The Licensing Game

[maleek]

I'll be following this for updates! Is this particular deal for a client, or for yourself?

 

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[Vigilante]

For one of my companies.

 

[saigon]

Saw another post link to this and read through it. Great information again. Rep+ sent.

Two examples I think are utilizing this are:
Kim Khardasian game (whether you like her or not, someone took advantage of the opportunity)
UFC Gym franchise (taking advantage of the explosion of UFC and turning your common gym into some more niche and specialized) which has been popping up near me in Atlanta and elsewhere

The UFC Gym example just reminds me that sometimes you don't need to reinvent the wheel. Food for thought: How can you improve on an existing/broken model out there (regular brick and mortar gym) by leveraging an already established brand (UFC)? Genius.

Sent this thread to a good friend of mine. Hopefully he uses it to take action.

 

[andviv]

Sent this thread to a good friend of mine. Hopefully he uses it to take action.

So your friend will hopefully use it...
What about you?
How are you going to use it?

 

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[saigon]

So your friend will hopefully use it...
What about you?
How are you going to use it?

Will be putting together some high level numbers and calling the celebrity's agency that i have in mind Monday morning to discuss.

 

[RazorCut]

Now we wait. Might work. Might not.

What was the outcome @Vigilante ?

 

[Vigilante]

What was the outcome @Vigilante ?

The agent never responded after the initial call, which is unusual. We didn't chase it very hard as we usually don't need to. I didn't feel strongly enough about it to break the door down or we could've stayed on it. So, we moved on in a different direction. Now I am totally glad we did… As the original call was made to… Liam Neeson.

The same Liam Neeson that revealed himself to weeks ago to be a huge jackass.

 

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[theag]

The same Liam Neeson that revealed himself to weeks ago to be a huge jackass.

I'm not that into celebrity gossip, but I like him. What happened? Google doesnt want to tell me.

 

[Vigilante]

Keep in mind that when you license a celebrity, you take the good and bad that come with that celebrity.

When we licensed Dale Earnhardt Jr for the GPS that we made with his voice, right after we launched the product we put it on QVC. We had QVC come to a NASCAR event and do a broadcast live with Dale on QVC. He gets on TV, and they ask him about the GPS. He downplays it, says he doesn't know if it is a good GPS or not, and in wanting to play it cool actually hurts the sales on the live television spot. So, any time you hook your wagon onto someone else's horses, you roll with the good and the bad. Your celebrity gets in a scandal or says something stupid, and you can basically kiss your investment goodbye.

Last week, Liam Neeson chose to use the terrorist attacks in France to lambast the UNITED STATES for having too many guns in the streets of the U.S. Ironically, his movie Tak3n (Taken 3) was hot in the theaters. France has extremely tight controls on guns, and the police first on the scene in France arrived on bicycles with billy clubs. The tragedy that befell France has nothing to do with the United States, but perhaps if someone had been allowed to be armed in France, the outcome might have been different. It made national news here and continues to.

And just like that, a license deal with a Liam Neeson can take a major change in direction.

Brands are somewhat better subjects than people for licensing, but keep in mind that one of Stephen Key's first major break throughs was his license deal he did with Taylor Swift for guitar pics bearing her likeness.

 

[charlieChalk]

Keep in mind that when you license a celebrity, you take the good and bad that come with that celebrity.

When we licensed Dale Earnhardt Jr for the GPS that we made with his voice, right after we launched the product we put it on QVC. We had QVC come to a NASCAR event and do a broadcast live with Dale on QVC. He gets on TV, and they ask him about the GPS. He downplays it, says he doesn't know if it is a good GPS or not, and in wanting to play it cool actually hurts the sales on the live television spot. So, any time you hook your wagon onto someone else's horses, you roll with the good and the bad. Your celebrity gets in a scandal or says something stupid, and you can basically kiss your investment goodbye.

