Updated November 27, 2023
The rapid rise of influencers and artificial intelligence (AI) alongside a booming streaming industry is increasing the complexity of how artists and performers earn money from their art, protect their image and ensure their fair share of sales. Organizations and professionals in the entertainment industry need to understand the potential impact of current trends on their business models and contracts. Here are five key trends to watch.
Entertainers and brands are more protective of their public personas than ever before — and many are finally reaping their hard-won benefits. As a result of a series of lawsuits brought against the National Collegiate Athletic Association (NCAA), amateur athletes can now profit from their fame via endorsement deals, appearances, sponsorships, social media influencer campaigns and more.
More than 30 states now have some sort of name, image and likeness (NIL) legislation. In recent years, New York and California legislators have also clarified and restricted NIL usage with “right of publicity” laws. One such New York law changed the use of NILs for deceased celebrities’ families so that a celebrity’s estate can be used to protect their “brand” and monetize the NIL for as long as there’s a demand for the celebrity’s name, image or likeness.
And that demand is clear with the rise of generative AI. Creators are using AI to resurrect the careers of performers who have passed away, but it raises difficult compensation and copyright questions. Does an AI creator have the right to use the voice and image of a deceased performer? Can they take the virtual performer on tour?
The estates of Whitney Houston and Ray Charles have worked with AI creators to create hologram concert tours. Some AI creators are showing us what Elvis, Tupac, Princess Diana and even Bambi’s mom would look like today.
While many NIL policy changes give individuals and their families more control over the commercial use of their identities, remember that NIL laws, contract laws and tax statutes vary by state. Your business manager can help you identify opportunities to ensure NIL and rights-of-publicity monetization.
New California legislation around noncompete agreements may also impact professional athletes, celebrities and sports industry professionals. This legislation intends to render any noncompete agreements (after January 1, 2022) unenforceable and, in some cases, allow the professional a liability claim. Interestingly, the noncompete laws may cross state lines as businesses in California employ entertainers and pro athletes in other states.
Talk to your business manager or attorney to understand how the voiding of noncompete agreements in several states may affect your brand’s valuation and your royalty earnings.
Big brands have tapped into the power of influencer marketing to make a larger impact and gain wider reach. It’s estimated that influencer marketing earnings will be worth $21.2 billion in 2023, according to Influencer Marketing Hub’s 2023 benchmark survey report.
Sixty-seven percent of survey respondents said they will increase their influencer marketing budgets over the next 12 months. And 23% plan to dedicate 40% of their overall marketing budgets to influencers.
The survey also uncovered something new in 2023 related to how influencers generate income from their social media content: Brands increasingly are paying them in percentage of sales value — similar to affiliate marketing payouts. This year, 53% of brands are using this model to compensate influencers. Just 19.6% offer a flat rate for influencer campaigns.
And 75% of brands are tracking the sales that result from influencer campaigns. Email addresses (31%), referral links (30%) and coupon codes (12%) were the most common measurement tactics for generating influencer sales data.
The new payout models are often set up as third-party agreements, and you could be missing out on revenue opportunities. Having a business advisor review your contracts with brands who use the percentage of sales value payouts could help you see if you are leaking revenue.
AI is everywhere, and it’s paying off for some artists and brands with “virtual influencers.” Everyone knew about Barbie, the world’s favorite virtual influencer’s movie because she infiltrated the culture by partnering far and wide with brands like Progressive Insurance, Crocs and Airbnb. The Barbie movie is set to be the highest-grossing domestic film in 2023.
Like Barbie, created characters (the works of authors and digital artists) are ruling the roost for Generation Z fans. Virtual influencers such as the Good Advice Cupcake, Lil Miquela, and Nobody Sausage are worth hundreds of millions of dollars and have millions of TikTok and Instagram followers.
Many of these characters went viral overnight. Creators who use AI to generate music, photos, videos and other content need to be ready for the intricacies of copyright and intellectual property law and royalty earnings related to this growing trend.
The entertainment industry continues to benefit from an insatiable need for content.
Between the growing number of streaming services and media platforms with global distribution, individual entertainment professionals, from actors and writers to directors and producers, along with broader entertainment organizations, have ample opportunity to capitalize on the considerable amount of work available.
While there is some speculation that the streaming bubble will inevitably burst, the desire for content shows no signs of slowing down. Netflix, for instance, grabbed an additional 6 million subscribers by leveraging its paid sharing offering. According to Nielsen, streaming accounts for almost 38% of all TV viewing. Kids have been leading the surge, with 90% of their TV stemming from streaming.
While the 2023 NBA Finals drove a 31.7% boost in sports viewing in the broadcast category, traditional broadcast TV has seen a 5.6% drop in viewership over the past year.
Whether the success of streaming services continues remains to be seen. Regardless, there will likely be no shortage of jobs for those on the content and entertainment side.
Keeping up with the legal, accounting and tax issues around monetizing NIL, staying ahead of AI and optimizing your streaming revenue can be complicated. But you don’t have to go it alone. Connect with our entertainment industry experts to discuss how you can best navigate the complexities of running a multi-layered business and entertainment brand, whether you’re an industry veteran or just getting started.
