Deals and Contracts in the Media Business – Transcript

A few months ago, my friends over at ChalkRow in Europe asked me to give a presentation on doing deals in the media business. I was happy to join them for a webinar! I’m now posting a transcript of the webinar if you’d like to read through.

John: Thanks everyone for joining and I’ll just jump into it here. So, just a really quick agenda of what we’ll cover today. Give you a quick overview of my background, just talk through that. We’ll run through, spend most of the time on different media deals. So really spending a lot of time talking through what are the different deal types. We’ll basically spend time on the vast majority of the deals. Of course there’s a lot of custom deals but I think as long as you understand how media companies typically look at deals, how we look at structuring these, you should be set up in a pretty good spot as far as going in there, negotiating, and knowing what’s important to these larger media companies.

Second is we’ll spend just a little bit of time talking through a media company work structure. It’s usually important to understand this so you know, especially if you’re going in cold to the company, understanding who is the right person for you to reach out to, and what they’re in charge of and how they interconnect with everything else in the company. And then the third thing we will touch on just briefly as well is dealing with management. So, really what happens after the deal is signed, that can really help inform how you do the deal to start off with. I’ve seen a whole lot of deals. I’ve probably done about 300-400 deals in my career and sometimes if you do the deal right to start off with upfront, it makes managing the deal for the ongoing term of it, which is usually multiple years, a lot easier. And then certainly we will do some questions at the end, and if you have questions in the interim, certainly let me know. And a quick disclaimer, I’m not a lawyer. I’ve done a lot of different deals but certainly if you’re gonna do a contract, I’d recommend bringing in your attorney and so forth.

So my background really quick. Currently I run a startup called DealSafe. I can tell you about that a little bit later, but we focused on partner management and contract management, and then ended up taking over the entire entertainment division which included sites like Moviefone, AOL TV, AOL Music, and so forth. So those are probably more long form and video content licensing deals that we did there. And then left AOL, I ended up joining a startup for about a year, a year and a half, called BioDigital, The BioDigital Human. And this is a healthcare digital technology platform, so we ended up licensing a lot of technology from our platform off to both people in the healthcare marketing space, different healthcare companies looking to promote their brands, and then also a lot of people that were really just looking for how do you better explain healthcare and the human body. And that’s a very complex topic. And so we did that a lot through what we licensed. Cool. So that’s me.

We’ll jump into really three different areas as I walk through really media deals and the structures, media organizational structure, and then deal management. Okay? So let’s jump in here. I think overall just high level on the media industry. I’m not sure how much experience everyone has here, but basically the media industry is all about connecting users, publishers and advertisers is really what it comes down to, as simple as possible. However, in reality, this is what the industry’s starting to look like; you have all these different players, this one as well, that basically connect one side to the other. And we won’t get into all of these today but I think understanding that it’s not as simple as user to publisher to advertiser. There’s a ton of layers in between and a lot of it can get super complex and this is why sometimes it’s difficult to do deals with some of these larger companies ’cause there’s all these other considerations that come into play.

So, jumping into the deals. Really how I think about these is there’s really two key goals for a media company. The first is how do you grow traffic to your site? So how do you get more users, more page views, more unique visitors to that site? The second is how do you grow revenue? And so based on that, the key types of deals that are associated with those, I would bucket into those different areas. So I think it’s always important for you to understand what’s the goal of this deal, and typically it’s usually one or the other. And so, this is how I would bucket them down.

So, the first one we’ll jump into is content licensing. So, first of all, what I’ll do is just kind of show you examples of how this looks in practice, and then we’ll jump into kind of some more specifics around how to structure it. So, example of content licensing, this is how many posts. This is, as you see the red box there, this is content provided by the Associated Press. Basically, how this deal works, it’s not unique to AOL, which is the parent of HuffPost, and they work with pretty much everyone, is you pay the Huffington Post… I’m sorry, you pay the Associated Press a fee, which usually is a flat fee based on how much traffic you think your content will be getting. And you usually negotiate this once a year, and you can come back and renegotiate usually on a yearly basis. But these are they types of deals, this is like fixed cost for the most part for the entire year. And usually, how you would do this if you’re a big media company is you would negotiate this across all of your different sites. So, it wouldn’t just be for the Huffington Post, but it would be for everybody that’s owned by that parent company.

