Ideas - Boom or Bust

I learned this first in my own life by making suggestions and seeing most of them summarily dismissed. For a while it bothered me since no one ever bothered to explain. Far from grateful, it was like you were an unwelcome intrusion and wasted their time.

Later I saw it in other’s lives. At first they would formulate an idea and make a suggestion. Giddy. And then they would submit the idea, and then... and then... and then... it was like it went into a black hole! Nothing came back and they never heard a word about it. For a while they would bemoan their fate to others and all would commiserate about how they could improve the company if "they" would just listen. Months later they were demoralized and feeling useless. Empowerment in reverse. Their ideas were obviously trash.

It is the same with ideas for writing and submitting scripts. You have an idea and work on it for a while, and others encourage you to write. And then later no one seems interested. Or you submit a script and you never hear back. Maybe the script comes back looking like no one even  read it.

It is the creative and entrepreneurial spirits, I think, that make people think that they can create something new, whether it is a business idea or an idea for a story. But in reality it takes a lot to make an idea work.

Here’s an example from recent news. An entrepreneurial man in the Philippines had family problems and needed money. So he hatched a plot to hijack an airplane, rob the passengers, and make the perfect exit. He was not lacking in creativity or the entrepreneurial spirit. He got together a ski mask, goggles, a gun and a grenade, made himself a parachute, and took along ropes to help him safely exit the plane. With a little investment capital, he purchased a ticket. This could have been a business plan. It could have been the outline of a story. It could work.

During the flight, he executed his plan perfectly. He showed his grenade, frightening passengers, and fired his gun, intimidating the crew; he was master of the situation. From each passenger he summoned his bounty, and then he enlisted the crew members' help in opening a door in flight and exiting the plane. But something went wrong at some critical moment. Perhaps his parachute wasn’t as good as he thought, or perhaps he did a 50 MPH body slam into a tree trunk - only he knows for sure. His body was found later in dense forest. 

Having submitted many ideas, started three businesses (none of which got off the ground), and having written many stories, I can assure you that there is usually a hole in the parachute and the landscape is littered with bodies. Many small businesses fail (restaurants have an 80% failure rate in the first two years). Ideas fail. Stories fail. Even stories that are optioned or published fail to go on to the big time - screenplays don’t get produced and published novels fail to make enough sales to reprint.

There is help. It helps not to let your expectations get carried away. It helps to improve the quality of the idea, which is what this Web site is mostly about. And it helps to know what is involved in the process, which is what this article is about.

An idea, whether it is a product idea, an idea for a story, or an entire story (screenplay or novel) is just the start of a long process during which the idea must be tested and evaluated again and again. There are at least 12 essential parts to developing and selling a product.

First, what about the basic idea? Is it sound and proven, or does it just sound like a good idea? Suppose someone comes to you and says that he has a wonderful idea for a new scalpel for surgeons. You ask if he is a surgeon? No. Does he have experience? No. Do you believe him? No. Experience counts. You were his first test market, and he failed.

If you are experienced in the field, then you have a head start. You will probably know if something will really be helpful or not. You might have even tried it.

Second, market research. Is the idea really something helpful that people will be interested in? If it is a story, the best advice is to write about something you know. If it interests you it probably will interest others. I have to temper that advice with some reality. Many of the things that I am very interested in, other’s aren’t even remotely interested in. So I know that I have to find out first if others are interested. Some things I know from experience that they are interested in. So my stories are usually a blend of what I am interested in and what I write for the audience.

The same applies for products and services. It may be a perfectly valid idea, but are other people really interested in it? Interested enough to pay money for it?

You aren't just marketing to people such as the audience or the end user. You are marketing your idea to businesses who will produce it. I once spent several days of my time researching a new way to create stronger substrates for microprocessors. I had no experience in the field, but I knew that it was a great idea, and it was technologically sound. But when I submitted the idea to the company that I worked for, they gave me a puzzled look and asked what I wanted them to do with it. They didn’t work in that field. So the next time I seriously researched a new product, which was a way to harvest DNA, I made sure that it was in an area that we worked in, and I got advice from someone actually working in the field.

