Now What?

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I just received a really cool new set of designs from one of our artists, something that I had not seen before – she took a whimsical … wait a minute, I can’t tell you because it IS new and fresh. Several client names immediately popped into my head who are candidates for this, so as I am planning to send it out I am thinking “what can she do next”…
We launched a new property called Life Is Country™ and the licenses are continuing to stack up nicely. We had just made a great deal for an apparel line and were having a celebratory glass of wine on the lanai when we caught ourselves talking about Now What… as in which of our artists has the next big thing ready to launch? Seriously, it’s what we do (some people might suggest that’s a lack of focus but what do they know).
A fine artist may spend months on a painting getting every highlight and every brushstroke just right, but in our business you will be hurrying to finish a set of (cards – ornaments – figurines – tableware – take your pick…) so you can get to work sketching on that new set of (cards – ornaments – figurines – tableware) that you were thinking about while working on the previous ones. Not you? It’s the nature of the art licensing biz, and to make a career of it you will need to be thinking several steps ahead. I know successful artists in this field that plan their year in advance with lists of categories and products they intend to work on, and then methodically work down the list in between client requests. They always have an answer for Now What (and a portfolio full of new art).
The forums are active with people asking questions about Surtex and what they should be doing, how they should be setting up this or that. Sure, it’s an exciting time getting prepared, but I can guarantee you that most of the experienced people in this business have left Surtex planning in the dust already, they might be tying up a few logistical loose ends but most are looking far past it and thinking Now What…
So what are you going to do next?

A Map in the Sand

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If you do much reading about business trends and what is going on in that world today you will soon notice that there is a relentless drumbeat for people to throw off the corporate shackles and try their hand at “Entrepreneurship”. With a capitol “E”. I am, of course, all for it but in some ways it is kind of amusing – sort of reminds me of Art Licensing with all the coaches, endless articles and forums, groups and advice, even business founder match-up services….and it is all on the upswing. 
But I digress. I read an article today called “The Worst Businesses to Start This Year”, you can read it here. It is not exactly an in-depth examination but does have great examples of a few changes in the world of commerce that should get you thinking. What happened to these industries? Who saw the changes coming and managed to find a way to disrupt the status quo, or at least profit from it? What will be the next established industries to undergo upheaval?
In addition to the listed categories, I would add a few additional ones that are a bit closer to what we do. Given the changes in our world I think these also could be bad choices for a new endeavor:
Graphic design firm
Scrapbooking store
Web design company
News-stand or Bookstore
Print and copy shop
Any more to add? Where does art licensing fit in with this? What do you think?

Just DON’T Do It

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There was an interesting story this morning on NPR about a lawsuit filed by Ray Teller of the Penn and Teller magic duo. He had registered the copyright for a magic trick (called Shadows) back in 1983, however another magician has misappropriated the secret and is not only using it on stage but offering to sell the secret of the trick to anyone willing to pay 3,000 dollars. Teller has filed a suit in US federal court to stop him.
Apparently even magicians can’t make copyright thieves disappear…
  
Counterfeiting has increased 10,000 percent in the last 20 years, roughly along the same timeline as the rise of both the internet and overseas manufacturing. Some shocking figures about counterfeit products from the International AntiCounterfeiting Coalition (www.iacc.org):
–  Since 1982, the global trade in illegitimate goods has increased from $5.5 billion to approximately $600 billion annually.
–  Approximately 5%-7% of the world trade is in counterfeit goods.
–  Counterfeit products cost U.S. businesses $200 billion to $250 billion annually.
–  U.S. companies suffer $9 billion in trade losses due to international copyright (IP) piracy.
–  Counterfeit merchandise is directly responsible for the loss of more than 750,000 American jobs.
– The Food and Drug Administration estimates that counterfeit drugs account for 10% of all drugs sold in the United States.
– The Federal Aviation Administration estimates that 2% of the 26 million airline parts installed each year are counterfeit, which equals approximately 520,000 parts.
– Hundreds of thousands of deaths worldwide are known to have resulted from the use of counterfeit drugs, however the actual number may be many times that.
How is it possible that the counterfeit trade is heading toward a trillion dollars? Unfortunately the answer is relatively simple – demand. Consumers want cheaper goods, suppliers are willing to cut corners and all are willing to turn a blind eye to the problems that they are responsible for creating when they deal in counterfeits. Everyone laments the rampant copyright theft in today’s world but then they knowingly buy knock off purses, fake Rolexes and download music without paying for it. Every purchase or download perpetuates the problem. 
It may seem like an insurmountable problem but every person can do their part. We decided long ago not to participate – we do not buy knock-offs or bootlegs, we do not download music that we did not pay for, we do not swap tunes with our friends and we do not understand how anyone who is in, or wants to be in, a business like licensing can justify doing it either. Our personal refusal may not stop that factory owner from stealing more designs, but someday everybody’s might…