Second deal, this is the Games.com website that I used to run. This is an example of game licensing. And basically, how we did these deals is there are two different types of deals. One is, we would do a different revenue share agreements, so we would basically split revenue based on how many users came onto the platform, and we would usually monetize these users through ads. There were some micro transactions, and if that’s the case, we would give them a rev share on that micro transaction as well. For some of these games though, what was interesting is we found out they were actually, they were more interested in selling the downloadable games. So, if you see here, these two green buttons, these were basically different providers that would allow you to download the game. And so, basically, what our agreement ended up being is, for games like this, they would end up giving us the game for free, we didn’t have to pay them any rev share. And then, for every user that was driven to go download and purchase the game, which would be a stand alone application on their computer, they would then basically pay us a rev share on those purchases. So, to them, having this game on the site was more like an advertisement to purchase a downloadable version of the game.

So, there were many kind of different deal structures that once we started talking to these companies, we would really recognize what’s their core objective, and really we would sit down and work with them to figure out what are the different ways that we could all work together in order to structure that deal that’s beneficial to both of us.

Another example, this is Spotify. This is all digital rights management. I won’t get too much into this. We dealt with this a little bit when I was running AOL Entertainment, but essentially, there’s a lot of these more parent companies that deal with all the licensing for these artists. And at least, I believe how Spotify has this structured is they’re essentially paid per stream. I believe that’s how Netflix pays as well. There’s others as far as, if you look at Apple iTunes and so forth, I believe they’re given a percentage of the purchase. So, for the most part, a lot of these come down to some sort of a revenue sharing agreement.

And then the third, this is from the company I was working with, BioDigital. So, the third thing… Sorry, this is the fourth. We basically would license this basically 3D platform that’s on the right side of this application. This is an integration that we did with About.com/health. And so, we basically gave them all the visuals. So, very similar to how you would license images from Getty, we would license them in here as well. And we would either do this based on flat fees or we would do this based on usage. So, it would be the number of API calls or number of what we call body loads, very similar to how Google Maps is also licensed into publishers as well. Google Maps will typically charge per map load on your site.

So, those are kind of the core… I think a pretty good example of the core content licensing examples and how that typically works. And so, really just to run through how I think about these different deal types. So, the first is really what is content licensing? So, it’s really when one party is allowing another party to use their content. Usually, this is limited based on a certain time period, and a lot of times it’ll be limited on what domains you can put this on. So, different things to think about negotiating. As far as payments, as I was saying through here, we can either do this based on traffic, we can do some sort of a flat fee revenue share, some tiered structure. So, usually, people are pretty open to how these are set up, but I would also say sometimes people would have some sort of a template agreement set up. So they basically say, “Hey, this is the way that we work with partners.” And usually for larger companies, if they’re gonna negotiate with a smaller company, it’s very tough to get them to end up changing their templates, because what ends up happening is then downstream, it becomes much more difficult to manage the many partners that they have, because they’d have all these custom terms.

Some other things to think about when you negotiate is what’s the portion of the content library that you have access to? So if you’re AOL and you’re licensing the Associated Press, I believe the Associated Press has many different sections of content. So whether it’s just news or if it’s other key points, so do you want all of it, or is there only a certain portion of it that you want? And then also talking about exclusivity. In the gaming business, we did a lot of this, where we told customers we would give them a slightly better rev share on the deal if they give us an exclusive on their game, or if they gave us an exclusive for the first six months. ‘Cause then as a publisher, you’re able to go out and advertise and tell people, “We’re the only place that you can find this game,” And then that’s a benefit to do games.com as a game publisher, because we’re then able to hopefully get more traffic than some of the other sites, and that would then justify paying a higher percentage.

Other considerations to think about; what geographies does it apply to? What domains do you want this to live on? How do you control it? So, if you’re a content licensor thinking about how… So, once your content’s out there in the open, how do you want to be able to shut it down if people aren’t paying? Do you want it to only exist for a certain period of time? So this is when a wind-down clause is very important. Usually, how having a… One of two ways. One is if you’re a company like Associated Press, you would probably say, “Once it’s done, you have access to keep those content on the pages, but you don’t get access to new content.” If you’re a gaming company, or a company like BioDigital, for a wind-down clause, you would basically say, “You have X number of days once the contract is over to remove all of our content from your sites.” And so really thinking about what does your site then look like once those are removed, and are you going to lose a lot of users and so forth because those are pulled out?

And I think one thing that people sometimes forget is business development deals should be beneficial to both sides. And so really you’re thinking about how can you structure this deal so both sides are incented to grow. You want the publisher to grow revenue, you want the content provider to create better and better content. And usually it’s good to set up quarterly meetings, so you can give feedback to each other, but also thinking about how can you structure this deal so it doesn’t feel like a one-sided deal. ‘Cause if it’s one-sided, neither party wins, you probably won’t end up renewing it, and there’s not a lot of point in doing the deal to start off with.

