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A lingering question after my recent Medium Shift column for The Information is whether “Steamboat Willie” Mickey Mouse entering the public domain is significant. In the 95 years after the cartoon first appeared, Disney animators have changed Mickey’s body shape, added pupils to his eyes and gloves and oversized shoes. “Steamboat Willie” was pie-eyed and in black-and-white. Whereas, modern Mickey Mouse is identified by “his iconic red shorts, yellow shoes, and white gloves.”
Very few Americans were alive when “Steamboat Willie” was released in 1928. In that sense, it is a niche business opportunity. An original business idea with “Steamboat Willie” is going to have to stray far from both the Disney brand and its legal barriers in order to succeed. Disney’s lawyers have exploited both copyright law and trademark law to protect the company’s legacy, including adding “Steamboat Willie” to its trademark. “Steamboat Willie” cannot be associated with Disney’s current Mickey Mouse, in name or illustration.
It is the first significant title to emerge with a wave of IP entering the public domain between now and 2040—including Superman (2034), Batman (2035) and Wonder Woman (2037). Exciting times seem to lie ahead for IP which has primarily been monetized in movies and TV.
But, within an attention-based medium like the internet, the question is whether new ideas will be worth anything to consumers and creators alike.
Key Takeaway
For popular 20th century intellectual property entering the public domain over the next decade (and beyond), blockbusters seem to be the least likely outcome. The IP will be worth something to audiences, but all available evidence suggests not enough.
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Total time reading: 5 minutes
Four “Back to the People” Models
Last month, I argued that the media conglomerate model of the 20th century is no longer capable of generating the same value for shareholders and consumers in the 21st century. Now, with major IP from the 20th century entering the public domain, the question facing media conglomerates is whether IP may be better monetized outside their walled gardens. These companies may be better opting for licensing business models that return characters and stories “back to the people”.
There are four broad buckets of “back to the people” models being funded by investors private and public:
Gaming (e.g., licensed third-party character “skins” in online games like Fortnite and Roblox)
Blockchain (e.g., non-fungible tokens (NFTs), memecoins)
Generative AI tools (e.g, learning language models that learn from data and produce content autonomously); and,
Creator economy (e.g., media companies partnering with influencers for promotion)
That essay focused on gaming and blockchain models. I concluded blockchain tokens and memecoins seem to offer a compelling case for greater returns on IP at a smaller scale.
Worth $0
The problem with early 20th century IP like “Steamboat Willie” is that fans with fond childhood memories of the character are mostly deceased. Fans of Mickey Mouse have Disney+ and Disney Theme Parks and Cruises to engage with the updated versions of Mickey. By circumstance and by design—its release was delayed by a copyright extension law passed by Congress in 1998 known as “the Mickey Mouse Protection Act”—“Steamboat Willie” enters the public domain with little-to-no brand recognition or audience demand.
There probably will be almost no nostalgia for The Marx Brothers’ 1930 comedy "The Cocoanuts", which will enter the public domain next year. For new versions of either IP to break through, a new generation of creators will have to reimagine the old analog ideas for this new retail-first, consumer-first and digital-first culture. Until or unless they do, the IP is worth $0 because there is little-to-no demand and there is a lot of competition for attention from creator-driven platforms like YouTube and TikTok.
Worth Something
That may be both a logical and an extreme conclusion. Filmmaker Rhys Frake-Waterfield last year produced “Winnie-the-Pooh: Blood and Honey” for $50,000 and earned over $5 million at the box office. A sequel is in the works for later this year. Inspired by that strategy, filmmaker Steven LaMorte is working on an untitled comedy horror adaptation with a masked killer dressed as Willie Mickey. A horror version of “Steamboat Willie” is available for download on Steam. There are viable business models, even if they do not produce blockbuster results.
It also seems there inevitably will be some demand from creators and audiences alike for new stories told with new technologies using the original versions of Superman, Batman or Wonder Woman. Memecoins using these characters seem feasible 10 years from now, too. But, these are best guesses based on available technologies.
Walking through the four “back to the people” business models, it is unlikely—but not impossible—that in a decade we will see blockbuster outcomes like the major movies or TV shows of the past four decades. The easiest conclusion is that for both creators and consumers, this IP will be worth more something but less than blockbuster movies like the “Justice League” movies of the past two decades.
Worth More Than Today
If the media conglomerate model of the 20th century is no longer capable of generating the same value for shareholders and consumers in the 21st century, can a new, “back to the people” model can replace it and deliver bigger returns? To put it in simpler terms, can a “Steamboat Willie” video get more views and earn more money than existing Mickey Mouse TV shows and movies on Disney+?
In gaming, the odds seem random. In 2023, Warner Bros. Discovery earned $1 billion from “Hogwarts Legacy”, an immersive, open-world action role-playing game set in the world first introduced in the Harry Potter books. But, it recently reported that it lost $200 million on its recent release of the third-person action shooter console game “Suicide Squad: Kill The Justice League”. With console growth flat and budgets for blockbuster titles growing, it is becoming more unlikely that we will see the blockbuster gaming successes of the past.
Blockchain seems to be the best bet given its model is predicated on markets driving the price of a token from $0.01 to over $1,000 (and in the case of Bitcoin, over $60,000). But looking at a media crypto offering like Bored Ape Yacht Club (BAYC), it is a risky bet. Yuga Labs—the startup behind BAYC—raised $450 million at a $4 billion valuation in 2022., In September 2021, a Bored Ape was auctioned by Sotheby’s for a little over $24 million. As of May 1st 2024, the floor price of BAYC tokens are now down 90% from May 2022.
As for generative AI and the creator economy, will text-to-video or a creator be able to produce a “Superman” content at a fraction of the $225 million budget of “Man of Steel” but deliver over $450 million in revenue (which at $291 million in box office gross, “Man of Steel” did not)?
The reasonable answer is no. Harvard Business School professor Anita Elberse argued in her book “Blockbusters”, “Smart executives bet heavily on a few likely winners. That’s where the big payoffs come from.” But, neither the creator economy or generative AI model are executive or blockbuster-driven models. In the case of the creator economy, as Samir Chaudry of Colin & Samir told me in a recent interview, "the media unlocks other business opportunities." Jimmy Donaldson aka MrBeast has a bigger business in chocolate bars (Feastables) than he does in YouTube videos).
10 Years!
Valuable 20th century IP entering the public domain will result in creative freedom at a time when billions of smartphone owners have creative tools at their fingertips. But, the process will not result in business models that will incentivize creators to pursue business models with the IP. Audiences at scale place less value on IP that had mass appeal in the previous century. We are left with the uncomfortable conclusion that blockbusters seem to be a relic of decaying linear and theatrical business models.
That said, we are also asking what will happen in 10 years. TikTok, the most significant paradigm shift in media, only emerged seven years ago. It now has a $20 billion annual run rate, but creators have difficulty monetizing on the platform relative to YouTube. So, the safest bet may be to sit back and wait for the next major paradigm shift.
But, unlike in TikTok, there is money for creators in blockchain and other creator economy business models. There is no evidence to rule out gaming as a business model for creators, either. The only true question mark seems to lie with generative AI, and that medium presents a thicket of legal issues without a resolution anytime soon.