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Following these six tips can help streamline contract management, improve efficiency, and enhance profitability.
The advent of streaming has radically changed the business model for media and entertainment companies. It means organizations must manage a lot more contracts than they have in the past — and do so quickly — if they want to compete in a crowded marketplace.
Unfortunately, contracts often get bogged down in internal approval processes. Following these six tips can help streamline contract management, improve efficiency, and enhance profitability.
The advent of streaming has revolutionized the way people consume media and entertainment.
The combination of cloud computing and widespread access to broadband Internet was already leading to an increase in the number of people consuming media at home during the 2010s. Then the pandemic kicked streaming adoption up a notch.
According to the Motion Picture Association, total subscriptions to online streaming services hit 1.1 billion in 2020. That was the first time streaming services had more than a billion subscribers, and it represented 23% growth over the previous year. And it wasn’t just movies — music, gaming, and live TV also saw increases in subscriber revenue during this time.
While some services experienced declines after the pandemic subsided, most people haven’t canceled their subscriptions. A 2023 survey by Forbes found that 78% of U.S. households subscribe to at least one streaming service, up from just 52% in 2015. And on average, Americans spend about 13 hours and 11 minutes each day consuming digital media.
For media and entertainment industries, this resulted in a rapid shift to their business models — the equivalent of a “smash cut” in movie parlance. “The status quo is gone. A lot has changed,” Disney Chief Executive Bob Iger toldhis staff.
Today, consumers have more options than ever at their fingertips. Actor Tom Hanks bemoaned, “Be honest: How many times have you — and maybe you alone, or you and your family — said, ‘Hey, let’s watch something tonight?’ Great, you pick up the remote and it takes you forever to agree on what you’re going to watch on Apple or Netflix or Hulu or Amazon Prime.”
If that situation is frustrating to consumers, it’s doubly so for media and entertainment companies who now face intense competition in a marketplace where consumers have easy access to many different options. By one count, American consumers now have 271 different options for streaming video services. And that doesn’t even include music and gaming options.
At the same time, media companies face the challenge of re-negotiating contracts with writers, actors, musicians, and others. And regulators are taking interest, which could result in lawsuits and/or new compliance challenges.
To remain competitive in this environment, media companies are looking for ways to boost their profitability. Iger, for one, has said, “Instead of chasing (subscribers) with aggressive marketing and aggressive spend on content, we have to start chasing profitability.”
One way to do that is to approach contract management differently.
One of the results of this new emphasis on streaming is that media companies need to manage more contracts than ever before. That poses challenges because negotiating and approving contracts can take a considerable amount of time. And after the contracts are negotiated and approved, companies face difficulties of making sure they comply with the relevant terms and re-negotiating when contracts come up for renewal.
If they want to keep subscribers happy, streaming services need to provide a steady stream of quality new content. If that new content isn’t available because of contract issues, it puts the business at risk.
Smart media companies are re-examining their contract management processes. Many are implementing the following best practices to help them become more efficient and make new content available as quickly as possible:
Every media company has a boilerplate that they include in their contracts. But firms with leading contract management capabilities take that a step further. They write standard templates for each of the many different types of contracts they regularly need.
For example, streaming services have contracts with their artists and their subscribers. They have contracts with employees and service providers. They may also have contracts with labor unions, other media partners, and agencies. They have non-disclosure or confidentiality agreements, option agreements, sales agreements, exclusivity agreements, professional services agreements, distribution agreements, licensing agreements, and more.
Companies can benefit from standard templates for each of these categories, preferably with variants tailored to some of the most common use cases. And the legal department can pre-approve this standard language. For best performance, companies can store these templates in a centralized repository where anyone who needs them can access the most up-to-date versions.
Then when a new contract comes through, the people involved in negotiating the agreement can simply flag any places where the contract deviates from the standard terms.
That can speed up contract processes in several ways.
First, those creating the contract don’t have to spend time drafting a new document. It can also speed up negotiation. If you have an agreement that artists or organizations have found acceptable, it’s likely that other people you are entering agreements with will also be willing to sign.
Most importantly, it can speed up the approval process. The process of obtaining approvals often creates a bottleneck in contract management processes. But if legal has already approved most of the language in a document, they can concentrate on the few areas of the contract where the wording has changed, requiring them to spend less time.
The end result is a faster process from start to finish.
In the media and entertainment industry, contracting is often a complex process that requires the parties to negotiate and sign multiple agreements. Because the different pieces are so closely intertwined, teams involved may need to wait while others complete their portion of the work. Many media contracts languish because one of the parties involved is slow to complete one small part of the process.
Companies can minimize these delays by laying out a schedule in advance. This schedule details the milestones and deliverables at each step, clearly laying out how long each party will have to complete the required tasks. For effectiveness, the schedule needs to include the consequences should either party fail to keep the timeline. Those consequences may be financial or logistical. In extreme cases, failure to adhere to the schedule may terminate the process.
Some companies offer incentives for getting approvals more quickly. If, for example, a faster turnaround process will make it possible for a streaming service to make new content available on their platform before it will be available on competing platforms, it might be worthwhile to offer a financial bonus to the content provider.
A contract management solution can simplify the process of laying out this schedule. It can remind everyone of important steps so that nothing gets missed, and it can recommend deadlines based on past experience.
These solutions also make it possible to track how long each step takes. That allows organizations to measure whether they are accelerating contract approvals, and identify any outliers that take considerably longer (or shorter) than usual. Over time, companies can use this information to further streamline their processes.
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