And then the last big thing I consider is how do you wanna brand it? So, do you want this to be a logo on the site? Do you want it to be a text link? Where should that link live? How big should it be? Is it just a logo, or is the logo clickable, and where’s that clickable logo go back to? So lots of things to think about. If you’re sharing your content and your objective is to get more users back to your site or grow SEO traffic, having a clickable logo can be a very beneficial thing to you, because then, especially if you’re on a larger site like an AOL or a games.com or Huffington Post, you then have all of this SEO back link credit that’s getting essentially sent back to your site. So, there’s a lot of benefits to doing things like that, and definitely, I think, could be interesting things to push for.

And then the people who typically look at these deals, a lot of it is business development. At the end of the day, they’re the ones that will negotiate and strike the deals. Behind the scenes, you’ll usually have the general managers and the editors of these sites overseeing them. Editor is usually the one that will be implementing a lot of these things, but those are the key stakeholders. So, I think I will jump into the type of deals unless there’s any questions?

So, the next one here is similar to content licensing, but this is what I call content sharing or traffic exchanges. Let me just show you some examples here. So the first, this is from AOL.com, is you see here on the top, there’s basically a byline for some site ViralNova, and when you click on it, it goes to their website. My assumption is this is set up as a traffic exchange for them. Basically, how those work is essentially one site sends traffic to another site, and then that other site sends traffic back to you. And so at the end of the day, you have a one-to-one transfer of traffic, for the most part, of users. And the idea is that both sites have different types of users, and so hopefully you’re getting both sides engaged in the other’s site. So both of you grow new users, and hopefully you’re not losing users at the same time. So I’m sure you’ve seen these sorts of pop-ups. These typically work the same way. They can be one-to-one traffic exchanges. You can also pay for this traffic, which I’ll talk about in a minute, but these are usually how these work. Here’s another example with Sports Illustrated. And then at the bottom of Sports Illustrated you see they have another type of a promoted stories link. So, here’s just another example as well.

So, that’s typically how both these types of deals look in how their placement happens. And so as I was saying, it’s really about sending traffic back and forth to each other. Usually you have some sort of a time period where you say over a month, or over three months, you are going to send each other the same amount of traffic. You can also do this where you say one site’s traffic might be a little more valuable than the other’s, so instead of a one-to-one relationship it might be 1.5 to 1 or 2 to 1. And the main reasons you might do this is maybe you’re looking to grow traffic in a specific demographic. So, maybe you’re a site that is targeting women from 35 to 54, maybe you’re trying to target men 18 to 24, kind of some of these typical demographics.

And the main reasons you would do this is because your advertiser would be interested in selling ads to specific audiences. And it might be that you’re sold out of inventory of those specific types, or you could also be in a situation where you’ve promised an advertiser that they’ll get this much traffic of this much age group, and you can’t fulfill on it yet, so then you end up striking a traffic exchange deal with a site that has that audience, in order to bring those in.

So, some key negotiating points. First of all, what’s your ratio of traffic in to traffic out? What are the penalties? A lot of these are done as a handshake, they might not actually even be written up as a formal deal, but some of these there’s no penalty and it basically says, “Hey, if you can’t give us equal traffic over a month or two, then we’ll just scrap the deal and walk away.” Others might have some sort of a cash penalty probably based on a per-user fee that you’d have to pay. And I think one thing to keep in mind here as well is it might take a month or two in order for these to really get up and running well. So, usually start off with a small amount of traffic and then it usually can scale up. But this is a great way, especially if you are a start-up and you have great content, this is a great way for you to get more traffic back to your site. And certainly having a link off of a major publisher site adds legitimacy to your brand as well.

So, some considerations, what are the sites you want to have be part of this deal? Sometimes what can happen is you might have a site that has a lot of traffic, and then you could also, within that same publisher have a site that has little traffic, and what you could end up doing is basically saying the traffic flowing out to one site, maybe that comes from AOL.com, and then the traffic coming back in they want sent to MovieFone. And what that allows a company like an AOL to do, is basically take a site like a AOL.com that has a ton of traffic, and maybe they’re looking to grow specific traffic on MovieFone because they have advertiser interest, and so they’ll then let that traffic get sent in to that site.

