Art Licensing 101 Excerpt

What is licensing?

Licensing is the business of leasing the right to use a legally protected graphic, artwork, name or logo. Licensing includes publishing, i.e. printing of posters, greeting cards, etc. It also includes 'cross-merchandising' items such as t-shirts, coasters, carryall bags, book marks, mouse pads, aprons, pillows-literally hundreds of items. Cross-merchandising is done through licensing agents. Similar to publishers, they buy rights and give the artist royalties to have their artwork printed onto different objects. Making money in the publishing or licensing industry comes when you sell large quantities. To create this large quantity, you often need a variety of items to be sold.

As an individual artist competing with huge companies for a piece of the cake, you might ask, "How can I introduce my work to the licensing marketplace?"

For the emerging artist, it can be tough to get a break until your reputation has been established. Studying the marketplace and doing your homework, of course, always helps. Many artists have been quite successful. One artist who received her start in the card industry some 14 years ago has 50 licensees now and is heading for more.

Recruiting an Agent

A licensing agent, the ideal way to enter the licensing industry, is always looking for the perfect 'marriage' in the marketplace for her artist and product. Publishers often act as agents for their artists, showcasing their work at licensing shows.

Getting an agent takes time, effort (attending a licensing show, calling agents), money (buying a directory) and also the appropriate art for a particular niche market.

An agent's commission is generally 35-50%. Having an agent is well-worth the fee. Agents are more aware of the marketplace, thus able to get more licenses. Being your own agent in this field is a full-time job that you don't want. Stick to art!

Royalty Rates

Our survey concludes that royalty rates vary. Every artist we asked had a different rate. Some rates were higher because the artist was more established. Others seemed to vary simply from licensee to licensee.

In 1994 the royalty rate on artwork generally ran between 6 and 9%, the average being 6.9%. In 1995 this average rose to 7.8%. This percentage is on wholesale sales.

Breakdown:
prints and posters 10-15%
calendars 5-10%
greeting cards 2-5%
t-shirts 5-10%
various household items 4-8%
textiles 5-10%

For example, a cup retails for $10, wholesaling for $5. If you were to get 9% (the higher end of the range), you would receive 45¢ (9% of $5 wholesale price) on each cup sold. If an agent got you the contract, your agent would get 15¢ and you would get 30¢. Remember, you might get nothing if you don't have an agent!