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Cosmetics, Toys & Electronics Drive Increases in Industry-wide Royalties in 2018

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Roughly two-thirds of the product categories TLL tracks saw nominal bumps in industry-wide royalties in 2018, according to TLL’s latest Licensing Business Survey. Make sure to review our breakdown of royalties by property type as well.

The most common driver behind such growth was the increase in royalties by entertainment/character-based brands—specifically noted in cosmetics, hair accessories, and other health and beauty aids (0.7% jump in 2018); toys/games (0.7%); and consumer electronics (0.6%).

Average royalties for the greater accessories category were flat (-0.1%) at 9.05% in 2018. The most notable shifts were in the luggage and travel accessories (-0.5%) as well as the jewelry and watches (0.6%) sub-categories, which shifted slightly to approach the overall average rate as well as the average accessories rate.

Apparel royalties continued to trend upwards (0.5%) in 2018, thanks in part to lower costs of production, higher price points, and overall larger margins that helped facilitate a bump in licensors’ share of retail sales.

Consumer electronics saw one of the largest jumps in royalties in 2018, with the average jumping by 0.6% and the range of royalties jumping by one full percentage point.

Domestics (0.2%), furniture/home furnishings (0.2%), and housewares (0.3%) enjoyed flat average royalties. The slight increase was attributable to a jump in celebrities entering the licensed home space in 2018.

Despite dramatic jumps in licensed retail sales, average industry-wide royalties for food/beverage goods are not expected to move far past the current 6.01% rate. Razor-thin margins in grocery and discount stores, which are the largest distribution channels by share for the product category, simply don’t allow for it.

Thanks in part to falling retail sales, royalties for licensed footwear were down -0.8% to reach a 8.02% average rate in 2018. Licensees are also reporting a decrease in the amount and number of minimum guarantees as their partners work with them to work through a tough sales patch.

Gifts/novelties royalties climbed 0.5%, an faster rate of growth than previously noted in 2017 and 2016 (0.2% each).

Health and beauty aids (HBA) was flat at 0.2%, despite a 0.7% jump in average royalties for deals involving cosmetics, hair accessories, and other HBA. Fragrance rates corrected slightly and dipped down to 9.24% in 2018.

Royalties for infant products fell for another straight year, reflecting a dip in licensing agreements for the space (i.e., several A-listers softening their presence in the space) in response to lower licensed retail sales.

Publishing rates were flat (-0.1%) in 2018; despite lower licensed retail sales for that year, it is one of the most diverse product categories we track and tends to follow the average rate.

Sporting goods jumped 0.4% largely in response to increased royalties from key sports- and collegiate-based brands.

Royalties for stationery/paper were down -0.3%, reflecting an increase in licensing arrangements for more art and artists (who, on average, command slightly lower rates).

Toys/games royalties jumped 0.7% on average to reach 10.62% in 2018 in response to higher demands from key entertainment/character brands.

On the other hand, royalties for video games/software were down (-0.5%) in part because of the rise in licensing an increasingly diverse pool of brands for mobile apps (not just games, but all types).

Average Industry-wide Royalty, by Product Category,
U.S. & Canada, 2017–2018
Note: Numbers may not add up exactly due to rounding.
Product Category Average Royalty, 2018 Average Royalty, 2017 Change, 2017–2018 Range of Royalties, 2018
Accessories 9.05% 9.05% -0.1% 3–18%
Eyewear 8.24% 8.23% 0.1% 5–16%
Handbags, Backpacks, Messenger Bags 8.91% 8.88% 0.3% 5–18%
Headwear 9.88% 9.86% 0.2% 7–14%
Hosiery 8.56% 8.57% -0.1% 5–14%
Jewelry and Watches 7.77% 7.72% 0.6% 3–18%
Luggage and Travel Accessories 10.00% 10.05% -0.5% 5–18%
Scarves and Ties 7.33% 7.32% 0.1% 5–14%
Apparel 9.71% 9.66% 0.5% 5–19%
Consumer Electronics 5.29% 5.26% 0.6% 3–11%
Domestics 8.95% 8.92% 0.3% 4–14%
Food/Beverages 6.01% 5.99% 0.3% 1–12%
Footwear 8.02% 8.09% -0.8% 3–16%
Furniture/Home Furnishings 7.57% 7.55% 0.2% 3–14%
Gifts/Novelties 8.71% 8.66% 0.5% 4–16%
HBA 9.01% 8.99% 0.2% 5–18%
Fragrance 9.24% 9.25% -0.1% 5–18%
Cosmetics, Hair Accessories, Other 8.50% 8.44% 0.7% 6–14%
Housewares 6.34% 6.32% 0.3% 3–14%
Infant Products 8.56% 8.58% -0.3% 5–14%
Publishing 9.62% 9.63% -0.1% 5–15%
Sporting Goods 9.80% 9.76% 0.4% 4–15%
Stationery/Paper 8.79% 8.81% -0.3% 4–12%
Toys/Games 10.62% 10.54% 0.7% 5–21%
Video games/Software 10.48% 10.53% -0.5% 1–20%
Overall Average 8.81% 8.79% 0.2% 1–21%


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