Royaltie$, September 2009 by aNb Media

CELEBRATING 10 YEARS OF HAPPY! A FLOOD OF FANS • Most watched Kids cartoon ever • Over 72 million monthly viewers • #1 animated program on all of TV 8 years in a row, among K2-11 and 6-11* *Nielsen: 7/17/99-12/31/08

NICK’S BIGGEST CELEBRATION EVER • $100 million in marketing and promotions including: - Ultimate Fansite: www.spongebob.com (January) - Three major TV events (April, July, November) - Two QSRs (April, November) - SpongeBob Documentary (July) - Global Day of Happiness celebrating SpongeBob’s 10th Anniversary (July) • All new product lines, ﬁrst-ever co-brands, innovative partnerships and re-imagined art styles • National sweepstakes promotion on over 15 million products

For International licensing information contact:

For US licensing and retail information contact:

Jill Tully VP, International Consumer Products Jill.Tully@nick.com

Shaun Turner VP, Retail Development Shaun.Turner@nick.com

Kristi Wasmer VP, Retail Development Kristi.Wasmer@nick.com

SB_TradeAd.RoyaltiesMag.rev.indd 1

4/22/09 5:46:19 PM

Volume 4, No. 9

September 2009

Features 16 BY

PAUL NARULA

18 BY

Sullied Celebrities as Brand Representatives

CHRIS ADAMS

22 BY

Building a Home Brand

PAUL NARULA

20 BY

Hilco Consumer Capital: Bringing Brands Back

Managing Through a Crisis

NANCY LOMBARDI

Departments

OBSERVATIONS & OPINIONS

PAGE

THE TICKER

PAGE

REAL DEAL

PAGE

HELLO KITTY

PAGE

YOU’RE HIRED!

PAGE

CALENDAR

PAGE

ESSENCE

STYLE

MAVERICKS

IN THE

MARKET:

JOSH ROMM ROYALTIE$ MARKETPLACE:

NANCY LOMBARDI

26 BY

Brand Name vs. Private Label: Reframing the Concept of Value

Michael Jackson: The King of Merchandise

NANCY LOMBARDI

EVENTS

ENDCAP

ON THIS PAGE: On top is the House of Marley logo. The property is managed by Hilco Consumer Capital. The lower image is Sanrio’s Hello Kitty, which is celebrating its 35th anniversary.

ON THE COVER: Bravado has begun introducing the first of its Michael Jackson merchandise, The Beanstalk Group is building an HGTV licensing program, and Michael Phelps provides two examples—in the cases of Kellogg’s and Subway— of what happens when a celebrity endorser experiences bad publicity. COVER BY DESIGN EDGE

www.aNbMedia.com PUBLISHED BY ANB MEDIA • Volume 3, Number 8

PUBLISHER ANDY KRINNER ANDY@ANBMEDIA.COM

by Andy Krinner

SNAPPING OUT OF THE LULL he dog days of summer are gone

as is the annual summer lull that besets the licensing industry. This

summer has been particularly lulling. I

look forward to the fresh, crisp air that comes along with September, as well as the energy in our business that seems to reappear along with fall.

There is no lull here at aNb Media,

though. We have been busy preparing for the sold-out Q4 media event for

www.TimetoPlayMag.com. More than 35

companies—from toy manufacturers to major family entertainment studios—will converge on NYC on Oct. 1 to present

their brands and to see what our esteemed

team of experts has chosen as its top holiday toys for 2009. Members of the press from all over the U.S., including the top “mommy bloggers,” will be on hand.

It seems as though the strengths of this

year’s Licensing Expo outweighed the weaknesses enough that the “other” li-

censing show—to be called THE Licensing Event—has decided it’s best not to try to produce a competing New York City-

based show next year after all. I think this

is a wise move. At this point in time, the

industry does not need or want another “Licensing Show.” Had Las Vegas been

unsuccessful, perhaps there could have been cause, but not at this time.

The stock market continues to creep its

way up—a sign some business pundits seem to think means the economy is turning around and the recession may be sub-

siding. Although I have my doubts that it is completely over, I would like to think that we are on the verge of an upswing that

will hopefully get consumers back into the comfort zone for spending. Lately, con-

sumer confidence indicators have also shown improvement along with the stabilizing unemployment rate.

And this just in: Disney is to acquire

Marvel for four billion dollars. It’s too early in this story to try to anticipate how these two entertainment giants will oper-

ate, but I can’t imagine the combined entity is going to be an easy puzzle to piece together. We may not feel the reverbera-

tions of this mega-acquisition for a long time to come.

See you in Dallas next month!

Correction to the August issue of ROYALTIE$: On page 10, it was erroneously stated that Anchor Bay Entertainment signed on food licensees for Wow! Wow! Wubbzy! The food companies Anchor Bay partnered with are cross-promotional partners and not licensees. We regret the error.

ROYALTIE$ SEPTEMBER 2009

ASSOCIATE PUBLISHER BOB GLASER BOB@ANBMEDIA.COM ADVERTISING MANAGER AMY LAND AMY@ANBMEDIA.COM CONTROLLER MARY GROGAN MARY@ANBMEDIA.COM EDITOR IN CHIEF JIM SILVER JIM@ANBMEDIA.COM EDITORIAL DIRECTOR NANCY LOMBARDI NANCY@ANBMEDIA.COM MANAGING EDITOR CHRIS ADAMS CHRISA@ANBMEDIA.COM EDITOR AT LARGE CHRISTOPHER BYRNE CHRISB@ANBMEDIA.COM ASSISTANT EDITOR LAURIE LEAHEY LAURIE@ANBMEDIA.COM ASSISTANT EDITOR PAUL NARULA PAUL@ANBMEDIA.COM WEB MASTER ERIK KIECKHAFER ERIK@ANBMEDIA.COM WEB CONTENT MANAGER BRENDAN SANABRIA BRENDAN@ANBMEDIA.COM CONTRIBUTOR MATT NUCCIO MATT@DESIGNEDGE.NET HONG KONG REPRESENTATIVE TONY LEE SMART REGENT PRODUCTIONS LTD., 66–72 STANLEY STREET, ROOM 603, KAI TAK COMMERCIAL BUILDING, CENTRAL HONG KONG PHONE: 2815 0166 • FAX: 2815 6911 • SREGENT@NETVIGATOR.COM

PUBLIC RELATIONS REPRESENTATIVE JOSSLYNNE WELCH LITZKY PUBLIC RELATIONS, 320 SINATRA DR., HOBOKEN, N.J. 07030 (201) 222–9118 EXT. 13 • JWELCH@LITZKYPR.COM

INTERESTED IN A SUBSCRIPTION? CONTACT SUBSCRIPTIONS@ANBMEDIA.COM ANB

MEDIA, INC.

229 WEST 28TH STREET, SUITE 401, NEW YORK, NY 10001 PHONE: (646) 763–8710 • FAX: (646) 763–8727

ROYALTIE$ is published 12 times a year by aNb Media, Inc. Copyright 2009 aNb Media, Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form, or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission from the publisher. Printed in the U.S.A. ROYALTIE$ is a registered trademark of aNb Media, Inc. Opinions and comments expressed in this publication by editors, contributing writers, or solicited or unsolicited documents are not necessarily those of ROYALTIE$ management.

NG NOW REPRESENTI

NDS THIRD PARTY BRA

YOUR

BRAND

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BUILDING GLOBAL BRANDS FremantleMedia Enterprises is the leading independent one-stop-shop for global brand representation. We have a proven track-record of groundbreaking programs across all licensing disciplines including consumer products, interactive, mobile, sponsorship, integrated marketing, live events, home entertainment and international television program distribution. CONTACT US TO FIND OUT HOW WE CAN HELP BUILD YOUR BRAND

For further information, contact: James Ngo Senior Director, Consumer Products FremantleMedia Enterprises T: +1 (818) 748 1145 E: james.ngo@fremantlemedia.com

www.fremantlemedia.com

A RECAP

INDUSTRY HEADLINES

SEARS OPENS TOY SHOPS

On August 15 Sears debuted Toy Shops inside 20 nationwide locations in the New York, Los Angeles, Chicago, and San Francisco areas. The shops offer a mix of mass-market items from companies such as Mattel, Hasbro, Jakks, Spin Master, and LEGO. In addition, the shops include a mix of specialty product from Schylling, Learning Curve, Madame Alexander, Gund, Russ Berrie, and Briarpatch. Private label offerings featuring Sears Craftsman and Kenmore brands are also available. “We are bringing toys back to Sears,” says Dev Mukherjee, SVP and president of the seasonal and toys business units for Sears Holdings during an August media walk though of the Toy Shop in the Woodbridge Center Mall in New Jersey. The core target is ages 3-5 with the Toy Shop aligned next to kids’ apparel. The Toy Shop also features a computer station with internet access for consumers to shop online. The Toy Shops are expected to carry 1,000 SKUs with a total of 5,000 toy SKUs available online. “This idea came out of customer requests,” says Julia Fitzgerald, DVP, CMO for Sears Holdings. It is expected that the Toy Shops will continue to open in additional Sears locations throughout 2010. Visit www.sears.com/toyshops

PROPOSED THE LICENSING SHOW POSTPONED DUE TO RECESSION

Linda Cohen, show director for the proposed THE Licensing Event trade show that had a planned launch in April 2010 in New York City, recently announced that it has become clear that as a result of the terrible economic conditions over the past year, an event in 2010 will not work for many in the licensing and retailing communities. It has been decided, in the best interest of the licensing industry, to postpone THE Licensing Event until the effects of the current recession have definitively started to lift. Cohen adds that she looks forward to producing the perfect event in New York, at just the right time.

