Art Licensing Editorial: Pros & Cons in getting an Exclusive License

An exclusive licensing agreement is when an artist gives a manufacturer the exclusive right to license all their art for a particular product category or categories. This type of agreement is different from most agreements when an artist agree to license one or more pieces of art to a manufacturer but allows the artist to license different art to other manufacturers that produce the same type of products. Exclusive licensing means that the artist cannot license ANY of their art in that category to another manufacturer even if the manufacturer they have the agreement with does not produce all the artist's art on their products.

More and more manufacturers that license art seems to be changing their business plan from using non-exclusive artists to exclusive artists. The reason is to not only reduce the amount of paperwork involved in making MANY individual licensing agreements but more importantly to differentiate themselves from their competition. If the manufacturer is the only company with exclusive artist's work on a particular product, retailers are forced to buy from them if they want that artist's work.

Fabric manufacturers that license art usually offer only exclusive licensing agreements to artists. However, some use non-exclusive artists for special clients when those clients want designs that are limited to them and are not in the manufacturers general product line. There are other manufacturers that use exclusive artists including C.R. Gibson and recently Evergreen Enterprises, Inc.

Last November, Evergreen announced that they now have exclusive licensing agreements with artists for their decorative flags, floor mats, and mailbox wraps. To find out more on why they are using exclusive artists and the biographies of some of Evergreen's exclusive artists David T. Sands, Annie LaPoint, Andrea Tachiera, Nancy Mink, and Jim Shore, read "Behind the Business: Evergreen's Exclusive Flag Artists."

C.R. Gibson has been using exclusive artists for years. Recently they teamed with One Coast sale and marketing agency to launch an advertising campaign "Brand's New Day" and announce their new exclusive artists Cid Pear, Dena, Emily Green, iota, Jessie Steele, Jill McDonald, Lolita, Michael Healy and Susan Winget. Read "It's a Brand New Day at C.R. Gibson" to find out more.

There are many factors to consider before entering an exclusive licensing agreement. Below is what it takes to get an exclusive licensing contract with a manufacturer and what the pros and cons in doing so.

Getting Exclusive Licensing Deals
When artists create art that is sought by consumers, they may be offered exclusive licensing deals by manufacturers. Artists need all or at least some of the following to be considered as an exclusive artist.

• Have a robust body of work that is suitable for the manufacturer product(s).

• Have an unique art style different from the exclusive artists already licensed by the manufacturer.

• Have a proven track record that her/his art sells products for the manufacturer product category and/or other categories.

• The artist art style is recognized and sought by consumers so that they purchase the products. Examples are Thomas Kinkade, Mary Engelbreit, and Jim Shore.

Pros of Exclusive Licenses
Artists consider accepting exclusive licensing deals when they think the arrangement extends their brand and provides a respectable amount of money from advances and royalties.

• Exclusive licenses could be a lucrative arrangement when the manufacturer has a large distribution of their products.

• It guarantees a certain amount of art to be licensed for the term of the contract. This could be important when the economy is poor and licensing deals are hard to acquire.

• Being an exclusive artist gets more exposure of the artist's work. Manufacturers tend to showcase exclusive art brands via their websites, blog and other social media besides advertising in trade publications and on the internet. Note: Non-exclusive artists receive little and sometimes no recognition of their art from many manufacturers.

C.R. Gibson's advertising campaign "It's a Brand New Day" is an example on how exclusive artists get brand recognition. During the January 2012 Atlanta Gift Show, C.R. Gibson constantly posted press releases on their facebook page and on the Atlanta Mart blog announcing It's a Brand New Day and artist signings in their showroom. And on their blog, C.R. Gibson has posted videos of their exclusive artists Susan Winget, Michael Healy, Lolita, iota, Jessie Steele, Jill McDonald, Emily Green. Dena, and Cid Pear. To learn more about these artists, see product art, new product releases and their relationship with C.R. Gibson, view Susan Wingets video first on "C.R. Gibson Video - Susan Winget." The links to the other artist videos is at the bottom of the post.

• Because of the greater visibility of the artist's art, it produces an increased potential in licensing to other product categories.

