Valuing a Celebrity's Right of Publicity

Unlike patent, trademark and copyright law, rights of publicity are governed by a patchwork of state statutes and common-law decisions, rather than by a single federal statute. And unlike trade secret law, rights of publicity are not subject to a uniform state law adopted in the vast majority of states. But as with valuing other intellectual property assets, right of publicity (ROP) valuations need to consider the unique characteristics of the subject asset and the context of the valuation.

Typically, ROP valuations are needed for one of three reasons: when negotiating a transaction (i.e., endorsements, licensing, etc.); calculating damages for ROP violations; or valuing celebrity estates and trusts. Each ROP asset is unique and each of these contexts varies, posing some unique challenges for reasonable analysis of ROP assets.

Endorsement Transactions

Before the opening ceremonies of the 2012 Summer Olympic Games had even taken place, Jamaican sprinter Usain Bolt had collected $20 million in endorsement revenue. After he won three gold medals, online delivery company Shutl offered Bolt a 1% equity stake in the company to headline its new marketing campaign. See, “Usain Bolt Gets Most Awesome Endorsement Offer Yet,” Adweek.com, http://bit.ly/Thwypk. A few months before that, the Chicago Bulls signed reigning National Basketball Association MVP Derrick Rose to a five-year extension worth $94 million. However, his new endorsement deal with adidas was by far the largest contract he signed during the season. As the second largest shoe deal in history, Rose's deal with adidas reportedly included $185 million in guaranteed money over 13 years, with the potential to reach $260 million through incentives; far larger than his on-court compensation. See, “Derrick Rose, Adidas Agree to Massive Endorsement Deal, According to Reports,” SB Nation Chicago, http://bit.ly/VREbAW.

The trend of corporations looking to celebrities to market their products is nothing new. With the immense popularity of sports, even athletes with average on-field performance may be more recognizable than other celebrities. However, even in highly visible transactions, the future economic benefit and appropriate endorsement fee can be difficult to ascertain. Even after the fact, a concrete determination of worth created through endorsement-based marketing is difficult. And instances of celebrity falls from public grace, such as Lance Armstrong's recent steroids-use scandal, can complicate ROP valuations even further.

Changes in sales trends can provide strong evidence of value generated, but apart from conducting exhaustive surveys, corporations can't know conclusively if these products would have sold with or without the endorsement in question. Further complicating the matter, preliminary research by CONSOR Intellectual Asset Management indicated a celebrity's relative level of fame bears little correlation to the amount paid for endorsements. In other words, relying solely on observed market transactions may not provide a reasonable indication of value for analyzing celebrity endorsement opportunities.

The Actor Can Become the Brand

Unlike athletes who develop intangible assets through on-field performance, entertainers often develop their persona with the portrayal of fictional characters. Despite making only six non-endorsement related television appearances since 1990, according to IMDB (www.imdb.com/name/nm0326091), actor Jonathan Goldsmith has become arguably the most recognizable figure in beer advertising with his portrayal of Dos Equis' “Most Interesting Man in the World.” In other words, a celebrity persona can be created to match corporate marketing objectives.

At times trademark laws, designed to prevent consumer confusion, and actors' ROP come in conflict. Over the course of several years, actor Jerry Lambert appeared in Sony PlayStation commercials as “Kevin Butler,” a fictional corporate executive leading the charge to “bring back the glory of Play to gaming.” On Sept. 3, 2012, three days after the expiration of his contract with Sony, Lambert appeared in a Bridgestone commercial that promised consumers a Nintendo Wii with the purchase of four tires. Sony is now suing Bridgestone and Lambert alleging the commercial “depicts a Bridgestone employee who consumers reasonably perceive to be 'Kevin Butler' promoting the Nintendo Wii, a product that competes directly with SCEA's PlayStation products.” See, “Sony Sues Actor Who Abandoned PlayStation for Nintendo Wii,” The Hollywood Reporter, http://bit.ly/W2sNDk. Sony is implying that use of a recognizable face will lead consumers to confuse the Wii and the PlayStation, two heavily branded and promoted products; therefore suggesting even unknown actors can be powerful endorsers.

Calculating Damages for ROP Violations

The traditional income and market valuation approaches may not provide reasonable indications of value for endorsement transactions. Developing a reasonable valuation in the context of negotiating an endorsement deal may require detailed research, use of multiple valuation methodologies and a thorough understanding of each party's economic alternatives.

