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Does intellectual property lie at the heart of the new business model for agencies?

The first Creative Birmingham event took place at the BBC with an audience representing a cross-section of the City’s creative community.

The event provided a wealth of insight into the lessons agencies can learn from different sectors of the creative community, from gaming to theatre.

The session was chaired by Andy Wilson, WAA Chairman and IPA City Head for Greater Birmingham. On the panel were Cat Lewis (Nine Lives Media and PACT), Jonnie Turpie (Maverick TV) Stuart Rogers (Birmingham Rep) Drew Wilkins (Fish in a bottle) and Lesa Le Monnier (The Partnership).

What can agencies learn from independent television production?

Fifteen years ago Jonnie Turpie was making programmes for Birmingham television and earning a 10% production fee. He remembers being laughed out of court for being a lifestyle company rather than a business by a venture capital company.

But then things changed. Working with John McVay and Eileen Gallagher at PACT, and Tessa Jowell in Government, Jonnie helped change the terms of trade for independent television production.

It took two years, to come up with the 2003 Communications Act, resulting in independent programme makers sharing the primary rights to their production with broadcasters – for up to three showings on terrestrial TV. The secondary rights then fall to the independent TV companies to exploit the format they have created on other channels or in other territories.

And look what a difference it’s made to the value of the sector. Cat Lewis, owner of Nine Lives, described the change that owning IP had made to the independent television industry in the last 10 years - it now represents £3.5bn of the UK economy. One third of Nine Lives' earnings are now in UK production, one third comes from international sales, and one third from making programmes for the rest of the world.

What can agencies learn from theatre?

Twenty years ago Birmingham Rep won the rights as sole producer to the stage production of The Snowman. It’s played for six weeks in the West End and ever since toured the UK and the rest of the world.

The theatre has licensed the production in Korea, and is now negotiating rights in the US and Australia. It’s been worth £10m to the Rep in income so far. Not surprisingly, given this business success, most of Stuart Rogers’ job as Artistic Director is about looking for the next Snowman.

Birmingham Rep’s IP resides in the ‘whole thing put together’. If the show is a success, the theatre takes a share of the profits. If the production then goes on tour, Birmingham Rep can sell it to a commercial producer for a fee and take royalties on the back of its success. If Birmingham Rep distributes it, the company pays itself a royalty.

Exclusivity is worth its weight in gold; Birmingham Rep got exclusivity on 12 Angry Men on stage with Bill Nighy.

What can agencies learn from the games industry?

Drew Wilkins runs a ‘work for hire’ production company, Fish in a Bottle, and creates branded content like Sponge Bob, and Domestos games with Nickelodeon.

NBC Universal commissioned it to produce new digital content for TV series Heroes, and it came up with a new character. NBC signed away rights to the BBC in the UK, and the BBC signed away rights to MBC. And the consequence was that it lost control of the character it created and it died after 90 seconds on screen.

The good news is that the business model in games is adapting. Developers produce IP, and sign it over to publishers, but they are paid a fee plus royalties. The way it works in games you can share royalties if you fund the development. This can work particularly well on mobile.

Smaller developers are now going down a self-funding model too, bypassing the publisher so that they can exploit their own IP. It’s a win for the developer if it catches on, but it’s risky.

Where does this leave agencies?

Lesa Le Monnier, client services director at IPA member agency The Partnership, believes there is potential for IP to expand at a global brand level. Her agency recently created a regional campaign, and the client has taken it global, using another agency. The Partnership are missing out on the exploitation because they haven’t contracted to license usage of the creative work.

As a small agency, Lesa thinks there are five things that need to happen to put a discussion about IP on the agenda at the agency, and with the client:

  • Education – for the agency to have confidence, not just see itself as a supplier
  • Transparency – to clear contracts upfront, with less ambiguity. Be clear about who owns the source code, the copyright on imagery, or new ideas
  • Information is key – to understand the potential for license rights on e.g. music
  • A framework – provide a joint guidance note for how to approach the discussion
  • Better commercial relationships with the client – their success is our success

The way forward

It’s time for agencies to propose a different business model to clients: a smaller upfront fee, and royalties from successful exploitation of the idea. Branded content and cross-platform provide the opportunity to change the rules of the game. I look forward to working with the IPA to take this thinking forward.

By Andy Wilson, Chairman, WAA!, IPA Birmingham City head

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