Paul Baharet
Securitizing Narrative, Empowering Creators
Abstract / Executive Summary
This paper details the "Story-Stock," a novel financial instrument engineered by the InHouse Platform to revolutionize the funding and valuation of creative works. Defined as a regulated security representing fractional ownership in the potential revenue streams of a specific, published creative project (such as an investigative report, an illustrated novel, or a documentary), the Story-Stock directly addresses persistent funding gaps faced by creators while offering investors a unique, impact-aligned asset class. Key features include the potential for holders to receive dividends derived directly from the associated content's revenue (primarily advertising, potentially licensing or merchandise), optional pathways for liquidity including a secondary market and a unique reserve-backed buy-back mechanism for certain structures ("Opt-In"), and operation within a compliant framework. By transforming narrative content into an investable asset, the Story-Stock aims to align the incentives of creators, investors, and audiences, fostering a more sustainable and accountable ecosystem for valuable creative endeavors. This document provides an in-depth explanation of its definition, lifecycle, core mechanics, and value proposition.
Introduction
The landscape of creative work, encompassing vital investigative journalism, compelling narrative arts, and other forms of impactful content, perpetually faces challenges in securing sustainable funding. Traditional models—reliant on fluctuating advertising markets, limited philanthropic grants, precarious patronage, or standard financial instruments ill-suited for project-based creative endeavors—often leave significant potential untapped and diverse voices under-resourced. This gap highlights a critical need for innovative mechanisms that can bridge the divide between creators seeking capital and supporters or investors seeking both meaningful impact and potential financial returns.
To meet this challenge, the InHouse Platform introduces its core innovation: the Story-Stock. This purpose-built financial instrument is designed specifically for the creative economy, offering a novel method to fund individual projects by treating them as distinct, investable assets. It represents a fundamental shift from merely consuming or donating to content, towards enabling direct participation in a specific creative work's potential success through a regulated, transparent framework. The story-stock aims to empower creators, provide unique opportunities for investors, and ultimately foster a more resilient and equitable environment for the production of valuable narrative content.
This white paper provides a comprehensive, in-depth explanation of the Story-Stock paradigm. Its objective is to clearly define this new asset class, delineate its lifecycle from the initial creator's pitch through issuance and potential trading, detail its core operational mechanics, and articulate its specific value proposition for both the creators whose work it funds and the investors who support them. While functioning within the broader InHouse ecosystem (a subject explored in related documents), this paper focuses squarely on the intricacies of the story-stock instrument itself.
Understanding this central mechanism is key to grasping the InHouse model's potential. We begin by formally defining the story-stock and positioning it relative to existing financial and digital assets.
Chapter 1: What is a Story-Stock? Defining a New Asset Class
At the heart of the InHouse Platform lies a novel financial instrument engineered to bridge the worlds of creative content and investment: the Story-Stock. Understanding its unique nature is fundamental to grasping the InHouse model.
1.1 Formal Definition
An InHouse Story-Stock is conceived as a regulated financial security representing fractional ownership in the potential future revenue streams generated by a single, specific, published creative work. This could be an investigative journalism series, an illustrated novel chapter, a documentary film segment, or another distinct piece of content funded and hosted within the InHouse ecosystem. Each share of a story-stock entitles the holder to potential pro-rata distributions (dividends) derived from the revenue directly associated with that specific creative work, as well as the potential for capital appreciation should the perceived value of the underlying work increase and be reflected in a secondary market.