The Good Oops

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She may as well have told me I had a third head. “You have a serious case of pneumonia” is what she said. Really? Pneumonia? Who gets pneumonia? That’s what mothers use to scare their children, as in “you’ll catch pneumonia if you go out without a jacket”.  It’s the scourge of elderly people and nursing homes. I had just spent the last 4 days alternately shaking with chills or burning up with fever (8000 feet up the mountain in a walk-out ski condo…sigh…so much for my Spring skiing) and it continued when I got back home. We thought it was the flu. Oops, big Mistake.
“Anyone who has never made a mistake has never tried anything new” -Albert Einstein
That was NOT the type of new I would recommend, however things are on the mend now, thank you. It got me thinking about mistakes, however. There’s an old proverb that states if you don’t make mistakes you don’t make anything, and believe me I’ve made some doosies in my time (I think I hear my accountant hooting with laughter…). Studies have long shown that “active learning”, more commonly called trial and error, is a far more powerful tool than learning by rote, and information learned that way is retained much longer as well.  Changing your mindset about making mistakes can be of great benefit – try to look forward to what you will learn from them, and recognize that the fear of making one may be paralyzing you into inaction. Waiting until you have your collection, portfolio or story absolutely perfect before sharing it may hold you back more than you can imagine.
One of the few guarantees in art licensing is this: very often the person you send or show your portfolio to will not be interested/won’t like/has no use for/ your absolutely perfect designs. This is why in many ways it’s a numbers game. We send out hundreds of designs to targeted clients and the “hit” percentage is in single digits. We have put together large presentations of art (by request), uploaded them into our YouSendIt account and later see that they never downloaded them. It’s the nature of the biz. I am NOT suggesting you forgo doing quality work in order to shovel more onto the market, but you need to find that balance between “striving for perfect” and “good enough to send”.  Clean up your work, dump the deadwood and get it in front of someone. Think you made a mistake? Good – now convert that information to your advantage, learn from it, build on it and get it out there again.
What did you goof up today?

All I Really Need to Know I Learned from Shark Tank

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We LOVE this show. If you haven’t seen it, go to ABC or Hulu and watch some episodes, check out the fan blog (inthesharktank.com), and while you are watching think about how what you do, as a licensing artist, is parallel to these poor hopefuls being chewed up by the Sharks. The real lessons you should take away from each episode are not so much related to the product concepts (although some are quite good) but rather can be gleaned from how the investors react and the questions they ask.
Try viewing your licensing partners as investors in your product (your designs), because in a very real sense that is exactly what they are. When you cut to the core of it most investors are motivated by one of two things:  the chance to make money (greed) and the concern about losing money (fear).  A licensee is going to be on this same page – you are asking them to invest their time and money in your business, and while the benefit for you is obvious is the benefit clear for them? Greed and fear dominate. Are you sparking one of those, and which one is it?  The idea here is to evaluate what you are offering to see if it could make it through as a start-up presentation to an investor. It goes without saying (but here it is…) that you need to have a good quality product to even begin the pitch, but assuming you do and you were standing up there in front of those sharks, you better:
1. Know your concept and your target market cold. How do they interact, who are your competitors, why is your product better or unique? (And if it’s not better or unique, why are you there at all…)
2. Pitch the right people. Companies have no use for ideas they cannot execute, so don’t waste their time. Know who makes what before you start talking. If you don’t know, ask.
3. Be prepared for questions and alternative scenarios. Have an answer for whether or not you will make changes, or let them make changes, if you will sell outright, can you do additional patterns, what about a flat fee – think about all these and more ahead of time rather than on your feet.
4. Connect with your investors. Shake their hands, make eye contact, smile and joke with them, make it a person to person pitch, not a person to a corporation pitch.
5. Respect their expertise. You may not enjoy their questions or comments but you need to acknowledge their experience, try to understand their concerns and have appropriate answers.
6. Go all in. Investors and licensees alike want to work with someone who is dedicated to their craft and passionate about their ideas. Be clear about what you do. Tentative doesn’t cut it.
7. If the deal does not make sense for you, walk. While everyone wants to get their business off the ground you don’t want to do it at any cost. Know enough about your field to set realistic expectations and to know a bad deal when you see one.
One of the keys to success in this (or any) business is the ability to see the world from your customers’ viewpoint. It’s about them, not about you. Spend a little time thinking about what your presentation looks like from the other side and you have a lot better chance of making that connection.

