Negotiating & Contracting
the Acquisition of Privately Held Intellectual Properties

Part Five
By Harlington L. Hanna Jr.

Understanding Distribution in Entertainment

Distribution is one of the most important elements in money making in any industry and particularly in entertainment. The modern marketplace is controlled by less than a dozen huge companies in each of the major entertainment industries. Their very size allows them to control the market. They have grown larger with time and through conglomeration with each other. Today it is difficult to figure out who is who, with buyouts and mergers happening everywhere and all the time. The independent publisher or producer who must deal with a distributor to reach some type of retail exposure of a production, historically sits in a very precarious position. Independent distributors and distribution deals have a long history of being blamed for the failure of many independent productions. A good distribution deal is hard to come by. The distributor should be carefully researched.

Self-distribution should be investigated after all if a publisher or producer intends to be in business for some time it may be a wise decision to place some of their resources into some type of distribution system. In the long run the ability to self distribute may be the element that keeps you in the publishing and production business.

The advent of the Internet has offered a glimmer of hope to the small producer and distributor and indeed it has rocked the boat a bit and will change the marketplace some. However big is big and big gets bigger and more in control wherever big sets his foot. Today big has set his foot in the Internet marketplace and guess what, Big is now controlling even the Internet. Why, because big is bigger, bigger means more power and more control wherever big sits. Therefore even though the smaller entertainment entrepreneur has been able to see a ray of hope through the advent of Internet distribution, this ray of hope will soon be effectively distinguished as happened in the traditional entertainment distribution market.

A classic example of how big controls where ever it sits can be gleaned from the fight over bulk E-mail that has permeated the Internet marketplace. While this battle seems to be fought by a group of fanatical antispam interests who want to keep the Internet commercial free and supposedly protect the privacy of your Internet mailbox. The real battle is being pursued by those large Internet and non-Internet interests who perceive the ease and facility of bulk email a threat to their prior control of the advertising media. It is obvious that the power of bulk E-mail will greatly cut into the profits, operations and control of many major companies. Obviously no one likes competition or the loss of control and profits. Bulk E-mail has be stifled in its infancy, not because of the antispam fanatics but because of it evens the playing field for small entrepreneurs. Unfortunately small entrepreneurs as usual eventually succumb to big entrepreneurs in most capitalism based economies. The Internet then is becoming and will probably become a medium controlled more and more by the mea business interests.

Wise distributors however who are good businessmen and women will always have opportunities for success. As stated before those opportunities accrue and are taken advantage of by the best business talents. Business talent rises to the top wherever it sits and despite the obstacles. Artistic talent although beautiful, adored, cherished and sought after, unfortunately always bows its head to business talent in the long run. Distribution is where the money is at in the modern economy. Without widespread distribution significant monies will not flow.

The first step in making money in distribution however is as always acquiring the intellectual property or right to distribute. If possible this right should be exclusive. The exclusive rights to distribution can be extremely profitable. If exclusive distribution can not be acquired then primary nonexclusive distribution rights should be the next desired. Other more subsidiary and secondary distribution rights can also be acquired. These rights can be bargained, battered, leased sold and borrowed, and their acquisition should be pursued when ever possible. If the property is potentially valuable there will be someone who will want to distribute the product, if the holder of the right is either unwilling or unable to actually effectively do the distribution.

The right to distribute comprises many subsidiary rights. This is evidenced easily in the Music and book industry where several layers and strata of distributors and sub-distributors cut up the pie before it gets to the retailer and ultimate consumer. Entertainment entrepreneurs must always consider the distribution possibilities for their productions, and must be innovative in their design and collaborations to provide effective and widespread distribution. There is money to be made all along the way for the wise entertainment entrepreneur.

 

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For Further details of the Hannaian Business network and its associated business opportunities visit the Business Opportunities Section of the Hannaian Publishing Website at
http://www.hannaian.com/distribr.htm