1.2 Comparison and Distinction: A Unique Hybrid
To clarify what a story-stock is, it is helpful to distinguish it from other familiar asset classes:
vs. Traditional Corporate Stock: Unlike conventional stocks which represent equity ownership in an entire company (like InHouse Platform LLC itself), a story-stock represents an economic interest tied only to the performance and revenue of one specific creative project. Its value is decoupled from the overall operational success of the platform company or the creator's broader career.
vs. Bonds: Story-stocks are not debt instruments. They do not offer a fixed interest rate or guarantee return of principal. Instead, they offer potentially variable dividends based entirely on the success of the underlying creative work in generating revenue, along with the potential for the share's value itself to fluctuate.
vs. Non-Fungible Tokens (NFTs): While story-stocks might eventually leverage blockchain for tracking (a technical implementation detail), their fundamental nature differs from typical NFTs. Story-stocks are designed and regulated as securities with defined economic rights (dividends) tied directly to the performance of an underlying revenue-generating asset (the creative work). Their primary purpose is investment based on that performance, not solely digital collectibility, proof of ownership for its own sake, or access/utility functions common in many NFT projects.
vs. Royalty Agreements: Traditional royalty agreements typically grant a passive percentage of revenue to a creator or rights holder. A story-stock represents fractional ownership of the revenue stream itself, is designed to be potentially tradable among investors on a secondary market, and offers potential for capital appreciation beyond the distributed dividends.
In essence, the Story-Stock is a unique hybrid: an asset-backed security where the underlying asset is the intellectual property of a specific creative work and its capacity to generate direct revenue.
1.3 The Underlying Asset: Creative Work as Value Generator
It is crucial to emphasize that the value proposition and financial performance of any given story-stock are intrinsically linked to the success of one specific creative work. The "asset" backing the security is the published content itself and its ability to attract an audience and generate associated revenue. Within the InHouse model, the primary anticipated revenue stream feeding dividends is advertising revenue directly tied to user engagement (views, clicks) with that specific piece of content, tracked via integrated platform tools. Depending on the nature of the work and future platform development, secondary streams directly attributable to that work (such as sales of related merchandise or specific licensing fees) could potentially also contribute to its dividend pool.
1.4 Legal Nature and Compliance Framework
The InHouse Story-Stock is intentionally structured and offered as a security under applicable U.S. federal and state laws (notably, interpretations based on the Howey Test, which defines investment contracts). This classification is fundamental to the model's integrity and necessitates strict adherence to securities regulations. InHouse plans to facilitate the offering of story-stocks primarily through established regulatory exemptions, such as Regulation Crowdfunding (Reg CF) or potentially Regulation A (Reg A+) later, which permit sales to a broad range of investors (including non-accredited) under specific conditions. This regulated approach, while demanding, is embraced as a core feature, providing essential investor protection through mandated disclosures, operational transparency, transaction limits for non-accredited investors, and the required use of SEC-registered intermediaries. This framework aims to build trust and position InHouse as a platform facilitating high-integrity investment in the creative economy.
Chapter 2: The Lifecycle: From Idea to Asset
A story-stock does not simply appear; it is the culmination of a structured process designed to vet creative concepts, secure community funding, and ensure editorial quality before issuance as a regulated security. This lifecycle typically involves several distinct phases within the InHouse platform.
2.1 The Spark: The Float Phase (Optional Validation)
While not mandatory, the journey for some projects may begin with a "Float." This feature allows creators (or even community members) to propose a basic story idea or concept with minimal initial commitment. Other users can then signal interest, provide feedback, and potentially pledge non-binding support. The Float serves as an optional, community-driven validation mechanism, allowing creators to gauge potential traction and refine their ideas before investing the effort required for a formal Pitch.
2.2 The Blueprint: The Pitch Phase
The primary gateway for creating a story-stock is the formal "Pitch." This involves an author submitting a comprehensive proposal through the InHouse platform, detailing:
Project Description: A clear articulation of the creative work planned (e.g., synopsis, outline, scope).
Execution Plan: How the project will be completed, including methodology (if applicable, e.g., for investigative work) and anticipated timeline.
Author Credentials: Relevant background, experience, and portfolio of the creator(s).
Funding Goal & Budget: The specific amount of capital required to complete the project, ideally with a basic breakdown of how funds will be used.
Disclosure Information: Crucially, the Pitch must include information provided accurately and truthfully by the author, covering aspects necessary for potential regulatory filings associated with the story-stock offering (as discussed in Chapter 1). This includes acknowledging potential risks or challenges.
