1️⃣Introduction - The Problem

An overview of the current IP industry and sample problems Ample is solving

The Current Intellectual Property Industry: Fragmented and Illiquid

Traditional intellectual property markets are often characterized by significant fragmentation and a disconnect between brands, IP owners and their audiences or interested parties. This lack of integration stems primarily from outdated systems and centralized frameworks that restrict access and transparency. Intellectual property, such as copyrights, patents, and trademarks, is typically siloed within specific industries or geographical boundaries, making it difficult for potential users and collaborators to engage or even discover available IP. Moreover, the traditional marketplaces that exist do not effectively bridge the gap between IP holders and the global user base. They often impose cumbersome legal and procedural barriers that deter small enterprises and individual creators from participating. This results in a market that is not only hard to access but also less competitive and innovative. The absence of a decentralized global framework means that many valuable intellectual properties remain underutilized, as they are not effectively exposed to a wide array of potential users and industries that could benefit from such assets. This scenario stifles creativity and slows down the progress of technology transfer and commercialization of intellectual property across different sectors and borders.

The intellectual property (IP) markets are currently also hampered by significant trust issues concerning data integrity and a pronounced lack of liquidity. In traditional settings, data regarding IP transactions, ownership, and validity are often scattered across various centralized databases and are not standardized globally. This leads to inconsistencies and errors that can undermine trust among participants, making it difficult for brands, investors and creators to make informed decisions. The opaqueness of the data also fuels concerns about potential fraud, as verifying the authenticity and history of IP rights becomes challenging.

Additionally, the market suffers from liquidity constraints due to the highly specialized nature of intellectual property and the complex legal frameworks governing its trade. IP assets are generally considered illiquid because they cannot be swiftly converted into cash without a significant loss in value. The process of monetizing these assets is encumbered by lengthy and costly legal procedures, further deterring potential investors and decreasing the overall market activity. These factors contribute to a stagnant environment where IP assets are undervalued and underleveraged, preventing efficient capital flow and innovation growth within the industry. Such issues highlight the need for transformative solutions that can bring transparency, trust, and enhanced liquidity to the intellectual property markets.

Sample Case Study - The Broken Music Industry

To understand where this specific industry is falling short, it’s helpful to remember how it works today. Currently, most professional creators usually work with multiple third-party studios, networks, labels, agencies or companies to fund their productions, promote and produce their creations, control and manage their distribution, and then secure favorable venues/publishing/merchandise deals for their bodies of work. These exhaustive and fragmented processes create a convoluted system that is easy to exploit. For example, a musician may work with a record label to record a song, distribute it to their fan base, and secure concert venues. Their record label negotiates with them a certain amount of royalties they will earn for future uses of their song, which will be paid to them periodically; usually about six months in arrears. And with limited global alternatives due to lack of framework, brands, studios, creators and communities have limited monetization plus inclusion opportunities.

There are several flaws with the status-quo as it stands today. How often are royalty payments made? Are royalties being tracked accurately, or are payment opportunities being missed? Can an artist easily transfer their intellectual ownership of their art – and their right to royalties – to someone else? Can an artist easily transfer just a portion of their royalty rights to someone else? If someone gains the right to royalties on a piece of art, are they then able to resell a portion of their royalty rights? How about a portion of a portion of royalty rights – is that possible?

Fig. 1 - Artist royalty flowchart showing convoluted processes and entities in between the variety of licensing agreements, streaming formats, commercial uses and the creator getting paid. A legacy system challenging to track or manage properly. Originally shared from Ari's Take [4] and modified visually.

As displayed in Fig. 1, royalties are cumbersome to work with, and the current system of intellectual property ownership, attestation, and transfer is difficult to manage. This is barely scratching the surface of the problems that plague the music industry – and to think, this is just one segment of a $2.3 Trillion Media & Entertainment global market.

What if things could be better than they are now?

Given these challenges—ranging from fragmented markets and unreliable data to the severe lack of liquidity—there is a compelling case for reimagining the infrastructure of intellectual property markets. Tokenized solutions present a promising avenue to address these pervasive issues. By leveraging blockchain technology, the tokenization of intellectual property can introduce unprecedented transparency and trustworthiness into IP data. Furthermore, it has the potential to substantially enhance liquidity by simplifying and streamlining transactions. The following sections will delve deeper into how tokenized intellectual property can revolutionize these markets, providing robust, scalable solutions that foster easier access, better data integrity, and more dynamic market participation. This transition into blockchain-based systems could redefine the value and exchange mechanisms of intellectual property on a global scale.