Building New Streams of Income – An Introduction to the Basics of Licensing The Licensees point of view – Licensing into your company.

Building New Streams of Income – An Introduction to the Basics of LicensingThe Licensees point of view – Licensing into your company

First Time Licensee Outline Licensing defined Some license examples Licensing language Licensee/Licensor relationship What types of licenses are right for your

company How to prepare your company for entry Tips on how to secure your first license

What is licensing? Licensing is “renting” the use of a

trademark or copyright, that is commonly called “the Property” which can be a name, likeness, logo, graphic artwork, saying, signature or any combination of these elements in conjunction with your publishing product.

These rights cover a specific time and geography for agreed to cash payments

Art Brand Name/ Trademarks Celebrity Character/ Entertainment Collegiate Estates

Fashion/Designers Music Non Profit Publishing Sports Toys/games More

Types of Licensing

License Examples-Character

License Examples - Celebrity

License Examples

Kids helping Kids!

Licensor/Licensee defined Licensor is the property owner of the

trademark or copyright you want to license from for your publishing product.

Licensees are publishers that secure the rights from the licensor

Formalized by a Licensing Agreement Contractual agreement that defines the

terms and mutual responsibilities of the licensor and licensee.

Licensee Responsibilities Guarantee: The minimum royalty dollar

amount you agree to generate for the licensor over the term of the agreement.

Advance: Down payment(s) against the guarantee

Royalty Rate: The percentage (some times piece) rate the licensee must pay the licensor based on the licensee’s sales volume

Publishing Royalty Rates Royalty rates are based on many variables and

negotiable. These rates are built into the wholesale price of your product, but be sure the market can handle the price you plan to charge inclusive of the royalty rate

Publishers (as property owners) charge, on average, 8.7% Publishers as licensees pay, on average , 9.8% Rates can range from 2 to 15% and vary by type - Books: 6 to 12% - Newspapers/Magazines 3 to 12% - Comic Books/Strips 5 to 15% Source: The Licensing Letter

Licensee Responsibilities

Exclusive vs. Non-Exclusive Territories Distribution Product(s) Ship & marketing dates

Licensee Responsibilities

Product development, the licensee must develop product incorporating the licensed property in an appropriate way acceptable to the licensor

Licensee Responsibilities

Approvals Marketing plans Product Liability Termination/Sell-off

Licensor Responsibilities

Style Guide Approvals Trademark Protection Advertising & Promotion Retail Development

What type of licensing is right for your company?

What are your corporate objectives

Examine your product line What is your distribution Who is your customer

Securing licenses - Preparation Staffing Know what a licensor seeks in a

perspective licensee Resources: - LIMA, Licensing Industry Merchandisers Association – www.licensing.org - Advanstar Communications, [email protected], www.licensingshow.com - The Licesning Letter, www.epmcom.com - Kidscreen Magazine, www.kidscreen.com - License! Magazine, www.licensemag.com - Royalties, [email protected] - The Licensing Book, www.adventurepub.com - Licensing Royalty Rates, Battersby & Grimes, www.aspenpublishers.com

Recent Trends Some licensors are “bundling” their properties

into one agreement – this gives you an assortment of properties and saves you the burden of multiple guarantees ie music, character, art.

Guarantees on average have come down in size with exceptions.

Contract lengths are also becoming shorter. Sales of licensed merchandise grew 25% in

ecommerce, TV +50%, Dollar Stores +14%

Building Income –

Questions??