Before a Pitch is made available for funding, it undergoes an initial editorial pre-vetting by the InHouse team. This review assesses basic feasibility, alignment with the platform's content standards and ethical guidelines, and clarity of the proposal, ensuring a baseline quality for projects presented to potential investors.
2.3 The Backing: The Funding Phase
Once a Pitch passes pre-vetting and goes live, it enters the funding phase. Registered users on the InHouse platform can review the detailed Pitch information. If they choose to support the project, they can pledge funds directly towards the funding goal using their integrated InHouse wallet. The platform provides transparent tracking, showing the amount raised relative to the goal and the time remaining in the funding period (deadline).
2.4 The Genesis: The Issuance Phase
The transformation from a funded Pitch into an actual story-stock asset is contingent upon two critical triggers being met:
Funding Success: The Pitch must achieve or surpass its stated funding goal within the specified deadline. If it fails, pledged funds are typically returned to users' wallets.
Final Editorial Approval: Independent of funding success, the completed creative work (or potentially a finalized, detailed production plan for certain project types) must undergo and pass a rigorous final editorial review by the InHouse Journal team. This ensures the final product meets the platform's standards for quality, integrity, and aligns substantially with the project pitched to investors.
Only when both these conditions are satisfied does the platform formally issue the story-stock. This typically involves:
Standardized Issuance: Minting a set number of shares for the specific project (e.g., 1,000 shares is the planned standard).
Price Calculation: Determining the Issuance Price per share, which simultaneously sets the Floor Price for subsequent secondary market trading. This is calculated transparently as: Issuance Price = Total Funds Successfully Raised / Number of Shares Issued
Allocation: Distributing the newly issued story-stock shares to the wallets of the investors who backed the Pitch (pro-rata based on their contribution) and, if applicable under the author's chosen equity option (see Chapter 3), allocating the agreed-upon equity stake to the author's wallet.
At this point, the creative concept, having been validated, funded, and editorially approved, becomes a distinct, investable asset within the InHouse ecosystem, ready to potentially generate dividends and participate in market activity as detailed in the next chapter.
Chapter 3: Core Mechanics - How Story-Stocks Function
Once a story-stock is issued following a successful funding and editorial process (as detailed in Chapter 2), it becomes an active asset within the InHouse ecosystem. Its function and value proposition are governed by a set of core mechanics designed to facilitate potential returns, provide pathways for liquidity, and enable trading, all integrated within the platform's infrastructure.
3.1 The Dividend Engine: Sharing the Success
A primary mechanism through which story-stocks offer potential returns is via dividends. These represent a pro-rata share of the net revenue generated directly by the underlying creative work.
Primary Revenue Source: The principal driver for dividends, as currently designed, is advertising revenue. The InHouse platform's integrated Ads App tracks user engagement (e.g., impressions, clicks) specifically associated with the published story backing a particular stock. A predetermined portion of the revenue generated from ads displayed alongside that content flows into its dedicated dividend pool. This creates a direct link between a story's audience engagement and potential investor returns.
Potential Secondary Sources: Depending on the specific project and future platform capabilities, revenue derived from other sources directly attributable to that single creative work—such as a share of sales from uniquely associated merchandise or specific licensing fees for that particular piece—could potentially also contribute to its dividend pool.
Distribution Mechanism: InHouse plans for a near real-time system. The platform intends to calculate distributable revenue and automatically pay out dividends on a daily basis directly into the wallets of shareholders, managed via the Market Application. Transparency in revenue tracking and dividend calculation is a core design goal for this system.
3.2 Author Choices, Liquidity & The Two Funds: Opt-In vs. Opt-Out
A critical mechanic influencing both creator compensation and investor liquidity is the choice made by the author during the Pitch phase regarding their own stake and the handling of raised funds. This creates two distinct pathways for story-stocks post-issuance:
Path A: The "Opt-Out" Model:
Mechanics: The author elects to receive the successfully raised funds (less platform fees) directly upon publication. In this scenario, investors collectively receive 100% of the issued story-stock shares.