FREMANTLE AND PLANET HOLLYWOOD LAUNCH LIVE AMERICA’S GOT TALENT

FremantleMedia Enterprises (FME) and Planet Hollywood Resort & Casino will launch a live version of America’s Got Talent. Produced by FremantleMedia Enterprises and SYCO, in conjunction with Planet Hollywood, America’s Got Talent Live will kick off its 10-week run on October 7, 2009 at Planet Hollywood’s 1,300-seat CHI Showroom in Las Vegas with shows every Wednesday through Sunday. Tickets for America’s Got Talent Live are now available at planethollywood.com and ticketmaster.com. America’s Got Talent Live underscores FME’s reputation in building brands beyond television and follows on the heels of similar live extensions with The Price Is Right in the U.S. and Australia, Grand Designs in the UK, and The American Idol Experience at Walt Disney World Resort in Florida.

SPIDER-MAN RETURNS TO MACY’S THANKSGIVING DAY PARADE

Marvel has announced that Spider-Man will return to the 83rd Annual Macy’s Thanksgiving Day Parade after a decade away from the parade. Spider-Man made its Macy’s Parade debut in 1987. The new Spider-Man balloon debuting in this year’s Macy’s Parade combines the classic pose of the previous giant—its arms outstretched in front of it and his legs bent behind in full crawling mode—but this time it will feature Spidey’s classic web-slinging pose coupled with a more modern look. The Spider-Man balloon is scheduled to be a part of the Macy’s Parade through 2011.

ROYALTIE$ SEPTEMBER 2009

JAKKS PACIFIC AND ROUND 5 SIGN MMA LICENSING AGREEMENT

Jakks Pacific, Inc., master toy licensee for Ultimate Fighting Championship (UFC), announced a sub-licensing agreement with Mixed Martial Arts (MMA) collectibles company Round 5 Corp. to share UFC and MMA talent. The agreement will allow both companies access to the biggest MMA fighters in order to manufacture, market, and distribute action figures and related products under the UFC umbrella. As a result, both companies now have access to a significantly larger MMA talent pool, including Randy Couture, Andrei Arlovski, Matt Hughes, Clay Guida, Chuck Liddell, Forrest Griffin, Brock Lesnar, BJ Penn, and other top MMA fighters. Jakks’ new UFC line of toys and collectibles is expected to be available at retailers nationwide starting this fall, with plans to roll out the newly acquired talent beginning as early as spring 2010. Along with the full line of deluxe articulated action figures, Jakks also expects to offer octagon playsets, accessories, and roleplay toys based on the UFC, PRIDE Fighting Championship, and World Extreme Cagefighting.

STONE AMERICA SIGNS

ON FOR

SCRATCH DJ ACADEMY

Stone America Licensing announced the company has been appointed the exclusive licensing agent by Scratch DJ Academy. Founded in 2002 by Jam Master Jay, the legendary DJ from Run-DMC, Scratch DJ Academy operates locations in New York City, Miami, Los Angeles, four cruise ships, and three Caribbean resorts. Stone America will help Scratch leverage its leadership position among DJs, music insiders, and influencers to become an iconic national brand. Licensing categories available to manufacturers and retailers include apparel, accessories, electronics, publishing, toys, games, and more.

FITZROY MEDIA SIGNS GAMING DEALS HEATHCLIFF AND FUNNY FACE

DISCOVERY ANNOUNCES SEASON 2 OF BILLY MAYS’ SERIES PITCHMEN

Discovery Channel’s Pitchmen, the 12-part series that features the late Billy Mays II and his business partner, Anthony “Sully” Sullivan, will be back for a second season. The show, which is produced by Original Productions, a division of FremantleMedia, takes viewers behind the curtain into the billion dollar infomercial industry, as Mays and Sullivan helped everyday men and women bring their inventions to the masses. Discovery Channel is developing the format of season two with Mays’ son, Billy Mays III, Anthony Sullivan, and Thom Beers, CEO of Original Productions. A premiere date for season two of Pitchmen hasn’t yet been set.

FOR

FitzRoy Media has awarded worldwide gaming rights for Heathcliff and Funny Face to San Diego-based Axis Apps in an agreement that gives Axis exclusive rights to develop and distribute games and applications for iPhones. As part of the four-year agreement, Axis plans to release the first games this fall with the November 2009 debut of Heathcliff and Funny Face applications for the iPhone and iPod Touch. Both games will be available for download through iTunes. Created in 1973 by cartoonist George Gately, today’s Heathcliff comic strip is written and drawn by Peter Gallagher, who took over the comic strip in 1998 after apprenticing with his uncles, George Gately and John Gallagher. Targeting an adult and tween audience, the new Heathcliff will focus on comedy set against a hip, club-music sound.

ROYALTIE$ SEPTEMBER 2009

NICKELODEON AND SPIN MASTER

Spin Master has been named the master global toy licensee for Nickelodeon Movies’ upcoming theatrical release of The Last Airbender, the feature film slated to hit theaters next July. The licensing deal between Spin Master and Nickelodeon and Viacom Consumer Products (NVCP) will produce a full line of products including action figures, vehicles, playsets, and more. The Last Airbender is a live-action adaptation of the animated Avatar series, which follows the adventures of the young martial artist named Aang. The film will be directed by M. Night Shyamalan.

SONY PICTURES AND CEACO

Ceaco has signed a deal with Sony Pictures to be the exclusive licensee for jigsaw puzzles based on the upcoming Sony Pictures film Planet 51, due for release on November 20. Planet 51 follows the adventures of astronaut John Baker as he tries to escape from the white picket fence world of Planet 51. Ceaco will offer three different 100-piece puzzles in its CeacoKIDS line, featuring the Planet 51 characters. The puzzles will be available in October at retailers nationwide.

SCIENTIFIC AMERICAN AND STONE AMERICA LICENSING

Scientific American has named Stone America Licensing as the exclusive licensing agent for the Scientific American brand. Scientific American, founded in 1845, is one of the oldest published magazines in the U.S. and has published articles on developments in modern science, medicine, and technology, with contributions from more than 140 Nobel Laureates. Stone America will be presenting the brand as a science and technology consumer brand, with products in toys, games, consumer electronics, exploration, publishing, gadgets, apparel, and more.

UNIVERSAL PICTURES AND UBISOFT

Ubisoft has signed up to develop a video game based on Universal Pictures’ upcoming actioncomedy Scott Pilgrim vs. The World. The film stars actors such as Michael Cera, Kieran Culkin, Mary Elizabeth Winstead, Chris Evans, Brandon Routh, Mae Whitman, and Jason Schwartzman. The game is being developed by Ubisoft Montreal through a licensing agreement with Universal Partnerships & Licensing and is expected to launch worldwide with the film’s 2010 release. The game will feature the same characters as the film.

DISCOVERY COMMUNICATIONS AND MERCHSOURCE

Discovery Communications will continue to develop its Animal Planet brand with a new deal with MerchSource. MerchSource willl be producing Animal Planet-branded pet care products including pet beds, blankets, leashes, and other items to debut at retail this fall. The product line will roll out in conjunction with the world premiere of the network’s pet celebration series Superfetch, which follows pet trainer Zak George as he helps pet owners tranform their pets into Animal Planet leash active “trick jockeys” and strengthens the bond between pet and owner. from MerchSource

ROYALTIE$ SEPTEMBER 2009

CLASSIC MEDIA AND MULTIPLE LICENSEES

Following up the 75th anniversary of The Lone Ranger, Classic Media has signed a number of new partners to the brand. Now & Zen will be producing apparel at department and specialty stores. Disguise will be releasing new Lone Ranger costumes for Halloween. Lionel Trains has created a collectible The Lone Ranger Wild West train set. Dynamite Entertainment will continue its comic books series of The Lone Ranger with six additional issues. Classic Media will also continue to hold The Lone Ranger live events and historic railroads and is releasing a 12-disc DVD box set of The Lone Ranger television series as The Lone Ranger 75th Anniversary Collector’s Edition.

