Opportunity knocks

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We spent our Saturday over at the Minneapolis Gift Market and came away somewhat energized, as we always do after these kind of events, as well as a little bit troubled – kind of a weird combination, but then – times are weird. The tri-annual Mpls show is pretty small and easily covered in a day: a couple hundred showrooms that are mostly rep groups with multiple lines, and a couple dozen temps – nothing like Atlanta, New York, Dallas or other major gift markets. But then those places won’t have several showrooms devoted to (my) Scandinavian heritage items either…uff-da….

It is always energizing to get out and scrutinize finished product on the shelves, see who is doing what and how they are doing it, what is good and what is just plain bad. I would venture to say that there is no better connection to the art licensing business than a gift show – better than social media groups, coaches or seminars, better than walking Surtex or Licensing. All of those have something to offer but pale in comparison to what you can learn in the “trenches” of the industry. After all, this is what it’s really about – the business of getting those products out of the factories and onto the retailer’s shelf.

And then the little bit troubling part. Normally in any gift show we usually see a fair number of new products that have us mumbling “wish I had thought of that”, but not so much last weekend. (Actually, not so much last Atlanta show either.) We were able to stand outside many of the showrooms, look in at the displays and see that we didn’t need to bother with closer inspection as it was the “same old stuff.” A disquieting number of showrooms were empty of buyers – and some were jammed – and we could make a direct correlation between the quality of the lines they represented and the number of buyers. Notice I said “quality”, not the number of lines represented or the amount of product displayed. Those selling well designed, nicely done product lines were busy writing business. Even so, as one (very busy) rep we talked with said, “They are only buying what they are sure they can sell.”

Yes, times may be a little weird, but I think the best way to view this is as an opportunity – the market is always seeking clever new ideas and fresh design, and apparently never more so than right now.

Let’s do the math

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There is no question that manufacturers and importers have some very real and difficult challenges in this economy. The retailers continue to hammer their wholesale costs lower, while at the same time production suppliers and overseas factories are ratcheting up prices due to rapidly rising material and labor costs. Even shipping has gone through the roof. As the hard costs of manufacturing go up and selling prices go down they need to look wherever they can to recoup some of that loss, and soft costs – such as the royalties paid to product designers – become prime targets. Seems to be a bit of that going around lately.

Of course we really have no one to blame but ourselves. As a nation we have pushed the lowest price model forward until it has become the prime reason to buy – made in the USA, or locally produced, or retailer ethics, or quality, or any of those attributes that were once important to a buying decision now all take a backseat compared to low price. One needs to look no further than the exponential growth of the mass market discount stores for proof.

Here is the problem – let’s say you have a contract coming up for renewal that is paying you a 5 percent royalty. Your licensee is looking to cut costs, so they propose that they renew the contract at a lesser rate, say 3%. “Times are hard” you are told, “and this is only 2% less than what we were paying you. Our costs have gone up 10 to 15% – what’s the big deal?”

Um, not exactly a fair trade:

A 2% reduction on a 7% royalty is a 28% reduction in your pay.
A 2% reduction on a 5% royalty is a 40% reduction in your pay.
A measly 1% reduction on a five percent royalty is still a 20% reduction in your pay. If you worked in an office or warehouse and the boss came in and announced you were getting a 40% salary cut would you be sticking around?

We have seen all of these situations and worse. We once had a client ask to chop the royalties on an existing contract because, as he said, “You have made enough money on this product”. It was still selling well – he just wanted to cap our royalties. (No, it didn’t happen). We will be the first in line to help our clients stay competitive and work toward an equitable solution so we can all succeed, but that is the key – it needs to be equitable for everybody involved.

Of course every case is unique, but it is always a difficult decision to hold the line, and possibly end up walking away, because you believe that what you are providing is fresh, contemporary and valuable in today’s market (let’s hope it is…). Just make sure you know exactly what you are giving up before you agree to give it up.

What is it?

