FRAPA entered 2011 — and its second decade at the epicentre of the global trade in formats — with a package of new services, including what is thought to be the world’s first format-rights price calculator.
Available free to FRAPA members, the online calculator has taken six months to perfect and is based on input from some of the format world’s most experienced brokers and traders. The collaborative project was driven by Erik de Winter, marketing and sales director of Absolutely Independent, the Amsterdam-based format specialist established by FRAPA board member Patty Geneste.
The idea for a price calculator was not “a light-bulb moment”, De Winter says, but a gradual realisation that many FRAPA members have no real understanding of how to price their IP on the open market — or even who to turn to for this sort of nuts-and-bolts commercial advice. The problem is particularly acute for smaller companies, whose inexperience and lack of financial clout leaves them vulnerable to exploitation when venturing into unknown markets.
“The idea is to prevent FRAPA members from undervaluing their format rights and getting ripped off as a result,” De Winter said. “We want to give them an indication of what the common license fees are in key markets and provide them with a tool to use in their negotiations with larger companies.”
But like many things that sound simple in theory, realising the price calculator has been a complex task. Valuing a format is not, De Winter points out, a precise science but a confluence of numerous factors, from territory and type of show to length, run and time slot.
“There are almost endless variations,” he said. “We could have gone on adding models to the programme, but you have to stop somewhere. Also, we didn’t want to create a cartel or introduce a system of fixed prices. If the market wants to pay over the odds for a format, we don’t want to stop it. We just want to make sure people get a fair price for their IP.”