Why Agencies Will Make More of Their Money From IP in the Future

By Tim Williams

By Tim Williams

One view of the future of our business is that increasingly agencies will make the majority of their revenues from the intellectual property they create instead of the hours they work.  The “work for hire” model that has persisted for the last half-century is becoming a less and less profitable way to make a living.

What’s wrong with “work for hire”

Look at an agency contract and you’ll likely find language like this:  “All rights, title, and interest in the Work Product (“work made for hire”) is hereby assigned by Agency to Client.”  In other words, everything the agency creates the client owns.  While this kind of approach might make sense for some other professional services – accounting and law, for example – it actually makes little sense for a creative services business that creates valuable, long-lasting intellectual property.

Consider that most of the creative services that agencies themselves hire – actors, musicians, voice talent, illustrators, photographers, etc. – are paid based on usage, and most retain actual ownership of their work.  There’s no reason why agencies can be paid in a similar way.

IP in many forms

Agencies like Anomaly, BBH, Mother, Taxi and others have found ways to capture ongoing revenues from the creation and ownership of IP.

Intellectual property development and ownership can take several different forms:

  1. IP created specifically for a brandFor example, Anomaly helped create the EOS cosmetic line (as well as the marketing) which is a completely custom effort exclusive to the EOS brand wherein Anomaly has an ownership stake.
  2.  IP created for the category and licensed exclusively by a brandSouthern California’s Ignite Health, via their Incendia Health Studios unit, creates their own infotainment properties, such as a video game to help kids with juvenile diabetes learn how to use their insulin pump. The agency owns the IP and licenses it to their pharma clients.
  3.  IP created and sold by the agency, unrelated to a client’s brandOne example among many is a product developed by the agency Media Logic called Zeitgeist & Coffee, a real-time social media management platform designed to help agencies collaborate with their clients on social media programs and initiatives.  BBH’s unit Zag is largely devoted to the development of proprietary, agency-owned products and services, such asPlayground Session, a software application designed to help people of all ages learn to play music.