Million Dollar Idea

July 13th, 2007

Here’s your million dollars right here: it’s called Splittr (or perhaps something else, but let’s just say).

The Creative Commons by-nc license is great for non-commercial collaboration – tag your content with this license and you indicate to everyone that you’re happy for other people to use it in derivative works as long as it’s non-commercial and as long as they credit you. You’re both protected (maybe: some would argue this) by the boilerplate legalese that license represents. Creativity is lubricated, stuff gets made, everybody’s happy.

But what about the commercial end of things? How do you sell that stuff? For instance, let’s just say a guy named Spiff makes a bunch of music videos using my music. Then maybe Spiff and I want to put those videos on Revver and share in the profits. Or maybe I want to invite fans to create T-shirt designs that I then sell on CafePress, giving them a cut. Or maybe Len wants to create and sell a JoCo coloring book on Lulu. All this stuff is possible (and some of it has happened), but there’s too much friction – the creators involved need to agree on a split and handle all the accounting, paypal-ing money around as it comes in. Sometimes there’s a legal document involved that comes from the Revver or the Lulu or the CafePress, but it’s usually not made for content that has multiple owners. And to be safe and smart, the collaborators might want to be protected by some kind of legalese as well, maybe codify their collaborative relationship so they can enter into these kinds of agreements.

This is where Splittr comes in. Spiff and I both sign up and create individual profiles, to which we can upload CC-licensed content. If we create some CC-licensed collaboration that we’d like to sell, we then use Splittr to create a JocoSpiff entity, a little micro-partnership that just applies to this specific content. We can then sign up (and enter into agreements) with Revver as JocoSpiff. Big bucks flow into the JocoSpiff account and Splittr distributes those moneys to Spiff and Joco (keeping a cut). Other sites that want to use this content in a commercial way can find and contact us through Splittr, make us an offer, and Spiff and I can opt-in if we like. Now the commercial side of all this Creative Commons content is just as lubricated as the non-commercial side. Stuff gets made, MONEY gets made, everybody’s happy.

This already exists, right? Someone’s working on this?

33 Responses to “Million Dollar Idea”

  1. MCM says:

    I’ve come across a few groups that are doing this kind of thing (I dabbled in it myself). Technically speaking, it’s a dead-simple thing to program… the biggest stumbling block is that usually the creators all want different things from the system, which makes it impossible to actually build. As much as it’s a social sorta idea, it needs a strong top-down “this is how it goes” philosophy. There’s also a trust issue involved, since the money goes into a single account and is split from there…

    On the other hand, if anyone wants to give it a shot, just tell me where and when and I’ll pitch in design, server space, programming etc to make it go. This is one of those things that the web really needs done right.

  2. Dean says:

    While technically this is do-able, I would think it would be a financial nightmare if you had to register and pay for each paypal/visa/whatever account created with each agreement. The Splitter would have to have one master account with each money dispersing agency and then keep its own tracking and dispersal method from there. The rest would be pretty easy to set up, but the regulations on collecting and storing data that has legal implications (contracts, etc) is pretty strict. So, startup capital for off-site data storage would be needed.

    Now that I’m thinking about it.. Yeah, this is a good idea. Especially because the number of Creative Commons participants is growing (Thanks RIAA) and these people still need to eat.

  3. Jason says:

    That’s a nice idea. What if, instead of having to re-sign up to the site as a “combined” entity, you could simply tag an item with the percentage split between the two initial accounts. What I’m imagining is sort of a CC store in which you usually get 100% of the proceeds (minus the site’s cut). Let’s say, however, that when you enter an item into the inventory (a T-shirt, for instance), there is a simple way to indicate “oh and put half of the money into Spiff’s account because we made this together.

  4. Len says:

    Squidoo has the start of something like this (that is, one place to show off all your wares and count up all the money – from Cafepress, Ebay, etc). But so far, it’s only for one user, not multiple users.

    Cool idea! I am in! When it’s developed, that is.

  5. Len says:

    MCM, the revenue split could be a program that automagically splits up the revenue based on the creators agreed upon terms. I’m no programmer, but that shouldn’t be too hard to figure out.

    Let me throw my hat in the ring that if anyone wants to start this, I’d be happy to do the logo and design for it. Hell, I’d even help on the marketing end as well.

  6. Jason says:

    I just realized, that when someone *does* make this site, the first thing they will have to do is set up a Splittr account for Splittr, so they can send you some of the income.

  7. Dean says:

    The multiple part of it comes from the first web form. The originator would have to enter the number of partners. Each would get assigned an ID associated with the agreementID. Then there would be a slidebar for each partner that would only allow a sum of 100% for the total. The originator would slide his slidebar to say 65% and the other slide bar(s) would split the difference to sum total to 100% at the bottom. If the other partner(s) agree, they click the checkbox agree. If they disagree, they move the slidebar to what percentage they would like and then click “Counter Offer”. Then the originator can agree to that or slide the bar to something else. Once someone clicks agree then the percent numbers are stored and the rest of the process is finished.

