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Annual Survey

Average Industry-Wide Royalty Rate Up 0.7 Percentage Points to Reach 8.87% in 2019

The average royalty rate for consumer products licensing contracts jumped 0.7 percentage points to reach 8.87% in 2019, according to TLL’s 2019–2020 Licensing Business Survey.

Since 2010, the industry-wide average royalty rate within the U.S. and Canada has grown by a mere 0.3 percentage points to reach 8.87% in 2019. Over that same time period, the 10-year average rate reached 8.73%. This last year marks the highest overall average royalty rate since 2004, when TLL recorded a rate of 9.4%. TLL first began tracking royalty rate data since 1986, and by property type and product category since 2001.

The average change in royalty rates was flat within the U.S. and Canada, with the average rate increasing slightly by less than 0.1 percentage points. Only 6% of respondents to the Survey doing business in the U.S. and Canada indicated that their average royalty rates decreased, while 28% said rates increased and the remaining 67% said rates stayed the same.

10-Year Change in Average Industry-Wide Royalty, U.S. & Canada, 2010–2019
2010 8.60% 2–20%
2011 8.70% 1–20%
2012 8.70% 1–20%
2013 8.70% 1–25%
2014 8.70% 1–20%
2015 8.73% 1–20%
2016 8.75% 1–21%
2017 8.79% 1–21%
2018 8.81% 1–21%
2019 8.87% 1–21%
10-Year Average 8.73% 1–21%

Note: Numbers may not add up exactly due to rounding. Royalty rates are calculated as a percentage of net sales.

In contrast, 8% of respondents doing business outside of the U.S. and Canada reported that their average royalty rates declined, while 36% said rates increased and 55% said rates stayed the same. Respondents working in Latin America were more likely to report an increase in royalty rates (46%) compared to those in Western Europe, who were least likely to report an increase (29%). On average, royalty rates outside the U.S. and Canada were up by almost 2.0 percentage points and fluctuated by as much as 5%.

Entertainment-, Celebrity-based  Properties Demand Highest Royalties

Within the U.S. and Canada, entertainment/character-based properties continue to command some of the highest royalty rates with an average 10.24% royalty, up just under 0.1 percentage point from 2018. The property type has the highest average maximum range of royalties of up to 21% of net wholesale price, although higher royalties are not unheard of.

Average Industry-Wide Royalty, by Property Type, U.S. & Canada, 2018–2019
Art 6.13% 6.13% 0.0% 4–15%
  Art and Artists 6.11% 6.11% 0.1% 4–12%
  Museums 6.12% 6.11% 0.3% 4–15%
Celebrities 10.26% 10.23% 0.3% 2–18%
  Entertainers/Models 10.37% 10.35% 0.1% 4–18%
  Chefs/Home-related 9.67% 9.65% 0.2% 2–16%
Collegiate 10.04% 10.04% 0.0% 5–19%
Entertainment/Character 10.24% 10.24% 0.1% 5–21%
Estates 9.74% 9.70% 0.5% 4–18%
Fashion 8.44% 8.44% 0.0% 2–17%
  Apparel 8.41% 8.40% 0.1% 5–17%
  Footwear 7.13% 7.12% 0.1% 2–14%
  Home 7.51% 7.51% 0.0% 2–14%
Music 8.11% 8.11% 0.0% 4–18%
Non-profit 8.22% 8.21% 0.1% 4–14%
Publishing 8.49% 8.49% -0.1% 2–18%
  Books 7.95% 7.95% 0.0% 6–14%
8.17% 8.17% 0.0% 2–12%
  Comic Books/Strips 9.56% 9.57% -0.1% 5–18%
Sports 10.14% 10.11% 0.3% 5–19%
Trademarks/Brands 7.79% 7.78% 0.2% 1–16%
/Motor Vehicle
4.07% 4.07% 0.1% 1–16%
  Food/Beverage 5.61% 5.61% 0.1% 1–11%
  Restaurants 5.93% 5.93% 0.0% 4–9%
  Sporting Goods 7.01% 7.01% -0.1% 6–14%
Traditional Toys/Games 8.21% 8.20% 0.1% 5–13%
Video games /Interactive/Online 9.05% 9.05% 0.0% 6–15%
Overall Average 8.87% 8.81% 0.7% 1–21%

Note: Numbers may not add up exactly due to rounding. Royalty rates are calculated as a percentage of net sales.

On average, celebrities command a higher rate of 10.26%, up 0.3 percentage points from the previous year, although a smaller range of rates. Properties based on entertainers such as actors and models have some of the highest average rates of 10.37% (typically up to 18%), but rates have remained virtually unmoved over the last 10 years.

The average rate for chefs and home-related celebrities jumped 0.2 percentage points since 2018 thanks to strong sales and greater demand over the last three years. The biggest driver behind higher rates in the overall celebrities category are top-list internet celebrities from YouTube and Instagram who may command higher royalties than their traditional film or television counterparts.

Sports- and collegiate- based properties continue to command a premium average royalty of 10.14% and 10.04% in 2019, respectively. Licensing programs for these property types typically involve co-licensing different sports teams or athletes, which may drive the final royalty rate above the 19% maximum royalty range on rare occasions.

