United States: Vidal Explores The Blurred Lines Between Tech And Content

Last Updated: September 6 2017
Article by Thomas H. Vidal

"Augmented Reality is a transformative concept that could dramatically change how we interact with and experience both technology and content," Thomas Vidal wrote in his latest article for InsideCounsel.

AR: A New Frontier for Content

Augmented Reality, or "AR", provides a composite view of a physical space or object by adding a layer of information — or content — on top of it such that the information appears as part of the physical world. For example, instead of having a menu bar on a computer screen, imagine seeing one emblazoned over the horizon as one looks out at the Rocky Mountains. Rather than allowing a user to copy and paste, this menu might enable a user to see a map to a ski resort; check snow, weather and traffic conditions; get ratings for the resort, and find accommodations or breakfast spots for the trip up.

Now imagine the user moves her gaze to the mountain peak where this resort is. One moment, she sees a group of skiers blazing a trail through fresh powder, she then hears an announcer describing the amenities and the wonders of the resort in rich detail, all while showing sweeping helicopter shots and images of people enjoying the resort. Moments later, the announcer offers to connect the user with a representative to purchase the lift tickets directly. If the user has not made up her mind to ski that resort, an episode of a short-form video begins to play featuring a group of skiers and their daily antics. The user, is of course, invited to subscribe to watch more episodes, and get a discount on a three-day lift ticket.

These are just some of the ways augmented reality is blurring the lines between technology and content, advertising and physical experiences. 

Opportunities - and Pitfalls - Abound

"If AR lives up to its promise, the opportunities for content creators will be staggering," Vidal predicted. "What remains unclear, however, is the business model for this new content."

It is possible that content will continue to be created as it is currently, with production houses hired to produce content on behalf of users (e.g., tech companies). But this will depend on the ultimate application for the content; if the content is a standalone film or episode of a series, then traditional business models will likely be adopted. On the other hand, when the content is one piece of an overall experience, different economic models may be required. As between the content creators and the distributor, those models could be based on profit-sharing, subscription royalties, license fees or even access fees paid for the services.

"The challenge for general counsel and dealmakers when confronting an AR-content deal will be carefully analyzing the economics of the underlying use of the content or technology," Vidal explained. Assuming a technology company is engaging a media company to produce the content, determining the flow of money between the consumer and the technology application will inform the decision as to the revenue model. For example, in an advertising application for a retail fashion designer, there are probably two leading options: a flat fee for producing the content; or if the designer is a major brand, perhaps an ongoing royalty for every item sold. How the brand and the producer determine what constitutes a sale for which royalties apply is another deal point that will require careful thought.

Putting aside the normal clearance and legal issues that abound in content production, additional challenges for the company's law department arise from these kinds of transactions. There are heightened issues involving privacy — an issue that was raised vociferously when Google Glass was launched — safety (as experienced during the Pokémon Go craze), gaming in the case of sweepstakes and contests, and perhaps law enforcement. Because of the strong connection between AR and advertising and marketing, there could be greater concerns for compliance with the Foreign Corrupt Practices Act regarding content and services that involve foreign governments and assets. It is not hard to imagine a scenario where producers are asked by government officials to pay money for access—maybe exclusive access—to government personnel, resources or geographic locations.

The general counsel will have to carefully map out the deal risks and craft a robust set of compliance obligations and representations and warranties to mitigate these risks.

To read Vidal's full article in InsideCounsel, click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Thomas H. Vidal
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