# IP as Platform - by Doug Shapiro - The Mediator

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## IP as Platform

How Entertainment Companies Can Capitalize on Infinite Content

[Image of Doug Shapiro]
DOUG SHAPIRO
FEB 21, 2023

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[Note that this essay was originally published on Medium]
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[Image of a crowd of people walking towards a swirling vortex of colorful figures]
Source: Midjourney, prompt: "an abstract image of an infinite number of people
collaborating on a work of art"

Last month, I published a post called Forget Peak TV, Here Comes Infinite TV. It
made the case that over the next 5-10 years, several technologies (including virtual
production and AI) will cause the quality distinction between professionally-produced
and user-generated content to blur, resulting in effectively “infinite” high-quality
video.

Putting aside the specific technologies, there are two basic ideas here that I think are
hard to refute: 1) technology generally makes it possible to do more with less; and 2)
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## IP as Platform - by Doug Shapiro - The Mediator

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the collective creative energy of the general population is far greater than the tiny
percentage of people who have navigated the established system for creating content.

We have already seen both play out in journalism and music. What once required an
entire newspaper printing and distribution infrastructure to accomplish can now be
done with Substack; what once required a record label now can be done with Logic Pro
and Spotify. The vast, vast majority of self-published writing and music is not worth
reading or listening to. But some is. Today, some of the best journalists in the world
never worked at a newspaper and most new superstar music acts emerge from the tail
of self-distributed music. The arc of technology suggests that inevitably film and TV
will face the same dynamics. This doesn't mean the end of Hollywood. But it has the
potential to be extremely disruptive.

Rather than focus on the threat, let's focus on the opportunity. Suppose you were
running an entertainment company and you bought the premise. Could you capitalize
on it? Even if you think the trends I'm describing are years away, the recent explosion
of activity and attention around Al make the question worth asking now.

One way to harness this creative energy, as opposed to fighting or dismissing it, is to
think of your IP as a platform.

Tl;dr:

*   It's easy to see why "infinite TV" could be extremely disruptive for entertainment
    companies. But they can also capitalize on it.
*   "IP as platform" means enabling and encouraging creators to expand on your
    intellectual property and curating this fan content for consumers.
*   This may sound like a radical idea, but fan art is an inherent part of the music
    business and the gaming industry has been built by commercializing emergent fan
    behaviors.
*   Not every entertainment franchise will inspire fan creation. But facilitating fan art
    could have several benefits for entertainment companies, such as strengthening
    their relationships with their most ardent fans and attracting new ones; providing
    free marketing; possibly sourcing new stories and talent; and boosting revenue.
    Plus, it might be hard to prevent even if they wanted to.
*   I discuss a basic framework for how all this might work.

Thanks for reading The Mediator! Subscribe for
free to receive new posts and support my work.

## What Does "IP as Platform" Mean?

Let's break down "IP as platform" into its components, starting with intellectual
property (IP). From Infinite TV:

The most valuable franchises may become even more valuable. With new tools and
lower costs, many creators will want to dream up entirely new stories. A lot will also
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## IP as Platform - by Doug Shapiro - The Mediator

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probably want to expand on their favorite fictional worlds, whether Harry Potter,
the MCU or Game of Thrones—or create mash-ups between them. Historically,
Hollywood has guarded its IP closely and has been more inclined to view fan fiction
as copyright infringement than enhancement. But progressive rights owners would
be wise to harness all the potential creative energy, not stifle it.

By platform, I mean a multi-sided market-a business that facilitates the interaction
of 3rd parties and consumers. Prototypical platform businesses include Microsoft
Windows, which enables developers to create applications for PC owners, or Uber,
which connects drivers and riders.

What would "IP as platform" mean for an entertainment company? Below I discuss
what this might mean in practice, but in theory it means enabling and encouraging 3rd
party creators to produce content that builds on their IP and making that content
available to consumers.

"IP as platform” means enabling and encouraging creators to expand on your intellectual
property and surfacing it for consumers.