Prudent analysis requires consideration of three valuation approaches: the “Cost,” “Income” and “Market” approaches. However, in ROP damage calculations for ROP infringements, the reasonableness of each must be evaluated on a case-by-case basis.

• Market Approach. While this approach provides the benefit of analyzing real world agreements, information available to use in a market approach may be skewed toward large deals, as smaller or minor endorsement deals are rarely publicized. Also, ROP violations don't involve the time investment associated with a typical endorsement. In other words, when a celebrity's name or likeness has been used without their permission, the celebrity clearly has not spent time on a film set shooting commercials. Therefore applying announced endorsement deals may skew a damages calculation to an unrealistically high result.
• Income Approach. The income approach provides the benefit of calculating the present value of revenue derived from use of the ROP. However, it is often difficult to quantify the impact of endorsement-based marketing on sales and profits. ROP damages based on the present value of the infringer's unjust enrichment would need to demonstrate that the ROP violation actually enhances sales or profits, and as discussed, this connection can be difficult to establish even when the celebrity is permitting use of their ROP.
• Cost Approach. In the endorsement market, substitution is a tangible option, and in some circumstances media impressions can be accurately quantified. However, calculating the costs to run an equivalent campaign can ignore the public image implications of an unauthorized ROP use. Also, unlike a copyright, a celebrity's ROP is an exhaustible asset. While it may seem like certain celebrities push the limit ( i.e., pre-scandal Tiger Woods), none can lend their name to an infinite number of companies or products.

Because one or more approaches may yield indications that are unreasonable for the context of a case or access to information may limit the ability to complete a thorough analysis, a complete damages valuation analysis should include multiple approaches, followed by a reasoned reconciliation of the often differing indications.

Analyzing Rights of Publicity

Several well-known situations illustrate distinctly different sets of conditions under which analysis of a celebrity's ROP played a central role. For the many endorsement deals golfer Tiger Woods signed before his now infamous divorce ' whether or not a formal ROP valuation was performed by each of the corporations paying Tiger, or by Tiger himself ' each corporation believed that the present value of future benefits, driven by their association with Tiger, would be greater than the amount they invested in Tiger. As mentioned above, it can be difficult to connect the sale of products or services to an endorsement-based marketing effort.

After the news of Tiger's infidelity broke, some corporations dropped their Tiger-based marketing efforts, while others continued to use Tiger's ROP. Notably, the professional services and consulting firm Accenture dropped Tiger, but Nike Golf kept him. While Tiger's level of fame and exposure certainly increased, the value of his ROP changed. Further, it changed differently for different users. As a golfer, Tiger's connection to professional services was less strong than his connection to golfing equipment and attire. The value of Tiger's ROP changed more drastically for the corporation with a lesser degree of connection between its future earnings and Tiger's ROP. In this context, the income approach to valuation can be used to understand the drivers of endorsement transactions.

A second, very different ' and highly relevant ' example involved a landmark federal appeals court decision in favor of Jesse “The Body” Ventura, who sued Titan Sports/World Wrestling Federation (WWF) in 1991 to recoup unpaid royalties. Ventura began wrestling for Titan in 1984, later retaining employment as a color commentator, essentially building on the ROP developed during his in-ring career. Throughout his career, each time his contract was renegotiated, the policy of paying royalties only to “featured” performers was reiterated.

In reviewing Titan/WWF merchandising and licensing activity, it was discovered that Ventura's likeness was being used on dozens of products including action figures, T-shirts, videos, cards, toys, paper goods, footwear and other consumer products. Affirming in favor of Ventura, the appeals court noted: “The District Court found that, had Ventura known that Titan did not abide by its stated policy, he would not have accepted a deal which did not compensate him for the reproduction and sale of his performances on videotape.” Ventura v. Titan Sports Inc., 65 F.3d 725 (8th Cir. 1995).

As the infringing use in this context was merchandising and licensing, an income approach measuring the value of unjust enrichment provided the most reasonable analysis method for the Ventura's ROP. Relying on Ventura's or other wrestler's endorsement transactions would have resulted in a damages valuation more comparable to a different form of use.

In April 2007, American Apparel (AAI) implemented a broad-based ad campaign featuring the unauthorized use of Woody Allen's ROP. Billboards featuring a headshot of Allen from “Annie Hall,” dressed as a Rabbi, appeared in Manhattan and Los Angeles with Yiddish text added that translated to “Our Spiritual Leader.” In addition to the full sized billboards, 60 foot-long banners featuring only Allen's eyes and iconic glasses were placed on top of several AAI stores, along with banners appearing on the side of the corporate headquarters. In Los Angeles, lighting fixtures were installed ensuring the banner could be seen 24 hours a day, and slideshows of various Allen images were show on the firm's website and social media outlets with the caption “Our Spiritual Leader.”

