A Guide to Commercialisation Strategies for Generating Passive Income

Passive income can provide an excellent opportunity to generate more revenue with less effort and risk. To develop a successful commercialisation strategy, it is important to establish intangible assets that can generate passive income streams through the efforts of others.

Intangible assets are a key component of generating passive income. By allowing others to use these assets, much like renting out tangible assets such as real estate, you can generate passive income with a lower risk profile than deploying those assets yourself. Assets such as patents, copyrights, designs, and trademarks are prime candidates for licensing and should be high on the priority list for businesses seeking to increase their passive portfolios. Let's explore how recognizing and capitalizing on passive income opportunities can help you earn more for less.

The Benefits of Passive Income

A portfolio of intangible assets is an excellent way to build a solid foundation of passive income. By investing in technology development, software, content, and brands, and protecting your creations using appropriate intellectual property rights such as patents, copyrights, and trademarks, you can create opportunities to leverage your own intellectual property with low operational costs for passive, lower-risk returns.

Depending on your business strategy, these passive income investments may be your primary income stream or may supplement your income from directly deploying your intangible assets in your home markets. Achieving consistent passive income can also help increase your enterprise valuation. These investments can also be used as low-risk returns that facilitate your investments in more high-risk R&D opportunities.

Become a Licensor

Once you have created your technology, whether that is an invention or software, you can start a licensing program to generate passive income. A license is effectively the right to do something that would otherwise infringe on intellectual property – so having your technology protected is a prerequisite. Even if your plan is to directly commercialize your technology in your home markets, you can still consider granting third parties the rights to commercialize it offshore.

Licensors earn remuneration, which might include royalties, upfront lump sums, periodic milestone payments, equity in the licensee, and access to future improvements. Choosing a good licensee and negotiating a balanced license agreement are essential.

Create White Label Products

White label products are unbranded products that are a great income generator for those with access to production facilities but don’t want the hassle and cost of marketing. This is a less passive option than licensing because you still need to produce the product and pass it on to a third party. However, the third party is responsible for generating sales, and you're only responsible for producing a product that is in demand.

You can also think about white-labeling your software to a third party with a specific clientele. For example, if you have created sales training software, you could consider licensing it to a management training company for them to offer it to their client base under their own brand.

Rent Access to Your Data

If your business involves the creation and maintenance of a database where the data would have value to third parties, you can establish a business providing secure access to that data. It is crucial to have terms and conditions in your customer contracts that permit the use of data obtained from them or their use of your products or services in this manner.

Create Online Content

Creating informative, insightful content, whether in the form of podcasts, video updates, or blog posts, is an excellent way to generate a passive form of income. Once you’ve built up a following for your content, you can start to generate income through advertising inventory.

The relationships built through podcasting and video creation are likely well worth the time; however, blog posts are our first choice of content to invest in. Blog posts are less labour intensive and (if optimised well) can generate web traffic to drive customers and, in turn, conversions. If your blog has enough interest, you can even start to sell advertising inventory for an easy way to make a dollar or two online.

Get the Most Out of Your IP with Innovation Liberation Front

If you’re keen to get on top of your IP portfolio, Innovation Liberation Front can help. When it comes to IP strategy and commercialisation, ILF can help to carve out maximum potential. Check out our Beyond IP programme powered by Callaghan Innovation. Whether you’re keen to generate passive income, build your brand and product potential, or ensure you’re free to operate as you like, get in touch with ILF today.