The Insanely Lucrative Ownership of Intangible Matter

Intangible Matter

This year alone, media executives and corporate shareholders will feast on the leftovers of more than US$2.5 trillion in annual revenues from a product literally willed into existence.  Such treasure is made manifest by the exercise of creative imagination and its transmutation into intellectual property.

A truly original idea is likely not a rare thing among a creative species numbering over 8 billion souls.  But each and every idea is fleeting; delicate.  Once a thought is lost, it may never have existed.  Until communicated to another, it is literally a secret.  A whisper into the wind carries no weight, but a few words written on paper can change the course of history.  That process of recording a thought is pure alchemy.  Once recorded, that thought has value.  It becomes a thing that can be owned.  It is suddenly intellectual property that can be sold. 

Intellectual properties, and the rights their ownership convey, are the legal basis for receiving every penny of revenue by the Media & Entertainment industry.  They are also why some Professional Investors are willing to pay US$200 million for the rights to Justin Bieber’s song catalogue, or US$900 million for Reece Witherspoon’s production company.


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It’s all about the IP

Intellectual property rights are colloquially referred to as “IP” or as simply, “Rights”.  They are what allow the streamers, distributors and (hopefully) the creators of hit movies, television shows and songs to make money.  Without IP, there is no Media & Entertainment industry. 

That IP is based on the concept of copyright. 

Copyright is essentially the right of a creator to protect and benefit from original pieces of literary or artistic work such as a book, script, song or painting.  This right is so important to the concepts of both economic freedom and prosperity that it was included in the first Article of the Constitution at the founding of the United States and is a fundamental tenant of today’s common legal framework within the European Union.   

Without copyright protection, courts could not fairly resolve disputes over who has the right to make money from distributing and delivering content to audiences.  There would be no theatres, cinemas, rock concerts or streaming platforms for audiences to pay for and no consumer audiences for advertisers to pay even more to pitch to.  The Media & Entertainment industry would not exist to deliver entertainment content without the IP that Private Equity is now spending billions to acquire.


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The financial value of that content is tied directly to those rights. 

But what can actually be owned?

The Media C-Suite explains.

Binding Paper

When an executive from a distribution company asks an aspiring film producer about the Rights to her film project, that executive is asking about contracts.  What piece of paper do you hold that says you own the Rights?  For a film producer, those Rights are the contract rights to develop a story protected by copyright into a feature film or a television series, the right to produce a picture or song and to contract others to perform. 

The original copyright owner will have all of the inherent rights to do with the artworks anything he or she wants.  These inherent Rights include the legal right to develop and produce a story into a medium of expression, like a song, a book, a film, television show or a live performance.  They also include the right to distribute that picture or song in different media market territories, and to charge money for the pleasure of experiencing it.  There is also the right to create a sequel, a prequel, a spin-off or any other derivative.  These are all separate legal rights formalised in contracts that serve as assets to an investor.  Without these Rights expressed in writing in a binding legal contract, no distribution exec will touch a producer’s project. 

If you want to make money from entertainment, you must hold the specific legal right to do so.

Reese Witherspoon, founder of Hello Sunshine.
Reese Witherspoon (pictured) founded Hello Sunshine in 2016 and sold a controlling stake to Blackstone-backed Candle Media for US$900 million in 2021. (photo credit: John Russo)

A creator will become the natural, original owner of copyright over a piece of art as soon as it is expressed.  But to allow anyone, including that creator, to earn money from it, there must be a piece of paper that identifies the creator, and what the law calls, the “Work”. 

Once that copyright is secured on paper, all or any of the Rights to do anything with the Work can be sold to other people, bringing an investment asset into existence. 

Balance Sheet Assets

There are two basic ways to transfer the Rights inherent within copyright from one person to another (including between companies):  By “assignment” and by “license”.  These are the underlying assets that any producer, company director, shareholder or investor is banking on. 

An Assignment refers to the transfer of ownership to Rights, or the complete copyright, from one person to another.  The Rights being assigned are in effect being sold from an existing owner to a new one. 

A License refers to the transfer of specific Rights for a specific purpose and often for a specific period of time and maintains a distinct connection between the present owner of the copyright and the Licensee.  For example, a music label might own the copyright to a particular song, and License the Rights to include the song on a film soundtrack to a film producer (these are referred to as “sync rights”).  The Producer can use the song only for that specified purpose, while the music label retains all other Rights to exploit the music. 

An exclusive License means the producer is the only person who can exploit the Rights granted, while a non-exclusive license means that the song might be included in the soundtracks of many other films. 

For any media company, the contracts demonstrating Assignments and Licenses for IP are balance sheet assets.  They are the machinery through which commercial content is produced and from which revenues are generated.  For media execs and entrepreneurs, how those balance sheet assets are secured and exploited is the most important piece of information that Professional Investors are looking for.


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The costs of producing entertainment content for global audiences are likely to exceed US$250 billion across film, television, music and gaming this year. The vast majority of content creators and production professionals earn their living from that expenditure; earning fees out of production budgets paid by companies that own the Rights to develop and produce the content. The companies that are set up to hold the Rights to each production then enter into further contracts with distribution companies.

The streaming platforms earn revenues from subscribers experiencing that content (and increasingly from advertisers seeking access to those subscribers).  The distribution and delivery of entertainment content to consumer audiences has driven persistent growth in revenues across the global Media & Entertainment industry to over US$2.4 trillion in 2021, according to PWC’s annual review of the industry.  These Industry revenues are on track to exceed US$2.5 trillion this year and expected to grow at a rate of 4.6 CAGR to reach over US$2.93 trillion by 2026.

As an increasing number of Professional Investors inject increasing levels of capital into media companies, the focus on ownership of IP is expected to become a fundamental criteria for doing deals.  Media entrepreneurs and Professional Investors that embrace IP as a balance sheet asset are the most likely to close those deals. 

Those who do, transform a literal product of the imagination into one of the world’s most valuable asset classes.

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