Get Out of the Middle

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Most people in this industry don’t know that in a previous life I was a boat dealer and yacht broker. I owned and operated a multi-location brokerage that sold both new and used vessels; we handled a number of high end lines over the years, and yes, occasionally I do miss it. In the world of boats there are literally hundreds of boat manufacturers, and it can be very confusing trying to sort out who makes a quality boat, an exceptional boat or – most important when you are 20 miles offshore – a crap boat. It is difficult because the lines are blurred between the great majority of the manufacturers when it comes to quality; there are a handful of exceptional builders, a very few crap ones, and a whole bunch of builders in the middle turning out a decent product that could be characterized as a good boat. The bar is set pretty high when it comes to “average” in the marine industry.
I tell you this because the thought struck me the other day that there is a sort of parallel situation when it comes to licensing artists and particularly the artist/agent question.
There are a large number of artists out there looking for agents, and many are having a hard time of it. We usually get several inquiries a week but the pace seems to have ramped up as of late, and now it’s not unusual to get more than one in a day. We try to answer them, and when we can would prefer to craft an answer that goes beyond a simple “no”, but that takes time that we don’t have, so unfortunately we can’t always respond.
But back to our analogy. We see a lot of submissions from a lot of artists, and this is how it plays out: there are a few exceptional ones, a surprisingly large number of crap ones, and a whole bunch that are stuck in the middle doing work that could be characterized as good. Of course the problem is that “good” doesn’t cut it in this business anymore – it may get you a few small licenses but it is not likely to get you representation. The conversation goes something like “Hey, look at this / So what would we do with them? / I don’t know, could maybe get a couple of licenses for cards-bags-other paper stuff… / Yeah, probably not much more, too bad.”
This is where the difficulty lies for so many of the artists seeking representation – even if they have decent art skills. Every successful agent already has the ability to pick off the “low hanging fruit”, all those quick and easy projects that come up every day, so we don’t need another person whose work is “good enough” to do that. We want to open that email or portfolio, see something so new and so fresh that we would say “Wow, come look at this!” and immediately start talking about what products it could work for, what clients would like it and how much fun it will be bringing it to the market. That is where you want to be, but of course the frustrating part is that no one can tell you how to get there, you will need to discover that path for yourself.
Oh, and along the way, don’t forget the next question is still “so what would we do with it?”….   

