviewing documents.

In this environment, it’s more important than ever to think big picture and make sure you have expert advice.

 

© 2019 Mitchell Silberberg & Knupp LLP
This post was written by Steven G. Krone of Mitchell Silberberg & Knupp LLP.
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