The Lone Ranger Wild West train set

TARGET ENTERTAINMENT GROUP AND MULTIPLE LICENSEES

Target Entertainment Group has signed its first licensing deals for PlayStation software IPs. Impact International will be producing plush and accessories for LittleBigPlanet in the UK, Ireland, and the Middle East, featuring the game’s Sackboy character. Bravado Retail and Licensing will produce men’s and women’s T-shirts for LittleBigPlanet, MotorStorm, God of War, and Resistance, as well as retro bags. Brazier and Co. have signed up to produce a line of PVC figurines based on LittleBigPlanet. GB Eye Limited will develop a range of posters, 3-D posters, postcards, and more for PlayStation brands.

MARS RETAIL GROUP AND MULTIPLE LICENSEES

Mars Retail Group has announced three new licensees for its candy brands. Candy-Scents, Inc., will manufacture candy-themed air fresheners designed for bedrooms, cars, gym lockers, and more. The air fresheners will include a line that features the M&M’s characters with popular scents such as fresh linen or coconut, as well as fruit-scented fresheners featuring Skittles. The Hillman Group will produce customized house keys featuring the M&M’s brand early next year. Ecoist will manufacture and market a line of handbags made from obsolete candy wrappers and other packaging misprints from various Mars brands. The partnership will prevent more than five million candy wrappers from going to landfills, according to Mars.

Sackboy

ROCKY MOUNTAIN CHOCOLATE FACTORY AND WHITE COFFEE

White Coffee has announced a new licensing agreement with Rocky Mountain Chocolate Factory to introduce a line of flavored Rocky Mountain Chocolate Factory gourmet coffees. The new flavored coffees will be available in 12-ounce bags in four different flavors, representing popular Rocky Mountain Chocolate Factory flavors. These flavors will be Dark Chocolate Truffle, English Toffee, Hazelnut, and Vanilla Caramel.

BOY SCOUTS OF AMERICA AND ROBERT KAUFMAN FABRICS

Robert Kaufman Fabrics will be introducing a line of cotton quilting fabrics with unique designs, including patriotic themes, in a new partnership with the Boy Scouts of America (BSA). The fabrics will include Scout symbols, including badges, as well as the values and laws of the Scouts. The product will be available in two color palettes: one for Cub Scouts and one for Boy Scouts.

ROYALTIE$ SEPTEMBER 2009

Playing for Change

Act III Licensing signed Ripple Junction to create T-shirts for Playing for Change, a multimedia movement created to inspire, connect, and bring peace to the world through music. The idea for this project arose from a common belief that music has the power to break down boundaries and overcome distances between people. Ripple Junction’s T-shirts celebrate Playing for Change’s ability to harmonize with different cultures throughout the world. The T-shirts will launch this holiday season at specialty retailers.

Palomita Panties at Sears

Palomita, a junior fashion brand with a focus on the Latino market, announced its launch of its new panty “calzones” line at selected Sears department stores and online at Sears.com. The panties feature designs that highlight popular logos and images from Hispanic consumer products and characters such as BOING!, Lulu, and Lulu Cola. Palomita sleepwear and underwear is manufactured and distributed under license by HYP, Inc. Palomita was created by Molly “Molona” Robbins, a Mexico City native and apparel industry veteran. She has secured exclusive rights to use trademarks and vintage art from an array of Latino companies. Palomita incorporates these colorful graphics, providing a platform for individual style. The logos range from beverage companies and confection manufacturers to original designs.

ROYALTIE$ SEPTEMBER 2009

Fashionably Strange

Gator Group, recently appointed global licensing agent for Emily the Strange, signed Atomic Fashion Marketing Pty Ltd. as a licensee for the teen brand. The blue Be Your Own Hero messenger bag is 100 percent PVC. It features pockets both inside and out, a fully adjustable 1.5-inch wide shoulder strap, zip closure, metal feet, and a bold all-over screen print design featuring Emily.

A Colorful Planet for Kids

The imagery of artist Todd Parr will make its way onto a line of children’s clothes, under the brand Planet Color by Todd Parr. The apparel is available exclusively at department stores, including Nordstrom in the Midwest and Northeast regions, and is intended for boys and girls ages 18 months–6 years. The collection is from U.S. manufacturer, Jen’s ideas. The Planet Color items available from Jen’s ideas will include T-shirts and thermals for boys and dresses and thermals for girls. Sizes will range from 2T–4T. Embroidered baseball caps will also be on hand for both boys and girls in toddler sizes. Planet Color by Todd Parr was created and developed by Parr and his marketing partner, SupperTime Entertainment.

JOSHUA ROMM, FUSION LICENSING by Paul Narula

here are many factors to success in the world of licensing, but perhaps one of the most basic tenets is to find a licensor and a licensee that work well together. The right combination of brand and licensed product is what can carry a licensing program to the appropriate consumers. “Much like fusion energy being generated when two atomic nuclei collide, when the right brand intersects with the right licensee, the result is a powerful brand and new sustainable business entity,” says Josh Romm, president of Fusion Brand Marketing & Licensing. It was that power that Romm had in mind when he founded Fusion Licensing. Romm has more than 20 years in the licensing industry under his belt. Prior to founding Fusion Licensing, he held positions at Neutrogena, Mattel, EMI, and Warner Bros. He cut his teeth in the industry as a brand manager at Neutrogena. At Mattel, Romm was initially a brand manager for Barbie before moving on to work with Mattel’s action figures. These positions gave Romm experience and helped him form the strategic approach that he continues to use to this day. From Mattel, Romm went on to work with EMI and then Warner Bros., expanding the types of properties he worked with. He was responsible for signing high-end motorcycle manufacturer Ducati to the Warner Bros. Matrix brand, creating a series of limited-edition motorcycles for the property. It was from this deal that the idea for Fusion Licensing began, as Ducati suggested to Romm that he help it build its own licensing program.

ROYALTIE$ SEPTEMBER 2009

Romm went on to work for Ducati as a consultant through his new company, Fusion Licensing. He began working with other clients on a consulting basis, including the U.S. Postal Service. He helped his clients get a grip on the world of licensing and establish the framework for successful licensing programs. After completing his work with these companies, Romm stepped back and decided to change Fusion Licensing’s direction. “I decided to take the career path I really wanted—to have a full-service licensing agency.” The company is now a full-service licensing agency that acts as a worldwide brand manager for properties such as Blue Note, Daisy Rock, and more. The company also acts as a North American sub-agent for brands such as the Royal Mail and a variety of artists, such as Salvador Dali and Victor Vasarely. For Romm, one of the key parts of building a brand and one of Fusion’s strong points is the ability to assess the potential of a licensing program. “We have to go beyond just the client’s perspective,” he says. Many brands have untapped potential that can go ignored, which Romm learned while working with brands such as Road Runner and Wile E. Coyote at Warner Bros., where he connected these properties to

licensing programs for insurance and tires. Romm took this ability to look beyond obvious connections to translate the Blue Note brand into a lifestyle brand. “We made the label itself into a brand, connecting with licensees such as Mighty Fine and Friend or Foe,” says Romm. This created more licensing opportunities for the brand. In addition, Romm notes that Fusion Licensing’s job isn’t over once a deal has been signed. “We are very results oriented,” he says. “We will roll up our sleeves and get to work.” Fusion will connect with its clients’ marketing and PR departments to help establish and support the program. As Fusion goes forward, Romm is looking to take his out-of-the-box style of thinking and apply it to not just establishing brands, but in choosing brands to work with as well. “We are going to look for brand opportunities that just need a market now,” says Romm. Romm has indicated that Fusion Licensing has actually seen more interest in its programs this year than previous years. “We’ve found our fit in the marketplace,” says Romm. A dedication to strategic licensing and a willingness to take a brand further than expected have become Fusion Licensing’s winning combination.

