Who makes a license, the licensor or the licensee?
This question was asked by Eric Kuskey, a partner at Creative Brands, the San Jose, CA-based licensing firm that represents artists like Thomas Kinkade, among others. One might suppose "licensor" would be his answer-considering his client Kinkade's licensed goods empire is valued at $250 million at retail currently, and by far, is one of the most recognizable, esteemed, valued, imitated, and respected artists dominating the art licensing scene. Instead, Kuskey's answer varied greatly.His question provoked License! to pose this question to other industry members and collect their thoughts, insights, and wisdom.
Nearly all felt compelled to mention the importance of "partnership" and a few said the answer needed to be elaborated upon to involve more than two parties. Here's six different answers-all interrelated-from leading players.PLAIN AND SIMPLE, IT'S THE LICENSEE"The easy way out of this answer is to say it's a collaborative effort, but I think it's the licensee," says Jeffrey Grinspan, vice president, director of licensing for New York-based dinnerware resource Sakura. His firm is a licensee to many artists, such as Warren Kimble, Debbie Mumm, and just-returning-to-the-Sakura-fold, Mary Engelbreit.
That said, Grinspan notes that if a licensee can't effectively translate the art to the product category, then the hard work of the artist is for naught. "If it's too whimsical, for instance, it's not ever going to sell."
IT TAKES THREE PARTIES, BUT REALLY, IT'S THE LICENSEE
"Who do I think makes the license? There is a prevalent attitude in the industry that the answer is the licensor, especially in the cases of large properties, like Disney or Thomas Kinkade," opines Creative Brands' Kuskey.
"But I see building a viable property is like building a house and there are three parties involved-the licensor, the licensee, and the licensing agent."
At the formative stages, the foundation is the most important part of the building process. The foundation is the property (or brand) and you can't build a house without it.
However, he counters, the house itself is what people see when they drive down the street. This is what the manufacturer (the licensee) produces. The house is the product-what consumers see when they shop in a store.
"At the end of the day," Kuskey says boldly, "the consumer is buying the house."
While that answer may sound like a vote for the licensee, Kuskey explains further.
The property (or license) is vital for it allows the manufacturer to differentiate itself from other players in the market, it can be used to add perceived value, and/or it can appeal directly with an identifiable consumer group. The property is "absolutely essential" in making product irresistible to a consumer, the agent says.
"It's extremely difficult to build one of those nice houses without an architect, or in keeping with the analogy-the agent," says Kuskey.
Architects have the contacts and know who the good builders are, and agents should be able to do the same.
"In my opinion, and I'm directing this to property owners who are just getting started in licensing-the initial force and drive of your program will define the property forever. Therefore, it would be foolish to build your house without the help of an accomplished architect."
WHO BREAKS A LICENSE?
"What an odd question," says Kenn Viselman, of Kenn Viselman presents..., formerly of The itsy bitsy Entertainment Co.
"It's like a relay race where you need teamwork to pass that baton. Because of my experience as both a licensor and an agent, I can say that, sometimes, we property owners tend to get too involved without enough information. Unfortunately, licensors can get in the way of their own success. They can involve themselves in things they don't know about. I think the question may be more accurately posed as 'who breaks a license?'
"I take partnerships seriously. Tell me what I don't know about the product category and I'll tell you about what you don't know about the brand. I can give input and overall concept guidance, but at some point I have to have enough faith and trust to hand off the baton-the license-and ask my licensee 'where do we go from here?' "
Property owners, he counsels, need to keep in mind that there is a reason why the manufacturer chose that particular piece of art or TV show. There was something the licensee felt was right.
"Yes, the property owner has the knowledge of the brand, like for example, Mary Engelbreit knows why her colors work or Anne Geddes why her photography subjects work.
"There is a place where one can overstep. I never told Ragdoll what size or color to make the Teletubbies. That was Ragdoll's vision. My goal was to take the knowledge and translate it to another medium.
"But the bottom line is: If a manufacturer doesn't take your license, you don't have a license."
IT'S A PARTNERSHIP
"I really think both the licensor and the licensee are critical to success, and it's the relationship and the fit between them that makes or breaks a license," says Mary Engelbreit, the artist behind the $110 million licensed goods empire.
"We market the Mary Engelbreit brand, but the success of any individual product depends on the sales and marketing efforts of our licensees," she says.
"We can design and develop a fantastic product, but if the licensee doesn't market the product well, it will fail. On the other hand, you can really market the heck out of a mediocre product that will not pull through at retail and that will also be considered a failure. So, in the end, creating the right partnerships is critical; both have responsibility to make it work."
The answer of partnership, an overwhelmingly popular response from those interviewed, comes in this form from Silvestri, East Boston, MA, a leading seasonal and decorative accessory resource.
"There is a lot of work we (as licensees) do: We are marketing the product, getting it out there, and positioning it in the stores, but it really is the partnership that makes the license," says Linda Simpson, vice president, product development for Silvestri.