So, just some things to think about, you can do the same thing, you could even pull in a third party to work through some of the traffic exchange stuff, as well. So, I think just some things to think about. There’s usually a lot of flexibility in these types of deals. And then, certainly negotiate for what your placements could be, because I think the brand value of having a placement like this is probably a lot less then having a brand-placement like this. So, you probably can’t say the only placements you want are big leaderboard images on the front page of a major publisher, but you could probably say, “At least once a week or once a month, I want one of these placements.” So, think about that and then as we were talking about before, certainly think about branding, logos, how you want that to be set up. A lot of these deals can be negotiated directly one-on-one with editors. If you want a more formal structure and you want a bigger deal, you usually end up working with the business development person that’s assigned to that site.

So moving on to the next type of deal, which is really about buying traffic. So, similar to the two ones we were talking about before, except instead of doing a one-to-one transfer, we’re talking about one company sends traffic out, the other company pays. So, here’s an example of how something like this might look. AOL clearly has this written as advertisement, it says “Sponsored by NextAdvisor,” and that’s pretty much how those structures work, is they’re a little bit more contextual than having ads. They may perform better, they may perform worse. I think it’s definitely something that’s worth testing. But, basically how these are set up is one company pays, the other company sends traffic, that’s pretty much it. You can pay for this a few different ways. I think your goal, if you’re getting the traffic, is you would want to pay… Have it be much more performance based if you’re the publisher sending it out. Unless you really know what your traffic is gonna be every day, you might wanna try to have this be some sort of a per day or per placement fee. So those are the sorts of negotiations you’ll have.

As far as figuring out how to price it, you may wanna think about what are the associated advertising rates to buy traffic such as that. And those are usually pretty easy to go find in the industry. And then certainly considerations, I think these are pretty standard across most of content, but what’s your placement branding? You can also merge these with other types of deals. So for instance, you could have a one-to-one transfer with… For a traffic exchange, and then in addition to it say, “We also want, basically, double the amount getting sent out. We’ll pay you for half of it, and the other half we will send back as traffic.” So you can kind of merge these deal types together as well. And then, once again, the editors usually will implement this. Business development will usually end up closing the deal, and then sometimes you have sales involved, depending on how commercial you make these types of deals.

And then jumping in from traffic into growing revenue, so selling traffic. So, this is pretty much the same thing we were just talking about before, just kind of going the other way. So, this is a good example of a site, AOL Jobs. Something that most of this traffic is sold over to CareerBuilder. So, if you look at this, and if you end up clicking through on a link, you’ll basically see a story, but all over this it’s branded CareerBuilder, and you must have a lot of called actions in order to search for jobs. And so, it’s kind of a contextual way for you to get users over to CareerBuilder to go search for jobs. So, this is an example of AOL selling traffic over to CareerBuilder. So, yes, you certainly want to think about how do you price this? You can price this based on how many qualified users you end up sending over. Usually how you think about these is, perhaps there’s a daily or a monthly quota of number of users you wanna send over. So, there’s lots of negotiation to happen as far as how qualified are the user, do you want to guarantee that you’re sending over. So it could just be any user, it could be a user that’s actually searching for a job, which it seems like this is how the deal is set up with CareerBuilder, since there’s not direct links to CareerBuilder, it’s only through those forms. Then there’s definitely a pretty heavy integration there as well.

And then really, another key thing to think about here as well is, do you as the publisher want content approval? So, there’s a lot of these sites where you might set up a deal that says, ” Okay, the site you’re sending traffic to will give you stories that will hopefully pull customers away over to their site. Do you wanna have some sort of approval authority over posting that content on your site?” I would say, “Yes.” But definitely something that you should talk about. And then these are usually pretty… Much bigger deals. These can be definitely be multi-million dollar deals. You’ll have the general managers who run the sites involved with this, business development to close the deal. And then the editor, they’re usually not as big a fans of these, and so you wanna make this feel as much as part of the site as possible, and try not to have it seem like a built-on from somebody else.

So the next way, as far as growing revenue, is selling ads. So, I didn’t pull example of the ads. I feel that everyone knows [chuckle] what an ad looks like. They usually come in three forms, display, video, and mobile. There’s a lot of different content advertising that’s happening now as well, which I think really merges in with some of the things we talked about previously. And these can be rich media pop-ups, interstitials, video pre-roll, all over the place. And I think one of the key things for you to think about, is how intrusive or not intrusive do you want these ads to be. They can… To some extent they can turn users away from your site. So, a lot of times if you wanna have more intrusive ads, advertisers will pay more money for those. But you should really think about, is it worth possibly losing some users in order to have those types of ads?