  8. Dante says:

    May I just say, as a non-geek, I truly do believe that geeks can run the world. I’m impressed.

  9. manstraw says:

    so who registered splittr.com last June? bleeding squatters ..

    I like this idea quite a lot. Like, A LOT. I’ve thought about something like this before, as I find myself helping people I’ve never met in real life, and sharing revenue from a project is ultimately something I do knowing the other person’s laziness (not greedyness) will result in them never getting around to paying me properly. And I’m just a guilty when it comes to procrastinating.

    Seems dead simple. Each person Joco, Manstraw having a participant account on notsplitter™. Each project has participants for revenue sharing, which whatever percentage is agreed upon, or perhaps even a model where some people get a fixed amount, and others get a remainder. It really doesn’t matter, it’s all trivial to set up that aspect of it.

    notsplitter™ really need to be a lot like an online bank, the likes of paypal. And thus comes the more difficult part. Liability, indemnity etc. this is not for the faint of heart. Actually, paypal are the people who should implement this. Are they reading?

    I’d talk to a regular old bank, and see about the logistics of setting up an appropriate account, and the legal/bureaucratic requirments of it. Those nigerian folks seem to have no problem with this sort of stuff.

    to do a poor man’s version of this ultimate means operating through a paypal type service. participants each have a paypal account. notsplittr™ has a paypal account, and receives money for disbursement. but can they? do paypal’s terms allow for that. it might be worth exploring as a proof of concept. joco can be the ginnea pig.

  10. [...] Coulton, one of my new favorite musicians, posted a really interesting idea on his blog [...]

  11. Spiff says:

    I love the idea (obviously). I’ve got a bunch of buddies who worked Verisign then moved over to PayPal. I’ll point them at this post to see if they’ve got any thoughts on it.

  12. Dean says:

    and profitslide.(all) is open too

  13. Peter Jaros says:

    There’s no *need* (at least at first) to actually handle any money. What we really need is a CC-style clearing house for legal boilerplate agreements. You just want to be able to quickly and simply license your work (like CC) for commercial purposes with royalties (unlike CC).

    Actually handling the money would make it much more powerful, but I think it would be useful without that, and it would be easier to get started without getting into banking and lawyering at the same time. :)

  14. PonderousMan says:

    JoCo, this shows that your genius is not limited to your music…

    I hope the PayPal folks (or Squidoo or someone) takes the bite, and they really will need to give you a cut!

    (Thank goodness for the self-documenting nature of blogs… but if I were you, I’d go find a cheap patent lawyer and patent this idea ASAP…)

  15. Dean says:

    JoCo is utilizing Harry Harrison’s “Toy Shop” idea. He secures the idea (by use of the blog) as his and then throws it out there for others to develop and perfect (on his blog). Once all the kinks are worked out, he gets to be a big part, or only part, of the new business. Very genius indeed.

  16. manstraw says:

    liability and indemnity are still an issue with a credit card processing services. but they are a good ‘middle ground’ place you can start. be sure you can use the same account for tangible and non tangible goods. fees are higher with that sort of service than if you had your own merchant account.

    but the one thing I don’t believe will work out with a clearing house situation is the money split. they won’t be williing to take that on. I don’t think it’s possible to do this service without handling the money yourself, in some capacity. if someone can explain a way, i’m all ears.

  17. Dean says:

    I remember something about some of the banks in (I hate) California that would process payroll for their business customers. Why not have a bank be the collection and clearing house for money coming in from paypal and visa and schtuff (for a percent fee) and cut checks once a month to the people involved based on the spreadsheet export (or program we give them) provided by the contracts program?

    Gotta Development meeting to go to now, so have fun hashing it out.

  18. MCM says:

    Poor man’s Splittr: sign up with your PayPal account. Collaborate on a project with another use, and create a “sellable” item on the site that tags the two of you as creators, with a 50/50 split (easy example). The item gets a unique Splittr ID. Anyone that sells that item (depending on terms, it can either be a free-for-all or a by-permission-only deal) pays into the Splittr PayPal account, with the item ID as part of the transaction number. On the item page, the creators would see how many items had been sold (and how much they’d get after fees etc) and on their own page, they’d see how much of the money they personally get to keep. Have a monthly payment schedule to dispense the money, and you’re set! To make it better, you’ add more payment options etc both on the user side and the Splittr side.

    And then you’d also want to make a quick “make me an offer” form where the creators set quick terms for potential resellers. “We’ll only sell this shirt for over $10″ or “We won’t sell this shirt to people with purple shoes”. If I, as a reseller, find the item and want to give it a go, I fill out a form that outlines the conditions the creators set, and they have a quick-and-easy way to filter the options and choose their partners.