Last week, Liam Neeson chose to use the terrorist attacks in France to lambast the UNITED STATES for having too many guns in the streets of the U.S. Ironically, his movie Tak3n (Taken 3) was hot in the theaters. France has extremely tight controls on guns, and the police first on the scene in France arrived on bicycles with billy clubs. The tragedy that befell France has nothing to do with the United States, but perhaps if someone had been allowed to be armed in France, the outcome might have been different. It made national news here and continues to.

And just like that, a license deal with a Liam Neeson can take a major change in direction.

Brands are somewhat better subjects than people for licensing, but keep in mind that one of Stephen Key's first major break throughs was his license deal he did with Taylor Swift for guitar pics bearing her likeness.

This is my first post and first step to what will be a better future.
Firstly, its been said, but vigilante thanks for such brilliant advice.

My first question is what would you say, information wise, is needed to be communicated in the first contact phone call - what answers need to be ready?

Thank you again,
And hello fastlane

 

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[Red]

@Vigilante .... dude. This. Rocks.

How in the hell did I miss this thread previously? This has rekindled an idea I had late last year after attending one of Matt's dirtbike races... I even made contact with the company who I wanted to license the IP from... (It's in the top 10 on that list you posted) They wanted a minimum of $50k/year guarantee (yeah, no), BUT... this has started my gears turning again... and given me a better approach (something along the lines of being the middleman but putting two large name companies together & taking a small percentage).

Damn.

Awesome thread. Thank you. See you soon!

 

[Vigilante]

.

My first question is what would you say, information wise, is needed to be communicated in the first contact phone call - what answers need to be ready?

For the first call, you are just setting the hook.

You need :

1. idea
2. balls of steel
3. ability to sell a vision

All you are doing with the first call is making sure you have the right people, and that you are calling to offer them money. 95% of the time, they will ask you to email them an outline or a presentation on your idea.

First call is just big picture.

 

[Semmy]

@Vigilante when do you send them a non disclosure agreement? after the first introduction call before presenting your full idea? how much of the idea can you give away on the first call overall without giving away the initial control and perceived ownership of the idea?

 

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[Vigilante]

They're not experts in what you do. Non-disclosure agreements don't do much. I have yet to find a big company interested in stealing an idea, getting into the manufacturing business of a product they're not familiar with, and cutting you out of the deal. So... I don't really worry about that.

Snoop Dog doesn't want to manufacture soap-on-a-rope. He wants YOU to do it, and send him a check.

 

[Semmy]

They're not experts in what you do. Non-disclosure agreements don't do much. I have yet to find a big company interested in stealing an idea, getting into the manufacturing business of a product they're not familiar with, and cutting you out of the deal. So... I don't really worry about that.

Snoop Dog doesn't want to manufacture soap-on-a-rope. He wants YOU to do it, and send him a check.

Ok, what about if you are in the game Stephen Key style where you do it the other way around?

 

[Vigilante]

I think he covers that in his book. Also, he's doing an INSIDERS call here soon... so might be a great question for him.

 

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[Semmy]

@Vigilante oh i know I know I will be on the call and I did buy and read his book 2 days ago and now rereading it and I watched the 1 hour presentation on his youtube channel, heck almost any videos of @StephenKey they have posted there and looking forward to the webinar and think that his coaching is the next step soon.

 

[Vigilante]

My sister in law is currently in his coaching program. It's better than most and she's getting some hard core 1-on-1 attention from his organization. He even provided his personal cell phone number.

 

[GuestUser113]

http://www.inventright.com/component/k2/steps-to-take-before-filing-a-patent-part-ii

http://thesolopreneurlife.com/use-nondisclosure-agreements-when-trying-to-license-your-ideas/

 

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[Semmy]

now just diving into this free sample class of his:
http://www.inventright.com/32-most-common-problems-sample-class

 

[charlow]

Hi @Vigilante thanks for making this thread. I have a question regarding a licensing/endorsement deal. I know you mentioned that every deal is different, and you don't have much experience in endorsements specifically, however I was hoping you might be able to shed some light on this scenario and tell me what you think a reasonable % cut would be between the two parties:

Licensee is a digital studio who seek to license the brand/likeness of a highly niche-specific celebrity.