The analogy only extends so far. Platform businesses are usually characterized by
strong network effects on each side of the market, which are key to their value
proposition, competitive moats and consumer lock in. As a result, they have a “cold
start" problem (they need to have a lot of buyers and sellers to attract a lot of sellers
and buyers) and platform businesses with particularly strong network effects often
create winner-take-most markets. Neither would be the case here. The most popular
entertainment franchises definitionally already have rabid fan bases and, because they
are so highly differentiated, there won't be winner-take-most markets (Harry Potter,
the MCU and James Bond can all succeed).

Hollywood is very precious about its IP and the idea of providing access to the general
populace might sound like heresy.

Here's why it shouldn't.

## Hollywood Needs Fans

As the world transitions to infinite content, IP owners need fans more than ever.
"Users" are dispassionate; “consumers” don't give anything back. “Fans” are...fanatical.

According to a study by Troika, 85% of people say they are a fan of something, and 97%
of people aged 18–24. Especially at a time when religious affiliation continues to
decline, for a lot of these people, their fandom is a vital part of their identity. (That's
exemplified by the prevalence of brand tattoos.)

For many people, the object of their fandom is entertainment IP. Anyone who has been
to ComicCon, E3 or a Harry Styles concert has seen that, as does anyone who has been
on the wrong side of fan backlash.
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Fans are loyal. Fans are unpaid marketers. And fans are lucrative. In theory, for every
product that has a downward sloping demand curve, every unit of demand to the left of
the market clearing price is willing to pay more than that price. Those points on the
curve represent fans. Consulting firm Activate has been particularly vocal about the
need for media companies to target “Superusers.” According to their research,
Superusers represent a disproportionate amount of both time spent (Figure 1) and
dollar spend (Figure 2).

Figure 1. Superusers Represent a Disproportionate Amount of Time Spent...

[Image of a bar graph comparing the average daily time spent with media per user between all other users and super users. The graph shows that all other users spend an average of 9 hours and 21 minutes, while super users spend an average of 18 hours and 55 minutes. The graph also shows that super users make up 22% of the user population.]

1.  Includes time spent watching video, playing video games, listening to music, listening to
    podcasts, and using messaging / social media services. Does not account for multitasking.
    Sources: Activate analysis, Activate 2022 Consumer Technology & Media Research Study (n =
    4,001), Company filings, Comscore, Conviva, eMarketer, GWI, Music Biz, Newzoo, Nielsen,
    NPD Group, Pew Research Center, U.S. Bureau of Labor Statistics.

Figure 2. ...And Spend

[Image of a bar graph comparing the monthly dollar spend by media type between all other users and super users. The graph shows the total video spend, total gaming spend, and total music spend for each group. The graph also shows the percentage of the user population that each group represents.]

1.  Includes money spent on all videos and video services, including traditional/virtual Pay TV,
    video streaming subscription services, and video purchases/rentals. 2. Includes money spent on
    video games and other video gaming purchases (e.g. in app purchases, video gaming
    subscription services) across all devices. 3. Includes money spent on music and music services.
    Sources: Activate analysis, Activate 2022 Consumer Technology & Media Research Study (n =
    4,001), eMarketer, Goldman Sachs, Grand View Research, IFPI, Newzoo, Omdia,
    PricewaterhouseCoopers, Recording Industry Association of America, SiriusXM, Statista.
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Fans Want to Create

For fans, fan art is a love letter to the object of their fandom and a way to strengthen
their bond with the fan community. The most prevalent form-because it has the
lowest barrier to entry—is fan fiction (or fanfic, FFs or just fics).

Figure 3. By One Estimate, the Volume of Fanfic Rivals All Fiction, Ever

[Image of a graphic comparing the volume of fanfiction to all other fiction. The graphic shows that fanfiction.net has 60 billion words, while all of human history has 80 billion words.]

Note: “All of Human History” comprises all the words in the Google English fiction corpus.
Source: Cecelia Aragon.

The modern history of fanfic dates back to science fiction fanzines in the 1940s and
the first TV-related fanzines, about Star Trek, in the late '60s. But fanfic surged with
the advent of the Internet. There are now over 14 million stories on the largest fan
fiction website, FanFiction.net. According to one researcher, this comprises 60 billion
words, compared to the 80 billion words in the entire Google English fiction corpus
over the prior five centuries (Figure 3).

