Monday, January 28, 2013

Know Thy Plan



After much discussion and some interesting phone conferences we decided to turn down a licensing deal today. It seriously pained me to do it because it had the potential to sell a ton of product, probably well into 7 figures at retail, and those situations are just not as plentiful as we would like.

So why, you ask, would anyone be nuts enough to pass that up?

It was not just the licensee, we like them and hope to continue working with them for a long time to come. Nor was it just the level of distribution, typically we love mass market deals and the volume they turn. It certainly wasn’t the art, as this brand does well in the market and has many loyal licensees. It was not any one of those things, it was actually the combination of ALL those things.

Mass market exposure is akin to a hurricane: a lot is being thrown at you with great force, and as an artist or brand you need to be like the proverbial palm tree - both deeply rooted yet flexible enough to remain standing afterwards. Many artists, brands and even manufacturers who make the leap into mass market don’t survive. We refer to it as “burned up” – you’re hot for a few weeks or months and then you’re gone. It can be a fabulous opportunity, or it can be a trap, or even both. 

The problem with the mass market level of retail is that the goals of the mass retailer do not align with the goals of the artist or brand, and if you are na├»ve enough to think they do you can be heading for burn territory. (Note this is not the licensee, but their customer – the one who is calling the shots.) The mass market retail business model is two-pronged – (1) volume and (2) low cost – and EVERTHING they do is in support of those. You may note that excludes a few things such as artist promotion, integrity of design, supplier profit margins, even basic survival of the brand or supplier – all those and much more are never on the radar unless it directly affects (1) and (2). Which is OK, it’s just the way it is, but never, ever forget it.

I’m not talking here about getting a gift bag, or maybe a set of paper tableware or a roll of wrap in Target or Wal Mart, because, contrary to popular opinion – nobody really notices. It’s in and it’s out. But if you are building a brand, crafting an identity or pushing a Big Idea into the marketplace, then having a plan and controlling your distribution becomes paramount. The prize is no longer a quick run on a mass market store shelf where you sell a bunch of product in 60 days but in 90 days no one can remember you were there. Now it becomes something bigger, and the timeline stretches longer. You won’t want to sacrifice the brand equity you have so painstakingly built, the goodwill of your other licensees or even the ability to leverage that special relationship you have with your posse just to have a brief run as a commodity in a big box store.

It’s a tough decision to make but so much easier when you already know the answer.

3 comments:

  1. Great article! Turning down a fab deal is a tough decision to make. And it is only agents that are looking toward the future and protecting their artist brand that have the guts to do it. Good for you. Unfortunately, not all agents do :(

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  2. Thank you for upholding quality and goodwill.

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  3. I absolutely admire your blunt honesty about the industry. Thank you for sharing your insight. Great blog!
    ~meg
    {illustrative design}

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