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The local morning news did a little piece yesterday on the Christmas displays that are already going up in some stores in the UK – a tad early, perhaps? Better start buying, there are only 140 shopping days left…

It does bring to mind the subject of why people buy product, a subject that should be of interest to every licensed artist. We are not going to plumb the depths of psychological motivations that might cause someone to pick an item up off the shelf – we’ll leave that to the theorists – but look more at the question often asked in our studio – “Sure it’s cute, but what is it going to be?”

This is what you should be asking yourself about every piece of art you want to license. How is this art going to translate into a fresh, unique but still mainstream product that will actually cause someone (preferably a lot of someones) to part with their hard-earned cash? We often say in our office that a design needs a “reason for being”, meaning that it may be a cute…penguin, snowman, kitty, character, etc… but that is generally not enough to make it commercially viable.

The greeting card industry is a great one to study because they have it down pat. People buy cards for holidays and life events like birthday, baby, grad, get well, new job – the list is well defined. And they target who they are buying for – spouse, mom, uncle, co-worker, and so on. They also have mastered that important “connection” part of the equation – as the saying goes about cards, “the art stops them but the words sell them”. That same philosophy can be translated into whatever category you are going to target – put together a group of products with good enough design to stop them, and a meaningful message to connect with them, and they will be much more likely to be picked up off the shelf.

Where has all the flat art gone…long time passing….

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(I hope you are old enough to remember “Blowin’ in The Wind”, and if not, well, skip the title and get back to geometry class.)

We have been hearing a lot lately about the ongoing erosion of the “flat art” projects. By flat art I mean that group of products that are not 3D, or shaped, molded, textured, woven or whatever – we’re talking mostly, but not exclusively, about paper here, items such as gift bags, wrap and tissue, paper tableware, napkins, gift boxes, and so on. (Greeting cards do remain an exception). We are hearing it from clients, other agents and even established artists who are not with Two Town – there seems to be a significant reduction in both the number and the size of these projects. What is happening here?

A few possibilities:

– Our clients tell us that they are just not producing what they used to – as one paper tableware mfr told us: “We used to do 7 or 8 collections a year, now its 2 or 3”. And when they do produce one, it is in much smaller quantities. Royalties on a paper collection at Target used to be worth several thousand dollars, now it may be only hundreds. Target, WalMart, the various Dollar stores, CVS, Walgreen’s, Party City, grocery and others are all competing to see who can buy the goods at the lowest price, and then are doing only one run and re-setting their aisles every 60 or 90 days. A few years back we had the best selling juvi BD bag in Target for over 2 years running – now it would be thrown out in a few months just on principal because that is the current retail model (ours was still on top when they dropped it…).

– Much of the art for these flat art projects, particularly gift bags and paper tableware, is now sourced through “cattle calls” – those “call for design” requests that are sent to untold dozens of artists and agencies, often complete with detailed art direction. I have seen more than one of these address books, and the odds of your design being chosen from the hundreds and hundreds of similar designs that will be submitted continue to be diluted as more artists get added to the lists. Some of the flag companies have jumped on this bandwagon as well.

– Retail outlets are disappearing. We had a client tell us last week in Atlanta that just a couple of years ago they had 3000 retail outlets, and they now have 1500. Many of the old school gift stores and smaller boutique stores are no more, in large part because of the bottom dollar pricing at the stores listed above. Some categories (scrapbooking, calendars, checks) have peaked and, while still selling, will continue to settle in at lower levels.

– The overseas manufacturers are slowly getting better at designing and supplying (royalty free) basic shelf goods direct to the retailers, effectively cutting out some of the stateside suppliers – and of course their designers.

So, the question is how do you adjust for this? What are your experiences?

It’s All About the Attitude

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How is it that computers know to self destruct at the worst possible moment? Just as we are leaving for the Atlanta show the main office computer implodes and will not allow any of the CS3 programs to open. Not good. The backup drives are locked up in our house and inaccessible. Then our travel laptop loses half of its screen the day we get to Atlanta, so I have to set up a new laptop in the hotel room mostly by feel – very frustrating.

And then there is the Geek Squad….

