The recent publicity about David Bowie’s estate being in discussion to sell his back catalogue of music for an estimated $200 million dollars is a real life example of the value of intellectual property. In this case, copyright. Other well-known musicians have reportedly sold back catalogues too including Bob Dylan, Neil Young, and Paul Simon. All apparently for eye watering amounts of money. Some commentators have called this a ‘gold rush’ in the music industry.
Why such high values? There two main reasons. The first is that the catalogues contain many classic songs which are expected to be popular for many years with increased playtime through music streaming and in films and advertising. The second reason is that the songs are protected against copying by copyright world-wide. The combination of classic popular songs protected by copyright is expected to generate substantial revenues for years to come and the revenue will be predictable.
Copyright lasts for a long time, generally for the life of the creator of the copyright work such as music and lyrics as well as recording of them. If these songs were not protected by copyright, then anyone could play them or use them for free.
Some have expressed concern about this ‘gold rush’ as copyright was supposed to enable artists to secure a reward for their creative efforts and that this level of commercialisation of an artists’ work was not the intention. Hence the ‘gold rush’ analogy.
Patents and design rights protect the effort in innovation and invention. Trade marks particularly if registered protect the investment in developing a brand and the associated goodwill and reputation.
Copyright comes into existence without registration although there are some circumstances where registration of copyright should be considered. In contrast, patents rights are acquired by registration and much enhanced legal rights in trademarks and designs are obtained by registration.
A well-managed intellectual property portfolio including registered legal rights should lead to increased revenues compared to what could be achieved without the intellectual property. The increased revenues might come, for example, from higher margins and market share or royalties from licensing and franchising.
The portfolio of intellectual property should also enhance the reputation and marketability of products and services. These increased revenues enable by the intellectual property protection (which prevents or limits competitor’s activity) can be used to put a financial value on the portfolio. The individual circumstances will determine if such a valuation might be possible and lead to a valuation that is credible.