Historically, Allen has exhibited a strong aversion to domestic advertising and chooses not to employ a “commercial” agent. Prior to a New York City tourism promotion following the 9/11 attacks, Allen hadn't consented to a domestic ad campaign since the early 1960s. Despite his general aversion, Allen testified that he has been more likely to consider offers for advertising outside the United States. In the early 1990s, and again in 2000, he agreed to develop commercials in Europe; however in both instances he was given complete creative control.

Damages resulting from AAI's use were analyzed using both the Market and Cost Approaches. To establish a compensation range, offers previously accepted and rejected by Allen were reviewed in conjunction with 60-plus comparable deals. However, fees established using this initial range assume arm's length negotiations between willing and comparably informed parties. Given the context of the situation other factors need to be taken into account, including:

• Scarcity of Allen's endorsements;
• Unfavorable effect of associating with AAI (numerous sexual harassment allegations had been brought against AAI owner Dov Charney ( see, “The Top 20 Sexual-Harassment Cases of All Time,” HR World.com, http://bit.ly/WoJrtc));
• Creative control issues;
• Dilution of Allen's goodwill; and
• No personal appearance needed (reduce hypothetical compensation).

Figure 1, below, illustrates the valuation. As a compliment to the Market Approach, the Cost Approach was used to calculate the total expense to replicate advertising based on billboard, Internet, and social media page views.

[IMGCAP(1)]

A five-million dollar settlement was reached just days before a jury trial was set to begin in New York City. This was reported to be the largest amount ever paid under the New York right of publicity statute.

Estates and Trusts

When descendible rights are at issue, it's common to value ROP or other intangible assets when conducting estate and trust valuations. In states in which rights of publicity extend many years, valuations are often conducted by projecting licensing and merchandising income streams 10 to 20 years into the future. However, given the one-time transaction nature of endorsement deals, basing calculations on expected licensing or merchandising income alone may not reflect the actual value of the celebrity's ROP asset. Standard cost approaches, based on the principal of substation or replacement, may not reflect the context that a deceased celebrity no longer develops new accomplishments or images.

In 2005, CONSOR was asked to determine the fair market value of postmortem publicity rights for the estate of Marlon Brando; an analysis contingent upon three primary inputs. First, future offers expected to be received needed to be forecast based on the nature and trend of historical offers, financial considerations of contracts, extent and duration of the celebrity's career, and assumptions about the advertising industry. Second, the economic or commercial life span those rights could reasonably be expected to last had to be established. And last, a reflection of the uncertainty and risk involved in forecasting demand for the celebrity's image and likeness into the future was needed.

At the onset or peak of his career, Brando did little to commercialize his celebrity status. However, in his later years he began to commercialize his name and likeness due to financial difficulties. Contract offers received and accepted between 1997 and 2003 were reviewed by CONSOR. These historical offers along with third-party analysis of growth rates in advertising expenditures were used as the basis for revenue projections. See Figure 2 below.

[IMGCAP(2)]

Under California law, enforceable rights of publicity terminate 70 years after death; however a reasonable timeframe for forecasting continued revenue opportunities must be evaluated on a case-specific basis. Moreover, specific to actors, there is the separation between the publicity rights value of the actor and the value associated with the character portrayed, which are typically not owned by the actor. While dialogue may be reproduced or performed by others in a commercial application for years, Brando's estate would not receive compensation unless a voice recording or image of the actor's likeness was used.

To estimate the appropriate rate with which to discount the future income stream of publicity rights income, several sources of risk and the time value of money were considered. For the purposes of this example, the most appropriate method to estimate the discount rate was determined to be the “Build-Up” method. In this model, the equity cost of capital was calculated as the sum of a risk-free rate of return, an equity risk premium, and an asset-specific risk premium.

Conclusion

We believe the current decade will see more emphasis on ROP valuations and the factors that drive ROP transactions. Corporate marketing departments will increase their analysis of financial returns on their marketing activities, celebrities will have shorter careers with greater exposure, and expanding media options will allow living and deceased celebrities to use their ROP across more avenues and for longer periods of time. We are also likely to see increased blurring of the difference between trademarks and rights of publicity, as many individuals employ both forms of protection for their imagery. All of these issues will impact the value of an celebrity's ROP.

