One of the questions we are asked a lot is “What royalty rate percentage should I ask for in a License Agreement?” And the answer is . . . it all depends!
You should always try to negotiate the largest percentage you can, based on the knowledge you have of the distribution of the product to retail (where are the products going?), the type of product being licensed (some products inherently yield smaller royalties) and your “status” in the field of art licensing (have you earned the right to ask for higher percentages based on years of good sales and a name brand?). You should be aware, though, that if you are just starting your career in licensing, do not expect to get industry maximums.
The Licensing Industry Merchandisers’ Association (LIMA) recently released the average royalty rates for the vast number of industries currently doing licensing, and we thought we would share them with you.
Let’s start with the most significant and relevant average to most people reading this blog – that of Art Licensing. LIMA reports that the average royalty for art licensing agreements is between 3 – 6 %.
(What you will find is that manufacturers that sell to mass retailers (Walmart, Target, etc.) are pressed pretty hard by the retailers to keep their costs down low. As such, they cannot afford to pay large royalties, with the assumption being that the Licensor (the artist) will make up the difference in volume. As such, you will see those royalty rates in the 3 – 4% range.)
Based on these averages, you should expect a good deal to be in the 5% range; higher if you have credibility in the marketplace, and lower if the distribution is to mass retailers or discount channels.
And just to show you by example what other industries are achieving, here are the remaining published averages:
- Entertainment – 8 – 12%
- Celebrity – 7 – 10%
- Collegiate – 6.5 – 10%
- Corporate – 6.5 – 9.5%
- Designer/Fashion – 4 – 8%
- Sports – 8 – 11%
There are so many factors to consider when entering into a Licensing Agreement, with royalties being one of the most important. While these rates may not always apply to your situation, they do give you a general framework from which to make your recommendations when doing a deal.
Our third post and we unfortunately need to address the rearing of an ugly issue . . . again – Orphan Works! This is collectively one of, if not the most important topic artists should be concerned about in relation to your business and your artwork. This topic has come up many times previously, with a big surge in 2015.
Essentially, companies are claiming that they are impeded in the quest for creativity by having to seek out copyright owners before using found and published artwork. Their goal would be for laws to be passed that dramatically change the steps these companies would have to take to seek the owner of published artwork – requiring almost no effort to be made to seek the copyright owners before claiming rights to artwork. So, the intellectual property you crafted and created could be “stolen” from you without your involvement or permission, and there is no opportunity for you to make any money from the use of your designs! Companies simply have to state that they could not locate the copyright owners! If you are highly motivated to do so, here is a link for the detailed 2015 government report on the topic:
Yes – this impacts each and every person who creates art of any type!
You can follow this link to learn more about the current and renewed dastardly efforts being made to change the copyright laws. We highly recommend you read and understand what is happening, and take action to make the minority a majority of the collective voice of artists everywhere
Make your voice heard today, and use this link to help share your view:
Here is what we got to hear from this week’s call with Josephine Kimberling . . .
- We learned of her exciting and unique journey into art licensing, and her thoughts on her in-house positions at both Nordstrom and Hallmark.
- How do you balance trend research and personal style?
- Where to you go to find upcoming design and color trends, so that your work hits the market before trend becomes commonplace and tired?
- How do you stay relevant to today’s consumer?
- In regard to targeting specific industries, how do you find partners and what is the most important thing you can do when presenting your artwork?
- Can you describe your art creation process?
- Where do you recommend someone start when entering into the world of art licensing?
- What trade shows do you attend or exhibit?
- Do you copyright your designs regularly, including all variations and color ways?
- Is it common to ask for an Advance when entering into a License Agreement? Can you negotiate royalty rates?
- What is the single best learning lesson you can share with everyone?
If you were signed up for the call, you should have received an email with the playbacks. If not, please register below.
About Caroline Simas:
Caroline Simas is a licensed artist, wife and mother of four in Charlotte, North Carolina, whose designs and patterns appear on a variety of products for the home décor and gift industries. Her faith-based brand, Multiple Blessings, has taken the industry by storm as Caroline’s art and messages of inspiration resonate with many, bringing joy and faith into homes worldwide. She has developed varied and distinctive styles in watercolor, gouache, mixed media, abstract, pen & ink and more.
“While my art may have a recognizable style and niche, I will always experiment with color and technique to keep my designs fresh and inspiring. I feel strongly about connecting my faith with my art. After all, the talent came from God in the first place, so I want to honor Him and use this gift wisely. I am fortunate to partner with manufacturers who understand my passion for creating uplifting products in today’s marketplace. Designing for a purpose certainly brings much joy and is truly a way to multiply blessings.”
