This Q&A was originally published in the Winter 2017-2018 issue of Documentary magazine, a publication of the International Documentary Association, a nonprofit media arts organization based in Los Angeles.
In a negotiation with an archive, several key deal terms have a bearing on price, such as those that establish the scope of the licensed use. Starting with the obvious, worldwide rights usually cost more than domestic rights and rights in multiple media (theatrical films, television, home video) generally cost more than rights limited to a single medium. A producer should not pay for a larger scope of rights than he or she needs, but should be sure to obtain whatever rights a distributor or exhibitor will require. Balancing archive costs with distribution needs can be nettlesome, however, as illustrated by the ramifications of a very basic deal term: the duration of the license.
Those on a modest budget may be tempted in the first instance to accept a limited license term in which to exploit the licensed material. While a short term license will reduce the initial cost, the marketplace favors long term licenses. Distributors routinely insist on license terms that can extend to twenty years, and producers generally must represent and warrant that they have the rights to exploit all elements of a documentary’s content for the term covered by distribution agreements. (The errors and omissions insurance carrier will ask for similar affirmation that the term of licenses of material contained in the film covers the distribution period.) For this statement to be true and accurate at the time the distribution agreement is executed, the producer must license archive material at least for the period required by that agreement including the overhang period of potential sub-licenses.
Also, a license of archive material for an initially short period by a producer who intends to extend the term later carries other risks. At the later date, the archive house may not be willing or able to extend the license. In that instance, the producer must scramble to find, license, and substitute a replacement on short notice — an exercise that is not only harrowing but also can result in higher cost than an initial full-length license. And no producer with a reputation to uphold will want to tell a distributor with outstanding sub-licenses that a license to archival material has expired.
Pricing of archive licenses may also depend on the perceived value of the licensed material. When it is one-of-a-kind, as opposed to something generic, its inclusion is expected to enhance the value of a documentary in the distribution marketplace and that value will be reflected in the license fee.
An exclusive license of archival material costs substantially more. It runs against the grain of what archives like to do — make as many licenses as they can — and in any event, archives rarely grant an exclusive license for unique materials for more than a limited period. Alternatively, a producer might obtain a holdback that bars the archive from granting a license to competitors for a limited time. Producers on a tight budget, however, might not be able to afford either exclusivity or a holdback.