Unlike patent, trademark and copyright law, rights of publicity are governed by a patchwork of state statutes and common-law decisions, rather than by a single federal statute. And unlike trade secret law, rights of publicity are not subject to a uniform state law adopted in the vast majority of states. But as with valuing other intellectual property assets, right of publicity (ROP) valuations need to consider the unique characteristics of the subject asset and the context of the valuation.

Typically, ROP valuations are needed for one of three reasons: when negotiating a transaction (i.e., endorsements, licensing, etc.); calculating damages for ROP violations; or valuing celebrity estates and trusts. Each ROP asset is unique and each of these contexts varies, posing some unique challenges for reasonable analysis of ROP assets.

Endorsement Transactions

Before the opening ceremonies of the 2012 Summer Olympic Games had even taken place, Jamaican sprinter Usain Bolt had collected $20 million in endorsement revenue. After he won three gold medals, online delivery company Shutl offered Bolt a 1% equity stake in the company to headline its new marketing campaign. See, “Usain Bolt Gets Most Awesome Endorsement Offer Yet,” Adweek.com, http://bit.ly/Thwypk. A few months before that, the Chicago Bulls signed reigning National Basketball Association MVP Derrick Rose to a five-year extension worth $94 million. However, his new endorsement deal with adidas was by far the largest contract he signed during the season. As the second largest shoe deal in history, Rose's deal with adidas reportedly included $185 million in guaranteed money over 13 years, with the potential to reach $260 million through incentives; far larger than his on-court compensation. See, “Derrick Rose, Adidas Agree to Massive Endorsement Deal, According to Reports,” SB Nation Chicago, http://bit.ly/VREbAW.

The trend of corporations looking to celebrities to market their products is nothing new. With the immense popularity of sports, even athletes with average on-field performance may be more recognizable than other celebrities. However, even in highly visible transactions, the future economic benefit and appropriate endorsement fee can be difficult to ascertain. Even after the fact, a concrete determination of worth created through endorsement-based marketing is difficult. And instances of celebrity falls from public grace, such as Lance Armstrong's recent steroids-use scandal, can complicate ROP valuations even further.

Changes in sales trends can provide strong evidence of value generated, but apart from conducting exhaustive surveys, corporations can't know conclusively if these products would have sold with or without the endorsement in question. Further complicating the matter, preliminary research by CONSOR Intellectual Asset Management indicated a celebrity's relative level of fame bears little correlation to the amount paid for endorsements. In other words, relying solely on observed market transactions may not provide a reasonable indication of value for analyzing celebrity endorsement opportunities.

The Actor Can Become the Brand

Unlike athletes who develop intangible assets through on-field performance, entertainers often develop their persona with the portrayal of fictional characters. Despite making only six non-endorsement related television appearances since 1990, according to IMDB (www.imdb.com/name/nm0326091), actor Jonathan Goldsmith has become arguably the most recognizable figure in beer advertising with his portrayal of Dos Equis' “Most Interesting Man in the World.” In other words, a celebrity persona can be created to match corporate marketing objectives.

At times trademark laws, designed to prevent consumer confusion, and actors' ROP come in conflict. Over the course of several years, actor Jerry Lambert appeared in Sony PlayStation commercials as “Kevin Butler,” a fictional corporate executive leading the charge to “bring back the glory of Play to gaming.” On Sept. 3, 2012, three days after the expiration of his contract with Sony, Lambert appeared in a Bridgestone commercial that promised consumers a Nintendo Wii with the purchase of four tires. Sony is now suing Bridgestone and Lambert alleging the commercial “depicts a Bridgestone employee who consumers reasonably perceive to be 'Kevin Butler' promoting the Nintendo Wii, a product that competes directly with SCEA's PlayStation products.” See, “Sony Sues Actor Who Abandoned PlayStation for Nintendo Wii,” The Hollywood Reporter, http://bit.ly/W2sNDk. Sony is implying that use of a recognizable face will lead consumers to confuse the Wii and the PlayStation, two heavily branded and promoted products; therefore suggesting even unknown actors can be powerful endorsers.

Calculating Damages for ROP Violations

The traditional income and market valuation approaches may not provide reasonable indications of value for endorsement transactions. Developing a reasonable valuation in the context of negotiating an endorsement deal may require detailed research, use of multiple valuation methodologies and a thorough understanding of each party's economic alternatives.