Learn more about Caroline at MultipleBlessings.com
Create Art. Create a Strategy. Create Income.
– John Mavrakis & Melissa Schulz
Well . . . here it is! Our first post for ArtLicensingInfo.com, and where do we begin? We thought it would be appropriate if we used this space to tell you who we are and why we have taken on this unique opportunity.
To dispel any rumors . . . no, there was no hostile take-over of the business, and no, we did not force Tara out on the street (yes – we heard both of these!). In fact, quite the reverse! Tara is one of our dearest friends and a client of ideaologie. During our discussions, Tara expressed an interest in moving on to an exciting new project, and felt that we should be the ones to take the reins of her absolutely wonderful and tremendously beneficial education and training program. We are honored beyond words to step into these shoes, and want to preserve and build upon the legacy Tara has created. We will continue to seek her advice, and joyfully play a small part in the continued growth of her design business and the development her new venture – Pivot to Happy! Check it out at www.pivottohappy.com!
So why us? What credentials do Melissa and John bring to the program? Here is who we are . . .
Melissa brings to the table vast experience as a Creative Leader, associated with leading brands such as Hallmark, American Greetings, Westminster Fibers, Kathy Davis, Disney and Harry Potter, to name a few. With close to 20 years of experience in the art licensing and product development fields, Melissa has strategically led creative teams through transitional and successful growth periods. Charged with entrepreneurial spirit, she has spent years helping artists and companies strategize their business growth path. Most recently, Melissa has devoted much time building the Kathy Davis brand online through social media marketing, as well as achieving great success in traditional marketing channels. Through the process of building her own jewelry line, she has proven her “hands on” capabilities in all aspects of the business. Finally, she is an optimist, a relationship builder and a brand ambassador
John draws on his deep executive expertise from working with brand titans Hallmark, American Greetings, Discovery Channel, The Body Shop, Intl., Kathy Davis Studios, Mary Engelbreit Studios, and The Gap/Banana Republic to carry out ideaologie’s business strategy. Earlier in his career, John was appointed Vice President of Stores for Banana Republic, responsible for the company’s meteoric rise and national launch. Tapping his industry skill, John created and developed Streamers, a chain of highly recognized party goods stores, served as Vice President/General Manager for The Body Shop, Intl., and led the Discovery Channel/The Nature Company’s retail operation as Vice President of Retail. John was recruited by Hallmark to become the Senior Vice President of Product Marketing and National Sales at one of their subsidiaries, InterArt/Sunrise Greetings; and also served as President/COO for Kathy Davis Studios, as well as President/CEO for Mary Engelbreit Studios.
We have known each other and worked together for over 15 years; and with more than 75 combined years of building and maintaining a multitude of successful companies and brands, and a combined 35 years in licensing experience, we certainly have the necessary knowledge and success rate to be an invaluable asset. We have the unique perspective of both navigating and negotiating, since we’ve worked on both sides of the fence, with brands, manufacturing and retailers (such as Target, Barnes & Noble, Hard Rock Café, and Walmart).
So that’s us – we are innately driven to helping people! We’ve generated great successes over the years and we want to share that knowledge with all of you!
Here’s to your continued success!
7 years ago TODAY – I released my first eBook – How to Get Started in Art Licensing.
I never dreamt that project would turn into the library of eBooks, audios, blog posts and classes that it is today!
I’m honored to have met so many amazing people in this industry as a result of Art Licensing Info. I’m honored to have been able to help artists understand what art licensing is about. My goal has always been to help artists really understand the day-to-day work and to uplevel the business acumen of artists in the industry as a whole.
Today I’m both excited and a bit nostalgic… I’ve decided to turn the reigns over to John & Melissa of ideaologie.
After a lot of thought and discussion – it made sense to all of us for them to take the reins and continue on with the Art Licensing Info brand. They have amazing backgrounds and years of expertise in retail, with licensees, representing artists and working with big brand artists – Mary Engelbreit and Kathy Davis sound familiar??
I believe they will be able to take what I created and bring it to a whole new level for all of us.
So what will I be doing moving forward?
I will still be creating art and licensing it – I’m not leaving the industry, just the teaching side of things. I’ve been working with John & Melissa over the past few months and realized I wanted to write, teach and create on a different path. I also realized there was no way I could add it to everything else I’ve been doing – something had to give.