R CTO E R DI D ND A AN THE Z M Z Z O Z U FR FU D...... A AD T F

E OT DE HO E ED FH H H O OF T T F O OF N N ON U U A A H CTI S A SH ON IVE A L OTI M OR ROM E F MAJ TUR

PIC

SA R E V

UNI TURES IC P

S RS ER T TE A A E E H TH NT I IN

0 1 0 2 DA : 818-777-2067 LICENSING IN U.S. & CANA 7-5694 INTERNATIONAL: 818-77 716 RETAIL : 818-777-6 789 PROMOTIONS : 818-777-5

SANRIO’S HELLO KITTY

by Paul Narula

n 1974, Sanrio released a coin purse in Japan that featured an anthropomorphized cat with a red bow on her head. Now, 35 years later, Hello Kitty’s image spans a line of licensed products that range from toys to cosmetics to candy. Sanrio has continued to support the Hello Kitty brand as it grew into a successful international girls’ brand. This year, Hello Kitty celebrates its 35th anniversary and Sanrio is further expanding the brand with new exclusive deals and commemorative events. Though Hello Kitty started as just an image on a coin purse, Sanrio has expanded that image to create a character that girls can identify with. Hello Kitty has a full family, including a twin sister named Mimmy who wears different-colored clothing. She also has a boyfriend, named Dear Daniel, and has a number of hobbies, including traveling, music, reading, and more. Hello Kitty is also joined by a host of other Sanrio characters, including Badtz-Maru, Keroppi, Pochacco, and others, often appearing in product lines with them or alongside them. Hello Kitty has also been the subject of a number of television shows, both in Japan and the United States. The character

ROYALTIE$ SEPTEMBER 2009

has also appeared in a number of themed video games for multiple systems. Sanrio has even created an MMOG based on the brand, called Hello Kitty Online, linked with the company’s Sanriotown website where players can register for a free account. Sanrio is celebrating the successful brand’s 35th anniversary in a number of ways, with a program called Hello Kitty Colors. The Three Apples in LA & NYC art exhibit will run from October to December in the U.S. The retrospective/art exhibit will feature modern artists, such as Ron English and Buff Monster, showing their own interpretation of Hello Kitty’s design. The exhibit will also include costume retrospectives, unusual Hello Kitty merchandise, and more. In addition, Sanrio will continue to expand the Hello Kitty brand licensing program with new licensees, such as MAC Cosmetics, Kodak, Dell Computers, Swarovski, and more. iPhone applications and accessories are also in the works. More event and licensing deals will continue to be revealed this year. With Hello Kitty remaining a strong brand after 35 years, one can only wonder what the next milestone anniversary will bring.

Fast Facts ° The UK Royal Mint is releasing a line of coins to celebrate Hello Kitty’s 35th anniversary, featuring Hello Kitty at various UK attractions.

° Hello Kitty is as tall as five apples and weighs as much as three apples.

° Hello Kitty is drawn without a visible mouth to show that she is not bound to one language, but can “speak from her heart” to her friends, family, and fans.

° The Hello Kitty character is the Goodwill Tourism Ambassador for China and Hong Kong.

° Hello Kitty is one of the main attractions at Sanrio’s amusement park in Japan, Sanrio Puroland.

PACIFIC CYCLE

PURE DIGITAL TECHNOLOGIES

Pacific Cycle has announced the introduction of new Hello Kitty-branded bikes and protective gear. The company will introduce a line of 12- and 16-inch bicycles, as well as bicycle helmets and other safety gear. The multi-year licensing agreement permits Pacific Cycle to develop and distribute bicycles, tricycles, protective gear, and more for the U.S. and Canadian markets.

HAWAIIAN HOST

Hawaiian Host will be selling a new line of candy that features Hello Kitty in Hawaiian dress, including a grass skirt, lei, and hibiscus flower, on the package. The chocolate-covered macademia nuts will be available in single boxes or in a Handy Pack of six boxes in a collectible plastic bag with a Hello Kitty bracelet.

Sanrio has partnered with Pure Digital Technologies to introduce new Hello Kitty Flip Mino camcorders. The camcorders are compact, weighing roughly three ounces, and come with a built-in USB port, an internal rechargeable battery, and two GB of on-board flash memory for 60 minutes of high-quality video. The camcorders also feature Flip Video’s new FlipShare on-board software platform, which allows the camcorder’s flip-out USB arm to plug into any computer for video organizing and sharing.

MAC COSMETICS

MAC Cosmetics has created a full line of products based on the style of Hello Kitty. Working with Sanrio, MAC has created eyeshadow, lipstick, lip gloss, nail lacquer, and more, featuring the colors and styles of the Hello Kitty brand.

KODAK GALLERY

Sanrio has teamed up with Kodak Gallery to create an exclusive Hello Kitty photo book featuring the Hello Kitty brand. Consumers can now combine their photos with Hello Kitty’s designs and characters using one of the photo books available at www.kodakgallery.com.

ROYALTIE$ SEPTEMBER 2009

HILCO CONSUMER CAPITAL: BRINGING BRANDS BACK

by Paul Narula

hen times are tough, even successful and well-known brands can feel the pinch. The past few years have seen a number of formerly strong companies buckle under the pressure of the economy and a changing world. However, to declare these companies gone would be premature. A strong brand name can last for a long time. Sometimes, all it takes is the right steps to revitalize a brand. And revitalizing a brand is one of the specialties of Hilco Consumer Capital. Part of the Hilco Organization group of companies, Hilco Consumer Capital (HCC) is a private equity firm that invests in consumer product retailers, wholesalers, manufacturers, and intellectual property, specifically focusing on North American properties with strong consumer brands. The company focuses on properties and brands in the categories of consumer electronics, sporting goods, fashion, home, and iconic personalities. Recently, in a partnership with Gordon Brothers Brands, HCC secured the assets of major brands that have fallen into bankruptcy and ceased their normal business operations, such as Polaroid, Linens ’n Things, and The Sharper Image, which Hilco intends to redesign into strong brands once more. One of the things that attracted Hilco to these brands was the high level of awareness that each company possessed, even while falling into bankruptcy. “Brand awareness is key,” says James Salter, CEO of HCC. “For example, in Polaroid’s case, the brand awareness was nearly 100 percent in the U.S. and Canada.” Hilco also examines potential brand expansion and demographic appeal before choosing to acquire a company’s assets.

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Part of the reason that HCC is able to move forward with restructuring companies like Linens ’n Things and The Sharper Image is that it is supported by all arms of the Hilco Organization. “When we show up at an auction or a meeting, it’s not just Hilco Consumer Capital showing up; it’s all of us,” says Salter. By utilizing this advantage, HCC can quickly turn a brand around. Once Hilco has pared down its acquisitions, it begins working to expand the intellectual property into a successful business. In Polaroid’s case, the company decided to expand the brand past the core business into new categories. Polaroid’s licensees include Summit Global for digital and video cameras, StyleMark for eyewear, Pandigital for digital photo frames, and others. For companies such as Linens ’n Things and The Sharper Image, HCC converted the base of the business from brick-and-mortar storefronts to purely internetbased retail outlets and independent retail brands (there are currently no immediate plans to work with the remaining Sharper Image real estate and Hilco does not own the Linens ’n Things real estate.) “While the storefronts were important, we felt there was much more to the brand,” says Salter. To garner more interest in the new online and retail brand incarnations of these former retailers, Hilco utilized a series of targeted e-mail blasts for Linens ’n Things, combined with affiliate marketing. The company avoided direct consumer advertising for The Sharper Image, instead focusing on building retail relationships for the brand.

The new online version of Linens ’n Things, LNT.com, will focus on bedding, bath, kitchen, toys, pet products, décor, home electronics, and baby products. The target demographic will remain mostly women 25–65, married with children. Sharper Image’s online storefront, sharperimage.com (which will officially launch this fall), will offer Sharper Image brand products for a number of demographics in a variety of categories, from health and wellness to fitness and travel, including third-party goods and non-branded Sharper Image products. Of course, Hilco’s business isn’t relegated to simply reviving brands in trouble. The company was named as manager of the House of Marley brand, which represents the work for late artist Bob Marley and his family. HCC will be responsible for developing, building, and licensing the Bob Marley 65th Anniversary program for 2010, as well as other Marley-related brands such as One Love, Tuff Gong, and more. Hilco Consumer Capital will continue to stick to the categories it has built relationships in. “We’re going to stay with our formula so that we can continue to work with the same people,” says Salter. However, there are major developments in the works for the Hilco organization as a whole, as the arms of the company will eventually be brought under one roof. Salter attributes this to the strength of those managing HCC’s brands. “When you have good managers, you’ve got a good company,” he says. As HCC continues to manage brands from bankruptcy into the limelight, it seems like all of Hilco seeks to follow that example.

