Licensing's trade organisation, the Licensing Industry Merchandising Association, began researching the US licensing industry in 1998. This year it extended the research to the UK providing the first rigorous analysis of the industry here. The survey can be purchased in full from LIMA UK; here is a taster.
The aim was to provide a definitive report of licensing revenue, based on the royalties received by licensors and agents. A standard multiplier of 20 is used to estimate total retail sales.
The total royalty revenues for the UK were found to be $227m (£147.9m). This translates to an estimated $4.5bn (£2.93bn) retail sales. The largest contributors were fashion and entertainment, which accounted for 70% of the UK licensing market. The survey found that the UK industry appeared to have shown a 'high single digit' decline from 2001. US royalty revenues totalled $5.6bn, which means the UK market is approximately
The survey identified the following UK trends:
The typical royalty rate is between 6-10% of the wholesale price. More specifically, for food and beverage it is 4-6% and for major corporate brands it is 5-8%. For the most popular properties, rates of 14-18% can be reached.
There is a trend towards consolidation of businesses in the UK market and companies in the UK are doing longer-term deals.
A minimal amount of licensed sales were achieved through direct distribution channels in the UK compared to the US and Germany, both of which have a more prominent mail order industry.
Steve Manners, Managing Director of CPLG, one of the UK agents that completed the survey, applauds the start of the analysis of the UK industry: 'It's a very difficult thing to do, but good news that this has started. Information like this can be very worthwhile, especially if presented in context. As people get more comfortable with it I'm sure the survey will reveal more.'
The fact that this is the first year of the survey means it's not hard to find anomalies. For example, it appears that entertainment properties generated no revenue in footwear or infant products, which seems unlikely in reality. Toys and games are reported to represent only 9.25% of the UK's total licensing income. But toy deals are often done directly with US principals on a global basis so the revenue for sales of toys in the UK appear in the US figures. In the case of Spider-Man, for example, this ignores £11m of toy sales at UK retail. The total licensing revenue of £147.9m might seem low to some. The same retail multiplier would indicate that the BBC contributed over 8% of this figure. But the figures will become more robust and reliable with time. UK companies were approached at the beginning of the year to return a questionnaire by the end of March. The questionnaire requires only three pieces of information. Please don't ignore it if one comes your way in the New Year.
The survey is available in full from:
Andrew Levy, Managing Director, LIMA UK, Macmillan House
96 Kensington High Street
London, W8 4SG
Tel 020 7937 0880
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