Today the biggest asset on the books of many major public companies around the world is intellectual property.
Why? Because innovation is the driver of intellectual property and the life blood of every company around the world. And in today’s challenging economic market, the demand for innovative new products, services and technologies is growing rapidly.
Licensing is a low risk and high return strategy. It’s a worldwide business that creates new products, services and technologies. Today’s technologically driven marketplace is a bundle of IP rights licensed across the globe. Everything around you from communication to transportation is all bundles of IP rights. This aspect of licensing continues to grow and evolve rapidly and now includes well-known brands. Branded coffee served on airlines, premium brand beauty products at upscale hotels, and gourmet ice cream at finer restaurants to name a few.
There are billions of dollars of un-commercialized IP sitting on the books of corporations, universities, research labs and government agencies around the world. Many of these intellectual properties are market ready. Some of the biggest names, such as Google, Netscape, Gatorade, Farecast.com, Lycos and others created through licensing agreements from universities. Many large companies, like IBM, Microsoft, AT& T, are another source of untapped intellectual property and a goldmine of licensing opportunities waiting to be mined by startups and small businesses. And any of this IP could develop into a lucrative licensing opportunity.
Through the licensing partnerships with licensees, a bigger pie is created that is very profitable for everybody across-the-board. Many clothing brands, such as Hilfiger, IZOD, Calvin Klein and others have grown into brands generating hundreds of millions of dollars in licensed product sales. Other consumer categories that have created large markets through licensing include professional sports franchises, food brands, photography and entertainment. Some intellectual properties are pure licensing models, such as dead celebrities, that have created hundred million dollar markets solely from licensing partnerships.
One of the most intriguing things about licensing is you never know how an intellectual property will eventually do in the commercial market. It is like mining for gold. Today many companies grow up using licensing. Some savvy business owners who understand the incredible potential of licensing have created companies strictly for the purpose of finding new IP, acquiring the rights for little or no money, then wait to see what develops.
These companies license intellectual properties because they know they are a quick way to reach the commercial marketplace and they are well aware that these licenses could transform their businesses overnight. During my studio days, I developed licensing deals on two major entertainment properties, Batman and Power Rangers, which went from zero to hero just about overnight. Some of the companies that were early licensees on these properties literally did explode into overnight successes.
While an IP that goes from zero to hero is the exception and not the norm, in this fast-moving and rapidly changing marketplace, new opportunities are popping up every day. In today’s economy, to build a hundred or two hundred million dollar company is very challenging, and may take decades to get there. Yet, in the same respect, you can use licensing to tap into or create a hundred or two hundred million dollar market. When you create a bigger pie through licensing and the marketplace is fifty or one hundred million dollars, royalty revenues from many licensees can amount to a very significant sum.