Cre­ative think­ing pay­ing div­i­dends

On­line plat­form for video pro­duc­ers aims to give artists ‘fair share’ of in­dus­try prof­its

Ottawa Business Journal - - FRONT PAGE - BY DAVID SALI david@obj.ca

Ot­tawa team says vir­tual mar­ket­place that shops con­tent and col­lects roy­al­ties for mem­bers will help spread the wealth

Pat McGowan be­lieves the term “shar­ing econ­omy” is a mis­nomer, and he’s not shy about say­ing so. “There’s a lot of talk about the shar­ing econ­omy out there, and I think that some of that rings a lit­tle hol­low,” says the Ot­tawa en­tre­pre­neur.

“What we see is these large com­pa­nies cre­at­ing mas­sive amounts of wealth at the apex of their cor­po­rate ex­is­tence … but the work­ers there are not get­ting pure ad­van­tage of that sit­u­a­tion. I don’t see that as a shar­ing econ­omy at all.”

Mr. McGowan says mu­si­cians, film­mak­ers, cin­e­matog­ra­phers and other labour­ers in cre­ative in­dus­tries of­ten don’t have the time or ex­per­tise to fight for their fair share of prof­its from their work. Many of them re­ceive no roy­al­ties at all, he ex­plains, earn­ing a salary while watch­ing peo­ple fur­ther up the pro­duc­tion chain get rich.

“Peo­ple are get­ting paid less and less, and you’re at the mercy of some pretty big mar­ket forces,” he says.

About 18 months ago, with his film pro­duc­tion com­pany in­Mo­tion in a state of up­heaval, Mr. McGowan started look­ing at other ways to make money. He be­gan sell­ing his videos to plat­forms such as Shut­ter­stock, earn­ing roy­al­ties each time a clip was used.

“I’ve man­aged to take my in­tel­lec­tual prop­erty, which is mostly wildlife cin­e­matog­ra­phy, and con­vert that into a com­mod­ity and do very well fi­nan­cially,” he says. “So I said, ‘Well, if I can do that, other peo­ple can do it.’ I looked at the whole thing, and I said, ‘We need a par­a­digm shift.’”

The re­sult is Mr. McGowan’s lat­est en­ter­prise, Black­Box. Launched in late July, the on­line plat­form acts as a vir­tual mar­ket­place where video pro­duc­ers can sell their work, con­nect with po­ten­tial busi­ness part­ners and col­lab­o­rate on projects.

Us­ing soft­ware de­signed by co­founder Tim Trinh, Black­Box shops mem­bers’ work to a mul­ti­tude of me­dia plat­forms, such as Net­flix, Shut­ter­stock and YouTube. It ne­go­ti­ates and col­lects roy­al­ties on any sales and de­posits the funds into mem­bers’ ac­counts.

“This is an egal­i­tar­ian busi­ness model that any cre­ator any­where on the planet can take ad­van­tage of,” says Mr. McGowan, whose own artis­tic ca­reer in­cluded a stint as key­boardist in a pop­u­lar Ot­tawa rock band called the Crayons in the 1980s. “It of­fers the same earn­ing op­por­tu­ni­ties to ev­ery sin­gle mem­ber, no mat­ter where they live.”

He says the sys­tem en­sures that all mem­bers’ in­tel­lec­tual prop­erty rights are pro­tected and that ev­ery­one who signs on to a rights agree­ment re­ceives a pro­por­tion­ate amount of rev­enues.

“Tra­di­tion­ally, rights hold­ers tend to ag­gre­gate at the top (of the pyra­mid),” Mr. McGowan says. “Not here. There is no hi­er­ar­chy. What I aim to cre­ate is a com­pany where peo­ple are ac­tu­ally able to get their fair share of the work that they do from a value-laden mar­ket.”

Mem­ber­ship in Black­Box is free, and Mr. McGowan and his part­ners take a 15 per cent cut from each trans­ac­tion. The plat­form al­ready has mem­bers from

“I’ve man­aged to take my in­tel­lec­tual prop­erty, which is mostly wildlife cin­e­matog­ra­phy, and con­vert that into a com­mod­ity and do very well fi­nan­cially. So I said, ‘Well, if I can do that, other peo­ple can do it.’” – CIN­E­MATOG­RA­PHER PAT MCGOWAN, FOUNDER OF A NEW ON­LINE MAR­KET­ING PLAT­FORM CALLED BLACK­BOX

Asia, Europe and the United States and be­gan gen­er­at­ing rev­enue only three weeks af­ter launch, he says, far sooner than he had pro­jected.

“When I saw those first sales come in, my wife will tell you, I was do­ing back­flips,” he says with a grin. “Not a lot of money, but it worked.”