The World Is On Fire

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Again. It’s not the first time, certainly we have seen sweeping changes in the way we live and do business, even in our lifetimes. Mechanical transport, electricity, telephones, air travel, radio and television – all these and more rearranged lives and businesses. But they did so at a relatively ordered pace since the infrastructure required to implement and support the advances did not exist, particularly outside of developed countries, and had to be built. Each one would build upon the previous as they progressed throughout the world. But now, as we are in the throes of the information age, or the digital revolution, or whatever you want to call it, the ordered pace of progress has become a firestorm and it is burning across the entire globe almost daily.
This is a key difference in several ways, but don’t miss this word: global.  
The party has gotten much bigger – instead of a few thousand people influencing your life you now have to contend with 7 billion. You needn’t dig very deep to understand how enormous a change that is. The basic methods of doing commerce have and continue to evolve in new and exciting ways, and as a result well-ordered, step by step career plans have also become a casualty. “Build” has been replaced by “pivot” as the new mantra. Pundits and professors alike are talking about business models that are more akin to chaos theory than an old time business plan, and they are not speaking in jest. (The fact that I can call it an “old time business plan” and you didn’t blink should tell you something.)
The intrinsic value of a patent or copyright has gone up in smoke as well.
A disturbing statement for anyone in the licensing business. Oh, the law hasn’t changed, it still grants ownership rights and a registration grants you more rights and some clout, but you know that doesn’t really matter if someone in Ethiopia or Vietnam ignores it. And it increasingly doesn’t seem to matter to 16 year old bloggers, wanna-be artists or the occasional Etsy designer showing off their, or is it your, creativity. Everything you do gets laid out on a worldwide digital stage. There is a school of thought wherein we are moving toward a cloud state where information and knowledge is a commodity owned by all and the concepts of authorship and origin will fade away. It is seductive in some ways to talk of free expression, shared innovation and the freedom to build upon each others ideas. Unless of course that affects how you feed your family, then maybe not so much, but unfortunately no less real.
I don’t have the answers, and even if I did they would only be right for me…for about 10 minutes. It is an exciting time for those who go to bed and wake up thinking about what they could, how they would, maybe they should… and then they do. It is a frightening time for those who look back at how they used to do things and wonder how to bring that about again – a sad waste of talent. You can’t stop a tsunami, sometimes you can’t even swim with it but you can climb above it. Run like the wind. Go!   

Atlanta Tidbits

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Normally I would toss these eagerly awaited gems out there and let you digest them as you will, but this collection from the recent Atlanta Gift Market seem to be wrapping around a couple of messages. The first is that the business is back – it was a great market and there are similar reports from those that followed; Dallas, Las Vegas, Chicago, LA and the NYIGF all reported significant increases in attendance and sales. For instance:
It’s like the good old days
– a showroom client about the Market
It’s nice to see our customers with their chins off the floor.
– a showroom client
The second point that I see being made is that the days of one-off designs, what I call the single snowman problem, are definitely waning. Yes, I’ve said this before, and yes, there will always be a gift bag here and a paper plate there, however for the first time we are hearing the clients articulate – almost as a group – that they are hunting for something bigger and better. These were all comments from different clients at different times over the six days we were there:
Most anyone can draw a picture, we want more than that.
– a licensee
It’s hard to put a finger on where this market is going so I don’t know what I want.
– a showroom client
We’re really looking for something that’s more than pattern based – everybody can get patterns.
– giftware licensee
We’re looking for properties that we can get behind, develop and sell across a number of categories for the next 2 or 3 years.
– art director of a large multi-category company
No one can afford to do continue doing these novelty collections that are in and out right away, so we want ideas we can carry over to next year and expand upon.
– a giftware manufacturer
And then there are a few random beauties:
This can be a thankless business.
– an agent lamenting the unexpected end of a long term artist relationship
I’m sorry but I just don’t want to be all that helpful.
– a successful artist in a discussion about the social licensing groups
This whole “everybody is an artist” thing makes me want to throw up. It’s just not the case.
– an agent
And of course my favorite:
For God’s sake, how many of these tilty-headed, big-eyed woman designs can this market absorb?
– from an agent walking the show

