Apply HN: AuthorInvestments – Trade Future Royalty Rights
I write books.
Here is my chart.
http://imgur.com/WpdGsDK
I want to sell 10% of my future royalties to whoever wants to buy it.
So would a lot of writers with demonstrable growth.
7 comments
Three questions:
1) Are we talking royalties for (i) a single produced work? Ex. I get 1% of a particular book that you're writing or publishing. Or (ii) is it 1% of all future royalties from any written work that you publish? In the latter case, the legal framework will get rather convoluted because you'll need to define the exact scope of what is and is not covered (what about monetized blog posts? what if you shadow write for another author? what if you write a screenplay? etc.).
2) Have you looked into SEC regulations regarding setting up such a structure? I'm not 100% sure how it works for films, which often option off royalty rights to all kinds of people, but (i) above would be a bunch of individual contracts in a similar manner. However, in case (ii) above it seems you would essentially be setting up a corporation for yourself that contractually owns your IP and receives royalties on it while issuing shares to others.
3) How much creative control do shareholders get in exchange for shares? Basically, are all shares non-voting, or if I own rights to 51% of your royalties do I get to tell you to stop writing alternate history novels for adults and hop on the sappy YA train instead?
In any case, I like the idea since it takes the concept of Patreon beyond the "well-intentioned benefactor" level.
1) Are we talking royalties for (i) a single produced work? Ex. I get 1% of a particular book that you're writing or publishing. Or (ii) is it 1% of all future royalties from any written work that you publish? In the latter case, the legal framework will get rather convoluted because you'll need to define the exact scope of what is and is not covered (what about monetized blog posts? what if you shadow write for another author? what if you write a screenplay? etc.).
2) Have you looked into SEC regulations regarding setting up such a structure? I'm not 100% sure how it works for films, which often option off royalty rights to all kinds of people, but (i) above would be a bunch of individual contracts in a similar manner. However, in case (ii) above it seems you would essentially be setting up a corporation for yourself that contractually owns your IP and receives royalties on it while issuing shares to others.
3) How much creative control do shareholders get in exchange for shares? Basically, are all shares non-voting, or if I own rights to 51% of your royalties do I get to tell you to stop writing alternate history novels for adults and hop on the sappy YA train instead?
In any case, I like the idea since it takes the concept of Patreon beyond the "well-intentioned benefactor" level.
1) I think both can work simultaneously. Either single works or entire catalogs. In the latter case, I'm thinking anything sold as a book, regardless of content.
2) Not yet, but I think for case (ii), I'd try to manage them as collections of case (i) instances to simplify things.
3) We will err on the side of writers. A shareholder can advise, but never dictate. Advice will be displayed to authors filterable by stake held. They can decide how to weigh things from there. We will do our best to make everyone happy on a case by case basis, but "Your advice might be ignored" will be displayed prominently throughout the purchasing process.
I appreciate your interest, and stake in my case (ii) is on a firesale if you would like to become investor zero and help me work out the kinks on the fly =)
I appreciate your interest, and stake in my case (ii) is on a firesale if you would like to become investor zero and help me work out the kinks on the fly =)
It took me a minute, after reading your sparse description a couple of times, to figure out what you want to do. This is interesting I've never heard of this type of market. So would this be like the publisher houses of old where they would give an author an advance, they write and publish the book, then the author essentially doesn't collect (or collects less) from book sales until the advance is paid back? Is it somewhat similar to that? Is it in perpetuity or for a set period?
I tried searching around online but I couldn't figure out if anyone really does this today or not. Is there a market for this?
I tried searching around online but I couldn't figure out if anyone really does this today or not. Is there a market for this?
It is somewhat similar to that, but also different.
For discussions sake, let's say my books bring in $100 a month today. As a self published author, I keep 100 percent of my royalties. I take 10 percent, and create 10 shares, offering each for sale for $100 a piece, each entitling its owner to 1 percent of my future monthly royalty payments for as long as they own the share. Right now each would be paying a monthly royalty of 1 dollar, assuming my sales stayed at the same level, more or less. As my stock as a writer grows, and I get more sales, those shares pay more, and maybe the original buyer resells them to someone else for more than they bought them for.
