Frequently Asked Questions

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Understanding Licensing: What it's all about

What is licensing?
Licensed products are something we see every day. They surround us in the form of food, cleaning products, clothing, even computers... everything imaginable! One of the most popular examples of art licensing is with Peanuts and Garfield. Both brands started as comic strips and have exploded into licensing dynasties. Their images show up on a wide variety of products including stationary, clothing, TV specials, and even on your lunchbox! Even in sports, licensing is a crucial part of the game. Every time your favorite team's logo is printed on a t-shirt, it is through permission from a licensing agreement between the owner of the logo and the manufacturer or printer of the shirts.

The owner of the team logo (who is called the licensee) gets a royalty fee for every t-shirt printed with his logo. This fee is established in a licensing contract, and ensures that a royalty (a certain percentage of the sale profit) is paid to the licensee every time a shirt sells. Licensing agreements also include guidelines for using the logos, usually called a style guide. How team colors are used, as well as the size and font of the logo, is part of the team's brand, and their usage and regulations are explained in the style guide.

By licensing a logo, a team can make a profit from their image without investing in the equipment and industry needed to produce and distribute all the clothing and other novelties themselves. It allows the team's brand to be distributed in such a way that it can be seen and enjoyed by a larger number of people.

One of the many books that explains this process is Licensing Art & Design by Caryn R. Leland. This book covers a wide variety of topics which introduce newcomers to the business of art licensing. The chapters include information on copywriting, trade marking and patenting, and licensing agreements in terms of the long term/short term. It also covers how to license artwork from an artist, model agreements, and how the web is involved. Comparative average royalties and resources for designers are also included.

What are some of the key terms used in art licensing?
Licensor - the person providing the artwork
Licensee - the company that will use the artwork either on their products or as a whole entity
Licensed Property - the artwork
Royalty - a percentage of the proceeds that the artist receives from the sale of the licensed product
Advance - An amount paid to the artist before the product is sold
Style Guide-The rules and regulations for use of a Licensed property

How do you find places to license work?
There are basically two ways to find a place to license work. One is to do it yourself, the other is to find an agent to do that for you.

When starting out on your own, research companies who provide products that you think your work would fit with and contact them. Put together a power point presentation and make up folders to send out containing marketing materials. Always have images ready to email and don't forget to add your copyright to all work. Many companies have web sites with more information on what they expect from potential licensors.

If you instead decide to hire an agent, make sure that agent specializes in the field you are trying to break into. Compensation is usually 15-25% of your earnings from licensing your work.

Either way, many of these contacts can be gained through trade shows. So, depending on whether you want to license your design to greeting cards companies or gift companies, that would determine which you go to. There is a trade show for everything. You can look at www.Javitscenter.com for more information on what is going on where. The two main trade shows are Surtex and Licensing International. They also offer conference programs covering all aspects of licensing, you can find out more about the Surtex programs here.

What goes into producing artwork intended for licensing? What will they need from me?
The requirements are different according to the company you are working with. Again, greeting card companies are going to need something very different then gift companies. However, a finished prototype is often needed in order for it to be reproduced by the licensing company accurately.

What should I ask for in my contracts?
In a perfect world you would ask for a percentage of the profits that increases yearly, as well as an advance payment and guarantee. You would also ask that the company pay all travel and related expenses. However everything depends on the company as well as the market and your track record. The more established as an artist you are, the more freedom to negotiate you have.

You should make sure there is a clause in your contract whereby the molds of your work are destroyed after the contract expires and that you retain the copyrights and only assign the marketing and distribution rights. You could also ask to periodically receive samples of the pieces to monitor the quality.

What about royalties?
You can find royalty information and percentages in the book Licensing Art & Design and also in the Graphic Artists Guild Handbook.

Do I need to travel to the factories to check on the progress of my work?
No, the companies should send you samples and proofs.

If a company is interested in doing lines with different materials do I need a separate contract for each line?
No, you can have all the lines included in an exhibit. The contract would say it was a see exhibit and list all the categories and lines.

A company has indicated that their staff can sculpt prototypes based on my "style." Do I allow this?
Yes, a lot of factories are very good at this. You provide the flat art and they can create the item, however you should always get final approval.

How do I keep my ideas and work from being stolen?
The moment you have produced artwork in tangible, ready-to-be copied form, you own the copyright of that artwork. You do not need to add a copyright notice; it is, however, advisable to register your work with the government. You may also file for a patent or trademark, read more about all three in the book Licensing Art & Design or at the US copyright office website, www.copyright.gov.

How much does it cost to license a product?
The costs to consider in licensing your artwork are the costs associated with your creation materials and time, marketing materials, cost of an agent and cost of getting a patent, trade mark or registering copyright. If you are successful in starting a licensing business you will also need to hire a lawyer and either on-site employees or hire people on an as-needed basis to do contract work. For example, you might want to hire someone to run a marketing program for you for a specific amount of time.

How do I find knowledgeable employees?
By placing an ad you can find a lot of really qualified people to do office work and grow into a licensing position. You can also go to trade shows and ask around to see if there is anyone who is looking for a job. It is also a good idea to build liaisons with local colleges and universities, offering internship programs for students.

Read Karen's Trade Show Tips

If you have any other questions after reading Licensing Art & Design please feel free to contact us and we will post the answer here.


 


Founded in 1985, LIMA is the worldwide trade organization for the licensing industry. LIMA's main objective is to work together with licensors and licensees for the advancement of professionalism in licensing through research, national and international seminars and trade events as well as publications. With members in 25 countries, and offices in New York, London, Munich and Tokyo, members enjoy access to a wide variety of activities, information and benefits. LIMA is a proud sponsor of the annual Licensing International Show (New York), Brand Licensing (London), Licensing Forum (Munich) and Licensing Asia (Tokyo). In addition, LIMA now offers a Certificate in Licensing Studies (CLS) program, the only educational course specifically designed to prepare licensing professionals to suceed in the ever-changing licensing industry. For more information please visit www.licensing.org

 

 

 


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