    We should make sure it works for physical good as well as conceptual ones. T-shirts vs. shirt designs. I like the idea of my local t-shirt shop being able to find new designs online to use easily, and have a frictionless conduit back to the artist.

    I’ll cover hosting etc if someone wants to try and figure out how we get around the “no trust me, it’s safe for me to hold all your money… I’ll pay you, honest” problem. It’s a big trust issue to let someone act as the middleman.

    Fundable.org does this kinda thing (in a different direction). How did they manage it?

  19. JC says:

    No question, if anyone ever makes such a thing, they will eventually get sued by somebody. Though that’s pretty much true of any website dealing with IP these days. That said, I’m sure there are a million draconian phrases you could put into a EULA that would protect you to some extent.

    Seriously, someone should do this thing right away. How about CommercialCommons? There’s two double-M’s in there! Mmmm!

  20. Spiff says:

    Feedback from my PayPal buddy:

    =======

    At first blush, it seems like an easy thing to do, but then there are a few challenges that come to mind.

    First, you either need to implement a full payment system or put your functionality on top of an existing one (or more) systems. I’m assuming the latter, since making your own payment service is a much bigger deal than the problem you’re trying to solve warrants.

    The main problem I can see is the number of people with their hands out for a piece of the cash. You’re still going to have to pay a minimum of N+1 transaction fees (where N is the number of people the $ is split among).

    Since Splittr wants to be in the middle, just running multiple transactions for each portion of the split is out (not to mention that it’s ghetto—the payer would see mulitple transactions, confusing them or telling them your split or both. So the main transaction has to land at Splittr and the service needs to take its cut and route the transactions to each of the parties.

    Now here’s the hard part. The main transaction is hit by a transaction fee, then Splitter needs to peel off its cut, then there’s going to be some cost to getting the money to each of the participants, each of which also has a transaction fee of some sort.

    You could minimize it by sending checks or ACHing (usually the cheapest way to transfer money) to participants, but it’s still going to cost you. You could further minimize the loss by only sending the participants money on a set schedule or a minimum amount necessary to make it worthwhile.

    Now you’re in quite a bit of procedural pain. In order to do the first part, which is just split the money and run transactions, you need to apply for a license as a money transmitter, like Western Union. There are a bunch of regulations around this, and you’d have to comply. If you hold the money for any length of time, this gets more complicated.

    Assuming you take credit cards, because you’re going to have to, you’ll also need to pass PCI and a host of other audits. Even for a small company, this is enough of a pain that it would probably be someone’s full-time job.

    And in the end, if Splittr took off, it would be fairly trivial for PayPal to implement one level lower than you, offer better rates and a brand, and you’re in trouble.

    I think some of this can be overcome, but this “simple” idea is fraught with problems once you dig in to it.

    Oh, and heaven help you when there’s fraud. If Splittr gets a chargeback, and it’s already sent the money on to the participants, then what? In the best-case scenario, you have to get money from each of the participants’ accounts, which likely gets hit with even more transaction fees. And that’s the good scenario, where they’re all still around.

    If your fraud model isn’t good (and it won’t be for a long time), you’ll be left holding the bag for the whole amount.

    =======

    And a couple of the other PayPal guys are saying “Good idea, we can call it PayPal Groups. I think we should propse it to management and get credit for the idea. ;)

    I don’t think any of us really cares who gets the credit as long as we can use the service.

  21. Emily says:

    This is a fantastic idea and I love it. If it existed, I would use it today for creative projects. It needs to exist!

    I love it enough that I’m already thinking through 2/3rds of the backend design and thinking through how the usability model would work and where to add in some extra spiffiness. I am a programmer, and I’m fairly sure that some of the business issues could be worked out with a small amount of hoity cleverness. The credit card processing bit is a bit of a nasty snarl, but it helps to have someone writing code who is familiar with PCI…

    If this becomes a real project, I’d happily contribute some code muscle.

    Build it and they will come! And don’t forget to make it Web 2.0 out the wazoo!

  22. Colleenky says:

    From my husband, a web developer monkey:
    “There’s a real high barrier to entry, which is that you’d essentially have to be a bank, like PayPal, with all the associated legal and regulatory obligations. I think one of the commenters also hits it on the head when he says that different people would want different things out of it. If someone wanted to throw $40 million in VC behind this idea, I’d be happy to build it, but it’s really not feasible without serious start-up cash.”

  23. Don Marti says:

    Do you know John Buckman at Magnatune? Magnatune has a low-overhead music licensing system that might be a good jumping-off point for something like this. Magnatune’s business model is to let people listen to CC-nc music, then buy rights if they want more.

    BTW, you could probably get all the venture capitalist meetings you wanted if you promised to do the pitch as a song instead of a PowerPoint presentation.

