Based on a business need to diversify your income base, this may be a good time to look into licensing your work. Many manufacturers with product development departments need to fulfill the creative aspects of their product lines, which has opened up new opportunities. Publishers are always looking for fresh ideas, creative design and art to maintain a competitive edge for their retail paper products.
The only limit to the different ways your art can be sold through licensing is your imagination! Start by looking around at different uses of images on everyday objects. These include obvious items as greeting cards, note cards, paper products (plates, napkins and cups), calendars, stationery and video games; and the not so obvious, such as kitchen décor, housewares, apparel, textiles, toys, beverage and food packaging. Interior designers also work with licensed products using design, illustration and photography. One of my favorites is the use of nature photography manufactured on floor tiles.
How do you know if you are ready to explore licensing? You are ready and marketable if you have imagination, technical skills, passion and persistence. In addition, product design capabilities, including the ability to translate 2-D illustrations to 3-D products, are in high demand.
For some expert advice, we talked with Jeanette Smith, owner of J’net Smith Marketing, Licensing & Publishing (www.jnetsmith.com). Smith has more than twenty years experience in the marketing and licensing industry. Her credits include building the Dilbert® brand from infancy to a global corporate icon while vice president of licensing for United Media. She has represented, consulted and coached hundreds of licensed artists, including Tara Reed and Becky Denny. Her strategic marketing expertise has led to character development and branding projects for such clients as Father Flanagan’s Girls and Boys Town, America’s largest privately funded organization for severely at-risk children. Smith also lends her talents to the Animaticus Foundation, a nonprofit organization, dedicated to the preservation, education and evolution of traditional 2-D animation in a digital age.
CA: Why look at licensing as a profit center?
Smith: Licensing is more important than ever to manufacturers; it’s a key way to create a competitive advantage in the retail industry. According to a recent study commissioned by the International Licensing Industry Merchandisers’ Association (LIMA), manufacturers paid $6.04 billion in licensing royalties in the U.S. in 2006 (up 1.5 percent from 2005). Most important to your readers is that the art licensing segment, while a small percentage of the overall licensing pie, had one of the largest growth rates in the industry. Art licensing grew in 2006 at a rate of 4 percent, with an increase of $7 million to a total of $182 million in licensing royalties according to the lima’s 2007 Annual Industry Study conducted by Yale School of Management and Harvard Business School. The term “art licensing” includes all types of creative, from design and illustration to painting, photography and collage.
CA: What are some of the qualities or skills necessary for success?
Smith: The number one quality is artistic and marketable talent, with an eye toward trends. Many manufacturers want something traditional, yet fresh. They don’t do ahead of the curve, but they do look for designs and art that are already “in trend” and that will appeal to a very broad audience.
Also, I always ask artists if they do holidays. For many manufacturers and retailers, Christmas, followed by Halloween designs, far exceeds sales of any other product lines. Because of the constant, and high, demand for new art and designs within these categories, it’s a great way to get started in the licensing business.
The work of some cutting-edge designers is marketable to such a small and sophisticated audience that manufacturers may shy away. Don’t be discouraged. If this is your artistic niche, take the time to explore alternative manufacturers who are the right fit for your style.
CA: Do artists need agents for licensing sales?
Smith: That’s a relatively complex decision with many variables. It boils down to your goals, the speed with which you want to accomplish them, your personal talent and skill sets and what you are willing to do to achieve your goals.
Here are some important factors when considering a relationship with a licensing agent.
• Cost is usually 40–50 percent of licensing royalties.
• What exactly do agents do for their fee? It varies. As an example, some agents include legal advice and others charge extra for it; the same goes for tradeshows and business travel. Make sure your agreement is specific.
• What’s the projected timeline for the agent to produce results?
• Where will they market your art?
• How many artists do they represent?
• Do you trust them to handle your money and develop your business?
CA: How do you find an agent?
Smith: Finding a really great agent is as difficult, if not more so, as licensing artwork directly to manufacturers. I suggest that artists consider learning enough about licensing to do-it-themselves for the first deal. I know self-representation isn’t for everyone, but it’s a great way to learn about the industry, the process and what it really takes to get a licensing agreement. Having done so, you will be better prepared for finding an agent, as well as being a more appealing prospective client to an agent. As the licensing industry is somewhat veiled, it’s difficult to get concise answers without some insider knowledge and assistance—but you can do it yourself. Today more and more artists market and license their artwork to control their business success.
CA: How do you make money in licensing?
Smith: Licensing means “permission to act” and, in this case, being paid for the use of copyrighted or trademarked artwork for use with products or services. The typical licensing payment model is based on royalties, which are computed on the manufacturer’s net wholesale cost. Some manufacturers offer a flat fee as a way to keep their costs down. I recommend artists consider this for their first deal or two, but not to accept this as a standard licensing model, because it’s not to their benefit.
Many manufacturers will offer some form of advance payment, which is technically an advance against the royalties that will be paid according to the agreement terms. The artist, in legal and industry terms called the licensor, is accepting an advance that must be earned through sales of the product. The licensor won’t receive any further royalties until enough products have sold to generate enough royalty income to cover that advance amount. When sales produce the first dollar, after the initial dollar amount provided in the advance, the licensor will begin getting paid royalties based on the schedule indicated in their agreement, which is usually semi-annually or quarterly.
CA: How do artists market themselves and to whom do they promote themselves?
Smith: I recommend sales and presentation materials that can be sent via e-mail. While some may get caught in a spam-filter, artists will know that their intended audience didn’t receive the e-mail when they follow up with phone calls. One can always resend or mail hard copies.
When preparing a target list of clients, be sure to review Web sites carefully. Many manufacturers and publishers are putting submission guidelines on their sites. If a client requests a printed presentation or has other specifications, by all means follow their guidelines.
The contact person varies with every company. Ask for the name of the licensing director. If there isn’t one, which is quite common, ask for the marketing, product development or creative executive in charge of making licensing decisions. There is no substitute for a phone call.
A consistent approach to self-promotion is important in this business. Send newsworthy press releases with photographs to trade magazines and write newsletters for the product categories you have targeted, as well as the licensing industry itself.
IN CONCLUSIONShould you add licensing sales to your business? As a creative professional, cast your eyes ahead for sales opportunities. Licensing your art could be one of those. The world (both print and virtual) is overflowing with manufacturers and publishers requiring design and art for their products. The key is to find an image or style for a broad range of applications. Work can be licensed for a variety of uses. To succeed, find your niche, plan your research and, above all, be persistent. ca