I think there is a market for it. I'd sell some of my future royalties for some cash to live on while I grow my author platform. I think a lot of authors would.
For discussions sake, let's say my books bring in $100 a month today. As a self published author, I keep 100 percent of my royalties. I take 10 percent, and create 10 shares, offering each for sale for $100 a piece, each entitling its owner to 1 percent of my future monthly royalty payments for as long as they own the share. Right now each would be paying a monthly royalty of 1 dollar, assuming my sales stayed at the same level, more or less. As my stock as a writer grows, and I get more sales, those shares pay more, and maybe the original buyer resells them to someone else for more than they bought them for.
I think there is a market for it. I'd sell some of my future royalties for some cash to live on while I grow my author platform. I think a lot of authors would.
There may be a lot of authors willing to sell but no investors willing to buy.
I won't know unless I try /super
I think I understand but I don't really know anything about that space so good luck to you :)
Thanks a bunch, stake in myself is available if interested in becoming investor 0 =)
David Bowie did this with his catalog about 20 years ago. They were called Bowie Bonds: http://www.bbc.com/news/business-35280945
Thanks for the link. So the precedent is asset backed securities granting slices of royalties for ten years. Time to talk to someone at the SEC
This is interesting; it reminds me somewhat of the "Bowie Bonds" concept that has been going around in music. The Offspring just sold their catalog for $35M I think. If the royalty structure is lucrative enough and worth the long-term exchange for the buyer then I think you could definitely establish a market.
Cool beans! It occurred to my as I was typing up the OP that the model could easily be extended to any form of artistry, music in particular, which I also do, I'm just a writer first, hence the focus. Plus, I had the chart to show.
One suggestion: figure out how the buyer reports the income on their income tax returns! I would be hesitant to invest if I thought it would be a headache.
Also: I'd be hesitant to invest if I thought there might be the possibility of "hollywood accounting", i.e. if I own a percentage of all of of your future royalties, you could potentially structure a deal with a publisher where you get large "appearance fees" for book signings, and the royalties are basically zero.
Overall, I like the idea.
Also: I'd be hesitant to invest if I thought there might be the possibility of "hollywood accounting", i.e. if I own a percentage of all of of your future royalties, you could potentially structure a deal with a publisher where you get large "appearance fees" for book signings, and the royalties are basically zero.
Overall, I like the idea.
It would be taxed like regular income made from investments, as it turns out the SEC requires me to register these as asset backed securities (in the works), but I'm not sure my market is the typical investor who already knows those ins and outs, so better believe there will be tons of hand holding in that regard, up to offering a free e-filing service in house, just to trim that barrier to adoption as low as possible.
As for being worried about Hollywood accounting, you won't have to worry, as the company will act as the exclusive publisher and copyright holder of the works belonging to the authors that want to join. It's the only way to insure against authors offering their works on other platforms behind our backs such that investors are defrauded of their cut (aside from costly monitoring and litigation), also, I can't depend on them to get their royalties direct deposited in their accounts, and then send us that portion belonging to their investors to disseminate it, rather, we need to receive said deposits, then distribute as needed. This limits the sort of authors who would be willing to join the platform to a certain sort of upstart writer, one with a small but growing catalog, and a small but passionate reader base, right at the cusp of getting on the radar of the mainstream publishing world due to their ebook sales. At least those are my thoughts at this time. I'd love to just trust authors to do right by their investors, but I can't ask the investors to be so trusting, and one author deciding to betray the company, if I leave the power in their hands, can tank the whole thing. I'm thinking owners transfer copyright of their works thus far and sign a contract to publish exclusively with us all works in the future, and in exchange they get 95% of the asset backed securities created for their books/future ten years of work, at which point they can then offer any amount up for sale like any other anonymous seller. The firm retains the other 5% for itself for its fee, and does the same. After ten years they are free to renew, or leave the firm to publish with others, but the firm retains the copyrights it paid for until they enter the public domain. Anything an author can make outside of royalties resulting from sales of their works either transferred to us or written under contract to us is their business, and in this case royalties refers to both royalties from sales, and royalties from kindle edition normalized pages read, as we're looking to have a special relationship with Amazon moving forward based on talks with them thus far.