Estates of deceased celebrities tend to command slightly lower royalties than their living counterparts with an average rate of 9.74% in 2019. However, the gap is closing somewhat with a 0.5 percentage point gain in 2019 and 2018 as well as a 0.3 percentage point gain in 2017.

Properties based on video games as well as interactive and online properties command and average royalty of 9.05% in 2019. Online properties include social media brands that are not focused on any specific celebrity or character. Respondents reported some fluctuations in publishing brands, although average royalty rates were flat at 8.49%.

Most notably, comic book- and comic strip-based properties declined by 0.1 percentage points. The change is attributed to the drop in interest in the property type overall, although top comic book brands continue to demand the top range of rates. Books and newspapers/ magazines were virtually unmoved with average rates of 7.95% and 8.17% in 2019, respectively.

Fashion-based brands were also virtually flat, with an average royalty of 8.44% in 2019. Apparel-based properties command the highest rates overall, on average 8.41% with a range of 5–17%. Home (7.51%) and footwear (7.13%) brands with longer contract terms tend to command lower rates, bring down their respective overall average royalties.

The average royalty for non-profit brands jumped by 0.1 percentage points to 8.22% after falling -0.3 points in 2018, -0.2 points in 2017, and -0.3 points in 2016. Tradition toy and game brands command an average royalty of 8.21%, up 0.1 percentage points from the previous year. Growth in average royalties for music properties was flat overall, despite key A-list properties sharply increasing their rates in 2019. The average rate for music brands has been steadily declining, down -0.3 percentage points in 2018 and -0.5 points in 2017 and 2016.

Art-based properties command some of the lowest rates amounts the major property types TLL tracks, with an overall average royalty of 6.13% in 2019. The average royalty for museum properties jumped just under 0.3 percentage points to reach 6.12%, while commercial and artists commanded a rate of 6.11%, virtually unchanged from the previous year.

Corporate trademarks and brands have the widest range on royalties, from just 1% to 16% on average with a median rate of 7.79% in 2019, up 0.2 percentage points from the previous year. Food and beverage brands were up 0.1 percentage points overall for an average 5.61% in 2019. Sporting goods properties command the highest average royalty at 7.01%, although rates have declined somewhat compared to the previous year.

Restaurants command a rate of 5.93%, unchanged from 2018. Automotive brands command some of the lowest rates, ranging from 1% to 16% with a median of 4.07% in 2019. Licensed Toys, Games  Command Top Rates On the product category side, licensed toys/games once again came out on top with the highest average royalty rate in the U.S. and Canada for 2019.

The average rate was up 0.1 percentage points to reach 10.63% after jumping 0.7 points in 2018 and 0.5 points in both 2017 and 2016. Video games and software saw a just under a 0.1 percentage point increase overall for an average rate of 10.49%. In 2018, average royalties fell by -0.5 percentage points after steadily increasing over several years. Royalties for publishing products fluctuated widely in 2019, although on average the shift was flat for an overall rate of 9.62%.

Respondents indicated that rates for stationery and calendars jumped slightly, with a minority of contracts moving beyond the 12% maximum range of royalties for the category. This contributed to a 0.2 percentage point jump for an average royalty of 8.80% for stationery and paper products overall. Licensed apparel commands an average royalty of 9.71%, flat from the previous year.

Footwear jumped by 0.1 percentage points for 8.03% average royalty in 2019. Licensed accessories commanded an average industry-wide royalty of 9.05%, up 0.1 percentage points from the previous year. Agreements for luggage and travel accessories tend to command the highest rates in this category, on average 10.00% in 2019.

Licensed headwear saw a less than 0.1 percentage point dip in average overall royalty compared to the previous year, down to 9.87% after gradual increases in 2018 and 2017. Handbags, backpacks, and messenger bags commanded an average royalty of 8.91%, virtually unchanged from the previous year. Average royalties for hosiery products were also flat, with a 8.56% rate. Licensed eyewear was up by 0.2 percentage points thanks to greater consolidation among top brands, bringing the average rate to 8.25% in 2019. Jewelry and watches commanded a rate of 7.76%, down by 0.1 percentage points from the previous year. Rounding off the accessories category, licensed scarves and ties had an average royalty of 7.32%, down by just under -0.1 percentage points from 2018.

Health and beauty aids (HBA) were flat overall with an average royalty of 9.01%, ranging from 5% to 18%. Licensed fragrance continues to command high rates averaging 9.24%, despite slipping by just under -0.1 percentage points from 2018. Cosmetics, hair accessories, and other HBA had an average royalty rate increase of 0.1 percentage points to reach 8.51%. Licensed gifts and novelties saw a 0.1 percentage point increase to reach 8.72% in average royalties.

After years of steady declines, the average royalty rate for infant products stabilized with no growth in value from the previous year to reach 8.56%. The average royalty rate for licensed furniture and home furnishings remained flat from 2018, after years of gradual increases, to rest at 7.57%.

Domestics were up by 0.1 percentage points to reach 8.95% and housewares up by just under 0.1 percentage points to reach 6.24% average royalty. Licensed food and beverages were the most volatile product category in this year, despite a steady 0.2 percentage point increase overall to reach 6.02% average royalty. The average royalty for consumer electronics also jumped by 0.2 percentage points for a rate of 5.30% in 2019.









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