FAQ

ROYALTY RATES – WHAT IS THE STANDARD?

RoyaltiesROYALTY RATES – WHAT IS THE STANDARD?

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.

Who In The Heck Is ideaologie?

MJ7.10.15Well . . . 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 Schulz

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 Mavrakis

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!

 

FAQ: CMYK vs RGB colors – what is an artist to do?

I remember when I started licensing my art, I got very confused about this whole RGB vs CMYK color issue – it isn’t something we ever discussed in marketing class!  I assume many of you who have a degree or training in art were less perplexed by this – but I get questions pretty regularly about it so I thought I’d do a little post about color – as I understand them.  Feel free to add to my and everyone elses knowledge in the comments!

Pink Floyd - dark side of the moon album coverCMYK stands for Cyan (a pale blue) Magenta (a hot pink), Yellow, and Key (or black).  It is called “subtractive color” because it starts with something white – often paper – and filters out wavelengths by applying ink to the paper.  (Remember physics? Yes, it is coming back to haunt you! Don’t remember it?  How about Pink Floyd’s Dark Side of the Moon album cover – not just pretty, it has meaning!)

RGB stands for Red, Green, and Blue.  RGB is “additive color” because it starts with black – or the absence of light – and adds light in colors as needed.

Computer monitors use RGB while most printers that print on paper use CMYK.

You might still be scratching your head and saying, “Tara, this is fascinating but still leaves me in the dark about what to do with my art if I want to license it.”

My answer: ask your clients.

Here is how I handle color – and I’m sure someone will jump in and tell me that I’m wrong but I’m just telling you what I do – my scanner scans in RGB and I like the way colors look on my monitor in RGB.  I create everything in RGB.

When I work with a new client, one of my first questions is, “What color mode do you need my art in, RGB or CMYK?”  Then I remember which manufacturer wants what and deliver the files appropriately.

But what happens when you move your art between color modes?

If you work in Photoshop, you might think it’s as simple as going to the IMAGE menu, clicking MODE and changing from RGB to CMYK.  Depending on the colors in your art, this could work with little visible differene or really change the way your art looks.

Certain colors – blue in particular – really change when you make them CMYK.  Below is an example of a blue square I created in an RGB space – nice and bright!  I then put it in a new file and simply changed the color mode to CMYK.  See how drastically it changed?  Pretty significant!

Color is a huge issue in art and printing and will vary by the factory doing the printing, what is being printed on – paper, ceramic, fabric, etc.  There are no easy solutions.

Here are some suggestions to make color – and your clients – your art’s best friend:

  • Think about the end printing process when you create if possible.  If you know you are designing something for a company that needs art in CMYK, know that the brilliant blue you paint won’t be quite so bright in the end.  Be willing to accept some changes – it’s the nature of the business.
  • Get some Pantone color fans. 
  • When I design for ceramics, rugs or some fabrics, a few clients ask me to give them the closest Pantone Fashion and Home color matches (TPX) to my art.  So I paint, then sit with the fan and place colors next to them to make my choices.  It helps them communicate color with the factory and get the best results.
  • The Color Bridge fan is helpful to see how colors will change from RGB to CMYK since they have the swatches side by side.  You can get more technical if you have the “coated” or “uncoated” fans to see how the colors work on coated or uncoated paper.
  • Learn more at www.Pantone.com
  • Really controlling and picking colors is easier if you are a digital artist who creates on the computer.  Artists like myself who paint by hand and scan have to understand that the colors may shift a little more.  The important thing is to remember that your client’s goal is to get it looking as good as possible – that is what will make it sell.  So I pay attention to color, but I don’t obsess about it.

Hopefully this helps… now all you color experts, chime in in the comments and teach us more!

Here’s to your creative success!

– Tara Reed

 

FAQ: How do I know if my art is a good fit for licensing?

This is the #1 most frequently asked question by artists just learning about this thing called “art licensing”.

Art Licensing means an artist grants the right to use their art to a manufacturer, for use on a specific product or products, for a specific period of time, in exchange for a royalty (percentage of sales.)  Sometimes there is a flat license fee but that differs from selling art outright since the artist still maintains the copyrights and there is still a contract defining the product(s) and term of the agreement.