As for being worried about Hollywood accounting, you won't have to worry, as the company will act as the exclusive publisher and copyright holder of the works belonging to the authors that want to join. It's the only way to insure against authors offering their works on other platforms behind our backs such that investors are defrauded of their cut (aside from costly monitoring and litigation), also, I can't depend on them to get their royalties direct deposited in their accounts, and then send us that portion belonging to their investors to disseminate it, rather, we need to receive said deposits, then distribute as needed. This limits the sort of authors who would be willing to join the platform to a certain sort of upstart writer, one with a small but growing catalog, and a small but passionate reader base, right at the cusp of getting on the radar of the mainstream publishing world due to their ebook sales. At least those are my thoughts at this time. I'd love to just trust authors to do right by their investors, but I can't ask the investors to be so trusting, and one author deciding to betray the company, if I leave the power in their hands, can tank the whole thing. I'm thinking owners transfer copyright of their works thus far and sign a contract to publish exclusively with us all works in the future, and in exchange they get 95% of the asset backed securities created for their books/future ten years of work, at which point they can then offer any amount up for sale like any other anonymous seller. The firm retains the other 5% for itself for its fee, and does the same. After ten years they are free to renew, or leave the firm to publish with others, but the firm retains the copyrights it paid for until they enter the public domain. Anything an author can make outside of royalties resulting from sales of their works either transferred to us or written under contract to us is their business, and in this case royalties refers to both royalties from sales, and royalties from kindle edition normalized pages read, as we're looking to have a special relationship with Amazon moving forward based on talks with them thus far.
I like it. If I buy some futures, can I sell them to anyone else down the line? Would also be super cool if investors could have access to early copies to gauge quality/value.
What are the legal needs in order to sell these? what kind of investment instrument would it be precisely?
What are the legal needs in order to sell these? what kind of investment instrument would it be precisely?
Yes, you can sell them to anyone down the line. I agree that early access would be a cool feature. Investors would be taking a stake in a writer as a whole, almost like a race horse, and can help their own bottom line by acting as a beta reader for said writer, telling people about "their writer's" books, tweeting links to their storefront, providing editing, cover design, deal making. Mentorship. There's a lot one can do if you like someone's style enough to take a risk on them. Mine are for sale, back-alley way style. Free e-book pdf's available on request.
I don't think the legal needs to sell these are too complicated. A simple contract would look like "The holder of this contract is entitled to x percent of the monthly royalty payments paid to y author" and the investment instruments are instances of said contract.
I don't think the legal needs to sell these are too complicated. A simple contract would look like "The holder of this contract is entitled to x percent of the monthly royalty payments paid to y author" and the investment instruments are instances of said contract.
This is a cool and interesting idea! It's like a private community IPO, hopefully there won't be too much taxation involved!
I appreciate your interest! I've started my sales sprint, lean start up style.
I've got this amazing author offering a 1 percentage ownership stake in her future royalties for just a hundred dollars, to get the ball rolling and create the need for what needs to be built. As for taxes, I'd get some help on that for sure, but I cut you a check for your earned royalties, you pay taxes on it, no different than the writer themselves would. I would think.
I've got this amazing author offering a 1 percentage ownership stake in her future royalties for just a hundred dollars, to get the ball rolling and create the need for what needs to be built. As for taxes, I'd get some help on that for sure, but I cut you a check for your earned royalties, you pay taxes on it, no different than the writer themselves would. I would think.
1% is a good start, but since it's still early, maybe you can negotiate a 2% for $125-$150... Doesn't hurt to try ;)
You know what, you seem like a nice guy, if it will get this company pizza profitable within 5 hours of it's conception, she's game via paypal at 2% for $175 [email protected]
Sorry, but I'm not interested! I was inputting some general ideas for you to use... Cheers
Totally appreciate it, and hey, my first rejection. Eventually I'll get a yes =)
You're very welcome! We're both in the same boat, just trying to figure out the path...keep trying and feel free to stay in touch with any other questions or concerns!!! Cheers
Will do!
Interesting concept. Worry about the SEC getting involved with this.
Thanks. Enough money flowing through the system to warrant SEC attention is a problem I'm ready to have. Until then, I'm in sales mode, and stake in myself is the product. Interested enough to bite?