Survey of Royalties Shows 5% Increase in 1998.
While retail sales of licensed merchandise decreased 3% in the U.S. and Canada in 1998, royalty rates across all business sectors increased an average of 5%. Average rates reached 8.7%, nearly equaling the record high of 8.9% reported in 1996, according to results from THE LICENSING LETTER's Annual Business Survey (see charts at left). Rates typically are based on manufacturer's net sales price.
Two important points should be noted. The first is that royalties represent only one facet of negotiations surrounding the granting of a license. Many times, the key negotiated factors in the agreement are the size of the guarantees and advances to be paid to the property holder.
Secondly, mix of companies responding to our annual survey changes from year to year, so slight changes in reported rates maynot be significant.
Survey results by property type represent a mixed bag. Declines in rates were shown in art, celebrity/estates and fashion, while increases were reported in average rates for entertainment/character, non-profit, sports, trademark/brand and toys/games. One significant source of upward pressure in entertainment and character licensing is the high rates reportedly being gotten by LucasFilm for Star Wars, which others are using as a rising umbrella under which to price their own properties.
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|Comment:||Survey of Royalties Shows 5% Increase in 1998.|
|Date:||Feb 1, 1999|
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