There are 5 million fanfic stories on Archive of Our Own (AO3), including 500,000
stories about the MCU, 400,000 about Harry Potter and 300,000 about DC, among
many other fandoms. Sometimes even less well-known franchises have a rabid (or
prolific) fan base; the TV series Supernatural has over 250,000 stories. The most-read
work on AO3 (which occurs in the world of Harry Potter) has over 9 million hits. The
fan site Fandom has over 250,000 fan-created “wikis,” where fans post fanfic, videos
and articles that explain the official canon. Marvel and Star Wars, two of the largest
wikis, include 280,000 and 180,000 pages, respectively.

It has also been legitimized. Initially, fan fiction lurked in the dark corners of the
Internet. While much of the content is still graphic, in recent years it has become
increasingly mainstream. In 2019, AO3 won a Hugo Award, the most prestigious
award in science fiction. And a number of fan fiction works have achieved broad
commercial success, like 50 Shades of Gray (which was originally Twilight fan fiction);
The Mortal Instruments series (based off Harry Potter); and the zombie-Jane Austen
mash-up Pride and Prejudice and Zombies.

Star Wars: X-Wing | A Star Wars Fan Film
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Watch on ►YouTube

IP as Platform - by Doug Shapiro - The Mediator

If you search "fan film" in YouTube, some astounding stuff comes up, like the video embedded above. Seriously, watch at least the first minute. Or consider this fan-made re-imagining of *The Fresh Prince of Bel-Air*, which resulted in the show *Bel-Air* on Peacock and landed the creator an Executive Producer role. But video fan art is far less common than fanfic for the obvious reason. It's really hard to do. (In the video embedded above, all the 3D models were made from scratch and the project took four years.)

What happens when it isn't?

# Music and Gaming as Models

Hollywood and the literary community have ambivalent relationships with fan fiction. Whether non-commercial fan fiction falls under fair use protection is not clear cut, as fair use is determined on a case-by-case basis. Studios and book publishers have generally turned a blind eye-unless it is commercialized, in which case they (understandably) spring into action. Famous examples include J.K. Rowling shutting down a fan-made *Harry Potter* encyclopedia, J.D. Salinger suing to prevent a sequel of *Catcher in the Rye* or CBS/Paramount successfully stopping a *Star Trek* feature film.

Let's look at two media for which fan creation is much more closely tied to the business: music and gaming.

# Songwriters Must Enable Fan Art by Statute

Fan art is a critical part of the music business owing to the compulsory copyright license. Anyone granted a copyright for a musical work in the U.S. must issue a license to anyone who wants to record the music.

In other words, anyone can cover a song—and commercialize it—as long as they secure a so-called "mechanical license." (Most of these licenses are administered by the Harry Fox Agency, which issues licenses and collects royalty payments.) Some streaming services, like Spotify and Apple Music, even handle that for cover artists. The statutory mechanical royalty rate is set by the Copyright Royalty Board, which is overseen by the Library of Congress. Total mechanical royalties aren't a huge part of music publishers' revenue, but successful covers generate additional royalties and can substantially boost the popularity of the original recording.

This isn't to suggest that entertainment companies develop a similar framework-they probably don't want three judges who were appointed by the Librarian of Congress to

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IP as Platform - by Doug Shapiro - The Mediator

decide the licensing terms for their IP. The point is that while we may not usually think of song covers this way, “fan art” is an inherent part of the music business.

# Gaming Was Built by Commercializing Emergent Fan Behaviors

While Hollywood has a low tolerance for fan art and the music industry has a mutually beneficial relationship (and no choice), the videogame industry has fully embraced fan creation. It is arguably built on the back of emergent fan behaviors.

Part of the reason is that, unlike passive media like TV, radio or print, gaming requires users to interact with the content and each other, which often leads in unexpected directions. Plus, the origins of gaming have close ties to the hacker/DIY community and many hardcore gamers have a high degree of technical proficiency and therefore the ability to alter games as they see fit.

Whatever the reason, progressive developers have long recognized these hacks and workarounds as unmet jobs to be done and commercialized them. I'm not talking about tangential features-much of the innovation in the videogame business originated with fan behavior.