Key pricing for these can be CPM, CPA, CPI, day rate. So that’s cost per mille, which is basically cost per thousand, so it’s impression based, so how many ads show up. Cost per action, or acquisition, depending on how you look at it, but basically you’re looking for the user to do something, and then you get paid. Cost per interaction can just be interacting with the ad, they don’t have to actually click, but they are then experiencing that brand. Or you can charge a day rate. So a lot of high traffic sites, if they have like a home page that gets a lot of traffic, usually what they’ll do is they’ll charge a flat fee for your ad to be up there for the entire day.

And then other things to think about, do you wanna guarantee how many impressions that user is gonna get, or do you want to leave that open ended? Typically, an advertiser is gonna ask for some sort of a guarantee there, so they know, when they’re allocating their money, how much is going to run here. What’s your audience type? Since a lot of people now that are really looking at “I only wanna acquire a certain audience.” So, if you are a certain brand and you know your core customer is falls in a certain demographic, they will typically ask, “Can I layer in certain targeting or can I just pay for audiences that are a certain demographic?” And I think one of the things is you wanna make sure you’re very careful with that because you… What you’ll end up finding is there’s typical audiences that are much more sort after by advertisers than others. And so, you don’t want to give away what we would always call… How we would talk about this is, you don’t wanna give away the cherry on top of the sundae without selling the rest of the sundae.

So, as you’re selling it, you wanna make sure you don’t just give away what your most valuable inventory is but make sure you bundle in everything else. So, you could have a whole webinar just about this topic but this is the same reason. If you look at TV, and how TV advertising is sold, usually Primetime advertising, Primetime TV is the top money maker, top most sort after time slots for advertisers, but in order for them to… In order for an advertiser to buy those slots, usually TV advertisers make you also buy late night TV or day time TV. Things that people don’t care as much about, but that’s usually how they end up getting all of their inventory sold. And some other things to think about as well is, if you have unsold inventory, do you wanna sign up with an ad network. So, basically if it doesn’t get sold by selling direct, that can fall down to an ad network to basically fulfill the rest of it.

Usually, they don’t get as high as CPMs but that’s… Usually it’s better than not having anything, not having any ads from there. And then certainly thinking about the pros and cons. Is it worth hiring your own sales team? Typically, you can get a little bit higher rates for the ads if you have your own sales team, but certainly then you have the cost to power your sales team as well.

And then, I’ll quickly run through these last two master services agreements. When you become a larger media company, what you end up finding out is a lot of the work… A lot of the ads you end up selling are with pretty much the top four media holding companies or advertising holding companies. They’re listed out here in the bottom, and typically what you’ll do is, you’ll sign kind of a master services agreement with each of those companies and agree on certain rights. So, those could be certain discounts. You could have first access to inventory, there could be for pricing, bundle pricing, exclusivity, launch partnerships, all those sorts of things.

Basically, what this companies are looking to do is, when they go out to their clients, some of the big brands that they got advertisers, when they go out to them, they wanna be able to say “We have… We are the only company that can get you access to this inventory on this sites.” And/Or “We can get it to you at a cheaper price because we can bundle it together with all the other clients we have and we’ve negotiated little rates.” For a publisher, it’s usually a good thing to have something like this in place cause you’re able to close deals faster, because you don’t have as much negotiations back and forth cause it’s already set up. And usually, that means the advertiser is more willing, the holding companies are more willing to come to you because they know they can close a deal faster too. So, usually, you’ll get more deal flow. Typically, if you’re a small company or a small publisher, it’s probably not worth trying to get one of these deal set up, and frankly, these companies probably won’t set one up with you. They just wont take the time to do it.

But certainly as you start growing, it’s certainly something to start thinking about. Something the industry doesn’t talk about as much, but certainly something that a lot of companies do. And then, I think this is the last one, ad repping. So, the main idea here is you let somebody else sell your inventory. So, there’s a lot of companies out there that will say “We’re the ad network for sports and we’re the ad network for entertainment news.” And then what they do is, they go around and they get all of these smaller publishers, and they bundle them together and they go out and sell them. And then they end up taking the rev share. The rev shares are usually somewhere between 30% and 50%. You might be thinking 50% is a lot, but if you think about it, the average cost of sales for a publisher company that has no sales force, is usually somewhere between 30% and 50%.

So you’re basically paying for sales force. But the great things is if you go out to market with some of these companies, they have their connections. So, they already know the people, they already know the advertisers that are gonna buy this. And usually, they can negotiate some pretty good rates because you actually have enough inventory. Usually, if you’re a small company going out to market, you probably won’t have enough inventory for an advertiser to really care about, and so it’s tough for them to actually do it thereby. So, definitely something to think about. There’s some great ad networks, there’s some bad ones. You should really try to negotiate some sort of a floor CPM, so that’s the cheapest they will sell this. I always try to push forward things like guaranteed revenue. I wanna make sure that they can guarantee a floor CPM, but unless they guarantee what your sell-through rate is on those ads, there’s no guaranteeing what your revenue might be.