I’ve started working on a new project – building a community, support and tools around being HAPPY. I’d love for you to check it out, share it with people you know who might be interested and join me for this new adventure. PivotToHappy.com
I’ve been through some stuff… just like you. There are two events in my life that stand out as “forks in the road”. Things that could have left me angry and full of excuses or made me pull myself up by my bootstraps and figure out how to move forward and find my happy again. My divorce – a fork in the road that almost turned me away from art licensing before I’d gotten started. Most recently, coming to terms with my father’s decline into Alzheimer’s and everything that entails has really tested my skills at remaining present and finding the happy in every day. It’s something I’ve been sharing personally with others but now want to do it a bigger way.
I’m working on a book proposal (anyone connected with publishers? Would love a referral!) as well as some speaking topics and other things to come.
This is a huge PIVOT for me – to shift from something I’ve been doing for 7 years and jumping into something new and unproven is a big leap of faith. But that’s what life is about – listening to your gut, evaluating your options and then going for it. Following what excites you, makes you leap out of bed in the morning and brings a smile to your face.
As I sit writing this post – the last official post as the owner of Art Licensing Info – I must admit to some serious butterflies in my belly! Thank you for reading, for engaging and for coming on this journey with me. It has been an honor to share my insights and opinions about this business and to get to know so many amazing people. The beautiful thing is that we get to “keep each other”. I’m still “Artist Tara Reed” all over social media and will still be creating art for licensing. It’s a pivot – not a farewell.
So after more than 1,125 posts I say again – here’s to your creative success!
– Tara Reed
I’ve talked about the “cash flow cycle of licensing” many times – how long it takes to make money licensing your art but I don’t think I’ve ever talked about the life cycle of the art.
It used to be (so I’m told because it was before my time) that art that was licensed would continue to be on products and earning royalties for several years. These days it’s more often “once and done”. Even many best selling products will be replaced the next year so the store has something “new” to offer.
Consumers want “new”. So the stores what “new”. Then the manufacturers want “new”. Guess what we, as artists, have to do? You got it, keep creating new art, more art, new variations on a theme… if you can create quickly and become an art collection creation machine, you can do well in licensing.
This shortened life cycle for products is both good and bad for artists.
- GOOD: If you don’t get a deal, the next deal will be right around the corner! When companies have to refresh art quickly, it means they need more art more often.
- BAD: You have to have many more deals today to make the same money people did 10-15 years ago. This is because the quantities of products being produced has gone down significantly AND the length of the deal is shorter.
Understanding the realities of art licensing today – and deciding if you want to participate or not – is important.
If you can create quickly, have computer skills to change colors or layouts upon request, enjoy coming up with new ways to do the same theme time and time again… this might be for you!
The way to make money in art licensing is when you can create collections that multiple people want to license for a variety of products. Work once, get paid by many. But know that you won’t get paid by each for years on end.
Here’s to your creative success!
– Tara Reed
The next call is sneaking up on us and we only have a handful of questions! Surface pattern designer Josephine Kimberling has agreed to share her experience and expertise on the July 15, 2015 Art Licensing Info Ask Call but without questions it might be, well, a little boring.
Don’t assume everyone else is submitting amazing questions – we need YOURS!
What do you want to know about art licensing? Fabric design? Pattern design? Josephine’s career? Her inspiration? These are a few ideas… PLEASE, submit your question below!
Thank you and here’s to your creative success!
– Tara Reed
Artists who are new to licensing get confused at first about how and why they need to build collections of art to succeed in art licensing.
Manufacturers want to see groups, or collections, of art more than stand alone pieces.
A collection is a coordinated group of images and/or patterns that can be mixed and matched to create full product lines that sell in stores and online. Think about throwing a party – either with fine china or paper plates – would you want the same exact image on everything or a little variety to make it more interesting? Variety of course! And it’s up to the artists to provide that for the manufacturers.
Here’s a video I created to show you how to think about collections….
How an artist goes about creating these collections seem to fall into two categories – those who take a ‘fine art approach’ – creating painting that could be put in a frame and hung on the wall. The type of art that easily lends itself to gallery sales, for example. The other way is to start with icons and build to a scene or image digitally. Art can either be done by hand or completely digitally – there are both types of artists successfully licensing their work.
