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Language of Licensing II

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Two years ago, we launched TLL’s first survey on the language of licensing to explore changing trends in terminology, business tactics, industry trends, and the way we navigate them. (Access the 2016 story.) Here’s the second iteration of TLL’s Language of Licensing (LoL) Survey.

Don’t forget to read up on the demographics of 2018 LoL Survey respondents here. And click here to see the answer to a question we did not ask two years ago: How do you pronounce “merch”? We’ll follow up in the next couple of weeks with more insights from the 2018 LoL Survey.

Note: Any direct quotations may have been lightly edited for spelling, grammar, and space.

Interestingly, based on the comments we’ve received, about just under one-third of respondents to the 2018 LoL Survey believe that licensing essentially hasn’t changed over the years. One executive who’s been the business for over 20 years noted: “the same basic licensing concepts are repackaged, renamed, and redefined every decade or so.” Another veteran confirmed that despite more “rules, regulations, and requirements, the basic rules have not really changed.”

It’s not all good, as one licensor points out: The “industry is stagnant” and “relying on an old business model” that doesn’t bring the same type of value to brand owners. Suggested answers to this conundrum from others include: more technology (although another points out that automation won’t work); more realistic expectations (for royalties and minimum payments—on both sides); greater collaboration (in terms of education and program support); and greater risk-taking, flexibility, and innovation in crafting deals.

Conversely, most executives feel that licensing has changed—for better (“much more collaboration going on”; “more professional”; “more open to sharing”; “larger profit opportunities”; “more equitable”)—or worse (there are so many technical constrictions that “it’s no longer fun”; “less collaborative”; “more complicated”; “robotic”; it should return to its “roots, like 6-8 years ago”).

When asked what the licensing world isn’t worrying about enough, the greatest number of responses had something to do with licensing strategy (e.g., over-licensing, too much focus on the mass market, too many unrealistic expectations, lack of understanding how it fits into marketing, not enough attention on emerging brands).

This was followed by changing retail trends, including a lack of understanding on how ecommerce generally (and sometimes Amazon specifically) is going to impact licensing and how to transition into a cashless economy. Traditional retail concerns included retail compression and a rise in direct-to-retail (DTR) deals that cut out licensees and agents. An equal number of comments also related to consumer preferences—e.g., not enough focus on consumer tastes and preferences (“not one size fits all!”) including, specifically, European countries and U.S. cities.

Unsurprisingly, the economy is another popular concern. This includes the impact of Brexit, the U.S./China tariffs (“trade war”), and the deficits of various countries, mostly the U.S. Hand-in-hand, many also worry about curbing IP abuses, including everything from counterfeiting/piracy to impermissible sub-licensing to noncompliance to small-claims enforcement of infringing activity across borders. Quality control is a critical issue as many feel that consumers are fast becoming disappointed. And of course, constantly evolving rules and regulations that “feel like a trap” and are difficult to see or predict without an (expensive) professional helping hand.

Rounding out the list, the next-most popular topics licensing executives think you’re not worrying about enough include: technology (in general, social media, payment systems), funding (private equity, high fees), and internal work culture (toxic employees, not enough time to focus on real life).

Is Licensing a Business or an Industry?

Unlike two years ago, respondents don’t seem to really care one way or the other if we say either “business of licensing/licensing business” or “licensing industry.” Overall, 52% prefer using the term industry while 44% prefer business—factoring in neutral responses, industry slightly overtakes business at 94% share compared to 91%, respectively.

Two years ago, those who preferred to use industry (36%) also outnumbered those who preferred business (18%). Note that in 2016, we asked respondents to chose between one or the other; 27% said they used both interchangeably. This year, we asked respondents to indicate their preference for each term separately.

A minority of respondents indicated that they used both business and industry, depending on the “context,” but others also drop an identifier in favor of some variant of “I handle licensing for [insert property type/product category here]” instead.

As to why industry narrowly beats out business, one licensor seems to have hit the nail on the head: “Business makes the discipline appear smaller” and might lead to licensing being “marginalized.” Another service provider who claimed that their preference was “irrational” noted that while business was a better fit, industry had a bigger sense of community.

Licensors were much more likely to prefer industry (58%) versus business (32%) and, in fact, had the lowest rate of preferring business. Agents narrowly beat out licensors, however, by share of those who dislike/avoid using business, 13% to 12%, respectively. Licensees were the most ambivalent, with the highest rates of respondents claiming that they were neutral.

By territory, licensing executives based in the U.S./Canada were the least favorable to business (14% dislike/avoid and 40% prefer/use) and Worldwide the least (0% dislike and 57% prefer). International executives were overwhelmingly neutral (61%). On the flip side, International executives were the most likely to prefer industry (69% prefer/use and 28% neutral) and Worldwide the least (33% prefer and 58% neutral).

Surprisingly, those who have been involved in licensing for a while were the least likely to embrace industry: 11% of those who have been in the business 20 years or more and 4% of the 10 to 20 year cohort actively dislike/avoid the term. (40% and 48% prefer/use industry, respectively.) The biggest support comes from those who have been involved 5 to 10 years (91% prefer/use and 9% are neutral).

But just because the older set doesn’t like using industry, that doesn’t mean they like business either. Just 55% of those who have been involved for over 20 years and 29% of those 10 to 20 years prefer/use industry. Surprisingly, 33% of those who have been involved under 5 years actively dislike industry (but given how few of them responded, this may simply be a rounding error).


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