Advice for investors in the securities, royalties or franchises of companies marketing to the following population segments, assuming a continuation of current popularity.
Health:
Improvement or maintenance of bodily functions or disease treatment or prevention. Companies can sell products or services at high profit margins due to their personal importance to customers. Third-party payment eliminates price being of direct interest to customers.
Entertainment and hobbies as a distraction from present reality:
Literature, music, theatre, cinema, game playing, gambling, professional spectator sports, and social media all require a concentration of the participants’ attention. Technology permits 24/7 activity and non-personal involvement of those interacting with the customer.
Fashion:
Enhancement of customers’ personal appearance ranges from cosmetics to apparel and is influenced by those receiving public attention. Influencers can be retained by merchants and producers of goods to promote acquisition and use. Fashion products may have a short period of attraction and sell at premium prices.
Sex and pornography:
Sexual activity is desired, to the point of craving, by a significant segment of the population and is stimulated and exploited by those offering personal enhancement products or services and locations permitting and intensifying desire of sexual activity. There is a natural reproduction-based relationship between fashion and sex for both males and females.
Education and Self-Improvement:
There comes a time when the relationship between education and income becomes recognized, and businesses, including institutions of learning, offer products and services to those wishing to improve their lives. Technology now permits education to be offered internationally, 24/7, with campus attendance being of less importance than was previously the case.
Hate, Politics and Religious Beliefs:
The websites offering contact with those of similar fear-based concerns attract fierce constituencies. These sites typically urge viewers to join and prepare to take actions against that which threatens the individuals and society. Some of the sites are elaborate and professional while others are self-produced. The identity of viewers can, if sold, be a source of income for those offering services.
Where possible, it will be in the investor’s best interests to propose to privately-owned companies seeking capital that revenue royalties are a better source of funding, because investing in the company’s defined revenues avoids the inherent conflicts between business founders/managers and equity investors. Revenue royalties are both non-equity dilutive and non-adversarial because the royalty investor is not concerned with executive compensation or policies. Both the investors and the owners of the company usually wish for a growth in revenues.
We can help both investors and business founders in the structuring of revenue royalties meeting the needs of the royalty issuing company and investors.
Arthur Lipper, Chairman arthurlipper@gmail.com
British Far East Holdings Ltd.
