By CCP — 10 Jul 2018
Can you start by introducing yourself and telling us what your company does?
My name is Daniel Fong and I’m the Senior Licensing Director for the Motion Picture Licensing Company (Hong Kong) Limited. MPLC Hong Kong is one of six Copyright Licensing Bodies accredited by Hong Kong’s Intellectual Property Department to operate locally and we authorize the public performance of our clients’ films and cable programs in a variety of contexts.
Motion pictures and other audiovisual works that are available for rental, purchase, or subscription are intended for personal, private use only and many people are unaware that copyright laws around the world provide that showing them virtually anywhere else outside of their homes requires a separate license from the copyright owner permitting their works to be performed publicly. And that’s exactly the services we provide to our license customers on behalf of our producer clients.
The MPLC’s global mission is to therefore provide an efficient system for ensuring compliance with copyright laws by offering easy and affordable licenses that legitimize existing and future public exhibitions of our clients’ audiovisual works at fair and reasonable prices that benefit both copyright owners and users.
Do your licenses cover movie theaters as well?
No. We leave theatrical exhibition to the studios and their distributors who have traditionally serviced that market very well, and with whom we would never want to compete. And we also don’t license broadcasters and pay-TV operators for the same reasons. We instead operate in various secondary markets beyond where showing films or TV programs is just an ancillary or background activity for an organization or entity rather than its primary focus.
More typical markets for us might include healthcare facilities ranging from doctors and dentists offices to hospitals and nursing homes; educational establishments ranging from kindergarten through universities; child care facilities; libraries; private and public sector communal housing facilities; government departments and agencies; corporations; churches and other faith-based enterprises; private membership clubs; busses/coaches; oil rigs; merchant vessels; just about anywhere you might think of that has at least one screen used, or capable of being used, for showing movies or cable programs.
These are markets that might otherwise be overlooked and left unserved. That’s why some of our clients think of the royalties that we pay as “found money”. We don’t seek to displace or upset any existing revenue streams. We want to add to those revenues rather than replace them.
So are you a new company then providing new services?
No and yes. The MPLC’s operations in the United States date back to 1986. The company opened its first overseas office in the United Kingdom in 2003 and since then then we’ve expanded into 35 or so other other international markets. By now the MPLC is the world’s largest provider of non-theatrical exhibition services and we have about 500,000 existing licensees that we service worldwide. So we are already established and very well known in many markets throughout the world. But with the exception of a joint venture operation in Singapore, the company didn’t have any further presence in the Asia-Pacific. So in 2017 MPLC’s Board of Directors decided to open both a regional headquarters in Hong Kong, as well as the local operating entity into which I was recruited earlier this year.
MPLC Hong Kong only opened its doors for business a few months ago, so in that sense we’re still very much a new company here locally.
The CCP promotes an understanding of the ecosystem between content creators, technology developers, service providers, regulators, and consumers about our shared digital future. Does the MPLC relevant think of itself in those terms?
That’s a great question! We definitely share a similar objective of promoting a better understanding, at all levels, of certain basic tenets of copyright that may sometimes be forgotten or disregarded as the technology fmaking content available to consumers continues to evolve and enhance at such a fast pace. In fact, that’s how and why the MPLC got its start more than 30 years ago.
The company was founded by two Hollywood studio executives (and a lawyer from the MPAA) who between them recognized that videocassettes – which were made only available to consumers for their private, personal use within a household environment – were a game changer for their non-theatrical exhibition divisions. Up until then, each studio handled that sector market individually, or through their distributor, and the business model was built around supplying the prints that were needed if someone wanted to screen a movie after it had run its course in the cinemas.
That meant that content providers had full control over the process and could impose whatever terms and conditions, or pricing into the equation that they chose to. Then all of a sudden, videocassettes were available just about everywhere, to anyone, and those usage restrictions printed on the back of the box and in the opening scroll were either misunderstood or ignored. Each studio individually lacked the resources to do much of anything about it.
But rather than resist and bemoan the technology that was threatening their livelihood, MPLC’s founders recognized that change was both positive and inevitable, and that videocassettes represented merely the tip of the iceberg that was still in formation. So they created a different business that didn’t involve supplying physical products, but instead focused on educating consumers about copyright law, in a proactive and enabling manner (rather than reactively and prohibitively), and by developing technology of their own that provided a better economy of scale to administer public performance rights collectively (rather than individually), through the introduction of MPLC’s comprehensive Umbrella License, which provides greater ease and convenience for customers than the traditional, title-by-title licensing model does.
The technology also enabled the MPLC to conduct a significantly enhanced volume of activity in a more comprehensive and professional manner than the studios could individually. This in turn allowed the MPLC to reduce pricing to uniform, non-discriminatory levels that appealed to both our customers and the US anti-competition regulators. And even though videocassettes and DVDs have by now given way to downloading and streaming services, the basic premise of the MPLC’s business model remains the same.
The long answer to your short question is that in its own way, for the services it performs, the MPLC has always been at the forefront of technological evolution and promoting a shared understanding of how content will be made available to consumers in a digital future. We fully support the continued development of new, legal technologies that increase the global audience for filmed entertainment.
That does sound innovative. So how do you go about doing what you do?