Licensor is an agency that represents said celebrity. Again, they are not a-list famous, not by any stretch, however they are very well known in their own niche. Further, the celebs representation is not massive (the agency is pretty new).

As the licensee I want to have exclusive rights to the celebrities likeness/brand etc for a specific digital product. Being a digital product, we won't use traditional brick & mortar channels to sell units. This means that unlike in your circumstances, we don't bring those mass-market relationships to the deal. The only way we can advertise the product is through the celebrities existing channels, which necessitates the execution of a well planned endorsement strategy. The value we do bring to the deal is the product itself, which requires 100's of hours of professional coding and development, this could be valued at near to $50,000, easily more.

I know my explanation is a bit vague, but using the above info do you have an advice?

 

[Vigilante]

You want the celebrity to do more. Therefore, he's going to want more.

I think a "b-rate" celebrity like Larry the Cable Guy was around 10% of wholesale. So, if an item sold to Wal-Mart for $10, Larry got $1.

With limited channels of distribution, reliant on the licensor themselves to lend value and help convert sales, the problem is you are dealing with variables that may be out of your control. There will only be so much you can do to influence sales.

Ideal license deals bring product AND sales channels, so all the celebrity has to do is lend her name/likeness/signature/trademarks to the project and sit back and collect money. Requiring any active involvement increases what they will want from the project.

 

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[Marcel1986]

Thank you very much for sharing your insights @Vigilante
I have a product fitting the surfing industry and have it already in my garage.
Because of this thread and @Stephen Key s call i decided i will try the licensing path for this one.
So i think a good move for getting the people who decide directly is adding / approaching them via Linked In.
I guess the product developers are best to get in touch here !?
Made my Sellsheet yesterday and now thinking of what could be the best way to introduce to them ?!
Just write: Hi, i´m Marcel and i have a product perfectly fitting your brand. Would be nice to have some further talk about it.
What do you think ? Is this approach a good one ? And are product developers the one´s i wanna talk to in this case ?

 

[Vigilante]

I'm not an expert in the Stephen Key aspect of that way to do a license deal. Have you read the One Simple Idea book by Stephen Key? I think he outlines it pretty well in there, but to be honest I have never done that type of license deal before.

 

[Marcel1986]

watched the videos, listened to your radio show and his call last week.
The book is on my list.
I was just curious about what you think about my approach. As it´s hard to find the emails and phone numbers of the responsible i think getting in touch via linked in is best
So i thought you know who is responsible and open for such suggestions ( new products ), the product developers !?
Think i´ll try the " Hi here i am way" and then get to the point and send them my sheet after 2-3 messages.

 

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[Vigilante]

I think before you do anything, you should read the book as I think he outlines it all in there. Again, my opinion doesn't mean much on the subject as I haven't completed a license agreement as the licensor before... I have always been the licensee.

Stephen is also on the forum from time to time, but I also know that his course that he offers would walk you thought this also.

Good luck!

 

[MoneyDoc]

Hi @Vigilante , thanks for the golden thread.

So much information here...

Just a question, I want to introduce a new product BeardZerian (beardzerian.com) to the market. To make this successful, I am trying to get a hold of Dan Bilzerian. I would wan't him to both endorse the product and to allow me to use his brand as the main USP. I have contacted his PR person, I have also emailed him directly. I am still waiting on a response.

My question was, would a licensing deal or an endorsement deal be suited for this? I would eventually want to branch out other beard products under the brand name "beardzerian".

Thanks in advance.