Investor Liquidity: Shares issued under the Opt-Out model initially possess liquidity only through the peer-to-peer secondary market (detailed below). There is no platform-guaranteed buy-back; investors must find another user willing to purchase their shares at or above the floor price.
Path B: The "Opt-In" Model:
Mechanics: The author elects to forego the upfront payout in exchange for an equity stake in their own story-stock (e.g., a pre-agreed 20%). The successfully raised funds, instead of going to the author, are transferred into a dedicated, segregated platform fund: the InHouseFund (Fixed Reserve). Investors receive the remaining shares (e.g., 80%).
Investor Liquidity: The crucial difference for investors is that Opt-In shares gain immediate liquidity. Holders of Opt-In shares can sell them back to the platform via the InHouseFund at the original Issuance Price / Floor Price at any time, providing a guaranteed exit path at that base value.
The InHouseFund (Fixed Reserve):
Purpose: This segregated fund's sole purpose is to provide floor-price liquidity for Opt-In story-stocks. It is capitalized exclusively by the principal amounts raised during successful Opt-In pitches. It acts as a stability mechanism, ensuring investors in these specific stocks have a guaranteed buy-back option at their initial investment price point.
The Active Investment Fund:
Purpose: This is a separate and distinct fund. Its capital comes from the premium captured during secondary market trades – specifically, the difference paid above the Floor Price when one user sells a story-stock (either Opt-In or Opt-Out) to another user.
Function: This fund might pursue its own low-risk investment strategy (e.g., holding treasuries) with its collected capital. It does not provide liquidity for story-stocks; its existence relates to managing the value captured in secondary market appreciation above the baseline issuance price.
3.3 Secondary Market Trading
For investors seeking liquidity (especially for Opt-Out shares) or aiming for capital appreciation, InHouse plans to operate a peer-to-peer secondary market, facilitated by the Market Application:
Mechanism: Expected to function via an order book system, allowing registered users to place buy and sell orders for specific story-stocks at prices they determine. The system matches compatible orders.
Floor Price Constraint: A critical rule governing the secondary market, based on current platform design, is that trades can only be executed at or above the original Issuance Price (Floor Price) for that specific story-stock. This prevents shares from trading below their initial funded value on the platform's market.
Regulatory Restrictions: Investors must be aware of applicable securities regulations regarding resale. Typically, securities purchased in a Reg CF offering face resale restrictions, often for a one-year period after issuance, before they can be freely transferred or sold on a secondary market (subject to specific exemptions and definitive legal guidance).
3.4 Wallet Integration
Underpinning all these mechanics is the user's integrated InHouse Wallet. This secure digital account, managed by the Market Application and funded via methods like Stripe, serves as the central hub for:
Holding purchased or allocated story-stock shares.
Receiving automated daily dividend payments.
Funding investments in new Pitches.
Placing buy/sell orders on the secondary market.
Receiving proceeds from the sale of shares (either on the secondary market or via the InHouseFund for Opt-In shares).
These interconnected mechanics aim to create a functional, transparent, and regulated ecosystem for the issuance, management, and trading of story-stocks.
Chapter 4: The Story-Stock Value Proposition
Having detailed the lifecycle and core mechanics of the story-stock, we can now clearly articulate the distinct value proposition it offers to the key participants within the InHouse ecosystem: the creators who bring narratives to life, and the investors who support them. The story-stock model is designed to create a symbiotic relationship, aligning incentives and offering unique benefits to both parties.
4.1 For Creators: Funding, Alignment, and Vested Audiences
For authors, journalists, artists, and other creators, the story-stock paradigm offers a compelling alternative to traditional funding avenues:
Direct Access to Capital: Story-stocks provide a mechanism to secure funding directly from a community of interested supporters and investors based on the merit, potential impact, and appeal of a specific project proposal, bypassing many traditional gatekeepers (publishers, grant committees, studios).
