The Magic Bakery: Chapter Nine
Beyond Next Year.
As I said last chapter, it has been my observation that most writers never look more than a year out, if that. And that lack of being able to see five years and ten years and fifty years into the future causes all sorts of really bad decisions.
Now, I wish I could say I had been an exception to this in my first few decades or so in publishing. Nope. Kris was a bunch better at looking long term and making decisions based on that vision. But I wasn’t.
And wow did I make some boneheaded mistakes because of that lack of vision. So now here I am trying to maybe help one or two people expand into the future their plans and hopes and focus.
The Magic Bakery
It is the future that really is important in a Magic Bakery. Let me try to explain why in just a couple simple points.
— Your copyright, your magic pie, will last and stay fresh for seventy years past your death (In the US, fifty years in other countries). At that seventy year mark your heirs will lose control over it, but that does not mean they still can’t make money from it for another seventy years or longer.
— You have no idea what technology will be coming in the next century. No clue. (New ways to cut your magic pie.)
(Example: I wrote one of the very first electronic books Pocket Books ever published. The year was 2000 and trust me, even with electronic books being sort of in existence for a decade or more before that, I thought it stupid. Shows what I knew. Again, in those years I wasn’t the best at seeing the future.)
— If you structure the business of your bakery correctly (a coming chapter), your business will not only make you a lot of money in your lifetime, but also survive you and thrive. But the business has to be set up for the future.
So Many Ways to Fail
Those three points above seem very simple and obvious, don’t they? But wow can you fail in so many ways when you stand in your Magic Bakery, surrounded by all your magic pies, and have no sense of tomorrow.
Let me give you three major failure points.
— Sell your book to a major traditional publisher (or movie producer) for all rights for the term of the copyright. Pie vanishes from your bakery. Writers who do this give zero thought to the future of their business at all. To them their book has no value beyond the tiny pat on the head traditional publishers give them and a little bit of money. Or hope for a movie that won’t get made.
— You don’t learn business and sales, so your store sits there with few customers and eventually you drift away to do something else. Your pies never mold or grow old, but dust covers the shelves and paint peals off the front of your store and no one goes in. (This happens to 80-90% of all fiction writers, sadly.)
You all know this kind of thing. Your store becomes a “whatever-happened-to?” store. We have all walked down a mall, seen an empty spot and asked “Whatever happened to that place?” Imagine that was where your Magic Bakery was at and you get the sad idea of what happens when you quit.
— You don’t understand how Intellectual Property (IP) works, so you make no preparation for the day something happens to you. So those seventy years plus that your Magic Bakery could remain open and flourishing and making your family or some charity money vanish when they dump your body in the ground.
All three of those major failure points are from lack of being able to deal with the future.
A Ticking Time Bomb
Remember a few chapters back I mentioned the new world of IP Valuation? Not your issue, right? Your stories only make a few hundred so they can’t be worth much. Right?
Again, no thought to any future. Courts and estate probate judges are understanding IP valuation and are starting to apply different forms of evaluation. If you are making a nice bit of money from your stories and you have not set up the right structure to move your IP to your heirs, they could get hit with a tax bill on your death that could destroy everything. Wouldn’t that be a nice gift to leave your family?
Easily fixed if you think about the future at all. But alas, most writers don’t.
And that leads to the next problem…
What Is Your Magic Bakery Worth?
Most newer writers and all traditionally-published writers would say nothing. And the reason for that is that there are no pies on the shelves. The bakery is mostly empty.
Even if there were magic pies on those shelves, most writers would still say it wasn’t worth much at all. Why? Because they can’t see past a year or so.
Now I understand that moving forward, IP needs freshening at times to remain attractive to the current buyer. Not going to talk about that on-going task. I know it all too well. So for this, I will assume you do that work, or have it done, or your estate will do it.
So if you can imagine that as a possible, what might your bakery be worth?
What amount would I sell all rights to all 300 of my magic pies, plus the bakery itself? What kind of future income do my 300 plus magic pies have possible?
And in three years that number will be past 400, and so on, not counting all the IP that will return to me under the 35 year rule starting in 2026.
Impossible to calculate. But fun to look at when you realize you really are creating something of value, even though it only sells five copies a year. It still has value.
Heinlein’s Rule #2 states simply: Finish what you write.
When you finish a story, you have added value to your magic bakery. It really is that simple.
How To Learn To Think Forward
Sure, work to make money now. Work to sell your stuff now. But all the while, keep these basic things in mind.
— Never allow your IP to leave your bakery. You license slices, nothing more. For only the term needed and when the term is up that slice will magically appear back in your pie.
— When discouraged, thinking of shutting the doors for good, do an inventory of your existing IP. Then try to put a value on it, keeping in mind your lifetime and seventy years beyond. Imagine two or three things being made into movies, imagine others being games, still others being part of some unknown tech. Then write the next story or book and add even more value.
— Learn Business. Tons of great books for small businesses out there. Understand what a good year of growth might be. That will help with perspective instead of always listening to the latest fad from the latest hot guru of marketing and thinking you are not doing enough.
— Learn Estates. It will help you if you figure out a way to help your favorite family and/or charity with your business if you can get it large enough. In other words, write your fun stories for a larger purpose in the future.
— Make It a Challenge. You want to have the best bakery. The most successful. The larger, the nicer your bakery is, the more customers you will get, the more sales, the more value. But building the best bakery takes time. Growing any business takes time. Make it a challenge. Not something to be afraid of, but something to have fun with.
A wonderful thing about our Magic Bakeries: They really are magical.
Copyright is an amazing ingredient in our pies that allows us to build and run these wonderful places full of diverse products. And magically attract customers from all over the world.
Our magic pies can be enjoyed as a book, a movie, an audio file, in tons of different languages, and who knows what else coming in the future. All without ever leaving our bakery.
Copyright also allows us the time to build these magical places.
You just have to know that the future is out there and first accept it, then plan for it.
How do we value a novel which is selling only 5 copies in a year? Assuming we make $4 per sale, it would mean $20 in a year. And if we take lifetime of its copyright (assuming 100 years), its value would be $20 x 100 years= $2000 which doesn’t sound much. But, as you said, last time, there is more to it. If one wrote 500 such novels, his estate would be a million dollars worth (which was very uplifting and depressing for taxation purposes). But how do we value our IP for self-confidence purposes? How do we move from “I love telling stories because I’m passionate about” to “I love telling stories NOT only because I’m passionate but also because my stories have great value.” And that value is…. Any idea of a formula?
As I said back in Chapter Seven, Google IP Evaluation and you will get some amazing stuff.
But start at http://www.ipwatchdog.com/2015/02/11/alternate-approaches-to-the-valuation-of-intellectual-property/id=54651/
Your method is flawed in so many ways, and takes into account no aspects of IP, just what few cash streams you are using now. IP Valuation is so much more than the money a property can make at the moment. And that’s when it gets scary for estates.