Artists who paint completed images use four coordinating pictures as the building blocks of a collection. For example, four different but coordinating snowman paintings would make up a winter or holiday collection. The artist could make the collection more easily applied to products by creating coordinating borders and repeat patterns, using elements from the four base images, to fill out the collection.
An alternate way of creating art collections is to start with individual icons as the building blocks. The icons can then be combined to create scenes (similar to the four painted images above), borders and repeat patterns.
Here’s a basic recipe for an art licensing art collection:
- 4 Coordinated images (this is the bare minimum you need)
- Patterns to support the images – often the patterns or textures are pulled from the images. For example, if you have snowmen and one has a striped scarf and the other has a polka dot scarf, create the stripe and polka dot as repeat patterns.
- Icons – pull out a few design icons that might work alone on a product. Perhaps the snowman would be embroidered on a towel or tote bag. Maybe flip flops would be added to a note pad.
- Borders – take elements from the images and create a border design. These might be used at the top of a gift bag, on a kitchen towel, on fabric or anywhere else borders would work.
How many collections do I need?
The answer to this question will vary but here are two good rules of thumb:
- 12 collections before you submit to an agent or manufacturer – it shows you really “get” the concept and are committed to art licensing. You are less likely to be a “one hit wonder” if you have taken the time to build a portfolio with collections specifically for art licensing.
- 25+ before you have your own booth at a trade show. It’s better to wait an extra year and make a solid first impression than spend the time and money without enough art for the manufacturers to choose from.
Creating collections means thinking about the bits and pieces a manufacturer would need to create a product. When manufacturers see that you understand and can provide what they need, you are more likely to get an art licensing deal.
– Tara Reed
P.S. To learn more about the basics of Art Licensing and decide if it might be a fit for you and your art, I recommend you take a look at the “Beginner Basics Audio” or the eBook, “How to Get Started in Art Licensing”.
Over the years, I’ve found music to be a great way to stay motivated, to get through tough times, celebrate great times and everything in between.
I’ll date myself now but I remember listening to the radio in college, my finger poised over the “RECORD” button on the tape recorder in hopes of hearing my favorite song so I could add it to my mix tape. (Yes kids – there is a reason the term “Mix Tape” exists… ’cause they used to be TAPE – google it.)
Or there were the songs we would play for ourselves or friends when we found ourselves dumped and broken hearted – those songs that said, “You are amazing!” (and he’s a fool) and “You will survive and be better than ever and he will rue the day he ever let you go!”
In more recent history, I’ve put together playlists of “empowering music” that I play when I need a little more energy in my day or when I start to doubt myself and need to be told I’m amazing but in a little different way than the breakup mixes…
This business is not for the faint of heart. Or the easily bruised egos. Or the artists who want overnight fame and fortune.
But for those of us who choose it as the way or a way we want to make money – we need those things to keep us inspired and going.
Here’s a new addition to my empowering music list – and I love the fact that it was released during SURTEX on May 19! (Seems like a sign that it was meant to be an art licensing anthem, don’t you think??)
Some days you might want to throw in the towel. Those are the days you need to find your fight to move from that voice in your head and keep the course!
Here’s to your creative success!
– Tara Reed
Last week (June 9 – 11, 2015) the Licensing Expo took place in Las Vegas. This is the big show for everything licensing – not just art. Entertainment dominates with large, elaborate booths and characters walking the show floor for upcoming movies, current TV shows and more. There is a brand and agent section and the art licensing section.
I haven’t been to the show for a few years and I definitely noticed that the budgets for booths from the TV and movie studios have increased since my last visit – a good sign!
I was there to teach a class on the opening day and also wandered around to check out the show on day 2 as well. The feedback from exhibitors in the art licensing section was good – I was told day 1 started off strong and a few people even said their first day was as good or almost better than SURTEX as a whole. Day 2 was a little slower in the art section – the crowds seemed to be in the entertainment section of the show. I’m not sure how day 3 went so if you exhibited – please give us your impressions in the comments!
Hopefully the show was a success for those who had booths and they have lots of quality leads to follow up on. Next year the shows (SURTEX and the Licensing Expo) won’t be quite as close together so it will be a little easier on those who do both!
Here are a few photos from my adventures – you can find more on Facebook on the Art Licensing Info on Facebook page.
Here’s to your creative success – art licensing show season 2015 is a wrap!
– Tara Reed
Want to make a plan to exhibit next year? Here are the dates:
SURTEX – New York, NY – May 15-17, 2016
Licensing Expo – Las Vegas, NV – June 14-16, 2016 (I think!)