Our office manager tried an online service call (where they take over the computer remotely) and after a few hours they decided they cannot fix the glitch this way and it has to go in; they will coordinate with the repair tech and give him a report of what they tried. When she brings the CPU in, the new Geek announces he doesn’t care what they tried, will NOT coordinate with them and they will get to it when they get to it. This is still the same organization, mind you. At this point they hook up to me in Atlanta to discuss the fact that they are going to charge for a full repair up front – even though they haven’t touched it yet – and then if they cannot fix it they will refund some of the money. And they want to be paid before they start. Hmmm…

All of that is bad, but the worst was the attitude I was getting from this twerp. I have been around computers since we had to program them in Basic and Fortran IV, and were ecstatic to get a 20MB hard drive and an 8088 processor. (Remember watching a spreadsheet change one field at a time?…ah, the good old days.) I may not be an official Geek but I do know enough to ask the right questions, however all I am getting is sighs and silence as answers. It was made very clear that they were in charge now and didn’t have any interest in my silly questions. Next we had 5 days of unreturned messages and no info until finally they decide they cannot fix it and need to wipe the hard drive, always the default position when they can’t figure it out. We took the computer away from them and did it in house.

I am boring you with this for two reasons – because unhappy customers love to share (yes, I would blow up my computer rather than take it back to the Geek Squad), and it so nicely illustrates how important attitude is to your success in business, and in particular the current licensing world.

We talk a lot with our clients and are always amazed to hear about artists who resist making changes, or don’t send requested designs, or even are willing to walk away from a project because it is taking too long to get an answer. A great quote from the Atlanta show from a client (about another artist): “She is more interested in doing what she likes than what we need”. Ouch. Or the follow-up call I had a couple days ago about a possible giftware line – it was all about whether the artist was easy to work with, would she come to their offices and brainstorm, and does she understand the process of producing a line – they already know she can draw, now they want to be sure they can work together.

It’s just like your mother told you – you only get one chance to make a first impression, so make sure it is a good one.

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We just finished up 4 days in Atlanta at the gift market and are quite happy to have a ton of follow-up to do – it was a really good show. We went into this market with more appointments than ever before, 3.5 days of running from one end of the place (three buildings, 14 to 20 stories, each one FULL of showrooms…) to the other and loved (almost) every minute of it. It was a strange show in many ways, we heard from some clients that they were having a great show, some a so-so show and even one who unfortunately was having one of the worst ever. Traffic did ebb and flow quite a bit, although I thought it was kind of slow even for a July market and it was way down on Sunday.

What I am taking away from this show is that the clients we saw were almost all looking for that new…something. We need a new angel collection, we need a new wildlife artist, we need a tweener line, have you a good Halloween?…there was not much “fill-in” work being sought, they were looking to find new and fresh lines to bring to market. We had prepped our books for a gift show, heavy on collections and concepts, and that will definitely pay off. We also noticed that there was not a lot of new “wow” product – almost none actually, which of course may explain why they are all looking for fresh new lines. The scrapbookie/pattern mix/collage look (coupled with inspirational messages) was EVERYWHERE, much of it virtually identical, so I suspect you can look for that to go away as it becomes even more overdone.

All for now, my feet hurt and I think I hear a well deserved glass of red wine calling my name….

Don’t Forget Your Feedback Loop

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If you ever delve into systems analysis you will find wide variety in the definition and application of something called the “feedback loop”. The specifics can vary wildly depending on the type of system, however in every feedback loop, information about the effect of some action (the input data) is by some mechanism returned to the system, and in general that feedback can be defined by whether it is positive or negative; note the positive or negative definition is determined by the effect the information (the input) has on the system, not the data itself.

What can be fascinating is that in most systems inputting only positive feedback will destroy the system as quickly as only negative feedback – by upsetting the system balance and sending it out of control.

Writers have appropriated this concept as a development tool. If you have any interest in studying the art of writing (and you should if you want to be in the licensing business) you will soon run across references to a writer’s “feedback loop”. I suggest that artists should also co-opt it as a tool of their own, because obtaining direct feedback is key to improving what you do. And I’m not talking about your Grandma or fellow artists telling you how pretty something is. You want to seek out and embrace the negative feedback as well. In a system negative feedback leads to adaptive behavior and the seeking of equilibrium, and that prolongs the life of the system – correctly handled, it can do the same for your career.

