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The Insanely Lucrative Ownership of Intangible Matter
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Really useful article, Just to clarify a little, copyright owners often sell/ assign exclusive underlying rights – i.e. rather than licensing them. For example, a film / tv producer will buy the exclusive underlying rights to produce and exploit a screen adaptation of a book. This is not a license, it’s the purchase of an assignment. Once these rights have been assigned to them, the producer will then create a new copyright by producing the the screen adaptation. Then the producer sells licenses to film distributors/ broadcasters/ streamers.
Gavin, so right. This is a typical path for spec screenplays or screenplays based on books. Though, the full suite of rights enveloped by Copyright to a story aren’t always fully transferred. A professional producer will most often pay the original copyright owner to “borrow” the rights for a short period in attempt to development a project. This is an Option Agreement (an option to purchase the literary rights). Usually a year, and usually renewable. If/When the Producer chooses to exercise the Option, then “ownership” of the copyright (or, often, the literary rights to make a film adaptation, is transferred to the Producer via an assignment.
In many of these transaction, the original creator of the works retains rights to non-motion picture expressions of the story, such as theatrical or live productions (which is now becoming a sizeable market).
Thanks, I know how options work – to clarify, an option to produce a screen adaptation is separate from the “literary rights”, which generally refers to the rights to publish a book. A film/ tv option is for the screen adaptation rights, as I’ve mentioned. This option may or may not include the rights to create a live theatrical adaptation – I’ve seen both. Much more important for some properties, however, are the merchandising rights – but again, there’s no. standard deal. I would imagine JK Rowling owns a share of the Harry Potter merchandising, which must be worth a fortune. And George Lucas did rather well out of Star Wars merchandising…
Fantastic insight as always, and really strikes a note for me, as one of our missions at Stelerator.com is to digitize the ownerships of IP and revenue claims, to support the best use of IP, be that actively used, or sitting on a balance sheet generating long tail revenues. We’re exited to explore new forms of secondaries, fractional and other ways to create a modern, optimal and dynamic marketplace.
Vlad, interesting. What does digitising mean? From a rights perspective? Do you mean transactionally? As in “smart contracts” for managing performance compliance?
From a capital perspective, most Copyright cannot be treated as a balance sheet asset under existing international accounting standards. Copyright acquisition costs are sometimes attempted to be recorded at book value, but not as appreciating assets in their own right.
Development costs are operating expenditure, not investment.
In reality, I do agree that they should be treated as balance sheet assets.