We’re now in the second decade of long-term stability in royalty rates, with the average up 0.2% to reach 8.75% in 2016 for the U.S./Canada. In comparison, the average royalty was 8.73% in 2015 and 8.68% in 2014. Since 2005, the average royalty rate across property types and product categories has remained in the 8.6–8.8% range.
Over three-fourths of respondants to TLL’s Annual Licensing Business Survey reported flat royalties for the year of 2016, with the remainder split between increases and decreases. Of those reporting flunctuations, the change in royalty was, on average, 1.0% for most categories.
The one exception? Entertainment/character-based brands, which commanded a 1.5% higher average royalty. The only other category to come close was videogames/interactive/online (0.5%), with all other major categories experiencing at most 0.2% growth. For the fourth year in a row, entertainment/character commanded the highest rise in average royalties, after increasing 1.4% in 2015 and 2.9% in 2014. Survey respondants pointed to Disney and other A-list entertainment properties as the primary instigators behind the rise, which served to bump the upper range of royalties up by one percentage point to 21%.
While celebrities continue command the highest average royalty (10.26%), sports (10.04%) and collegiate (10.01%) brands are catching up with slow, sustained growth. If the bubble continues to expand, entertainment properties (especially top movie franchises) will eventually surpass the top three—but in 2016, the 9.99% average royalty just barely avoided the 10.0% mark. In comparison, several Survey respondants noted that corporate trademarks/brands is beginning to look undervalued, although the category enjoys higher licensed retail sales in the U.S./Canada.
Note: Numbers may not add up exactly due to rounding. | ||||||
Property Type | Average Royalty, 2016 | Average Royalty, 2015 | Change, 2015–2016 | Range of Royalties, 2016 | ||
---|---|---|---|---|---|---|
Art | 6.17% | 6.20% | -0.5% | 4-12% | ||
Art and Artists | 6.19% | 6.25% | -1.0% | 4–12% | ||
Museums | 6.09% | 6.12% | -0.5% | 4–15% | ||
Celebrities | 10.26% | 10.28% | -0.2% | 3–18% | ||
Entertainers/Models | 10.43% | 10.48% | -0.5% | 4–16% | ||
Chefs/Home-related | 9.69% | 9.74% | -0.5% | 2–17% | ||
Collegiate | 10.01% | 10.00% | 0.1% | 5–19% | ||
Entertainment/Character | 9.99% | 9.84% | 1.5% | 5–21% | ||
Estates | 9.62% | 9.60% | 0.2% | 4–18% | ||
Fashion | 8.45% | 8.46% | -0.1% | 2–16% | ||
Apparel | 8.38% | 8.38% | 0.0% | 5–16% | ||
Footwear | 7.13% | 7.13% | 0.0% | 2–14% | ||
Home | 7.49% | 7.50% | -0.2% | 2–14% | ||
Music | 8.18% | 8.22% | -0.5% | 4–20% | ||
Non-profit | 8.26% | 8.28% | -0.3% | 4–14% | ||
Publishing | 8.48% | 8.49% | -0.1% | 2–18% | ||
Books | 7.93% | 7.92% | 0.1% | 6–14% | ||
Newspapers/Magazines | 8.16% | 8.14% | 0.2% | 2–12% | ||
Comic Books/Strips | 9.56% | 9.55% | 0.1% | 5–18% | ||
Sports | 10.04% | 10.02% | 0.2% | 5–18% | ||
Trademarks/Brands | 7.74% | 7.73% | 0.1% | 1–16% | ||
Automotive/Motor Vehicle | 4.06% | 4.07% | -0.2% | 1–16% | ||
Food/Beverage | 5.57% | 5.55% | 0.3% | 1–10% | ||
Restaurants | 5.91% | 5.91% | 0.0% | 4–8% | ||
Sporting Goods | 7.00% | 7.01% | -0.1% | 6–14% | ||
Traditional Toys/Games | 8.16% | 8.16% | 0.0% | 5–12% | ||
Videogames/Interactive/Online | 8.96% | 8.92% | 0.5% | 6–15% | ||
Overall Average | 8.75% | 8.73% | 0.2% | 1–21% |
Royalty Trends by Product Category
On the product side, there were no major flunctuations in average royalties. The biggest shifts were declines in categories like stationery/paper (-0.7%), accessories (-0.5%), and infant products (-0.5%).
The categories that gained all did so by 0.5% or less: toys/games (0.5%), domestics (0.3%), videogames/software (0.3%), apparel (0.2%), food/beverages (0.2%), gifts/novelties (0.2%), and housewares (0.2%).
The biggest flunctuation from last year was gifts/novelties, which rebounded from -0.8% in 2015 to 0.2% growth in 2016, largely on the strength of top entertainment properties (which command higher royalties) re-entering the space.
Note: Numbers may not add up exactly due to rounding. | ||||||
Product Category | Average Royalty, 2016 | Average Royalty, 2015 | Change 2015–2016 | Range of Royalties, 2016 | ||
---|---|---|---|---|---|---|
Accessories | 9.05% | 9.10% | -0.5% | 3–18% | ||
Eyewear | 8.26% | 8.28% | -0.3% | 5–16% | ||
Handbags, Backpacks, Messenger Bags | 8.88% | 8.92% | -0.5% | 5–18% | ||
Headwear | 9.85% | 9.85% | 0.0% | 7–14% | ||
Hosiery | 8.58% | 8.59% | -0.1% | 5–14% | ||
Jewelry and Watches | 7.72% | 7.70% | 0.2% | 3–18% | ||
Luggage and Travel Accessories | 10.07% | 10.10% | -0.3% | 5–18% | ||
Scarves and Ties | 7.33% | 7.34% | -0.2% | 5–14% | ||
Apparel | 9.52% | 9.50% | 0.2% | 5–18% | ||
Consumer Electronics | 5.25% | 5.25% | 0.0% | 3–10% | ||
Domestics | 8.88% | 8.85% | 0.3% | 4–14% | ||
Food/Beverages | 5.98% | 5.97% | 0.2% | 1–12% | ||
Footwear | 8.10% | 8.13% | -0.4% | 3–16% | ||
Funiture/Home Furnishings | 7.53% | 7.52% | 0.1% | 3–14% | ||
Gifts/Novelties | 8.65% | 8.63% | 0.2% | 4–15% | ||
HBA | 8.99% | 8.99% | 0.0% | 5–14% | ||
Fragrance | 9.27% | 9.29% | -0.2% | 5–18% | ||
Cosmetics, Hair Accessories, Other | 8.44% | 8.43% | 0.1% | 6–14% | ||
Housewares | 6.29% | 6.28% | 0.2% | 3–14% | ||
Infant Products | 8.61% | 8.65% | -0.5% | 5–14% | ||
Publishing | 9.64% | 9.67% | -0.3% | 5–15% | ||
Sporting Goods | 9.79% | 9.81% | -0.2% | 4–15% | ||
Stationery/Paper | 8.86% | 8.92% | -0.7% | 4–12% | ||
Toys/Games | 10.49% | 10.44% | 0.5% | 5–21% | ||
Videogames/Software | 10.51% | 10.48% | 0.3% | 1–20% | ||
Overall Average | 8.75% | 8.73% | 0.2% | 1–21% |