So, if you sign someone up, they’ll typically want an exclusivity clause in there that they’re the only people that are allowed to sell ads on your site, which is fine, but make sure that they’re willing to also step up, ’cause if you take that risk, they should also have another risk of some sort of guaranteed revenue or something like that. And just looking through the last ones, and I think we kind of ran through most of these, but if you have a sales team now and you’re looking at going the ad repping route, just remember, if you go back to sales team, you’re on sales team later on, it’ll take a long time to ramp back up, ’cause you haven’t been up to market in a while, and you usually sell these ad spots many months in advance. So it’s usually not as easy as going from one to the next. It does take a lot of time, and it’s definitely an investment.

Okay. So I think… Before I jump into this, I think these are the main deal types. Let me know if there’s any questions. We can certainly take some questions at the end as well. And so, jumping into work structures, and I’ll kinda run through this quickly. I think the key thing to understand is most large publishers are set up in some sort of a matrix structure. And basically what that means is you have a head of each of the different functional groups. So you would have a head of business development, a head of sales, a head of all of your media content sites, a CTO for engineering, and as that keeps going, you may even have an editor-in-chief over the entire company. And then basically what happens is, then each of these different groups have to work together. There might not necessarily be a reporting control between the two, but they’re all charged to work together. So your business development person for sports would have to work with the GM of sports, and the engineering person on sports, and then the editor who’s on sports as well.

Usually, the general manager is given somewhat of the leadership position there, but if you look at the reporting lines, they don’t necessarily report to each other. So just something to keep on mind. If you reach out to someone, you’ll typically reach out to the person who’s running BD, and then that person would get you in touch with everybody else. However, it’s never a bad thing to find out who’s that general manager or who’s that editor. Those are usually the people that have the budgets. That’s their responsibility. So, the general manager for sports, or for news, or for lifestyle, or for all these other divisions probably has that budget, even though they might not have control of business development or sales and so forth, that person might be more interested in getting a deal done than the BD person might. So just kind of keep that in mind as if a BD person says no, that doesn’t necessarily mean it’s not going to happen. I think if you can get connected through LinkedIn or through different networks to a general manager, that’s always a good thing as well. And certainly persistence pays off.

And really the last thing here is, now talking about deal management and post-implementation. There’s really just a few things that I’ve learned through my career of doing hundreds of different deals. The first is, really try to template out your deals as much as possible. And really what I mean by that is figure out what are the standard terms that everybody, for the most part, is going to agree to, and what are the maybe two or three things that people wanna negotiate. Maybe it’s negotiating on what the rev share is and negotiating on what your placement of your brand is if you’re licensing content, those sorts of things. But the easier you can make this, the easier it will be downstream to manage these partnerships and the more successful these partnerships will be. ‘Cause for the second point here, usually what ends up happening is you have a kick-off meeting. And for that kick-off meeting with that partnership, you’ll usually have the sales person, and you’ll have your sales or BD person who ends up closing that deal, and then you’ll have the partner manager or the general manager or the editor, whoever is responsible for maintaining that partnership at that meeting.

Usually what happens is you take 10 or 20 minutes to quickly walk through the partnership and that’s it. Usually what happens is a lot of the key terms that were custom-negotiated in those different deals are lost or forgotten, or business development just doesn’t think that they’re important enough to make their way on to the next group. So, definitely something important to think about is make sure that you have a tracking mechanism in place in order to track those different custom parts of it, and then also figure out who’s responsible for making sure when the deal is up for expiration and up for renewal, who’s responsible for renewing that deal and for monitoring when those things expire. And who’s responsible for making sure that the deliverables that you agreed to in that deal are fulfilled and that invoices are sent and checks are received for payment and all those sorts of things. Or for a traffic exchange, figure out who’s responsible for monitoring the traffic in, traffic out, and to make sure that there’s an equal balance on both sides. So I think it’s just very important to make sure that if you can, template out them as much as possible so the person that’s in charge of this doesn’t have to go through all of these custom requirements for everything, but knows every deal is set up the same way.