How does this apply to the entertainment business? Not every studio can make action movies, or horror movies – they are specialties and studios do specialize. Book publishers specialize. And not every audience wants to see yet another minor refinement in an already twice-told story. Some studios don't do low budget movies. On the other hand, independents can't afford to do extravaganzas or movies that are heavy with special effects.

Third, money and resources. The obstacle that I ran into each time that I tried to start a business was money. It takes capital to get just about anything off the ground from scratch, and I didn’t want to go into debt so I dropped it. And it takes a major commitment of money and resources for any business to take on a new product.

Businesses have to consider a number of factors. It takes many personnel to begin production - will implementing the idea cost too much?  In a movie, are there too many expensive car chase scenes and too many exotic locations?  In a novel, are there too many pages? Readers won’t buy large books by new writers, so publishers won't print them. Will a new idea divert designers from other higher priority projects? Will this product take months to develop? Development time is expensive. Take time to find out about what businesses are looking for.

Businesses are expensive to run, and promoting things takes a lot of money. In order to put a movie studio project together, studios and producers have to find people who will be willing to finance the picture. Businesses often have to borrow money or find venture capital to start new products.

Fourth – can the business be protected from competitors? Can they buy the rights to the product from you in the form of a patent or a copyright? If not, then a competitor can create the same product or the same movie and sell it so the company doesn’t make enough money to recoup the cost.

Fifth through eleventh, a business is an entire organization, and without any one of these parts there is a major hole in the parachute: There are people to do the hiring, accounting, waste disposal, product design, management, marketing, manufacturing, sales, shipping, distribution... Without any one of these critical parts, the product can hit the ground.

Twelfth, profitability. Can the product sell competitively, cover all costs, and return a profit so that the employees can put food on their table, send their kids to college, and grandma's retirement nest egg (IRA) will continue to buy clothes to prevent her from running around naked in the deep winter snow? OK, let's not get carried away - grandma is a little demented and runs naked in the snow anyway.

How much is an idea worth? Whatever you can negotiate. Perhaps it will prove tremendously valuable and create a major business and thousands of jobs. But those "eureka!" moments don't happen often, and the US Patent Office is crammed with ideas that are really great but useless. Movie scripts and manuscripts are holding a lot of shelves in place - earthquake protection.

From a practical point of view, an idea might be worth one-twelfth of an expensive business process. So in royalties, that is about one-twelfth of the fifteen year (patent rights duration) profits. Or as a fixed settlement to avoid taking the risk of failure, possibly ten- to thirty-percent of the royalty figure. Consider this: sell at as high a fixed price as possible with the agreement that you will investment half the amount in the product so that you profit from the success of your idea.

For example, if a movie costs 5 million (very low budget) to produce, promote, and distribute, then the script is worth $42,000.00,*¹ which covers the three months it takes to write the script and the three months it takes to find another job. (The other five scripts that you wrote were an "education.") Invest half of that, $21,000.00, in the project so you can profit like everyone else from the outrageous success that you know it will have. Or take the money and run.

If it is a new product idea, then you may be able to leverage years of experience into a nice reward.

The important thing about ideas is this: Knowing the craft can help sort the really good ideas from the others, and help improve ideas so that they are real winners.  

- Scott

1 The Writers Guild minimum is $31,000 to 47,000 (with treatment), and is the minimum amount that a writer "should" receive for an actual sale, which is payable on the first day of production (filming), and is sometimes paid in installments. More often, scripts are optioned by production companies to provide them with a collection that they can choose from - very few optioned scripts are actually shot, so the writer locks up a script for 18 months for 10% of minimum ($3100.00).

The Writers Guild is the industry standard for rates for everyone (US) even though you must have sold a script to a Guild signatory (or gotten other credit) in order to become an offical member. Note that independent companies that are not Guild signatories (don't support Guild standards) sometimes pay less than guild rates.

If you want to know more about the "official" business end of the biz, visit the Writers Guild Web site at http://www.wga.org.

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