What Happens at the Licensing Expo Won't Stay in Vegas

Excerpted from Advertising Age article by Michael Stone, June 02, 2009

LAS VEGAS (AdAge.com)—How is the economy treating you? Of course everyone is preoccupied with the economy. Licensing revenue and deal flow are often viewed as divining rods for licensing pros looking to predict the future. Unfortunately things are still looking grim. According to the annual Licensing Industry Survey released today by the International Licensing Industry Merchandisers' Association, brand owners collected 5.6% less in licensing revenue in 2008 than they did in 2007. Royalty revenue was down in eight of the nine categories of licenses tracked by LIMA. The only bright spot seems to be the collegiate market, where royalties rose 3.5% to $208 million in 2008.

But some licensors are not taking the depressed economy sitting down. I am struck by a (sort of) new crop of brands taking licensing to the next level.

These brands are not using licensing and brand extensions to create additional revenue streams, reach new audiences or solidify consumer loyalty. Rather, they are using licensing as their primary business model. For these brands, licensing has really become their lifeline.

Sharper Image, Circuit City, Linens 'n Things, Bombay and Polaroid all went bankrupt within the last year and are in the process of relaunching as licensed brands. There is also some speculation that Fortunoff and Eddie Bauer may end up doing the same thing. The idea here is that while the financials may not have worked to keep these venerable brands in business as they were (or are), they are still extremely popular with consumers. A licensing business model allows them to still exist in the mind of the consumer…