Prudent analysis requires consideration of three valuation approaches: the “Cost,” “Income” and “Market” approaches. However, in ROP damage calculations for ROP infringements, the reasonableness of each must be evaluated on a case-by-case basis.

• Market Approach. While this approach provides the benefit of analyzing real world agreements, information available to use in a market approach may be skewed toward large deals, as smaller or minor endorsement deals are rarely publicized. Also, ROP violations don't involve the time investment associated with a typical endorsement. In other words, when a celebrity's name or likeness has been used without their permission, the celebrity clearly has not spent time on a film set shooting commercials. Therefore applying announced endorsement deals may skew a damages calculation to an unrealistically high result.
• Income Approach. The income approach provides the benefit of calculating the present value of revenue derived from use of the ROP. However, it is often difficult to quantify the impact of endorsement-based marketing on sales and profits. ROP damages based on the present value of the infringer's unjust enrichment would need to demonstrate that the ROP violation actually enhances sales or profits, and as discussed, this connection can be difficult to establish even when the celebrity is permitting use of their ROP.
• Cost Approach. In the endorsement market, substitution is a tangible option, and in some circumstances media impressions can be accurately quantified. However, calculating the costs to run an equivalent campaign can ignore the public image implications of an unauthorized ROP use. Also, unlike a copyright, a celebrity's ROP is an exhaustible asset. While it may seem like certain celebrities push the limit ( i.e., pre-scandal Tiger Woods), none can lend their name to an infinite number of companies or products.

Because one or more approaches may yield indications that are unreasonable for the context of a case or access to information may limit the ability to complete a thorough analysis, a complete damages valuation analysis should include multiple approaches, followed by a reasoned reconciliation of the often differing indications.

Analyzing Rights of Publicity

Several well-known situations illustrate distinctly different sets of conditions under which analysis of a celebrity's ROP played a central role. For the many endorsement deals golfer Tiger Woods signed before his now infamous divorce ' whether or not a formal ROP valuation was performed by each of the corporations paying Tiger, or by Tiger himself ' each corporation believed that the present value of future benefits, driven by their association with Tiger, would be greater than the amount they invested in Tiger. As mentioned above, it can be difficult to connect the sale of products or services to an endorsement-based marketing effort.

After the news of Tiger's infidelity broke, some corporations dropped their Tiger-based marketing efforts, while others continued to use Tiger's ROP. Notably, the professional services and consulting firm Accenture dropped Tiger, but Nike Golf kept him. While Tiger's level of fame and exposure certainly increased, the value of his ROP changed. Further, it changed differently for different users. As a golfer, Tiger's connection to professional services was less strong than his connection to golfing equipment and attire. The value of Tiger's ROP changed more drastically for the corporation with a lesser degree of connection between its future earnings and Tiger's ROP. In this context, the income approach to valuation can be used to understand the drivers of endorsement transactions.

A second, very different ' and highly relevant ' example involved a landmark federal appeals court decision in favor of Jesse “The Body” Ventura, who sued Titan Sports/World Wrestling Federation (WWF) in 1991 to recoup unpaid royalties. Ventura began wrestling for Titan in 1984, later retaining employment as a color commentator, essentially building on the ROP developed during his in-ring career. Throughout his career, each time his contract was renegotiated, the policy of paying royalties only to “featured” performers was reiterated.

In reviewing Titan/WWF merchandising and licensing activity, it was discovered that Ventura's likeness was being used on dozens of products including action figures, T-shirts, videos, cards, toys, paper goods, footwear and other consumer products. Affirming in favor of Ventura, the appeals court noted: “The District Court found that, had Ventura known that Titan did not abide by its stated policy, he would not have accepted a deal which did not compensate him for the reproduction and sale of his performances on videotape.” Ventura v. Titan Sports Inc. , 65 F.3d 725 (8th Cir. 1995).

As the infringing use in this context was merchandising and licensing, an income approach measuring the value of unjust enrichment provided the most reasonable analysis method for the Ventura's ROP. Relying on Ventura's or other wrestler's endorsement transactions would have resulted in a damages valuation more comparable to a different form of use.

In April 2007, American Apparel (AAI) implemented a broad-based ad campaign featuring the unauthorized use of Woody Allen's ROP. Billboards featuring a headshot of Allen from “Annie Hall,” dressed as a Rabbi, appeared in Manhattan and Los Angeles with Yiddish text added that translated to “Our Spiritual Leader.” In addition to the full sized billboards, 60 foot-long banners featuring only Allen's eyes and iconic glasses were placed on top of several AAI stores, along with banners appearing on the side of the corporate headquarters. In Los Angeles, lighting fixtures were installed ensuring the banner could be seen 24 hours a day, and slideshows of various Allen images were show on the firm's website and social media outlets with the caption “Our Spiritual Leader.”

