Even though we speak of selling intellectual property products like ebooks and videos, what we’re really doing is licensing them. The information within isn’t actually being sold since no transfer of rights occurs. What’s being sold is a license to use that information, and often the license is limited to a specific purpose. You might also sell the physical media that stores the information, like a CD or DVD.
Licensing is more obvious with software which often includes a license agreement. You may have to agree to its terms in order to use the software.
In a broader sense, you can license your intellectual property to other entities, who can then exploit it to generate revenue, and depending on how you structure the deal, you can earn a cut of that revenue stream. This is what happens when you sign a publishing deal with a book publisher. They sell the book, and you receive royalties from the sales.
Some companies make millions from licensing their intellectual property for various uses. Look at the thousands of products with Disney characters on them, for instance. Disney earns a bundle in licensing fees for those products.
Could you create the next Mickey Mouse?
Here are some more examples of what you can do with intellectual property:
Design a t-shirt, and license your design to a
T-shirt company in exchange for a small cut of the sales.
Take some scenic photographs, and license them to a postcard publisher
Record some relaxing music, and license it to
people who sell meditation audio programs
Write a new iPad or iPhone app, and sell it through iTunes
Write an ebook, and sell it through Amazon.com
Invent a cartoon character, and license it to a toy company to create stuffed animals
Don’t let the word licensing scare you. Licensing simply means “giving permission.” Normally when you license work you created, you and the other party will sign a contract to spell out the terms. You can have a lawyer draft one for you, find boilerplate agreements online, or create your own.
Our goal is to find multiple income streams, and the more passive the better.