So how can you tell if your art would be a good fit for the art licensing industry?

Here are 4 things that make some art easier to license than others:


1. The art is FLAT. 2-dimensional art can be applied to all sorts of products: gift wrap, greeting cards, dishes, dish towels, fabric and more. And with some dimension and maybe a back and side view picture as well, 2-D art can be turned into 3-D figurines, ornaments, gift products and more as well.This doesn’t mean that if you are a sculptor, wood carver or other type of 3D art creator, that you can’t license your art. It just means that you will need to look at what products are going to be a good fit. I haven’t seen photographs of many sculptures on wrapping paper lately. So target companies who create products that are 3D, like your art.


2. The art is in COLOR. Go shopping and instead of looking for items you need to purchase for your own use, look at products that have designs on them. How many of them are in color vs. black and white? (And I’m not talking about the trendy black and white art, but black and white sketchy type art…)Art is used by manufacturers to help their product stand out from the competition. And most of that art is in color.


3. The art is in COLLECTIONS. It is rare for a single image to be licensed. Manufacturers usually need a variety of images – in my experience, at least 2 if not 4 if you paint or create in collections of images. (When I say “images” – I usually mean something you could frame and hang on the wall. A painting of fruit or a beach scene, things like that.)Another way to create a collection is to take a theme and create icons, borders and patterns. (That is what I do.) Manufacturers usually create groups of products instead of one of this and another of that. Think about dishes for example, sets often have a variety of 4 plate designs, an apple, a pear, a plum and grapes. Then the bowls might have a coordinating border design and serving pieces with a group of the 4 plate fruits. So designing in collections of art that can create a variety of coordinated products increases your chances of success.


4. The art is MAINSTREAM. Like I said in the beginning, art is subjective and no one style is more “valid” than another. It is personal expression, personal preference and personal choice. But when you want to license art, the rules change a little.You are no longer creating for yourself or a single collector but for the masses. Art that is more mainstream is going to be chosen more often than things that are more unusual, edgy or abstract. And in tighter economic times, retailers and manufacturers become even more conservative and traditional in what they choose.


A great way to figure out if your art might work for licensing is to head to the stores!

Go shopping and look at the designs you see on products on store shelves – do you think your art could fit? Of course I don’t mean “is your art exactly the same?” but is your art within a range of what you usually find. For example you will regularly see Christmas themes for home décor, paper and ceramic tableware, greeting cards and more. Chances are if you do Christmas themed art, you have a shot at licensing. So go shop!

Here’s to your creative success!

– Tara Reed

FAQ – The Cash Flow of Art Licensing

Today I decided it would be a great time to review the FAQ of making money in Art Licensing…

Many people have asked me what expenses I could possibly have because I work from home and I ‘paint’.

Computers, printers, software and scanners aren’t free. And the ink you go through printing things to submit or show– that adds up quickly.
Websites, reference books, trade magazines, … there are expenses.

Invest in your business but don’t go into major debt if possible. Watch your cash flow and spend wisely. Investments can be in the form of training (like books, classes, seminars or personal consulting), attending or exhibiting at trade shows, upgrading a printer or computer. Grow as your business grows.

The Cash Flow Cycle of Licensing

If you haven’t licensed your art before, you may wonder how long it will take to make money. Of course, it can vary and each artist’s experience will differ.  But below I have outlined the 7 basic stages that will give an idea of what to expect:

  1. Create the art. You or your agent show it to manufacturers.
  2. Celebrate! Someone is interested! Contract negotiation starts.
  3. Sign the contract. (Let’s assume it is January) You will get some money now IF
    you get an advance. In my experience, that happens about 50% of the time.
  4. Prepare the art. Make any requested changes or additions to your art and get everything to the manufacturer.
  5. Now the manufacturer needs to make sure everything is formatted and ready. Product needs to be made. It is often 6-12 months between when you give them the art and when the art is on the products, in a store.
  6. The manufacturer ships the product with your art. Assume this happens in January– it’s now been
    12 months since signing the deal.
  7. Most companies pay quarterly – so you will be paid 4 times a year. At the end of the quarter, which would be March, they start to do royalty reports and generally have to have them in the mail within 30 days – so by April 30th. You should have your first royalty check by the first week in May.