 

[Vigilante]

The reason an endorsement deal would be ok is because he has a list of a million plus fans. Part of any deal like this is that they promote it to their fans. Their fans buy stuff because they want to identify with the celebrity. So yes. He's a "c" rate persona (most people outside of certain circles either don't know who he is or have a negative connotation.) He's not going to do anything for you beyond his circle, but he has significant influence in his fan base. Most people don't know who he is. He doesn't have SCALE in a traditional endorsement deal. Endorsements work the best with A tier celebs, or at least B-tier.

We typically look for brands with universal appeal. For example, I'd license the "shark tank" brand and put it on a piggy bank. I'd license the Nickelodeon brand and put it on a clothing line. I'd license the Guy Fieri brand and put it on gas grills.

I would look (personally) for someone or something with more of a broad based appeal.

 

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[Wal-Mart Vendor]

A. We always answer the questions as YES, and then we figure out how to make things happen because NO is not in our vocabulary

B. As long as the artist is currently trending, the retailers have "open to listen"

C. You get the license deal done first, and then you work the retailers. No need to talk to the retailers until you have something to sell them.

D. You might want to use reps to sell the retailers

E. You might want to use distributors to sell retailers

F. Retailers will want to make 60%+ margin on this. Make sure there is enough room

G. The dirty secret about retail is that if THEY are in retail (i.e. the artist's cd's are on their shelves) it is much easier to get in. If his CD's are NOT on their shelves, then doubt it will happen. Those things usually go hand in hand, and you can literally ride in on their coat tails.

H. Just like law is based on law, license agreements are usually based on other license agreements. When we did NASCAR, they knew what they wanted because they knew what they had before. And, the answer to your question is it is like a well played poker hand. Some times you are bluffing, some times you hold cards. Theres no set formula answer to your question (unfortunately.)

Your job is to pay as little as possible. Their job is to get you to pay as much as possible. You swap no upfront money for higher license %. You swap no annual commitment (or small annual commitment) for higher %. It's all relative, and... by the way... it all can be renegotiated when Wal-Mart says YES. Wal-Mart may say "we'll take a million units, but at $4.00). Then, it all pushes back to working backwards against the big retailers cost requirements. If it costs you $3.00 to manufacture, and Wal-Mart wants to buy at $4, there's not much room. Thus, the negotiations begin again.

So, YES you can sell the big retailers, assuming the royalty % keeps the retail price reasonable.

And, it's not likely a test. The only answer a rapper understands about your deal is he wants MORE. MORE is his license %.

And, if you sell units on eBay, they know you can sell 1,000. If you sell to Wal-Mart, you might sell 2,000,000. That's why they are asking NOW how big you can scale this.

And, the only thing bigger than who we are is WHO WE SAY WE ARE because... you can become. You can do this. If the product and price are right, you can sell Best Buy.

I have a distributor I will connect you with when you are ready. They will front the cash, and sell Wal-Mart for you. They probably do $400m with Wal-Mart alone. And they will take an egregious % from you. But it's a super shortcut to the hundreds of thousands of units.

Length of contract will rarely be beyond a year from launch date, with the possibility of renewal. And, if the celeb is on the downward slide do NOT do the deal, as you can't be what helps save them.

For example, today I would do Pharrel, Gwen Stefani, Miranda Lambert, Blake Shelton, Maroon 5. I would look for A list celebs, or artists rapidly moving from the B list to the A list.

I would not do Celo Green, Snoop Dog, or anyone moving from the A list to the B list. Even with high name recognition, retailers won't buy inventory on declining brand names.

We caught Susan Komen a little too late on a deal I did recently. We shouldn't have done the deal, although on the upside we did raise a TON of money for breast cancer research, so from that standpoint it was awesome. However, we should have done it while the brand was peaking, not after it was past the crest and on the downward slide.

@Vigilante Just wow....Awesome reply! You know a lot about my world lol!!!!

 

[PEBBLE]

Vigilante, I have a proposition for you for an interesting licensing deal. I think I have a great idea but I would also like a mentor and someone with experience.

My idea + Your knowledge/experience = $$$$

But I can't seem to PM you for some reason. Please let me know if you would like to chat.

Regards,

Phil