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Apply HN: AuthorInvestments – Trade Future Royalty Rights

by _AllisonMobley on 4/8/16, 7:03 AM with 26 comments

• by mdorazio on 4/9/16, 3:12 AM

  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.

• by BinaryIdiot on 4/8/16, 10:50 AM

  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?

• by ajsgarage on 4/8/16, 1:42 PM

  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.

• by timdellinger on 4/11/16, 6:59 PM

  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.

• by newman8r on 4/8/16, 12:19 PM

  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?

• by rubynav on 4/8/16, 2:23 PM

  This is a cool and interesting idea! It's like a private community IPO, hopefully there won't be too much taxation involved!

• by wehadfun on 4/8/16, 8:23 PM

  Interesting concept. Worry about the SEC getting involved with this.