The Road Well Traveled

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I was reading an interesting article yesterday by patent attorney Andrew Spriegel about the realities facing inventors who approach him with what they are sure is the “million dollar idea”. You can find it here. After reading it through, I was struck by the many parallels to our own business and went back to it again with that as a focus.
And you know I love me them there realities…for instance:
For every 1,000 patents, only four or five will actually make it to the market and make any money; the rate is less than ½ of 1 percent. I’d say that in design licensing the percentage making it out of those portfolios would be similar.
Many inventors are too close to their idea and rely on family and friends for opinions instead of doing the market research to see if it there is a demand for the product, and as a result end up spending years and thousands of dollars on something with little or no market appeal. Boy does THAT sound familiar…
There is a network of “for-profit” invention mills that promise results but are only out to take the inventor’s money with no regard for whether the product is actually marketable. Hmmm….
Occasionally the best ideas that seem to have great promise don’t go anywhere. He stresses that the invention/patent process is often frustrating and you just need to keep moving forward. In our business this is absolutely true, and when (not if) it happens to you, stop and use what you’ve learned to retool, reinvent and then relaunch – either an improved version or a whole new idea. Sometimes our pet projects just are not going to work and that’s OK – fail fast, fail early and move on is the mantra.
He cautions inventors about selling out to a big box store like WalMart or Home Depot because their distribution models will produce only a small profit percentage for the IP owner. Well, ain’t it the truth. While big box retail margins stay high, we have seen a steady and relentless erosion of the royalties generated by products sold into big box markets (see the previous post) and there is no end in sight.
The point here is not to “dash dreams or slay hope” as he says, but rather to keep those alive by pointing out that your roadblocks are generally not unique, but instead typical of what one encounters while pursuing a successful creative life. Expect them, scramble over them and keep creating. Cast a wide net when looking for information and inspiration – you never know what will be useful and we can learn much from all those inventors, musicians, writers and others on similar but divergent paths.
And I bet we’ll have a few things to teach them as well.

Bring It On Home

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It would be funny if it was not so tragic. The headline reads “China Factories Eye Cheaper Labor Overseas”.  It’s well documented that labor costs have been rising – dramatically – in China over the last few years, something like 15 to 20 percent per year, and of course material costs for anything and everything have gone up worldwide.  Shipping is also skyrocketing, to the point where our clients tell us some factories will no longer quote hard prices – just an estimate that may change (upward of course) by the time they place the order. Countries like Bangladesh, Ethiopia, Vietnam and a host more are looking to pick up the slack, but the logistics of manufacturing in the middle of truly undeveloped countries will give anyone pause. Regardless, it’s a weird twist that the products we outsourced to China might actually be made in Africa by China.
Shouldn’t this open up more opportunity for us at home? Well…maybe… Art and design in America is inexorably tied to price – sad but true. We marvel at the beautiful pieces in a Scandinavian Design store and then wonder why we cannot buy them at WalMart. Everyone loves a Lamborghini or Ferrari, but every American company that has tried to build a high design car eventually fails. We crave Missoni, Mizrahi and Michael Graves but the only time we buy it is when Target rolls out a discounted collection. This is the state of consumption in America, cachet without the price, so is it any wonder so many of our jobs were displaced to countries providing cheap goods? You can try to blame corporate greed, but corporations react to what their customers want, and as a nation we want cheaper, cheaper, cheaper. Perhaps now the field will level a little bit and we can make an effort to support our own manufacturers and give them a reason to bring it back home again.
Ah well, a boy can dream.
Another article that hit my inbox today was about the new problem vexing big box retail, and it now has a catchy name: showrooming. This is the rapidly growing practice of using the brick and mortar stores to see, touch and feel the products and then ordering them online for a cheaper price. BIG problem for stores like Best Buy, Target, Wal-Mart and many others, especially for music and high end items like tools and electronics.  The first line in this article (from the WSJ) was “Target Corp is tired of being used” and my first thought was “well, that oughta bring snorts from anyone who has had the pleasure of dealing with them”. But all that aside, the basis of the article was that TGT has sent a letter to their vendors asking them to create products unique to their stores to help shield them from price comparisons (presumably by altering features or model numbers), and if that is not possible they want the suppliers to ensure they can match the online prices. Without hurting their margins of course.
Did you hear the groan from the experienced licensors out there? We already know that, working this backwards, that means retailers will extract more price concessions from the manufacturers, which means the mfrs will need to find ways to cut costs further which means – yup – we will all be invited to participate. Again.
Man, I am getting to dislike Amazon….