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What is Licensing?
Licensing is the marketing tool whereby the owner ("licensor")
of a patent, trademark, copyright or technology ("intellectual
property") grants a company ("licensee") the use of
such intellectual property on a product or service marketed by the licensee in
exchange for payment, usually royalties.
The Franklin Mint, for example, purchased the rights ("product
license") from General Motors to make a $100 model of the 1953
Cadillac convertible using the Cadillac name and crest (trademarks) and
the automobile design (copyrights). The Franklin Mint was the
licensee; the Cadillac Division of General Motors was the
licensor; the contract covering the relationship was the license. For
every model sold, Franklin Mint paid General Motors a percentage of the income
it received ("royalty").
Similarly, another relationship created by Bliss House as the licensing
agency was the license granted to IBM to use the likeness of Charlie
Chaplin as The Little Tramp in IBM's advertising of their line of personal
computers. This is an example of a service license -- the use of
intellectual property for a service.
What Are The Critical Ingredients In A Successful
License?
Licensing relies on two inseparable components of marketing: awareness and
appreciation. The target consumer must readily recognize the property (be it a
brand, character or design) and this recognition must elicit a strong positive
response. When the consumer resolutely associates his or her self-identity with
the property, as is often the case with college teams or NFL clubs, we say the
consumer is "bonding" with the property. When the consumer feels so
strongly that they want to "broadcast" this affiliation to others by
wearing team-branded apparel or brandishing other devices, then the income
generated from licensing is certain to be substantial.
The term "borrowed interest" in often used in explaining how
licensing works. The NFL licensee is "borrowing" the intense loyalty
to a particular team in order to sell his T-shirts and caps.
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