License to Print Money

BooksLicensing is the ultimate marketing gamble. Aligning your business with a hit will send your stocks soaring, buy into a dud and you’ll sink along with the warehouses of unsold books, toys and mouse pads. Drew Turney learns how it all works.

Despite memories of James Frey and Helen Darville, the most lucrative kind of license in publishing might not be creative license on behalf of the author but a brand license.

Along with marketing, filmmaking, popular culture and globalisation, the 1977 release of the movie Star Wars also changed product licensing. Before it, product licensing was considered a quirky sideline by movie or TV producers, limited to James Bond trinkets, a Mickey Mouse watch, even Shirley Temple crockery. In today’s era of media cross-branding, blockbuster movie or character licenses worth more than the box office take are negotiated and stitched up even before the green light.

Such licenses cover every conceivable product that might bear the brand’s name, from video games to ringtones, stickers to toys, TV shows to hamburgers – and books.

Curiously there aren’t any figures or estimates of how much licensed publishing represents as a percentage of the industry as a whole. The fact that digging such figures up would take considerable effort speaks volumes about how fragmentary the players and agreements between them are.

Trade publishers sideline in licensed books. Licensed book specialists have trade title. Publishers owned by the same media conglomerates as movie studios get licenses from competing studios. Even when ‘master publisher’ agreements are signed it’s not as clear-cut as it seems.

Mark Scott, general manager of Disney licensee Funtastic, does his best to describe the tangle. “We have licenses for Disney, Dora the Explorer, Nickelodeon, Barbie and the Wiggles,” he says. Funtastic also holds the licenses for Happy Feet, Transformers and Teenage Mutant Ninja Turtles ? both the cartoon and the recent movie.

Because the abovementioned films are from competing film studios, you’d think that means film licenses are a free for all. Not necessarily — Five Mile Press have agreements for Shrek with Dreamworks SKG, which also owns the Transformers name along with Hasbro. Funtastic have Spiderman Classic and Spiderman 3 tie-ins, but HarperCollins (US) have a Spiderman 3 license as well, which are ‘eking into the country’ through importers like Borders, according to Scott.

Funtastic’s also has the license for colour and activity, novelty and storybooks for Sesame Street while another licensee has Sesame Street sound books. Funtastic has Rainbow Magic novelty books and a competitor has Rainbow Magic fiction.

So we’re left with a myriad number of publishers producing books that are sanctioned, approved and constrained by some of the strictest intellectual property guidelines in the world. Unlike the world where fast food chains compete for the exclusive right to put Homer Simpson or Harry Potter on a hamburger wrapper, books of every description could be filtering into your store from more publishers than you knew existed.

New Landscape

The average author may or may not be dreaming this big, but one day an agent might have to deal with rights for characters to appear in a major Hollywood film franchise, the video game spin-offs, toy lines and a million other incidentals he or she hasn’t thought of.

Nowadays a smart agent will remove all but the publishing rights from a contract with a publisher. 20th Century Fox agreed to sign all the merchandising rights (regarded in 1970s Hollywood as near-worthless) over to Star Wars director George Lucas in return for a small salary reduction, a decision they’ve regretted ever since as he’s built his entire fortune on the backs of dolls, lunch boxes and computer games.

As Sydney agent and industry veteran Selwa Anthony advises; “I always take spin-off and merchandising rights off contracts and just leave in publishing,” Anthony says, “and I imagine most other agents do the same as more markets emerge for audio, movies and other tie-ins.”

As in every other industry, consolidation is changing things, and there’s evidence traditional publishing is making way for faster-moving packaged property managers who look after every aspect of licensing in everything from books to bed sheets.

It’s more of a headache than some resellers can handle. Dymocks buyer Meredith Drake describes licensing products as a ‘relatively fringe business’ and one they wouldn’t go to great lengths to stock. “There are very few properties we’d make that effort for,” she says. “We deal with [licensed publishers] similarly to a trade publisher for normal fiction — if it gets much harder than that we don’t generally bother.”

