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How much IP ownership is enough?

A growing number of creators want more than the standard 5% and several new prodcos are promising a greater stake in order to attract talent and bring in more money.
August 20, 2021

Ridwan Moshood—executive producer on Garbage Boy and Trash Can, Cartoon Network’s first African superhero series—assumed that as the creator, he’d own 100% of the IP. He didn’t realize that creators, especially those who are new or unknown to the industry, rarely get to own more than 5% of their brands…if they get to keep any percentage at all. But Moshood wasn’t going to take no for an answer.

“I’m the creator of the show, and it’s only right for me to retain a large amount of the IP,” he says.

Moshood partnered with two people who would not only help him make Garbage Boy and Trash Can, but also protect his interests. And they created a brand-new production company to do it.

Under the terms of this agreement, Moshood owns 40% of all work that comes out of the newly formed Pure Garbage studio (as well as 40% of the company), while his partners—Mike de Seve, head of New York-based Baboon Animation; and Nick Wilson, founder of Johannesburg’s African Animation Network—each have a 30% stake.

It’s a win-win partnership. Without the backing of a production company, Moshood wouldn’t have been able to hold on to 40% of his concept. On the flip side, without Moshood, Wilson and de Seve wouldn’t have a show at all.

“Without all three of us, we couldn’t have gotten this deal with Cartoon Network,” says de Seve. “But there’s a distasteful history of white guys milking the hell out of something that a really talented Black guy came up with, and I don’t want to be the next person to be remembered that way. This is a way for us to be three musketeers.”

Garbage Boy and Trash Can

Ridwan Moshood co-founded Pure Garbage specifically to maintain ownership of Garbage Boy and Trash Can.

There are many different ways that a deal can be structured, but typically, if an independent creator pitches a concept to a production company or broadcaster, they’ll retain a 2% to 10% stake in the IP. For writers or artists, selling their concept often serves as a job interview, through which they earn the right to work on their own show. If not, they will usually get a one-time payment and may never be involved in the project again. If the show is a success, creators may see a little money through royalties, after related expenses are deducted.

“The old model doesn’t work because the creator [rarely] sees a penny of that success,” says de Seve. “People are getting rich—just not the person who made it all happen.” The argument from production companies has long been that they need to retain a large percentage of IP ownership because the margins on animation are so small. Without that larger cut, they might as well stick to service work. More recently, commissioning broadcasters and streamers have argued they should own 100% because they’re covering the majority of the production budget and distributing the series on their platforms.

But in the kids space, a growing number of prodcos are unhappy with the old ownership model, and even more unhappy about completely handing over their creations to buyers.

Whether to attract top talent, edge out competitors or more thoroughly engage audiences, companies like Pure Garbage, Sow You, Angel Studios and The Co-Production Company have made it their priority to keep as much IP ownership in the hands of creators as possible.

Giving up ownership is a young man’s game, says Doug Schwalbe, a long-time DreamWorks vet who launched his venture The Co-Production Company in March. To build relationships early in a career, it might make sense for creators to sign away their stake in exchange for US$10,000 to US$15,000 to work on spec. But with more than 30 years in the industry, it’s not something Schwalbe is interested in doing—and he certainly wouldn’t advise any of the creators he works with to do so either.

Schwalbe’s proposition is a 50/50 split with creators, through which he’ll help polish the pitch package and scripts, and do the legwork to find a co-production partner to help with financing, tax breaks and production. (But just one partner—any more would dilute the ownership pie.) This means most creators working with Schwalbe keep roughly 25% of their IP.

Rather than chase a broadcast or platform commission, his goal is to bring a fully financed and well-developed pitch to the table. By focusing on an acquisitions model, Schwalbe and the creator can keep their stake.

Owning the IP means greater interest from investors for future projects, Schwalbe adds. And it also means that as an executive producer, even when his fees get squeezed—which they will—he still gets paid.

Irish production company Sow You, meanwhile, gives its creators a 30% to 50% stake in their IPs. But there’s a catch—they need to be heavily involved throughout the entire process. The expectation is that the creator will stay on board through development and (if greenlit) production to ensure the show is infused with their specific voice and style.

The model is a point of differentiation for the year-old prodco, and is so integral to their company ethos that the founders refer to it as their “North Star.”

“We couldn’t offer somebody 5% to 10% because we’re saying, ‘We need you, this is your voice. We have to have you. You’re an integral part of this,’” says Sow You co-founder Chris Dicker. “There are a limited number of creators we can work with, [and] we want to make sure that it’s a partnership—not just a ‘give us your kids, and see you later’ type of scenario.”

Sow You is so serious about the need for the full involvement of creators that it recently turned down a great pitch from a well-known kids content creator because, ultimately, the person wasn’t willing to be involved.

Even though it occasionally means losing out on big-name talent, this approach gives Sow You a competitive advantage, says co-founder John Reynolds. The prodco can offer a truly “creator-driven show”—something many buyers like Cartoon Network and Netflix have said they’re looking for. But Dicker adds that it’s important there’s an upside for the creator as well.

Sow You gives creators a 30% to 50% stake in their IP, so long as they agree to be heavily involved.

Sow You gives creators a 30% to 50% stake in their IP, so long as they agree to be heavily involved.

Owning 50% of their IPs acts as an insurance policy so that, regardless of what happens with the deals, creators get paid. And if a buyer comes in and is willing to pay for the whole production in exchange for 100% ownership, that’s OK, too.

“Any upside from the IP, we’ll both share,” says Reynolds. “We know that sometimes shows get bought out, but if it does, we’ll share that equally.”

Angel Studios, meanwhile, wants its creators to retain 100% control and ownership over their shows, and it built the crowd-funding platform Angel Funds to deliver on that promise.

Chris Wall, a former DreamWorks and VeggieTales producer, used Angel Funds to raise US$5 million in 20 days. That money fully financed six x 30-minute animated series Wingfeather (pictured, at top), Angel Studios’ first original kids show.

Produced by Wall’s shingle Shining Isle Productions, the series is for kids ages 12 and up, and will be distributed on a branded Wingfeather app as well as Angel Studios’ smart TV app. Like crowdfunding sites before it, investors get a reward—in this case, a share of Shining Isle’s subsidiary production company Toothy Cow.

The model means that while Angel Studios hosts the series, it doesn’t have to put up any money for production, and instead makes revenue from the distribution.

Wall says this type of model really only works if a creator wants to be heavily involved in their show.

“For content creators who just want to sell a concept and walk away, this is not a good fit,” says Wall. “But for creators who want to have a relationship with their audience, and have them engaged and excited—that’s who this is for.”

In turn, Angel Studios CEO Neal Harmon says viewers get a better show because the creator is accountable to the viewers, who are also investors. And that means more of a financial reward for them if/when the content pays off down the line.

While none of these production companies know whether their models will result in long-term success or change the industry in some fundamental way, they’re willing to give it a try. At the very least, they hope other studios will have to match their models to compete for talent, forcing some incremental change in the way IP ownership is allocated.

“As the creator, you [should] be part of the exploitation of your original concept for the duration of your life,” says Pure Garbage’s Wilson. “The cornerstone of a truly sustainable career in the media industry is not just participation in the creative economy; it’s ownership of your original ideas.”

About The Author
Alexandra Whyte is Kidscreen's News & Social Media Editor. Contact her at awhyte@brunico.com

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