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Royalties

Average Royalty Income Up 5.0% Worldwide in 2019

Contact the editor at karina@plainlanguagemedia.com

Seventy-three percent of respondents to TLL’s 2019–2020 Licensing Business Survey reported that royalty income was up from the previous year, compared to 18% who said it declined and 9% who said it stayed the same. On average, licensing executives reported a 5.0% increase in royalty income in 2019.

Royalty income is distinguished from licensed retail sales as the net revenue extracted from licensed goods. Although the health of any market may be gauged by an increase in licensed sales of merchandise, there are times when related costs such as the cost of production, marketing, and sales outweigh revenue.

We note that despite the loss in revenue, higher spending in the short run may pay off with higher returns in the long run as a market for the licensed goods are created or competitors drop out from the marketplace. Respondents working in the U.S. and Canada reported an average increase in royalty income of 4.1% in 2019 compared to the previous year. Almost 70% of respondents working in the U.S. and Canada reported an increase in royalty income, compared to 19% who saw a decrease and 13% who saw no change.

The greatest increase in royalty income internationally was in Asia (up 4.9% with 75% reporting gains in royalty income), followed by Latin America (up 2.9%; 73% reporting gains), the Middle East & Africa (up 1.1%; 67% reporting gains), Western Europe (up 0.8%; 58% reporting gains), and Central & Eastern Europe (down -2.2%; 56% reporting gains). Note that licensing executives in all territories reported positive growth in licensed retail sales.

Respondents who reported an increase in royalty income also reported an average increase in royalty rates overall of just over 0.1%, while those who reported steady or declining income reported virtually no change in average royalties. Licensors and their agents were more likely to report an increase in licensed royalty income in 2019 as compared to licensees and their agents (81% and 60%, respectively). Compared to last year, licensors and their agents saw royalty income jump 9.1% while licensees and their agents reported 3.7% growth.

 

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