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More Copyright Valuation

Main Way of Valuing Fiction…

If you haven’t read the previous posts on this topic, might want to go back and do so. Or read them again. And if you don’t understand copyright, much of this will just go past you I’m afraid.

So I mentioned one way of valuing copyright. I called it the “Cost Method” because you just add up all the costs of producing the book and that is the value. That method flat doesn’t work past putting a value on covers and a few other design elements. But it is the easy one to understand for most.

Now to be clear right here… I am not a lawyer and I am not an accountant. I am a writer just giving information to other writers. You take this as gospel and act on it without a good accountant and copyright lawyer advising you and you are dumber than you look. Just saying. This is not legal advice or accounting advice.

And secondly, you go to some local accountant with your international accounting business problems, you will get what you pay for, trust me. And third, if your lawyer does not know copyright, trademark, and corporations RUN!!  How do you know if your accountant or lawyer are wrong for you. They will suggest an LLC or a S-Corp. Just thank them and walk away, even if they are your sister’s husband and you are getting the advice cheap. They will cost you more money in the long run by far.

So back to valuing copyright…

The regular way, and most used is called by a number of names depending on who is trying to sell you their service. It can be called “The Income Approach” or “The Market Approach.” A few places even break those two methods apart to be fancy. Both are basically the same, and they both depend on the fact that you have EXCLUSIVE control of your copyright.

Now there are a ton of businesses who will give you a valuation on your copyright. They do it for profit and I honestly have no clue if any of them are any good. I do know they will give you the valuation in general that you pay for.

What do I mean by that? You need some copyright valued for an estate and the judge wants something official. You want the valuation low for taxes, you hire a company to do that and presto, a low valuation on official stationary.

In other words, this is just about as far from an exact science as there can be. But banks, estates, and other businesses need these valuations, plus in major licensing deals, your licensing partner might need a valuation as well.

So can you do a valuation on a copyright yourself? Sure. Just to get a general idea. You just have to know the basics. Will a valuation you do yourself hold up in a deal with a bank? Not likely. But it will give one of the many copyright valuation businesses out there a place to start.

Some Basics…

1… Not all copyright is born equal.

For example: I have a short story I wrote for a Mike Resnick DAW anthology 25 years ago. It is 3,000 words and I have reprinted it three times or so. I have another 3,000 word short story that was first published in F&SF about the same time. It has been optioned for movies, reprinted dozens of times, and made into a radio play. I have a Cold Poker Gang novel, part of a series, that is 50,000 words that I wrote about 15 years ago. It has been constantly in print, sold hundreds of thousands of copies, and has over a thousand reviews.

Those are all my copyright protected and owned stories, but they would not be valued at all in the same fashion.

Now to basic questions…

2… What is your expected lifespan? How many years do you have left approximately?

3… Do you have a literary estate plan?

4… How much has each story (copyright) earned you so far?

5… How many distinct copyrights do you control?

(Back with more in a future post….. But those four questions will get you a running start at figuring out the value of a copyright. These are the kind of questions a professional valuation company will ask you in the first sit-down, plus a lot more.)