"If you have an artist that can come up with fixturing ideas and press materials, and help sell it to your sales people, then you have the best of both worlds. The retail customer needs both the sales person, and if the purchase warrants it, the support of the artist making personal appearances at the store level," Simpson adds.
Partnerships make licenses, and long-term commitments make successful partnerships, expresses Carter Rennerfeldt, partner, Challis & Roos Licensing, Seattle, an art licensor with more than 20 licensees in the areas of gift and home products.
"For both licensors and licensees, there are many potential licensing partners out there. There also seems to be the sense, or expectation, that a licensed product line must be successful right away. Unfortunately, if immediate success doesn't happen, it seems easier than ever for either party to move on," notes Rennerfeldt.
"Long-term success comes from carefully matched partnerships and commitment to achieving mutual success."
Jill Sands, creative director at Toland Enterprises, Mandeville, LA, the decorative flag marketer known for its wealth of art licenses, also believes that teamwork makes a license successful, and that it is not a one-sided victory.
"A manufacturer's responsibility is to have the best quality product and to take advantage of the art in the best way," she says. Plus, the licensee must make the most of its extensive marketing and educational skills to ensure the retailer has all the selling tools its needs. As for the role of the artist, she says:
"The artist has to provide the art and is responsible to help us manipulate the art, so it fits best on all products. Some of the artists will repaint as necessary and are just as generous and giving and accommodating as you can desire." Those who won't play, usually don't stay.
IT TAKES THREE PARTIES-DON'T FORGET THE RETAILER
"I think the answer is both-the licensee and the licensor-and a third party is the retailer," says John Parham, founder of Parham Santana, a 15-year-old brand strategy and design firm that worked with Discovery to develop and launch its first licensing program and was the firm who developed the global re-imaging of the Barbie brand.
"A license may begin with the licensor, since retailers and manufacturers are eternally seeking something that's new and hot. But, there are a lot of properties to choose from and retailers and manufacturers are looking for the licensor's strategy. It is in the best interest of all parties to know each other's strategies, goals, what each party stands for, and how each work best."
If all three don't work in unison, there could be failure, he cautions. No one single party can do it alone, but a well thought out licensing program that involves the retailer can make all the difference in the world, he says.
"Take Discovery, for example. Instead of merchandising product by classification, Target gave Discovery's licensees 24 linear feet of aisle space. The merchandise presentation spanned puzzles, construction kits, crafts, plush, and board games."
He also offers a key point for licensors: Don't cook your strategy in a vacuum. "There needs to be a three-way conversation.
"Draw upon the strengths of one another. A brand owner needs to communicate the essence of a brand, but it comes to life with the manufacturing expertise of the licensee and the merchandising presentation skills of the retailer."
Another retail-cognizant answer comes from United Media, the agency representing the leading art property Precious Moments, among other established global art brands.
"It's like a three-legged stool," says Joshua Kislevitz, senior vice president, domestic licensing for UM.
"Last year we did a promotion with Beatrix Potter and Wal-Mart. Critical to that formula were licensees that understood the brand, could deliver the image, and also deliver product within the pricing parameters. Every partner was critical to the promotion's success."
Artists have become a lot more sophisticated in the world of merchandising, says Kislevitz.
"There is more awareness of what retailers want," Kislevitz maintains. "Everyone has more information at their disposal, everyone is looking at what works, like Michael Graves or Mossimo at Target."
IT'S YOUR EARLIEST PARTNERS WHO MAKE THE DIFFERENCE
A few industry experts expressed just how vital the choice of launch licensees-a property's first partners-is to the success of a newly born license.
The initial force that launched Kinkade's million-dollar empire had largely to do with several of his earliest partners, one of which was The Bradford Exchange. Bradford, a particularly advertising-driven licensee, began to market its Kinkade-inspired product in the early '90s, along with the artist's bio and photo, via Sunday magazine inserts and high circulation magazines.
"It was perhaps the single most formative building block to Kinkade's entire licensing business. Thom found himself being advertised in the largest circulated magazine in the country (Parade). It helped define him as a property."
However, missteps at this level can maim a license. "Artists especially need to be careful with their brands," warns Michael Schiller, vice president, consumer products for Bensussen Deutsch & Associates, a Woodinville, WA-based, self-professed Merchandise Agency (a hybrid agency/licensee/sales promotion firm) that has DreamWorks, Marvel, Nintendo, and Starbucks as clients.
"If you start off on the wrong foot, perhaps at the wrong time, with the wrong licensees, your opportunity is lost." A merchandise program with Target that delivers poor sell-throughs will limit a licensor's chances at getting a second chance with the discounter, and perhaps any hope of partnering with any retailer at all, he says.
However, not all is lost if you misstep a bit. Fine tuning and changing partners is sometimes necessary.
A good example of re-aligning partners and living to tell about it comes from Mary Engelbreit.
"Andrews McMeel took over our calendar program [from an existing licensee] in 1997, and within five years our calendar program has grown 700 percent and is now one of the best-selling calendar programs in the country. That's because we partnered with the industry leader for the product category (calendars, in this case) and they just "get" the Mary Engelbreit brand."
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