The Power of Licensing

Category:  Licensing, Moda Blog
Comments:  1 Comment

The Power of Licensing.  When we changed our name from MODA International Marketing to MODA Licensing, it wasn’t because we suddenly became cheerleaders for licensing, we always have been! We explained in our press release (see In The News, March 29, 2010) why we switched out “international” and “marketing” with “licensing” in our name. At the core of the change is highlighting our expertise, which is licensing; and elevating the perception of licensing as a very attractive model for business growth.

Too often licensing is viewed as a short lived opportunistic venture with a sole focus on marketing benefits. It is not always understood as a powerful and innovative means of leveraging an existing intangible asset (e.g. trademark, brand, patent) to develop new and enduring businesses.  And yet, many long-term and profitable businesses operate under a brand license agreement.  According to The Licensing Letter (April 19, 2010), retail sales of licensed trademark/brand based merchandise was $24.37 billion in 2009. 

Licensing should be considered as an option for business growth in the same way organic, JV, merger, acquisition, or divestiture are evaluated as strategic approaches.  Licensing allows the door to remain open to transition to another model if and when appropriate.  Of course the option to continue a mutually profitable licensing partnership may be the most attractive long term solution.   Additionally, licensing allows the IP owner to maintain control of the IP which is often not possible in other business models.  For the licensee, the cost of creating and developing a new brand business can be prohibitively expensive and risky.  Leveraging the licensor’s intangible assets and brand equity fast tracks and reduces overall risks to the licensee.

IP owners may have developed and built value for their IP over 25, 50 or 100 years or they may have recently acquired valuable IP as part of an acquisition.  In both cases, the IP owner already has made an investment in the brand.  If the desire is to monetize the IP, then why not go the route of licensing?  Why not partner with an expert in the industry, territory, and market to develop, build and grow a new business rather than make another financial investment in a JV or merger?  Statistics show that 70% of JV’s fail.  This may be due to a myriad of reasons including poor planning, undercapitalization, cultural differences, and poor management. Licensing on the other hand allows the parties to work together, test synergies, profitability and economies of scale to determine if a merger or acquisition is a logical next step, without making a premature irrevocable commitment to one another.

MODA has always approached licensing with these factors in mind.  Licensing IP is a flexible structure that conforms to specific circumstances and leverages IP in the most appropriate manner to deliver ROI to licensor and licensee.

MODA changed its name to highlight LICENSING and to advocate on behalf of this uniquely attractive model which too often is underleveraged.

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