  24. manstraw says:

    Don Marti, you are thinking outside the box with the song pitch idea. I love it!

    paypal should just do this. if they don’t, make them write a letter saying they will buy you if you do it first instead of just copying you. :)

    google likes buying companies and actually using them right? how about GoogleGroups™

  25. Roman Verzub says:

    The website NerdyShirts.com has something where you can submit t-shirt designs or ideas and they pay if you they use one, I realize that’s not quite what you’re going after, but it’s a start at least…

  26. glych says:

    Hey Joco…weren’t YOU a code monkey at one point? And wrote a song about it and stuff? I know you gave all that up to work on your fabulous music career but coder-ing a bit to perpetuate that fabulous music career just might win you a Nobel Prize. Or at least my undying love and affection (This would also work well for other creative enterprises like comic books where as many as 10 people can work on a single 32 page book).

  27. Marty Focazio says:

    What this needs is a legally defined Co-op (like Agway, ConAg, and similar entities), but webified for the instant formation of legal Joint Ventures for the purposes of media product distribution. Splittr is a framework to instantly form these legal Joint Ventures, wherein the JV is a legal entity like any other. When you join Splittr, you’re becoming a limited partner in the co-op firm – the legal parent – to any JV’s you form. Splittr becomes the proxy for your transactions, is the payor and payee to the JV’s. As a co=op member you have a straight % that goes back to the co=op for your admin overhead. Quickforms.com has examples of the legal form process – it’s painless.
    How it works:
    Creator of IP joins Splittr as a coop member. Creator of IP submits desired Terms for IP to Splitter. User of IP joins Splitter as a coop member. Finds IP, agrees to terms (or negotiates terms). Upon agreement, a legal JV is formed between 2 or more Splittr coop members. JV is a subsidiary org of Splittr coop with coop members serving as shareholders.Splitter is always the parent of the JV. Splitter coop accepts and distributes payments to coop members per terms of JV. Splitter coop is the “owner” of the legal entity.

  28. CurtisP says:

    The programming side isn’t all that difficult. I’m a business programmer myself, and my job has pretty much always been customizations to keep everyone happy.

    I’d almost certainly use paypal as the medium. I suppose the role of splitr would be as a broker, although the money would be moving through a single paypal account.

    The transaction fees could be killer though. I’ll have to think on it some more.

  29. xadrian says:

    Guru.com is a freelance site that has something that might be useful for this idea; SafePay. It would need tweaking, but I’m sure the idea could be fairly concrete.

    Instead of using paypal or checks, Guru has puts everything in escrow when a client wants a job done and they’ve accepted a bid from a freelancer. Then when the job is complete, the freelancer is paid out of the escrow.

    So, what you could do is go into a CC project with both parties agreeing to the payout. Let’s take JC and Len as an example. JC records a CD, Len illustrates all the songs off the CD. Each agreement creates a new “account.” JC’s CD is all his own, but he and Len create a new account and they link their “profiles” to it. Since JC is the Originator he has to approve Len. Once approved, there is now a “JC/Len – Thing A Week Coloring Book” account. If you buy one, the money you send goes to “splitter” into their escrow. At the end of each month, the escrow is released to the parties who’ve created the account.

    At least this way, not just anyone can glom onto the CC property just by dancing in their bedroom and making a video of it. The Originator has to approve the collaboration. It may defeat the purpose of CC, but it would at least limit the CC Payout. However, if someone didn’t mind, they could just approve every request that comes in. Let the “Splitter” database work out the splits. Ideally it’d all be 50/50 to avoid too many variables. Since JC is already getting 100% of the original song, anything additional should be a set amount. (Ok, maybe 70/30 or 60/40, let’s face it, there’d be no WWC vids or coloring books without those songs.)

    I think it’s a great idea and some folks are right, if Paypal was smart they’d jump on this. This would work really well for people selling their comic books online too as it would automatically pay the creators individually instead of sending one person an amount and letting them deal with it.

    Nice idea.

  30. “You’re both protected (maybe: some would argue this) by the boilerplate legalese that (The Creative Commons by-nc) license represents.”

    I urge you to *register* the copyright and then proceed to license the work, using your favorite licensing terms. The parts of the publishing industry that routinely pirate work know full well that most creatives don’t register their copyrights, and that the remedies available are trivial because of that failure to register.

  31. JC says:

    Walter: yes, to clarify, I didn’t mean that CC protects you in the same way copyright does. I meant that the creator of a derivative work who complies with the requirements of the CC license is protected in that they know they are not doing something illegal, and the owner of the original work’s copyright is protected in that they can specify some kinds of use not allowed under copyright without losing the protection of copyright entirely. Many would argue both points, and as far as I know the CC licenses are as yet untested in court.

    But I agree with what you’re saying: CC licenses do not replace copyright in any way.

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