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BUILDING

HOME BRAND

by Paul Narula he word “home” can mean different things to different people. For some, it’s a house in the suburbs. For others, it’s a townhouse in the city. However, regardless of the meaning of “home,” the meaning of the phrase “home improvement” is universal. Whether it’s redecorating, gardening, renovating, or entertaining guests, people have been looking for advice on how to make the most of their homes for years. One of the most trusted sources of this advice is the television network known as HGTV. The 24-hour network features shows that cover a wide variety of topics, relevant to today’s homeowner, and features personalities such as Kim Myles (Myles of Style), Chris McWatt (Weekend Warriors), and Rebecca Kolls (Rebecca’s Garden). The channel also has a strong presence at HGTV.com. As the channel’s popularity has grown, HGTV has named The Beanstalk Group the exclusive licensing agent for the developing HGTV licensing program. The Beanstalk Group believes that the time is right for HGTV to expand into a consumer products brand. “There is a trend that seems to be growing in people caring more and more about their homes,” says Michael Stone, CEO/president of The Beanstalk Group. “People are traveling less. They’re looking indoors. It’s all about comfort and being home.” In addition, the recent housing market downturn has actually resulted in increased HGTV ratings. The network has

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adapted its programming to suit the times by introducing new shows that focus on helping consumers buy and sell in a down market and how to redecorate on a budget. Since buying a new house today is prohibitive, more consumers are looking at ways to build up what they already have either for their own sake or as an investment in the future. “This creates a compelling opportunity for the home category in consumer products, and a perfect opening for HGTV to enter the market with educational and inspirational products,” says Stone. This consumer trust is a part of what will make the HGTV brand appealing to a licensee. “We want to take that dynamic of trust and advice and turn it into products that will help people style their homes and solve their problems,” says Stone. Not only will licensees be able to capitalize on the growing trend that Stone points out, but they will be able to do so with a brand that has already established a great deal of goodwill with the consumer base. HGTV reaches nearly 100 million homes and the website receives more than five million unique visitors a month. HGTV will be providing support for the brand via television and internet advertising on its channel and website. The channel also has a number of personalities that could support the licensing program through use of the HGTV product line on shows or in featured spots. “There’s a lot of marketing power that HGTV can bring,” says Stone.

The Beanstalk Group will focus the HGTV brand around the four cornerstones of the television channel’s programming—decorating, renovating, landscaping, and entertaining. The brand will appeal to the channel’s core viewers, which are women that span the 25–54 age group. “Consumers tend to make home product purchases at key life stages: their first apartment, their first house, a major renovation, among other key events,” says Stone. The HGTV brand will help “demystify the shopping experience” for consumers, according to Stone—whether they are first-time home owners examining their options or empty-nesters getting back into home improvement. “Products are going to appeal to this wide demographic because of their solution-oriented positioning,” says Stone. As a result, this is also one of the few brands that will have a distinct appeal to the over-40 female consumer, which is a demographic that is often overlooked in the licensing business despite its purchasing power. The intended range of products means that no one retailer will carry all of the HGTV products. Gardening tools and hardware will show up at gardening, hardware, and do-ityourself outlets. Many products will be available at mid-tier department stores. While The Beanstalk Group could not make any announcements at press time, HGTV product is expected to hit the shelves in late 2010. Stone is confident in the brand’s potential, as according to him, “At the end of the day, consumers look to HGTV for advice, information, and inspiration, and that’s what the HGTV products will bring them.”

SULLIED CELEBS AS BRAND REPRESENTATIVES

ichael Phelps, Chris Brown, Alex Rodriguez, Martha Stewart, Jon & Kate Gosselin: What do all of these celebrities have in common? They have all been a part of celebrity endorsement campaigns, licensing programs, or prospective licensing campaigns. Well, that, and they all have received high-profile negative publicity. What is a brand owner to do when a celebrity client goes off the rails? Does it mark the end of the marketing campaign or is it true that there is no such thing as bad publicity? These questions are not easily answered and the answers depend on many factors. The case of Michael Phelps is a perfect example of two sides of this coin. The 20-something Olympic Gold Medal winner was photographed smoking some weed out of a bong and news of his youthful transgression spread like wildfire. Did the incident spell the end of his lucrative endorsement career? Well, Kellogg’s almost immediately cut him, while Subway is still forging on with its Phelps campaign. What is the difference between these two? Kellogg’s, whose key market is moms buying for their family, knew that its consumers may not like to convey that doing drugs is alright to their families. On the other hand, there is Subway. Subway basically said, what was the transgression? He was caught smoking pot and a lot of people smoke pot, so let’s see how the public reacts to this. The determining factor that both of these brands analyzed is how public opinion, and their core consumers in particular, reacted. In the case of Kate Gosselin, who is in the midst of a messy, public divorce, the verdict is still out on public reaction and how it will effect her licensing and endorsement poten-

by Chris Adams

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tial. For instance, her clothing line promotion deal with Healthtex is up in the air. Living celebrities are human, and as humans they are prone to making huge mistakes, sometimes exercising poor judgment, and going off the rails. So why use them as endorsers in the first place? “You have a very limited amount of time in a very crowded market to capture a consumer’s attention,” says David Reeder, vicepresident of GreenLight, an entertainment consultancy that is comprised of a traditional rights-clearance business as well as rights representation for iconic estates. “Celebrities have instant recognition factor and have been effective in capturing a consumer’s attention.” GreenLight focuses primarily on deceased celebrities and their estates with its portfolio. This protects them from the kind of negative publicity that can affect living celebrities. The public has processed, and sometimes even mythologized, the deceased celebrities’ past transgressions. The potential downside of using a living celebrity as the face for a brand is so great that some marketers are weary of the practice. “There is no upside; it is all downside,” says Rob Frankel, a branding expert and author of The Revenge of Brand X: How to Build a Big Time Brand on the Web or Anywhere Else. “So long as celebrities are human, they are going to die, get in trouble, or say something really stupid, which will drag the brand down with it.” The risk of dragging a brand down with celebrity transgression seems to weigh more heavily in the world of celebrity endorsements in advertising than in the licensing world. There are some high-profile examples in licensing that highlight this.

Michael Phelps: a tale of two endorsements

“At the height of our Mary-Kate & Ashley program Mary-Kate went to rehab for an eating disorder, Britney Spears crashed a year or two ago, and Martha Stewart went to jail and there were no blips in the sales of consumer products,” says Michael Stone, president of The Beanstalk Group. “The only conclusion I can draw from this is that the American public is very forgiving—as long as a celebrity hasn’t committed some heinous crime they will forgive you. They will forgive an eating disorder, a meltdown, and securities fraud.” While the American public can be very forgiving, they do draw a line and the adage that there is no such thing as bad publicity doesn’t always ring true. Because of the severity of the crimes that he plead guilty to (assaulting his then-girlfriend, Rhianna), it is likely that Chris Brown will never again be the face for a brand. And even though the NFL reinstated him, Michael Vick, who plead guilty to federal dogfighting charges, will have a hard time rehabilitating an image that was beyond-tarnished because of the crime. Managing celebrities as endorsers or as an intellectual property is never easy. Sometimes bad publicity can make a celebrity (Paris Hilton, anyone?) and other times a sullied celebrity’s connection to a brand can tarnish it. There are so many ins and outs and there are no easy answers. The upside can be tremendous, but that potential isn’t without risk.