As you can see by this example, it can take some time to get the money flowing.

Sometimes things move faster but I want you to prepare for this type of time line. If you understand it going into it, you are less likely to get frustrated and give up. Once you have things in the licensing pipeline, you start to get very excited at the end of each quarter and watch for the mail carrier!

Here’s to your creative – and dare I say realistic – success!

– Tara Reed

FAQ: Do I need an agent to succeed in art licensing?

The answer all depends on you!

The art licensing industry is accessible to individual artists who want to do the work of marketing their art.  However, there are also many agents who help artists who choose not to take care of that side of their business.

Here are five facts to consider when deciding if you want to work with an agent:

FACT:  Agents want to work with artists who “get” licensing and have enough work to make it worth their investment of time and energy to promote.  If you only have a limited portfolio, you may have a hard time finding an agent.  Licensing is a numbers game – manufacturers are always looking for “what’s new” so agents need artists who can really produce on a regular basis.

FACT:  Agents do the marketing side of your business and for that, they share in the royalties.  Most art licensing agents work with a 50/50 split while some take less and a few take more.  So you need to assume that you will get more than twice the business with an agent than you would on your own, or you will be behind before you get started.

FACT:  Marketing your work isn’t easy.  Licensing is a competitive industry and there will be lots of rejection – or lack of response – so you need to have a thick skin and the ability to keep at it.  Just as you need to create a lot of art, you will have to make a lot of phone calls, send a lot of emails, and nourish relationships to get business.  Sometimes you will feel like you are communicating into a void… the reality is that many manufacturers are so busy that you won’t get a response unless they want your art.

FACT:  Some artists will find every excuse under the sun to postpone making a call or showing their work to anyone.  Those are the artists that should absolutely consider an agent – SOMEONE has to do the marketing, if you aren’t going to, try to find someone who will.

FACT:  Finding an agent doesn’t mean guaranteed riches.  You still have to do the work, create the art, study the trends, meet the needs of the manufacturers and work as a team with your agent.  You don’t head to an island to sip margaritas and paint every so often.

Not sure if you would be happier working with an agent or doing your own marketing?  Click here to get a free questionnaire to help you decide…

 

No matter what you decide is best for you – for now – I’ve written an eBook to help you shorten your learning curve.

I want help finding an agent…

I want help doing my own marketing…

How to Find, Interact and Work with Manufacturers Who License Art - eBook by Tara Reed

If you want to find an agent, there are more than 25 listed on the AGENTS tab of this blog. Thirteen of them gave feedback in the eBook and the rest have asked to be listed for artists to find. This is a resource only and I can’t guarantee that you will hear back if you contact them.

Whatever you decide – I wish you much success!

– Tara Reed

FAQ Review: What Do you Mean by an “Art Collection”?

I’ve received several emails recently asking for more clarification on this whole concept of “art collections”.  I decided it would be a good time to repost … and don’t forget, there is an FAQ page on this blog that links to answers to many of the most common questions.  So if you are new to licensing, it’s a great place to start!

In art licensing, manufacturers usually want to see groups, or collections, of art more than stand alone pieces.

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.

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”.

FAQ review: The Cash Flow of Art Licensing – this isn’t quick money!

Many people have asked me what expenses I could possibly have because I work from home and I ‘paint’.

Computers, printers, software and scanners aren’t free. And the ink you go through printing things to submit or show– that adds up quickly.
Websites, reference books, trade magazines, … there are expenses.

Invest in your business but don’t go into major debt if possible. Watch your cash flow and spend wisely. Investments can be in the form of training (like books, classes, seminars or personal consulting), attending or exhibiting at trade shows, upgrading a printer or computer. Grow as your business grows.