Cons of Exclusive Licenses
Artists that have exclusive licenses to a manufacturer(s) are tied to the manufacturer for the length of the contract. If manufacturers do not have the success in selling product(s) with the artist's art, the agreement could be a disaster. Below are some reasons why an artist may decide to decline an exclusive licensing agreement with a manufacturer.

• If the manufacturer does not have a large enough distribution of their products they cannot sell enough products to make an exclusive license profitable to the artist.

• If the manufacturer does not produce a large enough quantity of products, it may not be profitable.

• If the royalty rate is not high enough, it may not be profitable.

• If the manufacturer does not guarantee to produce enough of the artist's work on their products, it may not be profitable.

• If the product category has many manufacturers and licensing to them potentially generates more revenue for the artist than signing an exclusive license to one manufacturer, it may be better to decline an exclusive licensing agreement.

* If the manufacturer does not offer advertising and brand visibility to enable the artist to extend her/his brand, and that is important to the artist than the artist may decline an exclusive licensing agreement.

Impact on Non-exclusive Artists
The increase of manufacturers using exclusive artists could be detrimental to non-exclusive artists in getting licensing deals. If too many manufacturers decide that using exclusive artists is a good business model to maintain their competitive edge, it could significantly reduce the number of manufacturers that license art to non-exclusive artists. Of course, it depends on whether manufacturers use only their exclusive artists or they also license art from other artists. I guess that only time will tell. What do you think?

Make sure that you read the comment to this article for important information about exclusive licensing agreements from attorney Kyle-Beth Hilfer, P.C. !

Comments are welcome. Post yours in the comment section (below).

Art Licensing Tips from Agent Kimberly Montgomery: For better, or for worse?

Read the following article by art licensing agent Kimberly Montgomery. She discusses the changes in the art licensing industry and shares tips on how artists can survive and thrive.

For better, or for worse?
Follow these tips and see and benefit from the industry's 'better' side

by Kimberly Montgomery
Montage Licensing

As a licensed artist for 20 years, I have seen the industry grow and evolve. Some of the changes have been beneficial and have eased an artist's ability to connect with manufactures. Other changes have only served to muddy the waters of a growing industry that, at times, has seemed like the Wild West.

When I first began selling my work as a licensed artist, I spent a lot of time, energy and money mailing Xerox copies of my originals to manufacturers. It was tedious work that was not creative in the least, but was certainly necessary in order to sell a piece. The labor involved likely weeded out the faint of heart who were unsure if the time spent reaching out would, in the end, mean work sold.

Today I can email an electronic version of my work to multiple manufacturers in nano-seconds. Gone are the labor-intensive delivery steps and postal costs. But, at the same time, that progress has leveled the playing field. Thousands of artists can just as easily deliver their work electronically - meaning art directors can select from the work of thousands of artists with the click of a mouse.

The early years in the art licensing industry were like the Wild West. Nobody really knew what they were doing, what a contract should include and how much to ask for in the way of royalties. There were big winners, and big losers, when it came to payouts.

Today, the industry is much more standardized. Many manufactures have standard contracts and set fees, with little or no room for negotiation. Again, better in some aspects, worse for those talented artists seeking a windfall.

Despite the fluctuations of the art licensing industry, there are a few proven steps artists can take to ensure they survive - and thrive:

• Educate yourself! Learn about the industry and how you can provide something of value. Spend time online researching the business. Meet personally with industry veterans and ask them about their experiences and what advice they can share. Seek out any professional development related to the field.

• Differentiate your work. While the business side of licensed art has been simplified by technology, it's also a far more competitive industry then when it began two decades ago. Be sure the art you are creating will be valuable in the marketplace. Look at what you are illustrating from the viewpoint of the manufacturer. The art you create has to translate into a final product that will have consumer appeal.

• Review your own work. Like fashion, art styles come and go. When licensed art was a fledgling industry, the look was folksy and homey. Today, a more mature industry means manufactures are seeking illustrations that are sophisticated, and often even edgy. Is that the kind of work you are producing, or are you stuck creating a cottage look for what is no longer a cottage industry. Editor: Below is an example of Kimberly's early art with a cottage look and  a more recent painting with a more sophisticated polished look that appeals to today's market.

• Reflect on your business tolerance. If the idea that the art has to be about a manufacturer's product gets under your skin; or if you can't quite swallow the idea of adjusting your illustrations to meet the marketplace, you may be in the wrong business. Be honest with yourself and be sure that you understand the concept that your work will be employed to help items sell.

