You may wish to use a character in or on your new design. The character licensing industry generates a worldwide income of over $70billion yet it remains a mystery to the majority of people not directly involved in it. Put simply, it is the use of a character to promote a product or service. Characters, be they cartoons, film based or those that have originated from books or comics, are known as intellectual properties and like all property they have an owner. Whether the owner created the property or otherwise acquired the rights, they are the only ones who are ultimately able to permit use of that character for licensing purposes.
The rights holder is known as the licensor and the individual or company who wish to make use of the character in conjunction with their product, is know as the licensee.
Often a licensor will choose to work through an agency such as The Copyright Promotions Licensing Group, who will then handle the business of selecting licensees most appropriate to their client’s character. As the licensing business has become more specialist, so agencies have improved their business to offer services such as artwork approval, which ensures that the visual integrity of the characters is maintained and, in the case of larger agencies, design and PR functions. A good agency will ensure the best interest of their client’s character is maintained by ensuring that it is not over licensed and that licenses are granted to a broad range of suitable licensees.
Why use licensed characters?
Use of a licensed character brings to a product or service many advantages. A well known character such as Dennis the Menace, may have years of heritage. The character is also likely to have a high level of exposure perhaps via TV, books, videos, films or a combination.
As a licensee, an individual manufacturer will benefit from the activity of other licensees. Licensed characters can generate a tremendous playground ‘must have’ factor. A hit TV show for example leads to demand for all associated products. Finally, characters can bring with them parental approval as parents may be familiar with a character from their youth and therefore feel that they trust and understand them.
How the process works?
Every property is different and for a licensing programme to succeed it needs to be carefully thought out. At The Copyright Promotions Licensing Group a marketing plan is put together for each character taking a number of things into consideration:
-The anticipated lifespan of the programme
-The programme’s core target audience
-The appropriate distribution channels for product- will it retail through department stores, independents or both? What about catalogues?
-The merchandising strategy- what other product categories is the character is licensed to?
What is the timing on any planned media support?
Once the direction of the programme has been finalised the property can be presented to licensees.
Licensee selection process
Licensing agents both approach and are approached by potential licensees. In order to ensure that the most suitable match is made, the best product licensed and the maximum sales achieved, a number or factors regarding a potential manufacturer are taken into consideration:
-The size of the company
-The distribution channels of the company- does it have an existing account list and contacts in the appropriate channels?
-Does the company hold other licenses?
-What percentage of its total volume is tied up with these properties and will the new property compete with or compliment its existing portfolio.
-What is its general reputation in the marketplace?
-What are the company’s plans to support the merchandise at retail?
Once agency and manufacturer have reached an agreement and with the licensors approval, a contract will be negotiated.
The main points that a manufacturer can expect to find in a character licensing contract are:
-The parties- details of the identity of the licensor or agent and the licensee
-The term- the period during which the agreement will remain in force. The most common length of an agreement is one year, although licenses are generally tailor-made to the licenses individual needs and usually include renewal provisions
-The territory- the geographical area in which the licensees will be permitted to exercise their rights
-The property- the subject matter of the agreement
-The licensed articles- the articles in connection with which the licensee is permitted to use the property
-Duties of the licensee- in particular the duty to protect the IP of the licensor
-Financial commitments- royalty rates, the basis of calculation, the timing of payments and details of any advances and minimum guarantees (advances are upfront payments made in advance of royalties). Minimum guarantees are the absolute minimum payment that will have to be made by the licensee regardless of the success or failure of their use of the property by the end of the term
Once the contract has been agreed, design work can begin. The licensing agency should be equipped to assist licensees as necessary and to ensure that the end product is of the required standard.
Agencies often will get involved in all stages of development from initial concept work through to artwork and pre-production samples.
The agency will further assist licensees by supplying full information about activity surrounding both the property itself and other licensees on the programme. Regular update reports and frequent meetings ensure a co-ordinated approach to licensing giving maximum effect in terms of sales.
This chapter was written by Jane Garner of Copyright Promotions Licensing Group, an organisation with head offices in London. Fifteen territories across mainland Europe are covered by an additional ten offices whilst sub-agents are used worldwide. The company has a marketing led approach to licensing with each industry sector covered by specialists, it is also able to offer in-house design and PR services.