Aligned Income & Incentives: Beyond upfront funding (in the Opt-Out model), creators have the potential for ongoing financial participation. Through the Opt-In model, creators retain an equity stake in their own work, earning dividends alongside investors as the content generates revenue. Even without direct equity, the success of their work directly benefits the investors who backed them, fostering a naturally aligned relationship.
A Vested Audience: Transforming readers or viewers into investors creates a uniquely engaged community. Story-stock holders have a tangible stake in the success of the creative work, potentially making them more active promoters, advocates, and sources of constructive feedback compared to a passive audience.
Credibility and Professionalism: The rigor involved in creating a successful Pitch, including providing accurate disclosure information within a regulated framework, allows serious creators to signal their professionalism, planning capabilities, and commitment to potential backers, enhancing their credibility.
Acknowledged Responsibilities: This model also entails responsibilities. Creators are expected to provide truthful and accurate information during the Pitch phase and execute the funded project diligently and substantially as proposed to maintain trust with both the platform and their investors.
4.2 For Investors: Novel Assets, Potential Returns, and Impact
For investors seeking new opportunities beyond conventional markets, story-stocks present a unique value proposition:
Novel Asset Class: Story-stocks offer exposure to a previously largely inaccessible asset class: the economic potential of individual creative works. This allows for portfolio diversification into assets potentially uncorrelated with traditional markets.
Potential Financial Returns: Investment in story-stocks offers two primary avenues for potential financial gain:
Cash Flow: Through pro-rata dividends, potentially distributed daily, derived directly from the revenue generated by the underlying content (primarily advertising).
Capital Appreciation: Through selling shares on the secondary market at a price potentially higher than the initial Issuance/Floor Price (subject to market demand and regulatory holding periods).
Impact Investing & Direct Support: Investors can directly support specific journalistic investigations, artistic endeavors, or other narrative projects they personally value, aligning their capital with their interests and contributing tangibly to the creation of meaningful content.
Defined Liquidity Pathways: The model offers clearer liquidity options than typical non-marketable alternative investments:
Secondary Market: Peer-to-peer trading platform allows selling shares (at or above Floor Price), contingent on finding a buyer and adhering to regulatory holds (e.g., 1-year for Reg CF).
InHouseFund Buy-Back (Opt-In Only): The unique Fixed Reserve provides holders of Opt-In shares a guaranteed option to sell back their shares to the platform at the original Issuance/Floor Price, offering baseline liquidity assurance for that specific structure.
Transparency and Accountability: Investors benefit from the regulated nature of story-stocks, including mandated disclosures during the offering process and the platform's oversight, providing a higher degree of transparency and accountability compared to many unregulated crowdfunding or alternative investment spaces.
Acknowledged Risks: It is essential for investors to understand the inherent risks. Story-stocks are speculative investments. The underlying creative content may underperform, leading to lower-than-expected (or zero) dividends and potentially reducing secondary market value. Market volatility can affect share prices, and secondary market liquidity, especially for Opt-Out shares, is not guaranteed (as finding a buyer at or above the floor price depends on market interest). Investment value can decrease, and loss of principal is possible.
By design, the story-stock mechanism aims to create a mutually beneficial environment, empowering creators while offering investors a novel way to participate financially and emotionally in the success of specific creative works.
Chapter 5: The Story-Stock within the InHouse Ecosystem
While the preceding chapters have focused on the story-stock in isolation, its true potential and function are fully realized only when viewed within the integrated environment of the InHouse Platform. If the "Interdisciplinary Blue Atoll," as theorized in preceding work, represents the unique market space InHouse aims to navigate, then the story-stock is arguably the primary engine of the "specialized vessel" built to traverse it. It serves as the core instrument facilitating the practical convergence of Finance, Media/Content, Technology, Community, and Legal/Compliance.