Question: Sorry to interrupt. Quick question. I’m not sure whether you want to… Well, will be able to answer this, but with your partnerships and stuff like that, is there anything that kind of, from your experience, have kind of gone wrong in the partnerships, and is there anything that you would have changed or kind of look back and be like, “Ah, I could have done that.” Is there anything like examples kind of like that or a little…

John: Sure. So there’s… I think some of the worst examples of partnerships gone wrong have been some of these different groups that I’ve come in to take over. So, when I came over to take over the Games group and the entertainment group, what we ended up finding is there were… We had basically thousands of different licensing partnerships out there and we only knew that because we had their content on our sites. We had games on our sites, we had text and video content on our sites. But then when we went to go ask “Where’s the contract? What are these terms,” nobody had it. And so, basically, I spent my first six months on a lot of these positions calling up partners asking them, “Hey, do you have a contract? Is it current? Have you been paid?” All sorts of things. And there were certainly a number of partners that hadn’t heard from us in years because they were people that were… Had left and joined the company and didn’t have the proper hand off and all sorts of things. So, that was probably some of the worst setup. I would also say, really with point four here as well, is… Some of the other things that I learned is you might sign a partnership and take months to go sign something, and it might be a multi-year deal.

But a lot of times someone’s gonna negotiate some sort of an out, whether is a 30-day out or a 90-day out, and usually what ends up happening is we get to the implementation phase and something wasn’t thought about. Both sides come to some sort of a point where there’s some argument back and forth and both sides are holding firm and saying the contract says one thing or the other thing. You really have to remember that both sides still need to work together even after the contract is signed, because usually you’ll have an out and both sides can walk. And I don’t think any party wants a deal to collapse after it’s already been signed and taken months to be implemented. So I think it’s also another important thing to remember is, even though you have a contract with a signature on it, until things are actually implemented, there’s probably still going to be changes and you need to still be flexible. Certainly document those changes appropriately.

Yeah, so Dan, I think those are probably some of the, I think, best examples there. And then I think, just running through the last point here as well, one of the things that I’ve now… I’ve seen this problem time and time again and so this is really why I built and founded DealSafe, which is a platform for partner management and contract management. So basically what we do is we’ll extract those contracts into the platform, we help you monitor those key terms, send those alerts and reminders and then basically we’ll implement into other systems as well. So we can fire off deliverable reminders into project management software and fire off invoices and bookkeeping. So things to try to make the partner management process less error-prone and easier for everybody. Because typically, you’ll have one partner manager that has to manage hundreds of different contracts and it’s… Usually those have lots of revenue tied to them.

So I think it’s something that’s usually lost in the flow for many companies, but I’d say it’s something that I’d definitely think about focusing on. So, this is actually the platform that we built. Certainly happy to talk about this later, as well. But as I was saying, we have different alerts and reminders, basically have a team of experts that will automatically digitize all the key terms from your contract into a database. So instead of being a paper contract, it’s actually something that’s actionable as well. There’s certainly a lot of that security that goes along with it. But I think with that, certainly we’d love to open it up if there’s any other questions, comments. It can be about the media industry more broadly, as well, but certainly happy to take those.

Question: Yes, I have one question. So you’ve worked in various industries. What’s the main difference between healthcare versus entertainment?

John: Sure. So, I think that the main difference is just really the types of people you work with. So, that the deals you do at the end of the day, and for the company that I was at, we were licensing content on both sides, really I think what it comes down to is, healthcare is a, on average, is still not as up on technology as I would say entertainment is. And so, I think it’s still definitely much more than educational, consultative type sell. So there’s a lot of people that you still need to go out there, explain to them how this technology and how this education are… Educate them on how this will work for them. Whereas, I think entertainment understands that a little bit more, and so the deal types and structures and how you’d license this is still pretty much the same, but I think it really just comes down to who those people are. And so I think entertainment companies on average are probably more open and more interested in working with newer technology companies than I would say some of these bigger healthcare companies might be.

Question: Okay, that’s really interesting. That’s really interesting to hear the kind of different types of entertainment and health care. It’s obvious they are so different. Obviously, the content is still good. And kind of a question from me really, kind of going back to deal management, that kind of area, what kind of quantitative metrics can be measured, kind of with the deal management?

