One million dollars in 225 places. That’s how much Katty Perry made out of her new deal, selling a portion of her catalog to Litmus Music. To put the enormity of this in context, startups struggle to raise similar figures despite multiple funding rounds. Intellectual property (IP) valuation is the process that determines the monetary value of intellectual property assets. IP valuation is common in commercial transactions like mergers and acquisitions, though still uncommon in the creator economy, it presents a unique opportunity for creators to generate funds.

In the same way, businesses can be valued, which determines how much is paid during acquisition or sale. Intellectual property rights allow creators to protect and increase the monetary value of their content to be more attractive to investors. Creative catalogs can be pledged as security to generate money to finance new creative projects. And where the financial prospect of a creator’s work is valued, companies can invest to have a share of their future profit.  

With over 4.2 million people employed in the creator economy in Nigeria, IP assets unlock a new path away from the immovable assets we are used to in securing loans. 

Nigeria has a booming creative industry, from musicians producing chart-topping songs to movie producers crafting world-class movies and fashion designers setting new trends. The creator economy in Nigeria has evolved into a powerhouse that now includes a new direction of creators that deliver short, digestible content shaping cultural narratives and significantly contributing to the nation’s economic growth. There is an opportunity for Nigerian creators to thrive in the digital age and tap from the possibility that IP valuation presents in the creator economy. This article highlights the key role of IP valuation in Nigeria’s creator economy. And the connection between intellectual property and content creation. By shedding light on the importance of IP valuation, I aim to provide creators with insights on this subject matter.

The Creator Economy in Nigeria

In a blog written by Yuanling Yuan, the creator economy is defined as the class of businesses built by over 50 million independent content creators, curators, and community builders, including social media influencers, bloggers, and videographers, plus the software and finance tools designed to help them with growth and monetization.

The creator economy in Nigeria is driven by a younger population eager to express themselves and seize opportunities in the digital economy. They use platforms like YouTube, Instagram, TikTok, Spotify, etc., to showcase their talents and directly engage with their audiences. According to Prince Clem Agba, the Minister of State Budget and National Planning, Nigeria plans to increase its Gross Domestic Product (GDP) to 15% by 2025 through its digital economy to accelerate economic growth and development. Although ICT and telecoms are frequently viewed as the most potential digital economy businesses to deliver this expected economic development, the growth prospects extend beyond these areas to the creator economy. According to an analysis by Jobberman in 2021, the creative sector could create an extra 2.7 million jobs by 2025.

The passion economy has contributed to job creation and skills development worldwide. The creative economy contributes just over 6.1% to the global GDP, averaging between 2% and 7% of national GDPs worldwide. According to the International Monetary Fund (IMF), the entertainment industry accounts for 1.45% of Nigeria’s GDP. The financial rewards and recognition reshape career aspirations among young adults, encouraging them to pursue careers in the creator economy rather than in traditional professions like Law, Banking, Engineering, and Medicine. Content creators are making a substantial impact on Nigeria’s overall economy.

Intellectual Property and the Creator Economy

According to the English publisher Felix Dennis, control and ownership bring with them the promise of future wealth. Intellectual property rights provide ownership and control to content creators through systems like Copyright, Trademarks, and Trade Secrets. Intellectual property rights (IPR) is the legal framework that protects the intangible assets that content creators develop. The following are the forms of IP rights in the creator economy:

Copyright:

As a content creator, copyright ownership helps you to get the credit and compensation you deserve. It gives you the exclusive right to control who and what has access to your content. Copyright covers anything you create, from your tweets to TikTok videos and even blog posts. In 2017, MinaLioness made a tweet that featured in Lizzo’s “Truth Hurts” — a single that was number one on Billboard for a record-breaking seven weeks. MinaLioness reached out to her lawyers and is credited as an official songwriter on the single. 

Copyright is a tool that helps creators to protect and leverage their content portfolio. With the right strategy, like copyright registration, content creators can secure more brand deals, collaboration, and increased sales.

Trademark: 

Your content is key, but how people find and recognize it is important. Trademarks protect any word, symbol, slogan, or other marks unique to your brand and distinguish it from other creators. Your brand name, taglines, hashtags, logos, social media handles, and domain names are IP assets. Trademarks protect your brand’s uniqueness and your follower’s expectations. For example, when you watch a tech video on YouTube, and you hear without “#FodaAdu​”​​, you expect to see Fisayo Fosudo behind the camera. Recognizing and registering your trademark as a content creator can become an asset valued and used as leverage to acquire funding.