It is all in how you look at it – consider all feedback an opportunity to polish your skills. If they like it, use that as inspiration and let it power your offering. If they don’t like it, put aside the emotional response (difficult as that is) and try to find out why so the next time you can do better. Either way try to get details about what did or did not work for someone. Get feedback from everybody you can, be shameless about seeking it and then be sure to LISTEN, LISTEN, LISTEN when you do find it.

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I love to write down snippets of conversation that seem particularly penetrating or insightful, a habit I picked up from a college roommate who would do it at parties and then read them back at the end of the night…not particularly discerning statements but always hysterical. Trade shows are generally fertile ground for new tidbits of wisdom, most of these are from the last couple of months:

When an artist doesn’t know what to do next they go back into the studio and paint the same thing again even though it has not been working.
– a licensing agent discussing how difficult it is to get fresh work

I tell ‘em “just paint more pictures”.
– another agent in the same discussion

But are they even looking at their art first?
– one of the first agents in the industry in a discussion about art coaches

It’s very cluttered out there.
– a manufacturing client discussing art submissions

I used to have several licensors making 3 figure royalties – now I have none.
– a manufacturing client who licenses a large number of artists

We spent our art budget buying art outright in Europe so we won’t be licensing much of anything this year.
– a client that always licensed a large number of designs every year

They won’t buy it because they haven’t heard of it.
– a brand marketing consultant while discussing a new collection

I don’t care what you’ve done – what are you going to do?
– a top agent in a discussion about finding new artists

Google is the ultimate equalizer.
– in an SEO seminar

Your brand is what your customers say it is, you do not get to define it.
– in a branding seminar

Wow, can this person draw.
-an agent describing what they want to say upon opening a portfolio

Have any comments or perhaps some of your own to add? Let’s hear them.

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Yesterday’s CBS Sunday Morning program had a nice segment on Norman Rockwell, in particular the Steven Spielberg and George Lucas private collections that are now on exhibit at the Smithsonian, and how these two giants of film were so greatly influenced by his paintings. For those of us that grew up seeing his illustrations almost every day on the covers of Look and the Saturday Evening Post, in uncounted ads or on every new Brown and Bigelow calendar hung in our kitchen, Rockwell was a part of our life that we pretty much took for granted. Only now, after being in the “business” and watching the world of illustration change do I really understand what a treasure he was.

Even though he considered himself a commercial illustrator rather than an artist, he was an absolute perfectionist when it came to his work. It is fascinating to learn how meticulous he was about his art, staging scenes over and over and over again to tell – perfectly – the story in a snapshot, and then painting them with a level of skill so rarely achieved in our industry anymore. There are many valuable lessons to be learned from his career – not only about his ability to find and convey the emotion in every piece, but also in how he was able to continue to connect with such a wide audience for so many years.

When licensing becomes ridiculous

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We are always amused whenever the latest announcement is made by some manufacturer that some celebrity is now licensed for…potatoes, mattresses, handbags, furniture…go ahead and pick one, it really doesn’t matter. The truth is that a fair number of these “celebrity licensors” have nothing to do with the product, and I would not be surprised if many of them could not even pick out their own licensed items in a store. Having never seen them, don’t cha know. Even knowing how it all works, I was somewhat surprised when I received my first Paula Deen newsletter today – that they claim I signed up for. Hmmm…

I DID email the Paula Deen organization a few weeks back, but it was definitely not to sign up for their newsletter. Which is quite well done, by the way. I contacted them after the Homefires rug fiasco (where many of Paula’s “licensed” rugs were obvious copies of the Homefires rugs) and I suggested that Ms. Deen should consider a public apology and perhaps try to make amends for the apparent design theft – which I suspect she knew nothing about – and in response they have signed me up for her newsletter. Not quite what I expected, but then it sometimes IS all about the money – no matter what the commercials tell us.

And I was actually hoping for a pan of her brownies.