• Consider hiring a consultant. If you are serious about a successful career in licensed art, it's time to avail yourself of the benefits of experience. The money you spend on a consultant is likely a fraction of what it would cost you to go it alone. (Joan Beiriger's bog article "On Art Licensing Coaches (consultants)" can provide you with a list of qualified consultants to consider).

So, for better or worse, we're fortunate to work in such a vibrant and interesting arena. Hang on, the next 20 years is sure to be as fascinating!

Comments are welcome. Post yours in the comment section (below).

Blog Hop 12 Artist Studios

Get inspiration by visiting 12 artist blogs for a meet and greet. Artist Aaron Christensen is hosting a "blog hop" tour of artists Barbara Johansen-Newman, Beth Logan, Brenda Pinnick, J. Wrecker-Frisch, Karen Embry, Paula Joerling, Phyllis Dobbs, Samantha Walker, Sharon Himes, Shelly Comiskey, Sue Zipkin and of course Aaron featuring their studios and art. Each artist has a list of artists on the blog hop and a forward and backward button to link to the next artist on the list. Start the tour at "Hi Resolution - A New Year's Studio Meet and Greet."

I drooled over the studios! But whether you use only a corner in the family room, work in the basement, on the kitchen table, or your studio is in a closet as was Mary Engelbreit's first one, it is the creativity that counts when licensing art. Where you create does not matter :)

Art Licensing: The Importance in Having a Business Plan

You may have heard that when you have a business you should have a business plan. Many people think the purpose of a business plan is to entice investors to loan them money for their business. And since most artists do not plan to get a loan they question whether they need a business plan. However, that is not the only purpose in having one. It is also to put down on paper your business goals and objectives. It helps you think objectively, form strategies, focus and make the right decisions.

Each business plan is different depending on the type of business and the goals. Some of same information should be included in every business plan as pointed out in "Writing a Business Plan" by the U.S. Small Business Administration and in "Business plan" by wikipedia.org. They are:

• cover page and table of contents
• executive summary
• business description
• business environment analysis
• industry background
• competitor analysis
• market analysis
• marketing plan
• operations plan
• management summary
• financial plan
• attachments and milestones

Gulp, the above list is overwhelming! Filling out all that information is time consuming and how do you start? Information about business plans can be found on the U.S. Small Business Administration and on wikipedia.org websites (links are above). And also read "Business Plan Elements" by Maire Loughran of Arts / Crafts Business Guide and "Business Plans for Artists: Here, I Did It for You!" by THEABUNDANTARTIST for information on business plans for the artist.

What may be the most helpful in creating your own business plan is to look at ones already written for businesses'. Below are links to some examples of business plans for craft and art businesses'. By reading them, you can get some great ideas on how to write your own business plan.

Business Plan Examples
• "Art Sales Custom Framing Business Plan" for Hart Fraeme Gallery
• "Bicycle Art Business Plan" for BikeArt
• "Custom Pottery Business Plan" for Kaolin Calefactors
• "Custom Quilt Artist Business Plan" for Sew District
• "Custom T-Shirts Business Plan" for Your T-Shirt!
• "Decorative Pottery Business Plan" for Fat Cat Creations
• "Pottery Studio Business Plan" for The Pottery Table
• "Scrapbooking Store Business Plan" for It's Scrappy!

A business plan is not static but changes as your business evolves. For example, you may start your licensing career by designing for one demographic such as whimsical art for adults but find manufacturers are more receptive to licensing the images for the tween market. Or, you find that some of your images are in great demand for the jig-saw puzzle industry. Thus, it would be beneficial to concentrate on creating more art for puzzles and get established in that industry before moving on to other product categories.

Your business plan needs to be referred to, analyzed, and update regularly to improve your business. Read "Easy Two-Step Business Plan for 2012" by art licensing coach J'net Smith for an interesting and thought provocative article on business goals and the questions you should ask yourself to improve your art licensing business. And if you need help in focusing on your goals, purchase artist Tara Reed's e-book "The Goal Wheel for Artists." I know artists that found it very helpful.

Comments are welcome. Post yours in the comment section (below).