Magazine licensing: a beginner’s guide

Calling all small to medium sized publishing companies (you big guys are probably already doing it). Have you ever considered that you may be sitting on an untapped source of additional income… one that involves minimal risk and low overheads? It’s called magazine licensing and if you want to know more… read on.

I must straightaway admit to vested interest, because my company is set up to establish and hand-hold licensing operations of the kind described here. However it is possible to "do it yourself" and the following is designed to help magazine publishers do exactly that.

There is nothing new about licensing in the literary world because book publishers have been doing it for ages, as the annual knees-up in Frankfurt bears testimony. Of course, in years gone by, they were mainly dealing with words so – no problem – just hire a translator and go. Magazine publishers however were long aware that there wasn’t much you could do with a bundle of film other than translate the text, re-scan slides, and show someone how to recreate the whole thing from scratch. In other words, a bit of a nightmare that only the bigger guys were prepared to take on because the earning power of major brands made the expense and hassle worthwhile.

The digital revolution changed all that and nowadays there is hardly a magazine company in the land that doesn’t create and store page files digitally, making language versions an easily realisable option.

Future Publishing was one of the first to spot the opportunity for smaller scale titles to get in on the act. Cashing in on a worldwide demand for technology and gamer titles, the redoubtable Mark Williams blazed a trail of licensing success that others followed. (Incidentally Mark is now working as a consultant and can be contacted at: marksimonwill@aol.com.)

Why do it?

There are many different kinds of licence but in essence they all boil down to this: the licensor is trying to improve his revenue stream (and perhaps enhance brand value in the process) while the licensee is buying into something that he is not able to accomplish for himself… whether for reasons of logistics, capability or cost.

At one end of the spectrum you have the licensee who wants to jump aboard an already successful international bandwagon… buying into the brand and all that that may involve and gaining access to varying degrees of handholding and, of course, available content. This is the top end of the business, where you’ll find the likes of Marie Claire, Maxim and Vogue. Here the licensee will be under heavy pressure to maintain the style, brand and quality values of the original, while remuneration is very likely to be linked to sales performance of the licensed title.

At the other end we find the licensee who simply wants to buy rights to a number of pages to repurpose in an existing title. This is closer to old-style syndication and the licensee here is, in effect, buying "a bag of beans". There is no brand value on the table and (within limits) the licensor may have little concern over usage of the material. On the other hand it can provide a tidy and unexpected stream of income with few downsides.

The majority of licensing agreements lie somewhere between the two and are tailored to meet the uniquely negotiated conditions that come with each particular deal.

Have you got the right titles?

So now... the big question. Is your publication suitable for licensing? For starters, ask yourself the following:

* is the subject matter likely to be compelling to sufficient readers in another country?
* is the editorial focus relevant to their needs?
* does the visual material fit the bill, as opposed to looking "suspiciously English"?

Too many doubts here and it may be time to bow out gracefully.

But... there’s another question. Does the magazine carry an international brand that publishers overseas may want to exploit? A positive answer here could be the clincher in any decision to go ahead. Strong brands can deliver the kind of juicy potential that overcomes a myriad of obstacles and hurdles.

If you’re still in the game, next up comes the crucially important question of who owns the intellectual property rights. In my experience it is unusual for the written words to be a stumbling block because most publishers either own text outright, or they are able to easily (and cost effectively) reach agreement with the writers. It’s photos and illustrations where you get the most headaches. If you commission your own photography then try, if you can, to own the material outright… or at least purchase licensing rights as part of the overall deal. Picture libraries present the biggest problem because they usually want an additional payment per photo per territory – and that’s assuming that they even control rights in the place you require.

When forced to address this particular problem I often find the licensor doesn’t want the hassle of arranging additional rights after the event while the licensee is not interested in paying for them anyway. Game over! As a general rule I avoid setting-up deals where less than 80% of the photographic material is freely available to licensees but it’s possible for other factors to affect the decision.

Searching for licensees

However, I will assume you have passed all the tests so far and now want to go looking for the perfect licensee. But where? First try applying these questions to a candidate territory:

* Is the subject matter of your magazine in growth phase in that country?
* Is the marketplace there already crowded with such magazines – ie are you too late?
* Are there companies there that have a track record in licensing (which makes it a much easier negotiation)?
* Is there a strong or growing economy? For instance you will earn far more in France than you will in the Ukraine.

Once you have identified a country / territory I’m afraid it’s down to you to find a publisher suitable for taking on the mantle of licensing. Your criteria can be fairly wide-ranging but a good place to start is a company with a portfolio that fits the subject matter of your title and that has signed licensing agreements before.

It helps here to consider what your potential licensee will be looking for. I have come across many reasons for taking on a publishing license but these three are amongst the most common:

* he has identified a new market sector in his country that is ripe for exploitation and knows that rival publishers are moving quickly: he wants to get in there fast with a top-class product;
* he realises that the magazine he wants to publish will be expensive to produce in his country: licensing means he can create it more cheaply and perhaps more attractively;
* he knows that the existing magazine brand will be exciting to advertisers in his country: he wants to be part of an already successful vehicle and reap the rewards NOW.

The deal

The next stage in the process is likely to be the expensive one. You have found a licensing partner and both parties are agreed they want to go ahead. Now you need to create a licensing agreement that encapsulates this and deals with the contingencies and fine detail that protect both parties and the logistics of how the agreement is going to operate. This needs to be a comprehensive document and, with lawyers involved, it probably won’t come cheap.

Space here won’t allow for anything more than superficial commentary but key sections of the agreement will include:

* The granting of rights. Here you define the territory where the licensed edition is to be published, the language used and the duration of the agreement.
* Extensions to the agreement. The agreement may last for three, four, five years or more but, if it runs successfully, it’s likely that both parties will want to see it continue. This section sets out the criteria under which an extension can take place.
* Termination of the agreement. There are many reasons for terminating an agreement: the clock has run down; the mother magazine ceases to publish; the licensed edition is not making money; the licensing company has gone out of business. All these and more must be covered by the agreement.
* Material to be supplied. The licensee will want a precise description of what he is going to get for his money.
* How the material will be supplied. The licensee will want to be sure he can handle the format... for instance are the files in Quark or In Design? Will it come on a CD-ROM or DVD, or can he download it from a server?
* Security arrangements. You are handing over valuable material and the agreement must be clear as to what the licensor is allowed to do with it and who has responsibility for its safe-keeping – and when.
* Copyright requirements. The agreement must define who is the owner of the brand and material and what rights the licensor is providing to the licensee for its use.
* Payment levels and calculations. The nitty-gritty. How much the licensee is going to pay the licensor. Will it be a straightforward fee per issue or perhaps some kind of formula-driven royalty? If it’s the latter, you may want to factor in the cost of auditing the licensee’s figures each year.
* Method and timing of payment. Bottom line...payment should always be received before material is forwarded to the licensee. One major company I know expects to receive a year’s worth of fees in advance, which is why it has so few licenses. Between one and three issues paid upfront is the norm.

And there you have your licensing starter. Good luck with the new adventure!