Through private contracts with film studios, distributors, and television producers MPLC Hong Kong has secured the appropriate rights to grant licenses under the relevant provisions Hong Kong’s Copyright Ordinance for the use of their works. Generally speaking, we offer customers here two different types of permissions: (1) a title-by-title license allowing the limited use of one or more specifically designated works that may be advertised to the general public, and for which an admission fee can be charged; and (2) our “Umbrella License” that allows the unlimited use of any of the tens of thousands of works owned or distributed represented by our producer clientsus for viewings that may not be advertised to the general public and for which no admission fee is charged.
The Umbrella License is the more common of the two and is perfectly suited for the vast majority of our customers. It doesn’t require them to account or otherwise report any usage activity back to us. One annual payment provides them with unlimited amounts of public viewings for twelve months beyond the date the license has been issued, subject to the restrictions I just mentioned, and we can typically issue the license within one working day.
That sounds like how the music industry licenses the use of musical compositions and sound recordings, isn’t it?
Pretty much. We don’t not provide any equipment or inventory to our customers in order to facilitate or the viewings; we instead provide them the legal authorizations needed to ensure compliance with Hong Kong’s Copyright Ordinance. Our licensees are responsible under the terms and conditions of the licenses we issue to them for securing a legitimate copy of the content being viewed. Although you still see some DVD shops operating in Hong Kong and certain other Asian markets, the majority of our customers nowadays source the content online from e-Commerce sales and rental platforms such as iTunes, or Amazon, or from subscription streaming services.
We maintain proprietary databases and systems that allow our licensing and royalties representatives, and our investigators, to organize the huge volumes of information that we obtain and utilize for our daily operations. Collected fees are distributed on a quarterly basis in accordance with an agreed method of allocation uniformly applicable to all of our producer clients. We also maintain close cooperative relationships with government agencies and private-sector organizations to help raise awareness about intellectual property rights in all of the markets in which we operate.
Sounds easy. How’s the business doing so far?
Well, I can’t say that its easy! Anyone who’s done business in Hong Kong knows that it’s a vibrant and exhilarating place, but they also know that at times it can seem frustrating for various reasons. People who haven’t done business here, or are unfamiliar with its unique ebb and flow, usually experience more frustration than exhilaration during their early stages, particularly when the company’s headquarters are thousands of miles and several times zones away, or if the company isn’t yet culturally familiar with Asia. Over the years I’ve seen grown men cry, or burst into tantrums, when things seem to strange to them or don’t immediately go the way they expected them to.
By comparison the MPLC has a truly international perspective and views each entry into a new market as a long-term investment so I feel fortunate for that. We’re equally fortunate to have the support of several hundred producer clients, many of whom we’ve now represented for more than 30 years. Our infrastructure is solid and the senior management’s expertise and acumen for the work we do is unsurpassed. Finally, the MPLC has good private and public sector relationships in place, so we’ve got all the key ingredients that we need to be successful. By now that our internal systems are up and running properly so we’ve begun our business operations issued a number of licenses already. But in our minds we haven’t even cracked the surface yet. It’s exciting to be at the forefront of something “new” and I’m very optimistic.
What are the biggest challenges that your company is facing?
Probably a combination of relatively low levels of awareness amongst consumers about intellectual property rights, and relatively high levels of pirated content that is unfortunately remains available to those same consumers.
Movies and TV have always been great ways to entertain and educate. But lots of people around the world, and here in Hong Kong, might not be aware that unless they’re viewing them for their personal and private use, they will almost always need a separate license that specifically authorizes its public performance. Most copyright laws around the world, including Hong Kong’s Copyright Ordinance, provide that the rental or purchase of a copyrighted motion picture or other audiovisual works does not bear the right to perform the work publicly.
We know that copyright can seem confusing at times to many people, so our job is to educate them whenever we can. And we’re optimistic that most of the people in Hong Kong, once they fully understand who we are, and what we do, and why we do it, will choose to do the right thing and comply with their legal obligations. And as I mentioned before, our job isn’t to scold people for what they may have already done; it’s to instead focus on the present and the future by providing them with an efficient and affordable means to keep having their fun while at the same time ensuring they are compliant with their legal obligations.
Beyond that, it’s probably just human nature to resist paying for something if people think that they don’t really have to, or because they can easily seek out a free alternative somewhere else instead. We get that too. Unfortunately, there still isn’t a silver bullet solution that will eliminate copyright piracy completely and that’s why copyright owners still have to zealously enforce their legal rights from time to time and in certain situations. We hope that isn’t necessary here in Hong Kong.
Beyond that the MPLC also faces more traditional challenges in the form of competitor companies located throughout the world who purport to offer the same services that we do. But we’re probably less concerned about that because the results we’ve had over the past 30 years speak for themselves. In fact they’re why I’m speaking with you today!
What are your plans for the future?
Well I mentioned earlier that the MPLC has also established a regional office in Hong Kong that is responsible for overseeing operations in Hong Kong as well as our plans for expanding them into another seven or eight new territories over the next three to five years. Our Directors are bullish about investing more resources in Asia and they view Hong Kong as representing the first step of a 1,000-mile march. But we need to resist the temptation to run before we can walk or find ourselves spread too thin too soon. MPLC has an idea of what its future looks like and the plan right now is to do everything we can to make it happen.