A license to appeal

Nation's Business, April, 1985 by Sharon Nelton

A License To Appeal

TURN-OF-THE-CENTURY cartoonist Richard Fenton Outcault caught on fast when the Brown Shoe Company asked to purchase rights to use the name of Buster Brown, the popular comic strip character he had created. While the shoe company used the name to launch its Buster Brown line of cildren's shoes at the St. Louis World Fair in 1904, the savvy Outcault set up a booth and peddled additional trademark rights to any merchant who came along (at prices ranging from $5 to $1,000).

A deluge of Buster Brown products followed--at least 50 at one time, ranging from harmonicas to soap. Meanwhile, the Brown Shoe Company promoted the new shoes by sending throughout the country a succession of midgets, dressed like Buster and accompanied by dogs all called Tige. They appeared in theaters, department stores and shoe stores.

It was a happy coincidence of names--licensing in the United States might never have begun had Buster's last name been Smith.

Walt Disney was not quite so swift as Outcault in spotting such an opportunity. In 1927, when his Oswald the Rabbit appeared on a candy bar wrapper, he thought of the publicity as payment enough.

Two years later, with Mickey Mouse, he wised up. According to Pat Upton in Make Millions in the Licensing Business! (Monarch Press, $7.95), Disney was paid $500 in 1929 for the first Mickey Mouse license--for school notebooks. By 1931 Disney had granted 18 licenses, also for small amounts. One licensee so seriously underestimated the demand for its Mickey Mouse dolls, says Upton, that they were as hard to get in their time as Cabbage Patch Kids dolls were in 1983.

Given that we live in an era when almost everything seems to be sold on the cachet of someone--or something-- else's identity, it is hard to believe that licensing has only recently become regarded as a hot growth industry. We have stuffed toys, bed linens and bestselling books bearing the likeness of Garfield the cat; Mr. T cereal; Kellogg's Fruit Loops plastic ponytail holders; Playboy sunglasses; McCall's patterns featuring fashions based on the hit ABC-TV series "Dynasty'; LifeSavers on wastebaskets and Michael Jackson on virtually everything.

Could Shakespeare have been wrong when he wrote, "But he that filches from me my good name/Robs me of that which not enriches him'?

For enrichment, in most cases, is what it is all about. Gerald J. Alpert, president of Licensed Ventures International in New York, speaks of the "old licensing' before 1977 and the "new licensing' since. The 1977 watershed year marked the release of the movie "Star Wars' and the skillful advance licensing and promotion of all the products the film engendered. Their success made everyone see dollar signs.

In 1978, worldwide retail sales of licensed products were $6.5 billion, according to Arnold Bolka, executive director of the Licensed Merchandisers Association and publisher of Licensing Letter, a monthly industry newsletter. Last year, the industry had reached $40.1 billion and, says Bolka, it could easily exceed $75 billion by 1990.

WITH THE PRIMARY exception of the Disney organization, which engaged pioneer licensing agent Kay Kamen in the 1930s and established its own character merchandising division in 1949 when Kamen died, the licensing business had until the late 1970s been a haphazard one, limited largely to movies, television and newspaper syndicates. It was built happy accident by happy accident on characters or names that were already popular.

At a recent American Woman's Economic Development Corporation conference, Naomi B. Warner recounted how in the mid-1970s the publishing house she works for, Harry N. Abrams, bought rights to a Dutch book called Gnomes for a mere $4,000. Little did Abrams anticipate the reception the book would receive. The sale of a million copies in two years and the appeal of the book's creatures themselves opened up the opportunity for Abrams to create a licensing division. Warner, who was tapped for the job, learned by doing and has since started her own licensing consulting business.

Even the licensing of Charles M. Schulz's Snoopy, which ranks with Mickey Mouse and Donald Duck among the all-time most lucrative licensed characters, came about only after the endearing dog had won a following.

But "Star Wars' showed that licensing plans could be laid before a property was launched. Successes followed, as in the case of American Greeting Cards' creation of Strawberry Shortcake for the purpose of licensing, and so did disaster, as in the case of the film version of "Annie.'

Gerald Alpert, a graphic designer with degrees in marketing and law, has nurtured Licensed Ventures International on the growing sophistication of corporations. Although once they though of the free use of their names and logos and trademarks as good will and cheap publicity, often handled through "permissions' departments, they are not giving such rights away any more.

But profit is not the only motive for corporations to enter licensing, says Alpert, who represents such corporate "spokescharacters' as Tony the Tiger (Kellogg's Frosted Flakes) and the Campbell Kids, as well as Nabisco, Inc., and the New York Times. Licensing offers companies greater legal protection of their trademarks, he says, and, because licensing programs are carefully planned, they help companies make more impact on consumers.