Ottawa entrepreneur works to perfect the art of the deal

Pat McGowan believes the term “sharing economy” is a misnomer, and he’s not shy about saying so.

There’s a lot of talk about the sharing economy out there, and I think that some of that rings a little hollow,” says the Ottawa entrepreneur.

“What we see is these large companies creating massive amounts of wealth at the apex of their corporate hierarchies – but the workers are not getting any advantage from that situation.”

Mr. McGowan says artists, musicians, filmmakers, photographers and other labourers in creative industries often don’t have the time or expertise to fight for their fair share of profits from their work. Many of them receive no royalties at all, he explains, earning a salary while watching people further up the production chain get rich.

“People are getting paid less and less, and you’re at the mercy of some pretty big market forces,” he says.

About 18 months ago, with his film production company inMotion in a state of upheaval, Mr. McGowan started looking at other ways to make money. He began selling his videos to platforms such as Shutterstock, earning royalties each time a clip was used.

“I’ve managed to take my intellectual property, which is mostly wildlife cinematography, and convert that into a commodity and do very well financially,” he says. “So I said, ‘Well, if I can do that, other people can do it.’ I looked at the whole thing, and I said, ‘We need a paradigm shift.’”

The result is Mr. McGowan’s latest enterprise, BlackBox. Launched in late July, the online platform acts as a virtual marketplace where content producers of all kinds can sell their work, connect with potential business partners and collaborate on projects.

Using software designed by co-founder Tim Trinh, BlackBox shops members’ work to a multitude of media platforms, such as Netflix, Shutterstock and YouTube. It negotiates and collects royalties on any sales and deposits the funds into members’ accounts.

“This is an egalitarian business model that any creator anywhere on the planet can take advantage of,” says Mr. McGowan, whose own artistic career included a stint as keyboardist in a popular Ottawa rock band called the Crayons in the 1980s. “It offers the same earning opportunities to every single member, no matter where they live.”

He says the system ensures that all members’ intellectual property rights are protected and that everyone who signs on to a rights agreement receives a proportionate amount of revenues.

“Traditionally, rights holders tend to aggregate at the top (of the pyramid),” Mr. McGowan says. “Not here. There is no hierarchy. What I aim to create is a company where people are actually able to get their fair share of the work that they do from a value-laden market.”

Membership in BlackBox is free, and Mr. McGowan and his partners take a 15 per cent cut from each transaction. The platform already has members from Asia, Europe and the United States and began generating revenue only three weeks after launch, he says, far sooner than he had projected.

“When I saw those first sales come in, my wife will tell you, I was doing backflips,” he says with a grin. “Not a lot of money, but it worked.”

Mr. McGowan predicts BlackBox will hit 100,000 members within five years and says he believes his company’s share of the platform’s total sales could reach $100 million by then. Several “noteworthy” local investors have taken notice, he adds, and he scoffs at doubters who think the concept sounds too utopian for the real world.

“They’re going to think I’m a commie,” he says flatly. “I’m not. I’m a businessman.”

With an estimated $10 billion in artistic content available today on the Internet, he says, the pie is big enough to feed more than just those at the top of the food chain.

“Everybody shares – and what’s wrong with that?” Mr. McGowan says. “An egalitarian business model is much better than a usery, capitalistic business model in the digital world. And it hasn’t been done yet.”

It’s a great idea in theory, says Ottawa entertainment lawyer Mark Edwards. But he thinks many content creators will be reluctant to simply hand over their work to a third-party agent with no guarantee of any return.

“How many people are willing to spend two months working without pay?” he says. “Most people would only follow that kind of model in their spare time. It’s never going to be their day job because they need a (pay)cheque at the end of the week. Most of the product in the world is and will continue to be produced by individuals who conceive of the thing to be built, who put together the financing … and who develop a market and sell it. Everybody else will contribute to it on the basis of a payment for services rendered. That’s how the world works.”

However, Mr. McGowan says that once people grasp the concept behind the plan’s revenue-generating model, they quickly see its potential.

“It takes a little bit for them to understand that this is a good idea,” he concedes. “We’re talking about a longer-term return.”

James Bowen, a professor at the University of Ottawa’s Telfer School of Management, says BlackBox’s biggest challenge will be in convincing potential members it has the marketing muscle to properly promote their products. If it manages to do that, he thinks it stands a good chance of succeeding.

“If (Mr. McGowan) has the contacts and he can help increase the likelihood of the upside, sure, I’d be interested in it if I was a musician or artist or whatever,” he says.

“Young people today are more familiar with the concept of trying to be more entrepreneurial, trying to be more risk-taking, doing things on the side, crowdsource funding, et cetera. So that entrepreneurial mindset of taking a risk and trying to get something on the upside, it’s there.”

But finding buyers to generate that upside will be easier said than done, Mr. Edwards contends.

“You can be on iTunes, as millions of games are, (but) have no visibility and no revenue,” he says. “Merely accessing a distribution channel is not in and of itself a predictor of sales. That really is a very, very important and difficult problem to solve. It’s very difficult to get a broadcaster to pick up your show. It’s not difficult to get your show or your film on YouTube, but it’s very difficult to find an audience for it.”

Mr. McGowan remains undaunted. Although the platform is still in its infancy, he says he can see a day when even full-length feature films will be produced by crews that came together through BlackBox.

“Do you want to do a $200-million film this way?” he asks rhetorically. “I wouldn’t recommend it in 2016, but we’ll be able to do it in 2021. We can now become collaborators and co-owners of the outcome. That’s a joyous thing.”