Artist and Income –

Art Licensing

Art licensing is a viable and highly attractive way for talented, commercial artists to leverage their skills into money making careers. Licensing consists of providing someone else certain and specific rights to reproduce and use your creation (generally called Intellectual Property or ‘IP’) on a new product while you maintain ownership of the IP Rights. These IP rights can be in a drawing, a musical composition, a trademark, a brand or words. By licensing certain rights to a third-party (usually a manufacturer, but it can be a retailer as well), you are allowing the third party to manufacture a derivative product using your IP. By doing this, you give someone else the responsibility and the risk for manufacturing, distribution, sales, marketing, logistics, packaging, etc. Your primary responsibility is to create a design and then collect royalties every time that derivative work created from your IP is sold. Your royalties can range from 3% to 20% of the wholesale cost (or of the retail cost if it’s a direct-to-retail licensing program). Moreover, save for some limited situations, you can license the same IP to a variety of different manufacturers for different products.

In 2008, licensed designs accounted for over $80 billion of retail sales in the U.S. alone, which, at a 50% wholesale figure, equates to, on average, $3 billion in royalties paid to licensed IP property owners in one year. Within the licensing industry there are a few primary categories: character/entertainment; music; art and design; food; and trademarks and brands. The entertainment category is by far the best known and generates the most royalty income as it consists of industry behemoths such as Disney®, Pixar®, Marvel®, Nickelodeon® and others. Whenever you see a t-shirt, mug, or lunch box bearing Nickelodeon’s Dora the Explorer®, Marvel’s Spider-Man®, Disney Pixar’s Wall-E® or any other well known iconic character, licensing income was paid to the IP property owner in exchange for the right to place the design on that product.

One of the other large categories (over $7.5 billion in retail sales last year), is the art and design category. While this category houses some very well-known, fine artists who earn a large percentage of the reported licensing income (Thomas Kincaid, Mary Engelbreit, Christian Riese Lassen, and The Hautman Brothers, among others), it also includes hundreds of thousands of independent artists and designers who paint or create graphic designs for use on licensed products and who make a very good living doing so.

So now that we have your attention, you ask: how do you break into licensing?

Recipe For the Artist

In order for an independent artist to earn a living through licensing, the artist needs to enter into licensing agreements with manufacturers. In order to find these manufacturers, artists can conduct exhaustive and time-consuming searches and subsequent cold calls, or retain agents to represent them. These licensing agents generally work on a commission basis and often demand 50% of the artist’s royalties. Unfortunately, good agents are few in number and high in demand and thus there are simply not enough agents for all the artists out there. Alternatively, the artist can research extensively for themselves and then send in cold call submissions; they can rely on an existing network of contacts to build larger deals once the first is executed; and at times, they get lucky and manufacturers find them, either by locating them on the web (pure serendipity given the sheer volume of web sites) or attending trade shows.

There are two primary trade shows each year in the U.S. (SURTEX in New York and The Licensing Expo in Las Vegas) that last for only three days. There are a few other interesting and related shows during the year such as the Atlanta Gift Mart but they are focused on other things, with art licensing only a secondary consideration, so they are not as well attended. There are some large shows overseas as well. An artist who wishes to showcase art for licensing at one of the shows can either purchase a booth or find an agent who is interested in representing them and who will display their art in that agent’s booth. The cost for an artist to rent booth space independently, including rent and all other expenses such as travel, lodging, materials and supplies, can be a $10,000 (or more) venture. Until an artist is established in licensing (or independently wealthy), coming up with this kind of an investment is often challenging. Manufacturers walk the show floor and, if they are interested in the art on display, will enter into negotiations directly with the artist or the artist’s agent.

The reason so much value is placed on exhibiting at one of the shows is because nothing can match personal contact, and bringing all interested parties under one roof can breed and foster interesting and profitable relationships. Moreover, it can be very difficult and time consuming for an individual artist to search online for companies with whom they can work. And many manufacturers, since they do not sell to the public, do not even have web sites (or don’t have websites accessible to the general public). An additional, alternative and complementary method for reaching a potentially vast audience for licensing projects exists as well, that is time and cost effective. A website called Simply Licensed® allows artists to post their work available on the worldwide web 24/7 for viewing by potential licensing partners.

Recipe For the Manufacturer

Manufacturers must continuously design and create fresh new products for their customers. Years ago, manufacturers turned to licensing to help freshen up their product lines and create new ones. By finding artists that have a look and feel the manufacturer likes, and more importantly, they think their customers will like, the manufacturer can instantly diversify its existing lines and add new products altogether. For the manufacturer, there is much less risk in entering into licensing agreements than having a large, in-house art department.

So now you know how to get started along the road to pursuing your dreams of successfully monetizing fabulous artwork. Why not get started?