Publisher Jaclyn Crupi gives the impression she views Funtastic as just such a new breed of brand wrangler. “Each licensor seeks the best partner for their brand,” Crupi says. “If that partner can offer a complete licensed offering across multiple categories that’s an advantage.

“Licensors need to feel confident their licensees will dedicate resources, priorities and focus to their licenses. Our licensors know we’re committed to licensed publishing, so unlike traditional publishers, our licensed list doesn’t sit beside a much bigger list where it receives less attention.”

It’s also true at the sales end, where books have to be rolled out among a bevy of other branded products to give everyone the best possible bite at the cherry while buzz about a movie, character or property is riding high.

“There’s a feeling most licensed properties tend to work better in mass markets like K-Mart and Target rather than Dymocks,” says Ian Ashmore, managing director of Parragon, an active player in children’s and licensed books. “Some publishers are deemed to be more mass market friendly than others and would prefer to be aligned with a mass market. I’m definitely seeing more of that as time goes on.”

Then there’s the newly media-savvy younger generation, one for whom it sometimes seems a simple book just isn’t enough. Sales and marketing manager Gretta Blackwood describes Hinkler as an innovative and creative publisher, and to them the book is only the beginning. “Our products have explored the sound buttons and interactive ‘whiz bangery’,” she says, “We’re always looking for ways of taking that to the next level because people want more bang for their buck. You can’t just stick a logo on the front of something, you’ve got to build in value.”

How Does it Work?

Book licensing is basically a legally binding form of outsourcing. A rights holder or brand manager sticks to their core competency of managing brand-appropriate content and awards the right to use it on products to other companies of specialist production expertise, be they book publishers or website programmers.

“People usually align themselves with a licensing company and then pitch for the license brands they want” explains Parragon’s Ian Ashmore, “Once they’ve got them they talk to the different producers to see who’s interested and prepared to offer the best deal — not just in dollar terms but who they think will best represent the brand.”

It’s a delicate balance. On one hand, you can give all publishing formats to one provider and ensure consistency — the approach Disney Publishing Worldwide takes in Australia, as explained by Kylie Watson-Wheeler, director of publishing in Australia, New Zealand and ASEAN.

“We build our program with one publisher and have the full breadth across our titles and formats,” Watson-Wheeler says. “It’s less about it being too hard to co-ordinate different publishers and more about focus. If you’re dealing with one publishing house you get to build a strategy together.”

On the other hand, not all publishers understand the possibilities of how to get your brand in front of as many eyeballs as you can. Aside from Hinkler’s unique product offerings that encompass so much more than books, to Gretta Blackwood it’s about having market reach.

“One of our strengths is our distribution,” she explains. “We have relationships with the big chain stores where other publishers might have better success with independent booksellers or newsagents. It comes back to what the licensee wants to get out of it.”

So while publishers would prefer to have all formats of a license under their belt (for obvious reasons), the acid test comes when asking booksellers if dealing with so many different publishers for books about a single character or property gets confusing.

One large bookseller said it can get tricky navigating the differences between the release date of the property the books are about and the gift season release dates, but they tend to treat all products from all publishers as a single publishing program, pick and choose which suit them and order accordingly.

The Bookseller Experience

The point to keep in mind about licensed publishing is that it overwhelmingly comprises kids books, and even small stores dedicated to childrens’ books contacted by Bookseller and Publisher reported carrying little to no licensed products at all. The business model of much licensed product seems to be the low-cost, high-churn that suits the discount and department store chains.

With expensive shelf space at a premium to the extent that even best selling authors get little time with their front covers facing out, filling your storefront specials tables or an entire wall of cheap colouring books isn’t usually an option.

With a perception that much licensed publishing product belongs in discount department stores comes a market awareness all booksellers including the big chains have to aware of.

“We certainly do our buying knowing there are certain products the department and discount stores will have,” says Dymocks’ Meredith Drake, “so we buy the slightly higher-price or more classic licensed product. If it’s Disney for example, it has a classic feel with the older animation as opposed to the brand new stuff. We leave that stuff to the department or discount stores who get it to go with toys.

“To stock everything would need a lot of shelf space, and most bookstores prefer not to give shelf space to things they’re not making a lot of money on.”