Wednesday 7 September 2011

In-video Online Advertisements and Legal Challenges

 In is in. We had in-game advertising (console, internet, PC, and mobile), followed by in-app advertising (display / text advertisements within mobile applications) and now the recent tie up between MediaMind Technologies Inc (Hyderabad, India: digital advertising technology firm, NASDAQ: MDMD) and Impossible Software (Hamburg, Germany), a leading provider of dynamic video technology, is set to revolutionize the in-video digital advertising landscape in India.
The service enables advertisers to embed brand communication in the form of image, text or video in pre-recorded video clips, thus fusing brand placement and video to create a new individual video file. E.g. imagine a video clip of a car cruising on a highway dotted with billboards advertising Brand X. Using the technology provided by MediaMind and Impossible, the original advertisement of Brand X in the pre-recorded video clip can be replaced and embedded with a new advertisement of Brand Y. This in effect entails modification and re-production of the original recorded video.
Billboards are one example of dynamic video area available in the pre-recorded video clip. Other dynamic video areas can be balloons, street furniture, side panel of the cruising car etc. which are available to an advertiser for placing their brands.
This innovation adds in-video inventory to the existing video inventory of pre/post/mid rolls which are typically sold to advertisers. However unlike pre/post/mid rolls, embedded advertisements are not seen as a distraction and stand a better chance of registering with the viewer.
A simplistic view of the in-video advertising eco-system:

Publishers – Online destinations of Video Content. These websites could be either the ones that provide aggregated content from original intellectual property right holders, e.g. Films (Yahoo MoviePlex, YouTube Box Office), Music Videos, TV Content, etc. (Licensed content) and User Generated Content (amateur producers of content).
Technology Enabler – In the present case, MediaMind / Impossible is an example.
Advertisers – Brand owners who would like to embed their brand’s graphic/video/text in the videos hosted on Publishers website. The other existing options available with the advertisers are Pre roll, Post roll and Mid roll (similar to the way we are conditioned to see the ads on television, before, in between, and after the television program).
However placement of advertisements in the content licensed from original intellectual property right holders can be a bit tacky, since it involves modification of the original video clip. Usually when intellectual property right holders license their content to distribution media such as TV, Radio, Internet etc, the grant of license is subject to provisions such as:
1.    The Licensee shall not use, broadcast, distribute or otherwise exploit or in any form, manner or format whatsoever, deal with the Licensed Content except as expressly provided for under the terms of Agreement.
2.    The Licensee shall not authorize or permit any use by any third party of the audio-visual and / or any part(s) thereof except as provided in the Agreement.
3.     The Licensee shall not be entitled to do any of the following:
a)    prepare or use any re-arrangement, parody or imitation of any of the said Works in any manner;
b)    associate the said Works with any material which is obscene, derogatory or defamatory in any manner;
c)    re-record, remix or in any way alter, edit, modify or adapt any of the said Works except to the extent permitted in this Agreement;
d)    use the said Works for any purpose other than for bona fide distribution by the Licensee on and from the said internet website during the Term of this Agreement;
e)    use or permit use of any of the said Works in conjunction with or in synchronization with any advertisement, commercial, publicity, promotion in any manner so as to make such said Works appear or pass off as a part of any advertisement, commercial, publicity, promotion, by whatever name called;
Clearly the onus is on the online Publishers / Distributors of video content to obtain necessary indemnities / amend existing Agreements, with the right holders / content producers, to cash the opportunity of in-video advertising without breach of legal obligations, if any. However if the commercial / legal arrangement between the publisher and the content producer is about sharing of the advertising revenues instead of fixed fee / royalties, the rights holder may waive off the legal provisions cited above.
Any new technological innovation / service offering, is an opportunity to re-look at the primary / secondary functions of an organization and to be nimble enough to grab the first low hanging fruits offered by the new opportunity.
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