Trade Secrets:

Among IP experts, trade secrets are often called the silent assassins of IP. Trade secrets are any valuable information that gives your content a competitive advantage. As a content creator, this could be your content creation process and promotion strategies. This information has to be kept secret to maintain its value. Trade secret protection also extends to customer lists. For example, a content creator with a mailing list in a written or digital format can leverage that asset. Brands pay heavily to tap into the customer base of a content creator. 

Copyright, Trademark, and Trade Secret are the IP assets of a content creator. These assets can significantly contribute to a creator’s growth, attracting investors and stakeholders interested in the economic potential of their intellectual property assets.

IP Valuation a Tool for the Creator Economy

Recently, Nigerian tech founders made headlines for investing one million dollars in Editi Effiong’s latest Nollywood movie, The Black Box. In the creator economy, investment decisions are often based on creative vision and economic viability. In the case of “The Black Box,” Effiong’s successful movies like Up North and Fish Bone built confidence among investors that a one-million-dollar project was achievable and a worthwhile investment.

IP valuation bridges the gap between the creative and the financial aspects of the industry, facilitating balanced investment decision-making. Creators can make informed choices regarding licensing, franchising, or selling their works, while investors can identify valuable IP assets to diversify their portfolios. IP valuation holds significant importance in the context of the creator economy. It serves as a compass for creators and investors, guiding them in various aspects of their endeavors, such as:

Evaluating the Worth of Creative Assets: IP valuation helps creators and rights-holders gauge the economic value of their intellectual property. This assessment is essential when licensing or selling their content. By quantifying the value of their IP, creators can make informed decisions regarding monetization strategies and brand collaborations.

Strategic Investment Decision-Making: For investors, IP valuation is an indispensable tool for strategic planning. It aids in evaluating potential investments, assessing the risk associated with IP assets, and determining whether a partnership or acquisition is economically viable.

Protecting IP Rights: Knowing the value of one’s IP assets can also be a protective measure. Creators can use this information to negotiate more effectively in case of infringement, ensuring fair compensation for using their content.

Attracting Funding: IP valuation is pivotal in attracting investors or securing loans based on IP assets. A well-documented valuation can instill confidence in potential investors and financial institutions, leading to better access to capital. 

IP Valuation Methods

IP valuation methods help determine the value of intellectual property. There are three main methods for assessing IP value: Income-based, Cost-based, and Market-based. 

Income-based method: This focuses on estimating future earnings generated by the IP and providing insights into its potential financial value. This method takes account of the current revenue that the IP asset is generating and then forecasts the future income that the asset will generate. 

Cost-based method: This method evaluates the expenses of creating and maintaining the IP. The cost method suits IP assets that are easily reproducible and where precise economic benefits can’t be determined. There are two approaches when it comes to the cost-based method. This includes the cost of generating identical assets and the cost of creating similar assets with the same utility. Unlike the income-based method, it is based on historical rather than future costs.

Market-based method: To calculate the value of an IP asset, this relies on comparing the IP to similar assets in the market to reveal its current value. The market-based method helps to generate a more comparable valuation to other assets in the market.

Each method has its place in the Nigerian creator economy, depending on the IP type, the specific industry, and the valuation goals. These methods assist creators and investors in making well-informed decisions.

Major Challenges for Creators 

The major challenge for content creators is IP infringement and enforcement. This issue makes IP assets prone to piracy, affecting the creator’s income and making it tricky to determine the value of the creator’s IP. Additionally, there’s no standard method for IP valuation. This means that different approaches can give different results, making it uncertain how much an IP asset is worth. Furthermore, ignorance of IP rights among creators is another challenge. Creators are unaware of the opportunities that IP rights present and, as such, cannot safeguard them adequately.

These issues show that Nigeria’s creator economy is changing. We need better IP protection, consistent ways to value IP, and proper education to ensure everyone knows the importance of IP in the creator economy.

Conclusion 

IP valuation can unlock new wealth in Nigeria’s creative economy. The potential sale or acquisition of Mavin Records is a testament to this. The rise of IP-focused financial tools, like IP-backed securities and investment funds, further enhances opportunities for creators, which can drive Nigeria’s creative economy forward.

 

Written by: Adedoyin Farinmade

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