What are Licensing Agreements?
Licensing agreements are binding legal contracts that define content licensing relationships between content owners (licensors) and content distributors (licensees). The terms and conditions of a licensing agreement stipulate how and where media assets can be distributed, and what compensation (royalty or revenue share payments) the licensor will receive.
How Do Content Licensing Agreements Work?
Licensing Agreements for Traditional Pay TV
In traditional Pay TV (e.g. broadcast, cable, and satellite), television networks (content producers) enter into licensing agreements with Pay TV service providers (content distributors).
Linear media content licensing agreements grant the distributors rights to offer certain television channels to their cable or satellite TV subscribers in a certain region for an agreed period of time. In return, the content producer receives royalty fees – usually a monthly dollar amount for each of the distributor’s subscribers.
ESPN, one of the most expensive television networks, reportedly charges distributors a monthly fee of $7.21 per subscriber to carry the ESPN sports channel.
Licensing Agreements for OTT Media Distribution
Over-The-Top (OTT) content monetization includes a variety of distribution models leveraging three main strategies for content monetization: monthly subscriptions, advertising, and transactional.
Fixed License Fee Agreements
In a fixed license fee agreement, the content distributor pays the content owner a negotiated upfront fee for exclusive rights to distribute media assets in a specific territory. Fixed license fee agreements reduce the management burden of licensing agreements because there are no ongoing royalty payments and no reports on content performance. This type of agreement is used by subscription-based video-on-demand (SVOD) service providers to acquire new media assets for their platform subscribers.
Revenue Sharing Agreements
In a revenue-sharing agreement, the content distributor agrees to pay the content owner a percentage share of revenue generated by the media assets on the distributor’s platform. Revenue-sharing agreements are commonly used by transactional video-on-demand (TVOD) and ad-funded video-on-demand (AVOD) service providers to license content for their platforms.
Revenue Sharing Agreements with Guaranteed Minimums
Content distributors sometimes provide a minimum guaranteed payment as part of a revenue-sharing deal with a content owner. This payment is usually made to the content owner upfront.
3 Licensing Agreement Terms You Should Know
Intellectual Property
Intellectual property rights are codified in United States law. Intellectual property law allows individuals to own the rights to monetize their own artistic works, including movies and television shows.
Exclusivity
An exclusive license grants the distributor exclusive rights to distribute media assets in a specified territory for a specified time period. No other distributor may be licensed to distribute those assets while the exclusive license is in effect. A non-exclusive license would allow the content owner to enter licensing agreements with other distributors.
Indemnification
Indemnification means “compensation for harm or loss”. Licensing agreements may contain indemnification clauses that describe penalties for misuse or unlawful distribution of the content.
Manage Your Content Licensing Revenue with Revedia
SymphonyAI Media provides AI-driven data intelligence that helps content owners manage licensing agreements and maximize revenue from their media assets.
Content licensing and distribution teams use the Revedia SaaS platform to automate complex royalty calculations, measure content performance, and audit distributor compliance with agreement terms.
