Blog #17

28 11 2011

Manufacturers today want a sure thing.

As the economy has gotten tougher for manufacturers, they have gradually become more and more risk-adverse. They no longer like to produce product, shelve it in the warehouse, hold the stock, and hope it sells. That approach makes them vulnerable since product must ultimately sell to pay for the inventory created on speculation.

Rather than wait for sales from the product produced in the warehouse, manufacturers only spend money to produce product when it’s actually ordered by their retail customer.

This approach has become quite commonplace, though few people talk about it.  A manufacturer might ask, “I’d like to shop your art around. Is that okay?” Or, “Can I take this out to retailers and get some feedback?” Both of these questions mean the same thing: they want to show your art to retailers to try and get “buy-in”—a retail commitment—before they actually sign a licensing deal with you.

What I want you to know is that these scenarios do happen. Don’t be surprised.  Get some kind of agreement in place, if not a contract, at least a ‘shopping doc‘ to clarify what they can and can’t do. You just need a plan for how to deal with this situation, and a way to determine whether it is a good idea for you at the time.  The answer may vary, so be prepared for that as well.  Think about the potential outcomes if the manufacturers are successful ‘shopping’ your art, and if they aren’t.  And what are the potential risks and rewards when manufacturers show your art to retailers without your having a deal commitment.

I am sure many of you have been experiencing this in your art licensing business.  Perhaps you’d like to share your story.  This new way of doing business definitely has its benefits and negatives.

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3 responses

2 12 2011
Pat Saunders-White

A manufacturer approached me last February about licensing images. I license them in batches for for 3 year periods. I am glad I have done this. I receive royalties and have requested, and gotten two increases. I based my request on the strength of my sales. I was told my work is one of their top sellers on e-commerces sites that they have contracts with. When other venues for me have slowed down this has been a constant. Being paid quarterly is ok and I can track my daily sales. There has to be a lot of trust between the artist and the manufacturer that they are reporting ALL the sales.

2 12 2011
blogjnet

Pat, Sounds like a good licensee for you. It’s so true, there must be trust between the artist and the manufacturer for licensing to work smoothly. Thanks for reminding us all. J’net

1 12 2011
Carol McIntyre

This is really interesting. Thank you for posting info about this new approach.

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