John: Sure. So as you look at it, there’s a few things that I think everyone cares about which is, what’s the revenue coming in from this deal, or what’s the traffic that you’re getting to the site, what’s the cost or the cost savings? And so, I think as you’re really looking through how do you track and manage your deals, I would say the first thing you need to do is figure out what are the objectives for these deals, right? So if it’s really grow revenue, I think that’s really the key thing you’re gonna manage. So you’re gonna manage how much revenue’s coming in, how are you performing to those goals, and certainly looking at what’s the satisfaction of your customer and hopefully then, those customers end up renewing. So I think if those are your goals, that’s probably how you would track it. If you’re kind of on the other side and you’re looking at more of a cost approach, you probably look at, “How can I continue to lower my cost and increase those savings every year?” So you may look at both what’s your average cost per contract and start to look at for what you’re getting in those contracts, can you start to bundle together certain contracts? You can get better, lower costs and better [50:18] ____ scale there. So, I think it really depends on what your overall objectives are and what those contracts do for you.

But I think it’s really important to monitor those and also, especially as contracts are coming up for renewal, looking at what are some other contracts that may be expiring within the next six to 12 months as well and see is there a way you can bundle these together either to grow more revenue or to decrease cost, and then certainly it decreases complexity for your company if you have fewer partners for you to work with/ The other thing is if, for instance, in our gaming business, there was really no way for us to decrease the number of partners for us to work with ’cause we wanted to have a good selection of games. So, what we ended up doing was, we looked at partners we had negotiated custom deals with, and we knew they were satisfied with what was going on, and so we went to them and we said, “Hey, we’re no longer supporting these previous types of deals. Here’s the structure that we’re going with going forward. Based on your previous performance, here’s what you could expect the revenue to be.” We wouldn’t give them something that would decrease their revenue, so usually it would be a good thing for them, but they probably have to give up on a few things that they care about. So, it made things easier for us to manage overall and usually, it’s something we can make the partners happy with that, too.

Chalkrow: Okay, that was summed up really, really nicely. Thank you. So we haven’t got any more questions, so if you do want to ask another question, type it in really quickly. But if not, I’d like to thank John Fox again from DealSafe just for coming in and giving the presentation. I’d like to thank you all for attending.

John: While they’re typing it in, certainly if you have other questions that come up after this, my contact info is at the bottom of the screen there. Feel free to reach out and happy to answer to any of their questions, too.

Question: How is ad blocking changing the landscape?

John:  We did an analysis on this a number of years ago and so I’m sure that the numbers are a little different today. For the most part, it’s a pretty low percentage of people that have ad blockers installed. It’s… Obviously, there’s been some announcements in the recent weeks about ad blockers, too. I think the overall, I don’t see it really disrupting the industry too much. For content to be free, and the vast majority of publishers have free content for users, in order for that to happen, you have to allow advertisements. It’s really the only way for it to work unless you wanna charge your users, which there’s been a lot of studies and so forth previously that show that users aren’t really willing to pay for a lot of it, although it’s changing a little bit.

John: So, I’m not necessarily too worried about it. It’s far less than 1% of the industry, at least from the numbers I’ve seen previously. The advertising industry is pretty strong and still rowing, so I would say unless there’s something that changes in the monetization structure. There’s a lot of people that are talking about the ability to allow people to pay for reading content, like fractions of currency using Bitcoin and so forth for reading and consuming content that way, could be something interesting in the future. But yeah, I think overall, I don’t think the ad industry is really going anywhere because of ad blockers right now.

Question: Okay, perfect. Also, he has another question. Going back on the journalistic content, it was about licensing as well. So I think you just we’d like a real bit of a brief explanation of kind of what experience you have with that kind of content.

John: Yeah. So, when I was running Entertainment over at AOL, we did a lot of licensing. So, journalistic content, I’m guessing you’re probably referring to more of just long-form text content, something we licensed in quite a bit, and we would do it a few different ways. Some is, we would work with freelancer journalists and they would just essentially write content for us, and we would either own it or license that from them to post on our sites. There were other cases in which we would go out to smaller publications kind of in the same space, and we basically struck a deal where they were able to… We were able to post their content on our site. We gave them clickable links back to their site. And so basically, the content was posted in two places, on our site and on theirs. They ended up benefiting from it because there were kind of links on the bottoms that said, “If you wanna read more articles like this,” links back. So that was kind of a no-cash transacted deal, so similar to a traffic exchange in how that was implemented. I’m not sure if that answers your question or if you have any more specifics.

Chalkrow: Yeah, I just asked Terrance if he would like any more kind of questions. No, no, yep, that’s fine. I think you’ve kind of covered his question, really. And yeah, I think if that’s all of the questions, I think yes, about an hour now. So yeah, I would like to thank everyone again, especially John for kind of contributing to the talk. And yeah, we’ll hopefully… hopefully you to attend again. And yeah, again, thank you very much and I hope you all have a wonderful day, wherever you are.

John: Sounds great. Thanks, everyone.

Chalkrow: Thank you very much, John, take care.

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