Wherever you are right now, look around and you’ll likely see dozens of products that license some type of design element; maybe it’s a photo on the cover of a book, the geometric pattern on a scarf, the graphic design of a product label, or the illustrations on a holiday card. We are so inundated with marketing that we forget that all the imagery is the result of someone’s creative expression. In the majority of cases, that person is a freelancer who persuaded a manufacturer to license their creative work. Those creators who know how to tap into it the $7 billion dollar industry of art licensing, are well rewarded. Licensing can help creators fill in the gaps when art sales are slow or in a seasonal slump, providing the extra income to pay the bills, and deliver a continuing revenue stream based on royalties, not work.
There is no shortage of opportunities for those that want to enter the licensing market, but it does take some discipline and a bit of preparation. The cliché’ throw enough mud against a wall and see what sticks, rarely works. The most successful licensors are methodical, taking the time to research the various industries, finding those that best fit their type of creative work, discover which companies are the most likely buyers, and then reach out to the corporate decision makers, already knowing that their creative work is the type that those decision makers are likely to license. They also create work for the industries rather than repurposing old work. As we will discuss, the licensees’ wants and needs are very different from traditional consumers of creative works like art buyers, ad agency or graphic design shops. What to create and how to present it is as important as knowing who to will license the work.
The process may sound overwhelming but it actually isn’t very difficult, although like any other startup business, the process can take some time at the beginning. Thankfully, the Internet is filled with excellent resources that can help the budding licensor get started much faster and with far less effort than in the past.
The Push and Pull: Creativity vs. Merchandise
For the most part, a good licensing strategy tries to strike a balance between the various product types available for licensing and the creator’s artistic style. Only certain manufacturers or retailers may have products that compliment an artist design aesthetic but ultimately, it is the decision maker that needs to be a fan of the creator’s work. Discovering which manufactures are the most appropriate targets and who the decision makers is important because it allows you to waste less time on those who will not be interested and spend more time on the people that matter. So it is important not to rush the industry analysis. Remember that the initial target development only needs to happen once unless you decide to expand into other industries, at which point, hopefully, you are generating a steady royalty income already. Remember, with licensing each sale generates a royalty. Art licensors do not have to create something for each sale, but can have multiple income streams from multiple licensed designs while letting someone else do the selling.
A Methodical Approach to Licensing
Before we look at the licensing process, let’s review two of the terms so we don’t get them confused. Licensors are the “artistic creators” – the ones that hold the copyrights to the creative work. Licensors are the ones who will grant the use of the creative work for use on products. The grant will be in the form of a contract, which may be signed directly with a manufacturer or through an intermediary, such as a licensing agent, who will be given certain rights to negotiate and license the creator’s work. However, the licensor will always have the final say before the intermediary can finalize any agreement. A “licensee” is the company licensing the work. The licensee is generally the product manufacturer, who may also be the retailer (the one selling the product to consumers), although manufacturers are often wholesalers who sell the products to various retailers. There may also be an intermediary for the licensee with the right to negotiate on behalf of the licensee. In some cases, there may be multiple licensees. For example, a film company making a movie from a popular book may license an artist’s work for the movie poster and a publishing house may license the same work for the cover of the next edition of the book.
Step 1. The first step is always the most difficult and daunting in any new endeavor; that is “where do I even begin?” Licensing is a big topic with many facets. Don’t go into it without learning as much about licensing as you can. On the one hand, like anything, the more you know about it, the more effective you can be. But more importantly, the more you know about it, the better you will be able to decide if it is the right business for you. If you don’t feel like it is something that you can make interesting and enjoyable everyday, you won’t be successful. (However, as you’ll see later, hiring an agent may be a happy compromise for many of you.)
As for finding information on licensing, that is a fairly easy task; artists are blogging about it, people are teaching online classes, and of course, there is always Google and Amazon. Type “art licensing” into Amazon’s Kindle search and you’ll find aseveral excellent books on the topic. On top of the list you’ll see 20 Steps to Art Licensing, a quick, 60-page read, which at $2.99 is a bargain. Second on the list is License to Draw a 126-page eBook costing a mere $9.99. Both are rated at 4 1/2 stars. These books will help give you an overall sense of the licensing market and provide some of the strategies that made the authors successful. A word of warning, though: don’t rely on just one source. Every author will have their own unique approach so read a few, or at least skim different resources. Pay particular attention to the information or strategies that all the resources have in common as those will likely be the most indispensable. You might also want to look at some licensing blogs. Some of the more informative are MariaBrophy.com, ArtsyShark.com and the All Art Licensing Blog.
