Intellectual property is the broadly defined category of assets that typically includes brand names, trademarks, copyrights, patents, knowhow, trade secrets, etc. They are barriers to entry for competitors.
Intellectual property businesses are often favored by Foolish investors because of the lightness of their business models. The great challenge in the first place is to build up property (data, branded stories, and characters, etc.) that is recognized and valued by customers. Having achieved this, businesses are often in a position to earn outsized profits through proper management of the properties: adding to them, deploying them into more channels, cross-fertilizing multiple properties. Well-managed intellectual property businesses therefore often achieve higher profit margins.
Related Fool Articles
Recent Mentions on Fool.com
- Top Franchises: Investing in Red Robin Gourmet Burgers
- Is Activision Blizzard's "Destiny" a Flop?
- GlaxoSmithKline Keeps Setting Records, but Not in a Good Way
- Why the iPhone 6 China Delay Could Hurt Apple
- Organovo Holdings Inc Stock: 3 Crucial Pieces of Information Revealed
- Could This Wonder Material Help Samsung Crush Apple?