*The videogame industry is built on the back of unexpected fan behaviors.*

# Modding

Modifying videogames, or “modding,” has been an essential part of gaming for decades. Initially, developers didn't encourage it, but in 1983, id Software released DOOM with a separate game engine and data file, which enabled the creation of game mods. Since then, it is more common than not that games permit or encourage modding and there are numerous platforms for creating and discovering mods, like Steam Workshop.

Some of the most successful games today are mods of other games: Counter-Strike is a mod of Valve's *Half-Life*; Dota 2 is a sequel to Dota, which is a mod of Blizzard's *Warcraft III*; and in turn League of Legends was inspired by Dota and is also built on the *Warcraft* engine.

Figure 5. Creating is Intrinsic to Roblox

The image shows a screenshot of the Roblox Studio interface. The interface is colorful and features a prominent "Start Creating" button. The text "Make Anything You Can Imagine" is displayed above the button, emphasizing the creative possibilities within the platform. The interface also includes options like "Discover," "Avatar Shop," and "Create," suggesting a comprehensive environment for game development and community interaction.

Some of the most successful games today have taken modding to its logical conclusion: rather than just provide separate tools for modding, it is an integral part of the

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IP as Platform - by Doug Shapiro - The Mediator

experience. Over 40 million games have been created with Roblox Studio and although there are a handful of native games on Roblox, all of the top-ranked games were made by creators. According to Epic Games CEO Tim Sweeney, half of all play time on Fortnite is now on games made by 3rd parties using Fortnite Creative.

# Virtual Goods

The first virtual goods to be exchanged for real money (“Real Money Trade”) were items made for multi-user dungeons (MUDs) in the 1970s and massively multiplayer online games (MMOGs) in the early 1980s, traded on local message boards and later on Ebay. These trades were the first indications of user willingness to spend real money on virtual items. Today, virtual goods are the foundation of free-to-play gaming and people spend an estimated $80 billion annually on virtual goods in videogames.

# Competitions and Esports

Since videogames originated prior to widespread Internet adoption and, of course, broadband access, originally competitive online play of fast (“twitch”) games was impossible. However, as early as the 1970s groups of gamers held “LAN parties," at which they would bring their own PCs and hook them into a LAN. According to Mitch Lasky in the (highly-recommended) podcast Gamecraft, *Quake III Arena*, also from id, was the first game to be geared largely around online multiplayer play. Today, almost all games include multiplayer online gameplay modes and many games can't be played offline at all.

While the idea that people would want to play with other people online was a no-brainer, it was not at all as obvious that people would want to watch other people play videogames. In 1999, South Korean broadcaster ON Media sought content to fill up airtime in the evening on its cartoon network, Tooniverse, and broadcast a *StarCraft* tournament. It was such a phenomenon that the next year it launched a dedicated esports network, OnGameNet (OGN).

Today, League of Legends World Championship tickets sell out in minutes and last year Twitch viewers watched 22 billion hours on the platform. YouTube recently announced that Minecraft videos have now received a mind-boggling 1 trillion views. The game would likely never have been nearly as popular without all that free marketing. Whether esports is a good business is a fair question. But publishers of popular multiplayer online battle arena (MOBA) and first-person shooter games, like Riot, Blizzard-Activision and Valve, now rely on both live events and livestreaming platforms as critical marketing tools for their games.

# How Would You Do It?

So, fan art, broadly defined, is an important or even critical part of other media. As mentioned, historically this has been very hard to do in video, but as I described in Infinite TV, technology is on a path to make it much easier. For entertainment companies, they may not be able to stop this even if they want to. As also mentioned above, whether non-commercial fan fiction falls under fair use is a legal gray area and determined on a case by case basis. The democratization of high production value creation tools could result in a tsunami of non-commercial fan content. Even if these fans aren't competing for dollars, a flood of high quality Batman or Star Wars fan films could compete for attention.

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IP as Platform - by Doug Shapiro - The Mediator

Entertainment companies may not be able to stop it even if they want to and embracing it could bring several benefits.

As a result, enabling fan art could be defensive. If done right, it could also provide numerous benefits. It would strengthen entertainment companies' relationship with their most ardent fans; could attract new fans; provide free marketing; might be an inexpensive way to source new stories and talent; and could boost revenue.

