According to Forbes magazine “the world has changed dramatically in the past several decades with more and more of a company’s value attached not to factories, machines, or hard assets but rather the companies’ ideas, processes, and designs – their intellectual property.”
Intellectual property (IP) can take a range of forms – writing, music, design, inventions, or software are all examples.
The digitisation of the world has meant that the ability to convert these IP assets into money has exploded.
One of the world’s largest publishers Simon & Schuster’s CEO Carolyn Reidy recently reported:
“…[backlist sales now] comprise a higher portion of our revenue than at any time in memory”
In the past, a book publisher’s business model was to focus on latest releases. Blast these sales out for a few months, and then move onto the next one. But in the digital era where physical space is no limitation to what can be available for readers, a book written 10 years ago can be served up, either digitally or via print on demand, in seconds. Updates, perhaps even a new cover, can be rolled out in a few mouse clicks.
As Joanna Penn observed in episode 81 (Making a 6 figure Income as a Writer), there has never been a better time to be a self-publishing, independent, author. I’m sure the same could be said for many other forms of IP creation too.
So how might you use the creation of Intellectual Property to gain the choice in life that you deserve?
As already mentioned, income generating IP can come in many forms – from music, to books, to a game app. The real beauty of this form of income generation is that in a business sense it is something of a magic pudding – no matter how many song downloads you sell, your song is always available for the next person who wants it. And each subsequent sale requires no additional work by you.
The mindset must be that what you are creating is an asset. Something you own. And assets, when used properly, generate income. Income of course is what enables you to achieve Financial Autonomy.
Your IP assets can be protected in 1 of 4 ways:
- Trade secret
Protecting your IP is about ensuring that you control the future use, the exploitation to use a harsh commercial word, of your IP assets.
Copyright is about protecting the creative expression of ideas. You can’t copyright the idea itself, that would be done by a patent. Copyright is protecting the creative way in which you have put your ideas together.
Interestingly, creative work is automatically protected by copyright laws, provided it is fixed in some sort of tangible medium of expression – paper, film, or software for instance.
Copyright lasts a long time – the life of the creator plus 70 years. It’s not hard to conceive of hugely valuable estates, consisting entirely of Intellectual Property rights. Imagine the income generation of John Lennon or J R R Tolkien’s estates.
For our Financial Autonomy purposes, it is Copyright which is likely to be the most relevant in our IP driven income producing plans. But to briefly cover off the other forms of IP protection:
Patents protect ideas – think inventions. These ideas need to be novel, useful, and non-obvious. Patents don’t last nearly as long as copyright – typically 20 years.
Interestingly whereas you would assume the default would be to protect your invention via a patent, there is an alternate view, as expressed by Naresh Soni “The most uncommon way to protect intellectual property is not to file patents. Filing patents provides the recipe of how a product or service can be created. Once a recipe is published, one can create a similar product with workarounds to not violate the intellectual property rights.”
Trade secrets is an interesting one. There is no formal registration process here, and if someone can figure out your trade secret through reverse engineering or some other form of legitimate research, then you have no basis to object. Trade secrets are however protected from acts such as theft or bribery. A good example of a trade secret breech would be an employee leaving a company and secretly taking a copy of their customer list.
Finally, Trademarks relate to the use of individual ideas, such as a symbol. Think company logo’s.
When developing your plans to create Financial Autonomy, give some serious thought to whether the creation of Intellectual Property assets could be an important piece of the puzzle. If writing, whether fiction or non-fiction, is likely to be the path that makes sense for you, I can’t recommend strongly enough Joanna Penn’s The Creative Penn website. If music is more your thing, check out Ditto Music’s blog.
A great article on the topic, which I referenced in writing this piece is Business Musings: The Growing Importance of Intellectual Property by Kristine Kathryn Rusch. Give it a read to dive deeper.
Resources & Links
- Joanna Penn on making a 6 figure income as a writer
- The Creative Penn
- Ditto Music
- Business Musings: The Growing Importance of Intellectual Property