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SVOD Clearances

By Catherine Considine
SVOD Clearances

Please note below, from Cathy Sweet at Equity:
We have been in negotiations with Pact for some time regarding the level of percentages for SVOD platforms – like Netflix, Amazon Prime and Xbox. Where there is a sale to a SVOD platform i.e. a sale for the licence to transmit a programme on Netflix – the artists would share in the 17% royalty of the licence fee. This is straightforward to deal with.
However, the difficulty is where the SVOD platform invests in a production in return for the rights on their platform. i.e. Netflix investing into the programme for a licence period of transmissions on their platform. Because there is no actual sale and no financial transaction, we cannot operate the 17% royalty and we have to come up with a pre-purchase percentage to buy the rights on the SVOD platform upfront. In our negotiations with Pact – they believed a percentage of 1% was reasonable for this and we rejected this. We do not believe that 1% is fair compensation for unlimited transmissions on an SVOD platform with sizeable number of subscribers. The problem has been trying to figure out what this percentage should be without very many examples and proper research. Unfortunately in absence of a proper agreement in place – some producers have listened to Pact and offered the 1% as an advance with the intention of paying the difference once we reach an agreement. We have been very against this as 1% is nowhere near the level we would expect for this usage. There is a growing trend moving towards these streaming platforms and they are growing in size and popularity. We cannot accept low percentages on this – but negotiations have been made difficult with deals being done and people accepting the SVOD usage in the fee or accepting the 1% deals. We have held the line with Pact and we have held the line with producers who have approached us on ad hoc deals. The last deal done on “River” and “Humans” – we asked to see the level of investment from Netflix and Xbox and because this was akin to the levels received from the likes of PBS is the US – we felt that 15% was appropriate. We managed to still get the 15% even for a 5-year licence when 15% for PBS is a 7-year licence. This was because the providers only wanted 5-year licences but we were not willing to drop below 15% for SVOD usage in the US marketplace.
This is a much better deal than those done on other productions and we believe is fair in comparison to the level of investment and rights. Pact still believe these percentages are too rich and unaffordable for producers and trying to pitch levels akin to the lowest common denominator. These negotiations are continuing with Pact.
Best regards
Cathy Sweet
csweet@equity.org.uk