Figure 6. Unreal Engine Marketplace

The image shows a screenshot of the Unreal Engine Marketplace. The marketplace is a digital storefront where users can purchase and download assets for use in the Unreal Engine. The interface is clean and organized, with a search bar, filtering options, and various categories of assets. The assets displayed include environments, characters, and other 3D models. The image highlights the wide range of content available on the marketplace, suggesting its importance as a resource for game developers and other creators.

What does "done right" mean? This is just a sketch of an idea, but a framework would probably need a few components:

*   Tools. The easiest way to provide creation tools would be to leverage existing real-time rendering engines, namely Unreal Engine and Unity. IP owners could offer creators packs of digital assets associated with different franchises (The Wizarding World of Harry Potter, the MCU, Minions, etc.), including characters (in different outfits, at different ages), environments, vehicles, props and even music and sound effects. These assets should be in a consistent style and aesthetic (across a franchise and, possibly, even the entire corporate umbrella) so creators can seamlessly combine them. The other benefit of tightly integrating with gaming engines would be the potential for these assets to be used for more than just linear storytelling, such as gaming and other interactive applications. They could go even further, and work with Unreal and Unity to offer a suite of assets let's say a "Warner Bros. Filmmaker" plug-in—that would offer easy set-up, editing, pre-set character animations, etc., so that complete beginners could make rudimentary films without extensive training. (This is loosely analogous to what Disney allowed in toy box mode of the now defunct Disney Infinity, albeit for game design, not filmmaking.) These assets and plug-ins could be available on new official fan creation sites and/or in the existing Unreal and Unity asset marketplaces (the Unreal Marketplace is shown in Figure 6 above). Epic and Unity could probably be persuaded to create storefronts for different franchises, to make navigation easy.
*   Rights. Entertainment companies would need to ensure they have the rights for all the digital assets they provide, especially the characters. Would the 3D digital

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*   Tony Stark look like Robert Downey Jr.? That probably depends on what "image and personality" rights he signed away in his contract.
*   A legal framework. The digital asset licenses would need to have some sort of stipulation how the assets may be used. These should probably be as permissive as possible but include prohibitions against obscenity, whatever that is. IP owners would probably also want some sort of safe harbor protection against creators uploading fan art and then claiming that subsequent official releases were based on their ideas.
*   A distribution platform. Creators would need a way to distribute their work. Perhaps they should be allowed to distribute any way they want (YouTube, TikTok), perhaps not. But it would also be important to create an "official" dedicated distribution outlet for this content, such as within entertainment companies' streaming services or YouTube channels created specifically for fan content. This official platform would also be a natural place for fan communities to gravitate, where they could comment and vote on their favorite fan works.
*   A big carrot: the promise of validation. To tie this all together it would also make sense to add a strong incentive for creators to adhere to guardrails and post on the "official" distribution platform: validation. Entertainment companies could curate the best fan content, selectively provide some sort of Good-Housekeeping-seal-of-approval for some content (“Disney approved!") ("featured fan film of the month") and even hold out the promise of hiring the most talented creators for future work. The possibility of validation by IP owners would be a dream come true-and huge draw-for creators.
*   An economic framework. There would need to be some established revenue sharing arrangement for any monetization of the content (and probably a watermarking system to ensure the entertainment companies/creators get credit).
*   Careful management of the canon. Entertainment companies would also need to carefully manage what they deem official canon. But this already happens today. For instance, in 2014 Disney rebranded the Star Wars Expanded Universe (all non-film media, like books and comics) as *Star Wars Legends*, meaning that these stories were no longer canon and future films and stories wouldn't be bound by them. Disney also cleverly introduced the multiverse concept to the MCU, meaning that everything (and, I guess, nothing) is canon, because anything is possible. Official DC canon is also presumably up in the air with the recent arrival of James Gunn and Peter Safran to run the franchise.

As described at the beginning, the quality differential between the "head" and the "tail" has already blurred in lower-barrier media, like journalism and music. It hasn't happened yet in video because the barriers are so much higher, but the usual arc of technology suggests those high barriers only delayed the inevitable. If you buy the premise, then entertainment companies have a choice: they can fight the tide or ride it. Since the former may be futile, the latter may be the only viable option.

Special thanks to Anthony Koithra for his feedback to a draft of this post.

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