Intellectual property contributes significantly to economic growth, cultural development, competitive advantage, and facilitates market regulation by preventing unfair competition.
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The OK Program, sponsored by the Walton Family Foundation and Prison Fellowship, gives young dependents of prison inmates the opportunity to experience different creative industries to see if they have interest and ability to pursue careers in those industries. This group was at Tweed to learn the process and business of sound recording. The outcome of the process was for each student to create a unique “beat.” Working with Andrew Ratcliffe and John Snyder of Tweed, the students completed their assignment and, upon completion, registered their beat with the US Copyright Office to protect their creations. They were then led in a discussion about not only protecting but valuing such Intellectual Property. The group was excited to find out their creations had value, and when someone suggested we use one of the beats in our outtake video, the young creator asked, “How much is it worth to you?” The point was made.
Intellectual Property (IP) plays a significant role in the Gross Domestic Product (GDP) of the US. In fact, the U.S. Patent and Trademark Office found that IP-intensive industries accounted for over 38% of total US GDP. As a part of this significant portion of US GDP, IP plays a crucial role in the Creative Economy. It incentivizes creativity and innovation, contributes significantly to economic growth, cultural development, and competitive advantage, and facilitates market regulation by preventing unfair competition.
Let’s start with what we mean by the term “Intellectual Property.” According to WIPO (the World Intellectual Property Organization), “Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names, and images used in commerce.” Essentially, anything you create can (and should) be protected as yours alone.
“Very few artists, musicians, filmmakers, writers, painters, designers, dancers, or playwrights understand how copyright law protects them and provides them with exclusive rights that make them a business,” says John Snyder, a lawyer and multi-Grammy award-winning music producer. “Very few teachers of people so engaged understand how these forms of Intellectual Property are protected or the consequences of registration.” Snyder goes on, “The IP economy is a third of the GDP of our country, but very few copyright ‘creators’ understand the entrepreneurial consequences of creative expression: they make YOU a business.”
But understanding the specific value of IP in the Creative Economy requires complex analysis. In some creative industries, such as film, music, and publishing, IP can represent a significant portion of a product or service’s total value. For example, the value of a blockbuster movie or bestselling book is heavily tied to its copyright. While it’s challenging to pinpoint an exact percentage universally applicable to all blockbuster films or books, IP often constitutes a substantial portion of a film’s total value.
The value of that copyright can come from brand and franchise value, merchandising and licensing, ancillary revenues such as streaming, and cross-platform exploitation. Given these factors, it’s reasonable to estimate that IP can constitute anywhere from 50% to 70% (or more) of a blockbuster’s total value. This estimation can vary based on the strength and recognition of the IP, the effectiveness of its marketing and merchandising strategies, and the success of ancillary revenue streams.
IP can be valued in a variety of ways, including by projected economic Income Method (generally requires some level of existing positive cash flow), the comparable Market Method (looks at a similar IP asset’s value), or the Cost Method (looks at the cost of a similar or exact IP asset).
For franchises like Marvel, Star Wars, or Harry Potter, a significant portion of the film’s value is derived from the established brand and the IP associated with it. These franchises have extensive fan bases, recognizable characters, and expansive worlds, all of which contribute to their marketability and profitability. For example, the Star Wars franchise has generated billions from merchandise alone.
This brings us to the question, “Should creative industry IP value be calculated as part of the overall value of the Creative Economy?” The simple answer is “Yes.” Organizations such as WIPO, the U.S. Patent and Trademark Office (USPTO), and various national statistics agencies regularly conduct studies to assess the economic impact of IP in the creative economy. These studies typically confirm that IP is a vital component of the creative economy and should be included as contributing significantly to its overall value.
But when that creative IP value is not included in the calculation of a given creative economy, it dilutes the actual value. In the state of Georgia, according to Scott Frank, President of the Georgia IP Alliance (GIPA) and President & CEO of AT&T Intellectual Property LLC, “There is no one ultimately responsible for measuring and tracking IP value in general, much less the more difficult IP of our Creative Economy. Tech is much easier to track, but through GIPA, we are making individuals aware of the need for such protection, measurement, and communication.” Through GIPA initiatives, the State of Georgia proclaimed October to be “Intellectual Property Month” to bring attention to the value of given creative IP and the need to protect it.
It is imperative that the State of Georgia analyzes its Creative Economy (look to Georgia Senate Resolution 727) and in that analysis includes the valuation and measurement of the Intellectual Property represented in our creative industries. If we don’t, we are certainly undervaluing the great creative work being done and underleveraging Georgia’s Creative Economy!
