In October, Allan Feldman, Founder and Executive Chairman of LMCA, spoke at the “Managing Trademark Assets” conference in New York City. The two-day conference was a product of the World Trademark Review, a London-based magazine and newsletter serving intellectual property attorneys throughout the world.
As part of his discussion, Allan touched upon two key points: Making money with Trademarks and the Legal Department as a Profit Center.
Making Money with Trademarks
Referencing published data from License! Magazine’s Top 100 Licensors List, Allan illustrated just how much revenue is in fact being realized by brand licensors. The numbers are significant, and they continue to grow. Extrapolating from reported retail sales down to wholesale and then applying an average royalty rate, the top entertainment licensors (excluding the outlier Disney) look to have generated average gross royalties of about $90 million in 2021. By comparison, earnings for the top corporate licensors on the list average about $25 million/year.
Why the difference? Entertainment licensors are among the most sophisticated practitioners. They have a long, maybe 40-year head start over corporate licensors and licensing is viewed as an important component of their overall earnings because of the uncertain and usually limited life span of their properties. Corporate licensors, by contrast, are much newer to licensing and for most, earnings from licensing take a far second seat to their marketing, strategic and legal goals.
This earnings data came as new information for most of the audience. It demonstrated just how lucrative licensing can be, especially in view of the very modest resources and staffing needed to develop and manage a licensing program.
Legal Department as a Profit Center
As for the legal component, Allan shared stories of some early corporate programs where legal not only initiated licensing within their companies, but in certain cases almost singlehandedly ran the program. These were the early days and awareness and use of licensing as a corporate business tool has come a long way since… especially in the last 15-20 years. Programs today are increasingly being strategically integrated into the licensor's core business. As a result, most current programs are developed and managed by a team typically consisting of legal, marketing, business development and Q&A staff. Still, the ROA’s and ROI’s remain off the charts.
Interestingly, while general awareness of licensing has increased dramatically, audience reaction at the conference made it clear that there is still tremendous growth potential within the business and legal communities to fully leverage the breadth, depth, and power of licensing as a business tool.
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