MANAGING THROUGH by Nancy Lombardi

ll companies experience crisis situations. But it’s how a company deals with that crisis both internally and externally that makes all the difference in not only solving the problem but in making sure the brand emerges stronger than before the crisis began. Those interviewed for this piece cited the 1982 recall of Tylenol, which stemmed from the death of seven people who unknowingly ingested tampered capsules that contained cyanide, as the benchmark for perfection when handling a crisis. Yet when discussing what not to do, many cited the Perrier benzene situation. In 1990 a study found benzene at Perrier’s water source, discrediting its claims of purity. Although no one was harmed and a massive recall went into effect, the company flip flopped on the reasoning and was always behind the story. Some interviewed say that the company never fully recovered from the bad publicity. Over the past few years, there have been numerous recalls including pet food, human food, juvenile products, tires, vehicles, etc. The toy industry, most notably, experienced numerous recalls and bad publicity. There was Mattel, HIT Entertainment, RC2, MEGA Brands, and Spin Master, among others. Yet what places one company ahead of its crisis while another missteps behind and never recovers? Those interviewed offered tips on how to tackle a crisis. RULE NO. 1: The first rule may seem incredibly obvious but it’s one that is often overlooked and it’s simply: don’t panic. “Everyone’s first instinct is to react,” says Harold Chizick, vice-president of marketing

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CRISIS

and corporate communications for MEGA Brands. “Stop. Think. Evaluate the situation and then ask yourself what you are not thinking about. Make sure you have all the information and the right people to discuss the situation,” he says. Chizick also recommends investing in outside help, depending on the severity of the crisis. A firm that specializes in crisis management can help a company see things from a different vantage point. RULE NO. 2: Internal communication is key. First, address the situation with employees. “Employees are your first duty,” says Susan Tellem, partner in Tellem Worldwide. “You have a responsibility to keep them in the loop. They are going to feel left out if you don’t communicate and that’s when the rumor mills really get going.” It’s important that employees understand the situation and are given a clear and consistent message because they are going to be on the front line talking to the trade and consumers. It’s also important for the employees to remember their role in the brand’s message. “It’s not just some logo,” says Brian Rafferty, managing director of research and strategy for The Brand Union. “It’s the reputation of the company. It’s what all the work stands for.” RULE NO. 3: Communicate to the public/take ownership of the situation. Regardless of the severity of the situation, companies must make an immediate statement. “Consumers need to know that they are dealing with a company that cares and has a plan in place and a solution for them,” says Chizick. Certainly in some cases the less said the better for legal reasons, yet the worst thing a company can do is say nothing and hope

the story goes away. It certainly won’t go away and in taking this approach it’s only going to escalate. “It doesn’t have to be big news but small intermittent information that you are ‘working on the situation,’ or ‘are fully cooperating with the agencies involved’ lets customers know that something is happening,” says Tellem. “Give non-specific updates on a regular basis that give people the feeling that you are on top of it. Do it again and again until the crisis passes.” Those interviewed noted that all messages should come from a CEO or similar person at the top. There should be one point person with a consistent message delivered from a prepared statement. Don’t let this person do interviews, but statements should be released. RULE NO. 4: Remember who your audience is and address them accordingly. Reach the public in the same manner that the story first took off. If you are getting bad publicity from high schoolers on Facebook it will not do you any good to have CNN’s Lou Dobbs interview the CEO for a response. Get the CEO on Facebook. Don’t discredit the power of social media and don’t fear it. So many of these stories are now born on the web. Social media can be an asset to a company. It comes off as a more personal way to address consumers compared with issuing press releases. This is where employees can be so crucial. Companies that have deep corporate cultures such as Johnson & Johnson or Coca-Cola have employees with an affinity for the brand, which they are anxious to defend. Johnson & Johnson has even used

employees in ads to put a human face on the corporate name. “Your workforce can be your brigade putting out fires,” says Dr. Peter Sealy, who served as the first global marketing director for Coca-Cola. RULE NO. 5: Move quickly. The story is gaining traction and it’s imperative to get out in front of it. The days of issuing a press release a few days later are over, says Dr. Sealy. “At one time you had days to respond,” he says. “Now you barely have hours.” Crisis management has become even more important during the age of social media, according to Lerzan Aksoy, author,

expert in loyalty management, and associate professor of marketing at Fordham University. “Companies can’t hush things,” she says. “Consumers have the power.” This was evidenced by the “United Breaks Guitars” video that received more than five million views on YouTube. It’s a song by musician Dave Carroll, frustrated by the non-response from United Airlines after handlers broke his guitar. Judging from the articles on the internet about this situation, this can now be filed under “what not to do” when dealing with bad publicity—or handling customer service for that matter. United Airlines should have nipped

this in the bud. They didn’t and now Carroll has a sizeable web following. Now that you have addressed the situation immediately—and with the right message—use this crisis as an opportunity to reinforce the positive attributes of the brand in statements to the media. A brand is all about perception, according to Brand Union’s Rafferty, and it’s all about how you influence that perception. Now is the time to ramp up positive communication with the public through the media, traditional ads, and through social networking. The crisis can turn into a positive for the brand if it is dealt with correctly.

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BRAND NAME VS. PRIVATE LABEL: REFRAMING THE CONCEPT OF VALUE by Nancy Lombardi

s the recession drags on, the media has been focusing its stories on how consumers can save money. There is a back-to-basics movement in progress whether it’s growing your own vegetables, utilizing the library, bartering with neighbors, or purchasing private label items, particularly in the supermarket. For consumers who already live their lives in this manner, listening to the media talk up frugality makes them laugh. Yet it is no laughing matter to many consumer goods companies whose sales are being hurt by consumers who have switched to private label, forgoing the brand names they have been purchasing for years—oftentimes without a thought given to its price. The Private Label Manufacturers Association (PLMA) commissioned GfK Custom Research North America to conduct a poll of nearly 800 main household grocery shoppers. The poll, conducted in June 2009, showed that “nine out of 10 shoppers agreed that the store-brand products they buy are just as good as, or better than, national brand products. Additionally, 91 percent of those polled said they will continue to purchase store brands once the recession is over.” While it may be true that private label is just as good as, or even better than, the national brands, it is impossible to predict the actual number of shoppers who will stick with private label once the recession ends. It can be argued that the frugality movement that is now underway is nothing more than a passing fad and once overconsumption comes back into fashion, the American mindset will once again swing the other way. Those interviewed all surmised that consumers will switch back to the national brands they once purchased, even though the polls say otherwise, because their reason for changing was only temporary to begin with. In the meantime what can national brands do to stop consumers from making the switch to

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private label? Those interviewed agree that national brands can’t compete on price so the concept of value needs to be redefined. “National brands have to make value something other than dollars and cents,” says Scott Lucas, executive director, Interbrand. “It has to be about product performance, trust, emotional connection, innovation.” It has to be about anything but price. He explains that a price-based conversation is a short-term fix. “Once national brands introduce couponing they encourage consumers to start thinking dollars and cents and compare prices,” says Lucas. In that type of scenario the national brand will lose to the private label every time. Selling a product based strictly on price leads the brand down a slippery slope. “If you are not careful, you can let the brand name slip and once it slips, it’s hard to get it back,” says Jamey Boiter, principal, in charge of brand and strategy development for BOLT. The brand name vs. private label discussion seems to be most pronounced in the supermarket and part of the reason, according to Bill Cross, vice-president of restaurant and food brand licensing for Broad Street Licensing Group, is that the national food brands have done a terrible job fighting private label. They are not taking it seriously enough and, in some cases, they are manufacturing the private label products, says Cross. “Stop manufacturing for your competitor and make sure that your brand has distinctive value points,” he says. “One of the best ways to do this is through food licensing, for example with restaurant-licensed products.” PLMA agrees that licensing will become more important over the next three to five years as retailers try to become more sophisticated in their offerings, according to Brian Sharoff, president. National brands vs. private label is a much more complicated marketplace than Walmart ketchup vs. Heinz ketchup, according

to Sharoff. “That is an oversimplification that doesn’t reflect what’s out there,” he says. What is out there, he explains, are stores such as Whole Foods, Trader Joe’s, Aldi, and Safeway that have developed extensive, high quality product lines “that have driven store brand sales over the long-term,” he says. “It’s in that mix that licensing can start to have an appeal for further differentiation.” Although not part of the supermarket discussion, those interviewed mentioned Sears’ Craftsman and Kenmore brands as examples of successful private label brands. No one thinks of them as private label but they are. Also, “look at Archer Farms within Target,” says Marty Brochstein, senior vicepresident of industry relations for LIMA. “Probably on one level people know it’s a Target brand but you don’t see it referred to as that.” This could be a whole new opportunity in licensing because, for example, Archer Farm could do a deal with Disney, Sesame Workshop, or just about anyone else.

WHAT’S NEXT?

Once the economy turns around those interviewed expect there to be many changes at retail. The entire sector has a long, uphill battle ahead. However, what remains to be seen is just how much the mindset and shopping habits of the American consumer have changed or will change. This will either be “a protracted period of difficulty or a protracted period of opportunity,” says Sean Heitkemper, vice-president of business development for IMC Licensing. Either way it’s been a profound period of change. It’s one that is not easy to define. There are many sectors within national food brands, many facets of private label, and various aspects of licensing that all are crossing over in ways never before seen and whose lasting impact has yet to be determined.