The Cash Flow Cycle of Licensing

If you haven’t licensed your art before, you may wonder how long it will take to make money. Of course, it can vary and each artist’s experience will differ.  But below I have outlined the 7 basic stages that will give an idea of what to expect:

  1. Create the art. You or your agent show it to manufacturers.
  2. Celebrate! Someone is interested! Contract negotiation starts.
  3. Sign the contract. (Let’s assume it is January) You will get some money now IF
    you get an advance. In my experience, that happens about 50% of the time.
  4. Prepare the art. Make any requested changes or additions to your art and get everything to the manufacturer.
  5. Now the manufacturer needs to make sure everything is formatted and ready. Product needs to be made. It is often 6-12 months between when you give them the art and when the art is on the products, in a store.
  6. The manufacturer ships the product with your art. Assume this happens in January– it’s now been
    12 months since signing the deal.
  7. Most companies pay quarterly – so you will be paid 4 times a year. At the end of the quarter, which would be March, they start to do royalty reports and generally have to have them in the mail within 30 days – so by April 30th. You should have your first royalty check by the first week in May.

As you can see by this example, it can take some time to get the money flowing.

Sometimes things move faster but I want you to prepare for this type of time line. If you understand it going into it, you are less likely to get frustrated and give up. Once you have things in the licensing pipeline, you start to get very excited at the end of each quarter and watch for the mail carrier!

Here’s to your creative – and dare I say realistic – success!

– Tara Reed

P.S. Be sure to check out the answers to other Frequently Asked Questions on the FAQ page…

FAQ: How do you know if your work is safe when submitting to manufacturers?

I get this question a lot – here is what one artist emailed:

“When you have a potential lead with a company and you present them some of your art work, how do you know your work is safe? Should you copyright your work first? How do I know my work is safe if and when I present them my work online.”

Here is my response:

I copyright my art every quarter – bundle all your new stuff together, keep good records and get into the habit.  Then if you are infringed in a big way – you can do something about it in court.  If you are infringed in a smaller way and it isn’t worth legal fees, you can at least send a cease and desist letter, with proof of copyright, and usually scare people into legal alignment. :)

You are never 100% safe.  There are disreputable people and companies out there.  The best defense is to do your research (as much as possible) on companies before sending your art.  Always send low res files for review as well.

However – without showing anyone your work, you’ll never get anywhere.  So do what you can and don’t obsess.  That’s how I approach it anyway.

I hope this helps!

Here’s to your creative success!

– Tara Reed

P.S.  Here is a blog post I wrote about registering copyrights in large groups – save some money for art supplies that way!

FAQ: What art licensing trade shows are there?

I’m regularly asked what trade shows exist for artists who license or want to license their work.  That question is often followed up by, “Which one should I do” and “When do I know if I’m ready?”

I can’t tell an artist which show will be “the one” for them or when they are ready but I can give you some links and some generic advice.  Then it’s up to you to decide. Sound fair?

Every person will have different results from trade shows based on your art, preparation, how you work the booth, how your art fits what people are looking for, etc.  I will say that you need to have a body of work before investing in a trade show booth.  Paul Brent recommends a minimum of 25-40 collections – groups of 4 or more coordinating images or collections of coordinating icons, borders and patterns.  Or… some combination of the two.  With less – you probably won’t get enough interest to justify the expense.  More is always better… one constant in this business is manufacturers asking, “What do you have that’s new?”

The two art licensing trade shows

There used to be four yearly shows that are either entirely for licensing or have sections specifically for artists who license their art but it is now down to the two that have been around since the 80s.    I’ve  included a link to the websites, a general time frame and a brief description of the show.

SURTEX – New York City – May

  • Trade show solely focused on artists and agencies in art licensing.
  • Show website: www.SURTEX.com

Licensing Expo – Las Vegas – June

  • This show covers all aspects of licensing – sports, movies, tv as well as art.
  • Show website: www.LicensingExpo.com

Here’s to your creative success!

– Tara Reed

P.S. Need help preparing? Do you need tools to help you get your booth, your game plan, your game face, every ready? Don’t forget we have lots of options – eBooks, audios, and more at www.ArtLicensingInfo.com/shows.html Click on over and see what might help you put your best art-foot forward!