5.1 The Core Mechanism Enabling the Intersection
The story-stock is the practical linchpin that makes the InHouse vision operational. It directly enables the platform's function at its core intersection by:
Integrating Finance and Content: It provides the tangible financial instrument through which capital can be directly invested into specific creative works, and potential returns (dividends) can flow back based on that content's performance.
Leveraging Technology: The issuance, tracking, dividend distribution, and secondary market trading of story-stocks rely entirely on the specialized technological platform InHouse has developed, including secure wallets, transaction engines, and data tracking systems (like the Ads App).
Activating Community: It transforms passive audiences into active stakeholders. The processes for initiating projects (Floats, Pitches) and funding them rely on community participation, while the ownership structure fosters a vested interest group.
Requiring and Benefiting from Compliance: The nature of the story-stock as a security necessitates the robust Legal/Compliance framework, which in turn provides the trust and legitimacy (as discussed regarding "Compliance as Feature") essential for the story-stock market to function. It's a mutually reinforcing relationship.
Without a fit-for-purpose instrument like the story-stock, attempts to directly and transparently link investment capital to the performance of individual creative projects within a regulated, scalable framework would remain largely theoretical.
5.2 Synergies with Key Platform Components
The effectiveness of the story-stock is amplified by its interaction with other integral parts of the InHouse ecosystem:
In-House Journal (IHJ) & Editorial Process: The rigorous editorial vetting provided by the IHJ team ensures that the creative works underlying the story-stocks meet standards of quality and integrity. This curation provides a crucial layer of due diligence for investors, enhancing the perceived value and trustworthiness of the assets being funded. Conversely, the story-stock mechanism provides the necessary funding to enable ambitious, high-quality projects suitable for the IHJ.
Community Features (Floats, Agora, Insight Exchange, etc.): Community tools provide vital support throughout the story-stock lifecycle. Floats offer pre-pitch validation. Discussion forums (like the planned "Agora") allow for engagement between creators, investors, and readers around specific projects and their associated stocks. Other interactive features can provide qualitative signals about a project's reception or impact, adding context beyond purely financial metrics. The community acts as the source of both funding and audience.
Compliance Framework: As mentioned, this is a symbiotic relationship. Story-stocks demand a compliant structure, and that structure, in turn, makes story-stocks a more reliable and trustworthy investment vehicle compared to unregulated alternatives.
InHouse Intelligence (Future Synergy): Looking ahead, insights derived from analyzing the broader media landscape [via the planned InHouse Intelligence arm] could eventually provide valuable context for creators crafting more effective story-stock pitches and for investors making more informed decisions about which projects to back within the wider narrative environment.
In essence, the story-stock is potent not just because of its inherent mechanics, but because it operates within a carefully designed ecosystem where editorial rigor, community engagement, technological infrastructure, and a commitment to compliance all work together to support its function and value.
Conclusion
The InHouse Story-Stock, as detailed in this paper, represents more than just a novel financial instrument; it is a purpose-built mechanism designed to fundamentally realign the economics of creativity. By conceiving of individual creative works as distinct, investable assets and structuring them as regulated securities, the story-stock provides a transparent and accountable pathway for direct funding. Its core mechanics—linking dividends to content performance, offering unique liquidity options through the Opt-In/Out system and associated Funds, and facilitating peer-to-peer trading within a compliant framework—are all engineered to serve a dual value proposition. It aims to empower creators with access to capital and a sustainable share in their work's success, while simultaneously offering investors a unique, impact-oriented asset class with potential financial returns and defined liquidity pathways.
Addressing the persistent funding challenges within fields ranging from investigative journalism to the narrative arts requires innovative models that move beyond traditional paradigms. The Story-Stock Paradigm, operating within the integrated InHouse ecosystem, presents a potential solution. By fostering a direct, financially aligned relationship between creators and their audience-investors, and by embedding principles of transparency and accountability through its regulated structure, the story-stock model aspires to cultivate a more resilient, participatory, and ultimately sustainable creative ecosystem. It offers a pathway where the success of meaningful content can be a shared success, benefiting those who create it and those who believe in its power enough to invest in its existence.