For now, the sys­tem mar­kets only video con­tent, but Mr. McGowan says he plans to add mu­sic to the mix in the fu­ture. He pre­dicts Black­Box will hit 100,000 mem­bers within five years and be­lieves his com­pany’s share of the plat­form’s to­tal sales could reach $100 mil­lion by then.

Sev­eral “note­wor­thy” lo­cal in­vestors have taken no­tice, he adds, and he scoffs at doubters who think the con­cept sounds too utopian for the real world.

“They’re go­ing to think I’m a com­mie,” he says flatly. “I’m not. I’m a busi­ness­man.”

With an es­ti­mated $10 bil­lion in artis­tic con­tent avail­able to­day on the In­ter­net, he says, the pie is big enough to feed ev­ery­one.

‘EV­ERY­BODY SHARES’

“Ev­ery­body shares – and what’s wrong with that?” Mr. McGowan says. “An egal­i­tar­ian busi­ness model is more bet­ter than a usery, capitalistic busi­ness model in the dig­i­tal world. And it hasn’t been done yet.”

It’s a great idea in the­ory, says Ot­tawa en­ter­tain­ment lawyer Mark Ed­wards. But he thinks many con­tent cre­ators will be reluc­tant to sim­ply hand over their work to a third-party agent with no guar­an­tee of any re­turn.

“How many peo­ple are will­ing to spend two months work­ing with­out pay?” he says. “Most peo­ple would only fol­low that kind of model in their spare time. It’s never go­ing to be their day job be­cause they need a (pay)cheque at the end of the week. Most of the prod­uct in the world is and will con­tinue to be pro­duced by in­di­vid­u­als who con­ceive of the thing to be built, who put to­gether the fi­nanc­ing … and who de­velop a mar­ket and sell it. Ev­ery­body else will con­trib­ute to it on the ba­sis of a pay­ment for ser­vices ren­dered. That’s how the world works.”

Mr. McGowan says that once peo­ple grasp the con­cept, they quickly see its po­ten­tial.

“It takes a lit­tle bit for them to un­der­stand that this is a good idea,” he con­cedes. “We’re talk­ing about a longert­erm re­turn.”

James Bowen, a pro­fes­sor at the Univer­sity of Ot­tawa’s Telfer School of Man­age­ment, says Black­Box’s big­gest chal­lenge will be in con­vinc­ing po­ten­tial mem­bers it has the mar­ket­ing mus­cle to ef­fec­tively pro­mote their work. If it man­ages to do that, he thinks it stands a good chance of suc­ceed­ing.

“If (Mr. McGowan) has the con­tacts and he can help in­crease the like­li­hood of the up­side, sure, I’d be in­ter­ested in it if I was a mu­si­cian or artist or what­ever,” he says.

‘DIF­FI­CULT PROB­LEM’

“Young peo­ple to­day are more fa­mil­iar with the con­cept of try­ing to be more en­tre­pre­neur­ial, try­ing to be more risk-tak­ing, do­ing things on the side, crowd­source fund­ing, et cetera. So that en­tre­pre­neur­ial mind­set of tak­ing a risk and try­ing to get some­thing on the up­side, it’s there.”

But find­ing buy­ers to gen­er­ate that up­side will be eas­ier said than done, Mr. Ed­wards con­tends.

“You can be on iTunes, as mil­lions of games are, (but) have no vis­i­bil­ity and no rev­enue,” he says. “Merely ac­cess­ing a dis­tri­bu­tion chan­nel is not in and of it­self a pre­dic­tor of sales. That re­ally is a very, very im­por­tant and dif­fi­cult prob­lem to solve. It’s very dif­fi­cult to get a broad­caster to pick up your show. It’s not dif­fi­cult to get your show or your film on YouTube, but it’s very dif­fi­cult to find an au­di­ence for it.”

Mr. McGowan re­mains un­daunted. Al­though the plat­form is still in its in­fancy, he says he can see a day when even full-length fea­ture films will be pro­duced by crews that came to­gether through Black­Box.

“Do you want to do a $200-mil­lion film this way?” he asks rhetor­i­cally. “I wouldn’t rec­om­mend it in 2016, but we’ll be able to do it in 2021. We can now be­come col­lab­o­ra­tors and co-own­ers of the out­come. That’s a joy­ous thing.”

PHOTO BY MARK HOLLERON

Busi­ness part­ners Pat McGowan and Tim Trinh say Black­Box, which launched in late July, has the po­ten­tial to be a $100-mil­lion en­ter­prise.

PHOTO BY MARK HOLLERON

Pat McGowan (top) and Tim Trinh launched their on­line mar­ket­ing plat­form, Black­Box, in July and be­gan see­ing rev­enues three weeks later, much sooner than ex­pected.

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