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MICHAEL JACKSON: THE KING

by Nancy Lombardi

ichael Jackson died on June 25, 2009, at the age of 50, and for nearly 45 of those years he was a global entertainer. In that time, he went through numerous phases—some of which are unforgettable for positive as well as negative reasons. Despite what one’s opinion may be about the man or his music, no one can deny that the King of Pop is poised to become the King of Merchandise. As large as he was in life, a merchandising program may make him even larger in death. Michael Jackson is unique among the many deceased celebrities whose estates continue to be successful. Those interviewed for this piece were quick to compare Jackson to Elvis Presley, whose estate is very successful more than 30 years after his death. The comparison stems not just from financial success but in how their lives mirrored each other in tragedy and triumph. Yet even with the comparisons to Presley, all interviewed expect Jackson’s program to be The More Things Change the More They Stay the Same. . . July 23, 1984—25 years ago this summer—this quote from Jack Friedman, then president of LJN Toys, now CEO of Jakks Pacific, ran in a number of newspapers about LJN’s Michael Jackson doll. “It probably won’t make anybody forget the real thing. After all, it cannot sing and dance. And it stands just 12 inches tall. But its maker undoubtedly hopes the public will think it’s a thriller. It’s the Michael Jackson doll. ‘Michael Jackson is the No. 1 talent in the entertainment business today,’ said Jack Friedman, president of LJN Toys. ‘People love his music, his sense of style. And we think young people, both boys and girls, will love the Michael Jackson doll.’ Each doll comes with a glittering silver glove and a model of a handheld microphone.”

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much larger. (Elvis Presley Enterprises Licensing Division declined an interview.) “There is a bigger market for Michael Jackson than for any other deceased celebrity,” says David Reeder, vice-president of GreenLights Rights Services. “Elvis is currently the benchmark but Jackson is a much bigger star than Elvis, especially globally. You also have to remember that when Elvis died there were simply less people on the planet to purchase stuff than there are today. In that time the population of the world has grown exponentially and places such as China have opened up [to merchandising],” says Reeder. When referring to deceased icon status, others mentioned Marilyn Monroe, James Dean, and Bob Marley. Yet Elvis Presley, Marilyn Monroe, and James Dean are all quintessential American icons. Bob Marley is always associated with Jamaica. Michael Jackson is a true worldwide icon. Elvis Presley died in 1977 and in the 30-plus years since his death the world has been transformed through technology. Events are instantaneous and global, making the impact of Jackson’s death a worldwide event. Jackson is set apart from so many other entertainers for another reason. He is relevant for so many generations. Each generation of fans associates him with an era of his life that mirrored an era of the fan’s life, whether it’s the Jackson 5 years, the Off the Wall, Thriller, Bad, or Dangerous albums. When Jackson died, fans were quoted as saying a piece of their childhood died with him—and at that point all the negative publicity that surrounded him over the past few years was suddenly forgotten. As is often the case with entertainers, their deaths take on

MERCHANDISE

this mythic quality freezing the entertainer’s positive attributes in the fans’ collective psyche and washing away the negative. In the months before his death, Jackson was practicing for 50 live performances that were to have taken place beginning July 8 through the end of September at London’s O2 Arena. The tour was to resume in January 2010 and run through February. The 50 performances, called the “This Is It!” Tour, were reportedly to pay off a staggering amount of the debt that Jackson had incurred. In addition to the live performances, a licensing agreement was signed with Bravado for the company to manufacture global merchandise for the tour, which Bravado also had the right to sell into retail. Now a recently signed new agreement builds upon the deal already in place between Bravado and AEG Live, promoter of the “This Is It!” Tour, that placed Bravado as the exclusive merchandiser for Jackson’s London tour. With this new deal, which has been done directly between the estate and Bravado, the company will now exclusively create, market, and distribute the majority of Michael Jackson-related products on a global basis. “We met with Michael in May,” says Tom Bennett, CEO of Bravado. “We got a real outline from him as to what he wanted. A month later when we presented him with ideas, he had quite an extensive retail and merchandising vision for himself. Unlike a lot of other musical acts, he was very keen on merchandising. Going back to the 1980s there were a lot of merchandising deals for him. This wasn’t new; he had done it before,” says Bennett.

Jackson-Approved Products

Bravado’s Michael Jackson Official Store at MichaelJacksonMerch.com shows a host of items currently available worldwide that were approved by Jackson for the London shows. In addition, these items are also now available in the U.S. at JCPenney, Kohl’s, and Target, among others. These products coincide with the release of Sony’s Michael Jackson: This Is It, which is expected to release on October 28. The movie will feature rehearsals as well as behind-thescenes footage from the planned London tour. Tickets go on sale at the end of this month. Sony’s Columbia paid a reported $60 million for rights to the project. The deal was reached with Columbia; concert promoter AEG Live, which is looking to recoup money invested in the London concerts; and Jackson’s estate. Bennett explains that the products currently on the market are, in a sense, movie-related products because these are the pre-approved items that Jackson greenlit for the concerts. Bravado is now in the process of crafting a licensing program for Michael Jackson for the long-term. Initially, there are time-sensitive licensing deals such as calendars, posters, and Halloween costumes that will be signed with-

The Next Step

Top-Earning Dead Celebrities in 2008 (as of October 2008) 1. Elvis Presley—$52 million 2. Charles M. Schulz—$33 million 3. Heath Ledger—$20 million 4. Albert Einstein—$18 million 5. Aaron Spelling—$15 million Source: Forbes Magazine through BBC.com article, August 2009

in the next two weeks. The goal is to have items on shelf for the remainder of 2009, according to Bennett. From there, Bravado will craft a program with the estate. “We will be very selective. We have a lot to do in a short time and we are looking to work with the top licensees in each category,” says Bennett. “We don’t want to take risks with this. We will watch the Elvis Presley licensing program carefully to see what has worked and what hasn’t.” Bennett points out that product is expected to be on shelf in 2010 globally. As Bennett points out, the company has a lot to do in a short time. Part of the reason is the estate wants to feed the demand from the fans. The other reason is the estate wants to feed that demand by placing officially licensed merchandise in stores/online. The estate must combat the avalanche of counterfeit material that is being produced. It is really important that the estate goes after the counterfeit items, according to Paul Cohen, vice-president of Hilco Consumer Capital, which manages the Bob Marley brand. “It’s not the small mom-and-pop operations that are the problem. It’s the big companies that have manufacturing capabilities overseas that are penetrating developing territories such as South and Central America, India, and Asia where brand protection is paramount,” Cohen says. But going after these groups will certainly pose a challenge. “One of the key things is enforcement,” says GreenLight’s Reeder. “You don’t want to cheapen the brand not just with inferior merchandise [from unau-

Stop the Counterfeiting

Fast Facts Bravado has the global rights to exclusively create, market, and distribute Michael Jackson-related products. Visit MichaelJacksonMerch.com The music rights from the Jackson 5 years until the launch of Jackson’s solo career are retained by Motown, which is owned by Universal Music. Universal also owns Bravado. The rights for the Off the Wall album and the remainder of his solo career are retained by Sony Music.

thorized product] but with a glut of merchandise [from legitimate licensees]. There will always be the ‘garage makers’ of Tshirts but if you have dedicated licensees then there are many ways for it to be tastefully done. That will overcompensate for the junk out there,” explains Reeder. Certainly Bravado agrees. “The good news is the retailers are always very careful about what they buy,” says Bennett. “They make sure they are authentic, official products.” Bennett explains that Bravado deals with counterfeiting on a regular basis due to the nature of its clients. “We hired a ton of people and now we just have to expand quite dramatically,” he says. “We have legal teams in place from Japan to Korea to Australia to the U.S., UK, and Europe. It’s going to be a big task but we are up for it and should make a lot of headway in the next 30 days.” Now that all facets of the plan seem to be taking shape, the world will watch the legacy of Michael Jackson unfold. Elvis Presley’s estate made an estimated $50 million-plus last year. Those interviewed estimate that Michael Jackson’s estate could far exceed that, which is good news for the music and licensing industries.

ROYALTIE$ SEPTEMBER 2009

ICSC REORGANIZES

The International Council of Shopping Centers, Inc., (ICSC) announced a strategic reorganization of the department that organizes the association’s deal making and trade shows. The change will enable ICSC to better serve its members’ needs with a team of professionals dedicated to facilitating all exhibition aspects, including sales, setup, and on-site coordination. In addition to the supervision of the Leasing Mall and Trade Exhibition at RECon, the world’s largest retail real estate conference, the Deal Making and Trade Show Services Team will have oversight of the exhibits at the New York Deal Making, Chicago Deal Making, RetailGreen Conference, Asia Expo, RECon Latin America, Fusion, Canadian Convention, Western Conference, and Retail Connections Europe. Tim McGuinness, staff vice-president, global trade expositions, has assumed responsibility for ICSC’s Deal Making and Trade Show Services Team. He joined ICSC in June 2008 after spending four years as executive director at NYC & Company, the convention and tourism bureau for the City of New York. In that role he managed the tourism, convention sales, membership, and visitors information centers. Reporting to McGuinness are Rita Malek, global trade show sales manager; Douglas E. Lugo, trade expositions planner; Peter Bordes, coordinator of leasing/deal making; Sally Stephenson, senior advertising executive; and Suzanne Tanguay, global sales manager. Assisting the department are Liz McKinney, trade exposition coordinator, and Vivien Zhang, project assistant. Phyllis Peterson, who built ICSC’s trade show and deal making programs from small local events into large and productive commercial real estate business-to-business venues, is retiring from ICSC after 31 years with the organization.

