JH: That does make it much simpler to understand.
Now, a s I was looking through your online information, I fully grasped the idea of selling the rights to one’s intellectual based project to raise funding. However, I was a little hazy on the other option, which is the ability to sell rights to an existing property. In filmmaking terms, would this be designed to raise money on a completed film for distribution costs? Or is this designed for folks who already own part of a work that’s been completed? If it’s the latter, could you explain that a little for our readers?
BG: Simply, a lot of people manage to raise some money from friends and family, and get as far as making the film or album, but run out of money! (even small companies do this – money is hard to come by for creative projects…or was..). So there are a lot of people 0out there who have made the film, but need money for copies and distribution etc. So they can sell percentages in the completed film, in the same way as selling points in the proposed film – except that the public can have more confidence in the film, since making a good film is, well, the hardest bit!
And yes, this is also designed for people who own a piece of Intellectual property in an existing work to raise some funding for further developing that work, or even to raise some money for general use.
JH: Ok. Now, how does your average filmmaker, for example, determine what portion of an IP he wants to sell and what the rate will be?
BG: The great thing is that a filmmaker listing should get a fair price….because the price reflects demand. E.g, if a filmmaker lists a project, and no one buys it, he may conclude it is no good. OR he may conclude that the price he was asking was too high. In which case he can re-list after the end of the listing, with a lower price per point, and see if that price attracts buyers….As far as working out the initial figure, if he works out the amount of money he needs, compares it to how much he believes his and his partners and other contributors contributions are worth, in terms of percentages, and subtracts those percentages from 100%, hopefully he will be left with the amount of money required, and the percentage he can sell in return. For example, he needs $500,000 to complete and market the film. His or her effort and money, and the effort and money of others to date, deserves about 50% of the profit. Which means he can sell 50% of the IP, in return for $500,000. So each 1 percent is worth $10,000. And one thousand of one percent is worth $10. So he may decide to list 50,000 points, at 10 dollars each, with each one being .001% of the IP.
JH: One of the selling points for the site, on behalf of the buyers, are that they get a say in how the IP owner create his project. In the case of our readers, they get a say in how they create their film. What exactly does this entail?
BG: It's actually up to the filmmaker to decide how he or she wants to do this, its not up to us to tell them what to do! What we would strongly recommend is that they utilize the blogs and forums on the site (going live in a few weeks) as a way to get all the contributors involved in the project. We’d also expect to see at least one ‘annual meeting’, where all the buyers can come along, and meet the filmmaker, and vote on decisions about the project. Although we cannot dictate to the filmmaker how he should approach this, if its clear that they don’t want the sellers to be involved, then its unlikely they’ll be allowed to use the site.
JH: Obviously, a lot of our readers are going to be interested to know how many folks are likely to invest in an IP stock market. I heard somewhere that, with all the new forms of distribution available, one in two independent films turns a profit, which would hopefully be great news for investors at your site. Some people, of course, say that most average Americans are unaware of this fact and see investing in independent films as a very risky move. Why don’t you tell us a bit about your plan to attract folks interested in investing to the site?
BG: Well, investing in the stock market is very popular, that’s true. And as you have mentioned, many people consider investing in the entertainment industry to be very risky. That’s a bit of a misunderstanding, as you’ve also mentioned. Because, whilst it’s a bit risky, the reality is that all new ventures are risky; 9 out of 10 new businesses fail in the first 12 months. Many in ‘solid’ businesses that are considered ‘low risk’. It’s a similar failure rate in the creative sector, its not any worse, so its about educating people to the fact that the entertainment industry is not any more risky than other businesses, but it’s a lot more fun! And the bottom line is, the demand is there. I mean, was there any shortage of people lining up to invest money in that creative idea about selling books online? Not as far as I remember!
