When I started raindance, I had no idea what I was creating. I also had no idea how to monetize intellectual property.
One of the first painful lessons I learned about IP took place in 1995. I directed Raindance for a few years and met many screenwriters. I had made friends with the two directors of HandMade films at that time. HandMade's property had been transferred from George Harrison to another company. Gareth Jones and Hilary Davies ran the company from an office in London's Golden Square. They asked me if I knew new writers from the world of Raindance. I asked what type of script they were looking for. They told me they were looking for the next "Withnail and I" – their most recent hit.
I mentioned this story to some of the screenwriters I worked with back then, and a few months later I stormed into their office with a brand new script: "Withnail and I" – 10 years later. Gareth and Hilary looked at the title and threw me out of their office. You see, Bruce Robinson, who wrote the original "Withnail and I", had the characters he created in his film. I was just taught one of the most important lessons on how filmmakers monetize intellectual property.
Intellectual property: the new economy
With the stock market crash and the impending demise of retail, investors are avoiding traditional stationary investments. This makes what you create worth an investment for traditional investors. But first, you need to understand the different areas where money can be made for ideas. And before you start looking for an investment, you need to make sure that you protect your ideas (intellectual property).
Intellectual property is what investors call intangible assets. Lock in:
- Brands (brand logos, words, slogans and jingles)
- Patents (technical inventions)
- Copyrighted material (written material, scripts, drawings, computer code)
- Designs (industrial design of products)
- Domain names (website URLs)
- Business secrets (workflow method known only to select individuals)
- Other (goodwill related to a brand like Disney or Raindance)
Each of these intangible assets has different types of protection through one or more of the following:
- common law
- Confidentiality agreements
- Nondisclosure agreements
- Physical barriers
What makes intellectual property unique?
A material product such as a car or a coat loses value through use. Intellectual property is not. Intellectual property can often be used by more than one person at a time. For example, when different artists cover the same song.
An artist or creator must value the property of their intellectual property. Each type of property has different strengths and weaknesses.
Financiers only write out the check after they have thoroughly checked all facts and figures. This is known as due diligence. If you, as a real estate developer, were to consider an idea for a new apartment block, you would be entering a phase of due diligence. In this phase, you would test all of your design, construction cost, and marketing projection assumptions. If the result is satisfactory, you would then seek funding and export and create tangible property.
Filmmakers and screenwriters should also exercise their own care and evaluate their ideas before implementing them. If you are serious about monetizing your ideas using one of the well-known monetization channels, due diligence is critical.
Traditional ways of monetizing intellectual property
Large film companies create scorecards with the strengths of any intellectual property. This gives them a method for every intangible asset value. It can also highlight marketing assets.
Independent filmmakers have often invested their own time and money in developing their projects. However, building a development partnership with another company or investor offers many advantages. This enables the filmmaker to spread the risk (and reward) while combining resources.
Points to consider:
- How "success" and profit distribution are defined
- How sublicensing and subcontracting rights are defined
- How to deal with compensation and liability issues
- How to deal with the consequences of dropped targets
- How profit incentives should be distributed
Make sure to clearly define who owns the intellectual property and related assets generated through the co-development partnership.
The brilliant Canadian philosopher Marshall McLuhan coined the term "Golden Village" in the 1960s. Check out this short video clip that explains what he means.
The reason why this is so relevant to filmmakers today is that licensing your intellectual property to other territories or media than originally intended is the new golden goose. Like gaming, for example. Investors are very interested in everything that a cross-media application can have and can work both online and offline. And of great interest is intellectual property, which can also produce goods.
By creating intellectual property that can converge in other media, you can increase the monetization opportunities of your property. It can also give you a market advantage over your competitors and give you and your ideas a market advantage.
If you create additional licensing opportunities for your intellectual property, you can also spread the cost of up-front investment in research and development.
Two license examples
In 2017, Roger Corman sold the rights to 270 of his films to Shout! Factory and China's Ass.Titles like Rock & # 39; N & # 39; Roll High School, Piranha, Bloodfist, Black Scorpion, Eat My Dust! and humanoids from deep. In this license agreement Shout! produces English-language remakes and Ace the Chinese.
In 2020, Raindance licensed the university model to a private investment group in Dubai. They retain rights in several Asian countries and have advanced the acquisition and renovation of a classroom and studio building. Raindance Dubai provides the curriculum and trains the trainers. The Dubai Group provides marketing and infrastructure.
Points to consider:
- field of use
- Territorial usage restrictions
- Sublicensing rights
Any form of property can be pledged to raise capital. A lender may require you to pass ownership of the intellectual property on to it until the loan is repaid.
Raindance was an enticing opportunity to sell the entire Raindance brand to an American company that works with a leading university on the west coast. The idea was to use this intellectual property to raise money to start an online training platform. In the end, Raindance resigned from the 6-digit bill to recover intellectual property rights should the company fail.
Points to consider:
- Term of the loan
- Release of intellectual property
- Standard provisions
Existing patent or copyright agreements often have a predictable source of income. These flows can be attractive to investors seeking a return based on the asset's creditworthiness analysis and, of course, due diligence.
In 1997 David Bowie raised $ 55 million to buy back his music rights from his manager before 1990. He was then able to offer investors a substantial return on their investment. Now called Bowie Bonds, he was the first to use intellectual property as security.
5. Sale leaseback
In commercial real estate, assets are sometimes combined and combined. The combined value is then used to raise funds and each party or property moves against the principal in accordance with the terms of the agreement.
Sometimes part of the unused intellectual property can become a new legal entity. The advantage? These assets can be better used and used without affecting other priorities of the whole.
An excellent example is the launch of the Monty Python YouTube channel in 2006 to take advantage of the brand as well as to eliminate online piracy.
As with any monetization strategy, the secret to unlocking money is to devalue the company. With the benefits of local tax incentives and the creation of a variety of applications for your idea, you can monetize your intellectual property.