Licensing mobile apps is a big business. It’s becoming more common as businesses look for ways to extend their reach into the mobile market. Some mobile apps have become big brands, generating revenues from licensed merchandise. A prime example is Angry Birds, which has over 200 licensing partners.
Any app that creates value for a company has the potential for a licensing deal, even with a small organization. One example is a startup that developed a mobile app for auto body repair estimates. It enables users to send their car wreck photos to a shop for an estimate.
They learned the auto insurance industry was way behind in technology. And that presented a big licensing opportunity for their app. Their strategy focused on licensing the app to insurance companies and allowing them to “brand it” as their own app. The insurance companies offer it to their millions of customers, who can use it to get damage repair estimates done quickly without having to wait for an agent on site.
Another variation of this licensing strategy is adapting your app to other industry uses. In this case, a small company created a branded app for use during sporting events in a fixed location venue. When they discovered a licensing opportunity with a major distributor of esports events, the company expanded its patented technology, adapting it to a web-based app for live and virtual events.
Under the licensing deal, the app’s brand is featured on the app, and the esports company provides it to its fans, enabling them to interact with their events anywhere in the world. This licensing strategy is expanding the app company’s technology into new markets and increasing and building its brand recognition(and value).
One of the great things about app licensing is the flexibility it offers. When deciding how to license your mobile app, you have a number of options. One of the most common is the end-user license agreement (EULA). This is a license between you and the user, covering what the mobile app user can and cannot do with your app.
A second licensing option is a geographic mobile app license. This is a good strategy to use to expand into other countries. You can license your app to companies in each market or on a broader basis to one company for several countries.
A third strategy is to license your app to other developers to offset the development and marketing costs. You can often find a developer looking for a quality app to reuse or re-brand under their own brand. I have a client who used a variation of this “white label” license strategy to launch their new app into the automotive aftermarket industry.
A fourth strategy is to license your app components for other apps – basically licensing only parts of your source code for reuse in other works. The value here is providing parts of your app code saves other programmers hours of development time. They get high-quality code without having to “reinvent the wheel.”
When you’re ready to negotiate a deal, remember these crucial points. Make sure you are clear on exactly what rights the licensee will get. Do some due diligence on the licensee to ensure you can work with them. Before signing any licensing agreement, consult with an IP attorney. They will ensure your deal is structured to prevent future problems between you and your licensing partner.
Depending on your app, you could generate more revenue from licensing than app store sales. Licensing lets you control everything from usage terms (e.g., feature-based, time-limited) to operational aspects (e.g., activation and back-end integration). You can use licensing to launch your app or expand into new marketplaces by partnering with other marketers or developers who can take your app to the next level.