ROYALTIE$ SEPTEMBER 2009

KIDZ BOP

SASHA JUNK, VICE-PRESIDENT, PUBLIC RELATIONS

Kidz Bop named Sasha Junk as vice-president, public relations. In her new role with the music brand for kids, Junk will employ her broad experience to develop and promote Kidz Bop brand platforms, including audio and consumer products, website, live events, brand extensions, and strategic partnerships across all media platforms. In addition, she will work closely with the management team to build further momentum for the company’s website, KidzBop.com. Junk was most recently the senior vice-president and managing director at The Morris + King Company. There she spearheaded innovative publicity campaigns for the company’s client roster including AOL, Classic Media, Dolphin Entertainment, Broadway producer Ken Davenport, Marquis Jet, and The Ritz-Carlton Club.

FRANK SINATRA ENTERPRISES AND RHINO ENTERTAINMENT

SARA NEMEROV, SENIOR VICE-PRESIDENT OF CONSUMER PRODUCTS AND BRAND LICENSING

Frank Sinatra Enterprises and Rhino Entertainment hired Sara Nemerov as senior vice-president of consumer products and brand licensing. She will be charged with handling the consumer products program for Frank Sinatra Enterprises (FSE), and similarly for Rhino-affiliated artists. Nemerov will be identifying and securing new opportunities featuring Frank Sinatra’s name and likeness, as well as expanding existing FSE efforts. Nemerov will also handle licensing with respect to other artists within Rhino. Nemerov joins Rhino and FSE from The Trump Organization, where she was most recently vice-president of global licensing.

MARVEL ENTERTAINMENT, INC.

THEO PAPHITIS, INTERNATIONAL ADVISORY BOARD

Marvel Entertainment, Inc., added Theo Paphitis to the company’s International Advisory Board. Comprised of business leaders from key international growth markets, the Advisory Board works with Marvel executives to explore opportunities for expanding the presence of the Marvel brand and key character franchises in international markets. Paphitis is an entrepreneur who acquired and revived notable retail brands, including Ryman the Stationer, Contessa and La Senza lingerie chains in the UK, Partners the Stationers and Stationery Box, and turned them into profitable businesses. He combined the stationery businesses under the Ryman Group, where he is now chairman. Paphitis sold his interest in La Senza and Contessa in 2006 and now retains a minority share. In 2005 he acquired Red Letter Days, the UK’s leading gift experience company, in partnership with Peter Jones. Earlier this year, he was appointed patron for Skillsmart Retail, the Sector Skills Council for Retail, which is committed to driving up skills levels in the industry.

FREMANTLEMEDIA ENTERPRISES JON PENN, CEO

FremantleMedia Enterprises (FME) appointed Jon Penn as CEO of its business for Asia Pacific. Penn is responsible for developing, setting, and implementing the strategy for FME’s businesses in Australia, New Zealand, and Asia, and he will also look at growing the business in pivotal territories such as India and Japan. He is additionally charged with raising the company’s position in the market as a highly creative entertainment company and extending FME’s new and established brands as widely as possible, in addition to securing high-quality third-party product and content, while developing new brand extension business areas. Previously, Penn was senior vice-president of licensing for FME, Asia Pacific.

CBS CONSUMER PRODUCTS

HART & VAN CITTERS, PROMOTIONS

CBS Consumer Products promoted Veronica Hart to vicepresident, licensing, and John Van Citters to vice-president, product development. Hart will be responsible for managing an expanded portfolio of licensing categories, including toys and gifts, video games, slot machines, live events, exhibits/attractions, and food/beverage. She handles these areas across a vast array of properties including Star Trek, current television shows, and a classic TV library. Hart was previously director of licensing. Van Citters is responsible for all product development and approval for the Star Trek franchise, including product from this summer’s movie. He is also the key liaison to the Star Trek community of partners, talent, and fans. Van Citters was previously director of product development.

CAREER OPPORTUNITY

FANTASMA SEEKS SENIOR CUSTOMER SERVICE/MARKETING LIAISON

This position encompasses the following responsibilities: quoting major retailers using their format, sending orders to either our Hong Kong office to be written or to our domestic warehouse to be processed, coordinating letters of credit with our credit department, working with our HK or domestic office to ensure orders are shipped out on time, providing shipping documents to our credit department to ensure payment, issuing UPC numbers and item numbers, keeping track of all weights and dimensions of the product line, coordinating samples for the sales reps as well as having art department supply photos for ads, and having fun and enjoying being a part of the No. 1 brand in magic toys. Fantasma will train any enthusiastic and intelligent person. We prefer a candidate with retail experience who is proficient in Excel and other programs. Salary depends on experience. This position offers health insurance and other benefits. Interested candidates, please contact Roger Dreyer at roger@fantasmamagic.com

ROYALTIE$ SEPTEMBER 2009

O CTOBER

5–9

MIPCOM

mipcom.com

Palais Des Festivals

Cannes, France

17–22

High Point Market

ihfc.com

International Home Furnishings Complex

High Point, NC

6–9

22–25 27–29

Fall Toy Preview

toyassociation.org

iHobby Expo

ihobbyexpo.com

Dubai International Character & Licensing Fair

character.ae

3–5

SEMA/AAPEX

26–27

Brand Licensing India

N OVEMBER

15–17

PLMA

Donald E. Stephens Convention Center

Dallas

Rosemont, IL

Dubai International Convention Centre

Dubai, UAE

aapexshow.com

Sands Expo Center

Las Vegas

licenseindia.com

Hotel Ashok

New Delhi, India

plma.com

D ECEMBER

Dallas Market Center

Donald E. Stephens Convention Center

Rosemont, IL

7–10

International Halloween Show

hiaonline.com

Halloween Building

New York City

7–10

International CES

cesweb.org

Las Vegas Convention Center

Las Vegas

11–14

Hong Kong Toys & Games Fair

JANUARY

11–13 25–28

Hong Kong International Licensing Show

hklicensingshow.hktd.com

Hong Kong Convention & Exhibition Centre Wanchai, Hong Kong

NATPE

natpe.org

Mandalay Bay Convention Center

Las Vegas

FEBRUARY

hktoyfair.com

Hong Kong Convention & Exhibition Centre Wanchai, Hong Kong

10–12

KidScreen Summit

kidscreensummit.com

New York Hilton Hotel

New York City

26–1

Halloween Costume & Party Show

hcpshow.com

Donald E. Stephens Convention Center

Rosemont, IL

14–17

American International Toy Fair

toyassociation.org

Jacob Javits Convention Center

Licensing Show 2010

June 8–10 Mandalay Bay Resort, Las Vegas

ROYALTIE$ SEPTEMBER 2009

New York City

by Christopher Byrne

POSTED

BELOW IS A SAMPLING OF WHAT

A MERICAN

Source: Social Media Today’s Survey of 900 Marketers • Using social media for marketing—88 percent • Using social media for less than three months—72 percent • Using social media for more than five hours each week—64 percent • Using social media for more than 10 hours each week—39 percent • Using social media to generate exposure—81 percent • Top tools used: Twitter, blogs, Facebook, LinkedIn

MARKETERS USING SOCIAL MEDIA

Source: Neustar • 203 million people in the U.S. have a text plan (72.2 percent of wireless users) • Texters 13+ represent 57 percent of the total • Increase in texting in the U.S. versus 2008—107 percent • Number of text messages sent daily in the U.S.—2.5 billion • Average texts per month per cell phone—357 • Average phone calls per month per cell phone—204 • 138 million U.S. users have sent a text in the past three months • Number of recognized texting abbreviations—1,100

TEXT MESSAGING STATS, YTD 2009

Source: Mobiledia 1. RIM BlackBerry Tour 2. T-Mobile myTouch 3G 3. Apple iPhone 3Gs 4. LG enV3 5. LG GM739 6. Nokia N86 8MP 7. Palm Pre 8. Samsung Instinct 9. Samsung Propel Pro 10. Nokia E75