Value of IP…
Most Writers Never Think of This…
But again most writers don’t understand copyright, which is a form of Intellectual Property (IP).
Now some writers understand that anything they write has value, although I must admit it takes early stage writers a period of time to get past their egos and their false assumptions that they know what is good or bad in their own work.
Interestingly enough, value of IP doesn’t much care about quality, at least in the early stages.
Also 90% of all writers I have talked to have zero understanding that the work product they create around a book or story also has IP connected with it and thus also has value. You know, basic things like covers, sales copy, and so on.
Yes, it all has value.
But when it comes to IP, assigning value is always a strange thing. But often courts have to do it, or banks, or sales agents, and often probate judges.
So in a series of short blogs, I will try to at least make some sense of some of this.
But I am not a lawyer or accountant, so none of this should be construed to be legal or accounting advice. Just information for you to act or not act on to get real help as you see fit.
To start, there are different methods of putting a value on a piece of IP. No method is right for everything, thus part of the problem. And to do this really well, you need to have a full understanding of how to use copyright and trademark and so on, but since almost no one here has that, I will try to be very general.
Method One… Cost
Most writers understand this, to a degree. What did it cost to put out that short story to the world wide? Price of art? Cost of pizza to have a friend read it and find typos?
To be honest, this method almost never works for fiction of any kind, shape, or size, but let me play with it for a moment. I am going to make a lot of assumptions to get to the actual cost value of this story. Roll with it.
1 New Short Story Distributed Wide
- Art Cost: $5.00
- Copyediting: $10.00
- Vellum cost… Assigned Percentage: $2.00
- InDesign Cost… Assigned Percentage: $5.00
- Writing Time… $50 per hour: $250.00
- Writing Sales Copy… $50 per hour: $50.00
- Office Expense… Assigned Percentage: $100.00
- Launching Time Wide: $50 per hour… $50.00
Total for just those basic costs to write one short story and launch it is $472.00.
That is the Cost Method Value of that short story. (I know, I missed stuff, live with it. This is an example.)
Now, frighteningly enough, this method undervalues the story, which is why it is almost never used for fiction. For work product like covers and sales copy, sure, but not fiction.
But keep one thing in mind. If this method was used, I published right at 50 short stories this year.(Wrote over 100.) So I added to my assets the value of $23,600. (50 stories x $472.00)
Just this year.
And that is undervalued by factors when it comes to methods used more commonly with fiction. This method pays no attention to the life plus 70 years of value, or any other side licensing or trademark values. For example, I have two stories that have made me far beyond $20,000.00 per story (and I am still alive and they are still earning.)
I have another fifty or more stories that are beyond $10,000.00 over the last two decades. My gut sense, without actually crunching that many numbers, is that half of my total number of stories published have earned far beyond that $472 cost value number.
You don’t understand how that is even possible? Here is an example that is very clear. Last January Kris and I put a collection of 100 mystery short stories together and did a Kickstarter. My share for my 50 stories was $15,000.00.
That math is easy. Each story made $300 on that alone. The books are still selling and also the stories are still selling wide stand alone, and some of them are in other collections, and some were reprints where I got paid by an editor $300 plus to start.
It adds up per story over time.
So in a near future blog, I will detail out one of the methods more commonly used to assign value to fiction IP.
But for just putting a value on sales copy and covers, this method works well. Just realize that when you do sales copy for a story, or create a cover, you are creating IP and thus value.
Looking very forward to this series of posts, Dean. Thank you.
T Thorn Coyle
Great, Dean! I love it when you dig into these topics.
Isn’t cost SUPPOSED to be less than the value of the thing? or why would you even bother creating with no feasible ROI? I feel like at the most basic level anyone valuing at cost is missing something way more fundamental than copyright. That’s kind of scary.
More posts coming over the next few weeks. Hold on, as I said in the post, this is the worst way to value a story. But it is one method. Stay tuned.
Love this Dean. I sometimes look at the ranking of a short story and I’ll say to myself, well it doesn’t sell. Then I’ll look at lifetime sales and it’s made $2K more or less and I’m amazed. A lot has to.do with an author’s perception of whether they are making money or not….
Yup, and author’s perception is worth exactly nothing in any kind of bank, probate, courtroom, or licensing deal. Zip.