Developing the strategy and tactics to license your artwork is at its core, a marketing function. So it doesn’t hurt to get a little general marketing under your belt. Understanding the basic marketing principles can only help you to develop a successful licensing strategy. To learn marketing basics, check out Skillshare, the online classroom for creators. The site has several marketing classes but one of the best is the Modern Marketing Workshop. Don’t miss it if you have the opportunity. Another great course is Make Art that Sells.
Step 2. Once you have a good handle on the licensing industry, (you don’t need to be an expert, that will happen over time) start looking at which industries and product categories you would like to see license your work. And, just like you did for the licensing industry, the next step will be to pick targeted industries and learn as much as you can about them. The idea here is to discover which industries are the most likely to license your type of work, or the work that you know you can create. Then, find those companies that are doing the most licensing. The important part here is to be honest with yourself. All too often, people find ways to justify the direction they take because it is what they want to happen, but want should go hand in hand with the potential for success. Discovering what not to do is as important as discovering what to do.
In this step, start by making a list of industries and product categories that interest you and that you intuitively feel would benefit from your work. Some work lends itself better to particular industries. For instance, if your art is surface designs or patterns, it makes sense to look at fabric companies, or clothing accessories like scarves, or even gift wrapping. Illustrators find success in book covers and greeting cards, which is a huge and lucrative industry. Graphic designers can look at home decor or t-shirts. Your final list may be long depending upon the type of work, so the next step is to narrow down the selection, choosing only a few to focus on. Use your instincts taking into account those industries that you find interesting, that you think would be profitable, that you can see creating work for, and that you can handle given the time you intend to put into this effort. If the industry is highly lucrative, it is also probably very competitive and so it may not be the best place to start. You can tackle those industries when you have more experience.
With those industries in your head, start by looking at the variety of products being sold, while at the same time, paying particular attention to those that have designs which are similar to your work. The companies selling those products are the most likely to want to license your work. Compile a list of those companies but be sure to list the manufacturer, not necessarily the online store selling the items. Also, be sure that your work compliments the product line and isn’t too similar. You want your work to broaden the company’s portfolio.
Once you have your company list, we need to find out if they actually license their designs, or do them in house. There is no point in targeting a company that does all the designs internally or just doesn’t have enough products to make it worth your effort. But most important, you need to discover the decision maker; the person responsible for licensing at that company. Start with the companies website. Then use Google to do some basic searches. Pat attention ot local newspapers and blogs, especially if the companies are in rural communities and are always big news for the locals.
Try some of the trade industry publication websites. A fantastic resource, juts for the licensing industry, is License! Global Magazine, the premier publication and news source for the licensing industry. Use their “license finder,” or their company lists. Reviewing their list of the Top 100 Global licensees may also give you some additional information on companies you might wish to target. If you are serious about licensing, become a member. Another excellent resource is the Licensing Letter Source Book, a directory of licensing decision makers. According to their website, the Sourcebook listings include 1,467 licensors and details of the properties they own and the agents who represent them, 1,637 manufacturers listing the licenses they hold and the products they manufacture, 678 licensing agents and the properties they represent, and 686 consultants and attorneys Its a bit pricey $469 for the digital version, but it could be helpful depending upon your industry targets. There are many other databases you can access on the web as well. Foe example, the LIMA Licensing DataBase (International Licensing Industry Merchandisers’ Association) maintains a list of licensees but you must join LIMA to access it.
Finally, consider attending industry trade shows. You can see the various products being offered and often meet some of the decision makers, who usually attend. License! Global, holds a trade show, Licensing Expo, just for the licensing industry. This year it is at the Mandalay Bay Convention Center in Las Vegas from June 9-11th.
Step 3. Weed out some of the less desirable companies, focusing on a core set. For these companies, we already know that they will be receptive to your work, but do they have the have the sales potential to warrant your efforts. Whatever information you can find on their sales and their licensing practices will be helpful. Everything from sales figures how much they may have paid for a license will help you decide whether the company has enough potential for you to spend time trying to get to the right people. Befriend people at trade shows, look on industry message boards, read comments people may have left in a website’s comments section. If you cannot find much information, but you feel they are a company you would like to see license your work, then target the company anyway. There are no hard and fast rules, just make the best decisions you can based on the available information.
In part 2 we will look at what to do once you have done your research and have picked your targets. I will also discuss the advantages and disadvantages of hiring a licensing agent, and provide some basics on calculating royalties.