Historically, Allen has exhibited a strong aversion to domestic advertising and chooses not to employ a “commercial” agent. Prior to a New York City tourism promotion following the 9/11 attacks, Allen hadn't consented to a domestic ad campaign since the early 1960s. Despite his general aversion, Allen testified that he has been more likely to consider offers for advertising outside the United States. In the early 1990s, and again in 2000, he agreed to develop commercials in Europe; however in both instances he was given complete creative control.

Damages resulting from AAI's use were analyzed using both the Market and Cost Approaches. To establish a compensation range, offers previously accepted and rejected by Allen were reviewed in conjunction with 60-plus comparable deals. However, fees established using this initial range assume arm's length negotiations between willing and comparably informed parties. Given the context of the situation other factors need to be taken into account, including:

• Scarcity of Allen's endorsements;
• Unfavorable effect of associating with AAI (numerous sexual harassment allegations had been brought against AAI owner Dov Charney ( see, “The Top 20 Sexual-Harassment Cases of All Time,” HR World.com, http://bit.ly/WoJrtc));
• Creative control issues;
• Dilution of Allen's goodwill; and
• No personal appearance needed (reduce hypothetical compensation).

Figure 1, below, illustrates the valuation. As a compliment to the Market Approach, the Cost Approach was used to calculate the total expense to replicate advertising based on billboard, Internet, and social media page views.

[IMGCAP(1)]

A five-million dollar settlement was reached just days before a jury trial was set to begin in New York City. This was reported to be the largest amount ever paid under the New York right of publicity statute.

Estates and Trusts

When descendible rights are at issue, it's common to value ROP or other intangible assets when conducting estate and trust valuations. In states in which rights of publicity extend many years, valuations are often conducted by projecting licensing and merchandising income streams 10 to 20 years into the future. However, given the one-time transaction nature of endorsement deals, basing calculations on expected licensing or merchandising income alone may not reflect the actual value of the celebrity's ROP asset. Standard cost approaches, based on the principal of substation or replacement, may not reflect the context that a deceased celebrity no longer develops new accomplishments or images.

In 2005, CONSOR was asked to determine the fair market value of postmortem publicity rights for the estate of Marlon Brando; an analysis contingent upon three primary inputs. First, future offers expected to be received needed to be forecast based on the nature and trend of historical offers, financial considerations of contracts, extent and duration of the celebrity's career, and assumptions about the advertising industry. Second, the economic or commercial life span those rights could reasonably be expected to last had to be established. And last, a reflection of the uncertainty and risk involved in forecasting demand for the celebrity's image and likeness into the future was needed.

At the onset or peak of his career, Brando did little to commercialize his celebrity status. However, in his later years he began to commercialize his name and likeness due to financial difficulties. Contract offers received and accepted between 1997 and 2003 were reviewed by CONSOR. These historical offers along with third-party analysis of growth rates in advertising expenditures were used as the basis for revenue projections. See Figure 2 below.

[IMGCAP(2)]

Under California law, enforceable rights of publicity terminate 70 years after death; however a reasonable timeframe for forecasting continued revenue opportunities must be evaluated on a case-specific basis. Moreover, specific to actors, there is the separation between the publicity rights value of the actor and the value associated with the character portrayed, which are typically not owned by the actor. While dialogue may be reproduced or performed by others in a commercial application for years, Brando's estate would not receive compensation unless a voice recording or image of the actor's likeness was used.

To estimate the appropriate rate with which to discount the future income stream of publicity rights income, several sources of risk and the time value of money were considered. For the purposes of this example, the most appropriate method to estimate the discount rate was determined to be the “Build-Up” method. In this model, the equity cost of capital was calculated as the sum of a risk-free rate of return, an equity risk premium, and an asset-specific risk premium.

Conclusion

We believe the current decade will see more emphasis on ROP valuations and the factors that drive ROP transactions. Corporate marketing departments will increase their analysis of financial returns on their marketing activities, celebrities will have shorter careers with greater exposure, and expanding media options will allow living and deceased celebrities to use their ROP across more avenues and for longer periods of time. We are also likely to see increased blurring of the difference between trademarks and rights of publicity, as many individuals employ both forms of protection for their imagery. All of these issues will impact the value of an celebrity's ROP.