Publisher Assets and Intellectual Property Estates

I’ve been thinking a lot about the intellectual property assets a publisher accrues, and how for most publishers, the intellectual property is the only real value in the business. In the case of self publishers, that property is wholly owned by the author and publisher, in the case of large trade publishers and small presses, the property rights are defined by the book contract. Certainly some of the large publishers have accumulated real estate and infrastructure assets, and while the real estate is probably a winner, the infrastructure only has value to somebody who wants to run a similar sized publishing business. Some large and medium sized publishers have some strong brands and customer relations that could be valued as good will, but there are a very limited number of these compared to the overall number of publishing businesses in extent. While brand recognition in small niche markets is a nice thing to have, there will always be a question as to whether it’s more cost efficient to buy it in the form of an existing publisher, or to build it from scratch with new titles and niche marketing.

In looking at the future for my own publishing business, I’ve looked about a bit for some other small publisher to buy, in hopes of changing my own economies of scale and making more tax efficient use of the business income at this point of my life. The more I think about it, the less sure I am that I want to be running the same type of business that I’m running now, just two or three times the size. Traditional publishing and Internet publishing have been waging a ten year battle in my head, and I increasingly find that the Internet publishing model holds more interest for me. It’s also telling that the majority of the responses to my post about buying a publisher were in the form of partnership offers from small to midsize publishers who were looking to expand their Internet presence.

One business model I’ve become fascinated with is that of setting up an agency and brokerage for intellectual properties belonging to authors and small publishers. The idea would be to take partial responsibility for maintaining the value of the works, to whatever extent possible, with the ultimate goal of selling them to other publishers who could make the most of them. Just yesterday, I heard from a small publisher who had read my article about acquiring another publisher and who have done just that. They purchased a small publisher that had reached the end of its life cycle and was letting books go out of print, and they’ve already revived several of those titles. In doing so they’ve saved real value from going to rot, in both societal and financial terms. In the internet age, online books and intellectual property are exactly like real estate, in the sense that their value depends on their neighborhood, condition and earnings potential.

The problem in valuing such intellectual property is it requires an honest third party who is intimately familiar with the legal status of the assets (read “lawyer”) and also knows something about both the book publishing and online publishing worlds. There’s no difference between purchasing intellectual property rights from people they don’t belong to and receiving stolen property as far as I can tell. Having paid the wrong party won’t protect you from infringement claims, and you aren’t going to get your money back from a crook. There are also a number of important yet often overlooked Internet related chores that an agency could take care of, like filing regular website copyright registrations, keeping up domain registrations, and watching for infringing websites and suspicious activity on the domain.

However, I think the most important job for such an agency would be in concentrating relatively low value intellectual property assets and packaging them for sale either to existing publishers or as turn-key publishing businesses. It would be an especially useful tool for estate executors, who on the death of an author or owner of a small press, may be faced with valuing and temporarily managing assets they have no experience with. In the time it takes the executor to sort things out, those assets may be tremendously diluted or even turn into expenses.

I suspect in the vast majority of cases today, self publishing assets are simply allowed to disintegrate if the author becomes disabled or dies, not to mention authors who simply can’t make a go of the business or run into extraordinary life expenses that force them to seek a buyer. Small publishers that are incorporated and run by professional managers would be easier for an estate to deal with, but many small publishers are essentially a one man or woman show, even if they are incorporated and have very solid legal agreements with their authors. Rather than having to separately obtain the services of lawyers, auctioneers and appraisers and publishing experts, both paper and online, an agency could provide one stop shopping for a standard percentage. It would also give me something to do when I get up in the morning.

No comments: