Welcome to episode 66 of the podcast. In this episode we are joined by Veteran Entrepreneur and Amazon seller, Paul Miller. He is going to break down licensing agreements, and how in less than 3 years he was able to go from 0 to 4 million dollars. In this episode we break down everything you need to know about licensing. We tackle how to get started, the benefits, what a typical licensing deal looks like, and how a brand owner gets started!
Date: November 20, 2020
Episode: 66
Title: Norman Farrar Introduces Paul Miller, a Veteran Entrepreneur, Founder & CEO of CozyPhones and Co-Founder of Amazing Exits Podcast.
Subtitle: Basic knowledge in Licensing
Final Show Link: https://lunchwithnorm.com/episodes/episode-66-the-benefits-of-licensing-w-entrepreneur-paul-miller/
In this episode of Lunch With Norm…, Norman Farrar introduces Paul Miller, a veteran entrepreneur, Founder & CEO of CozyPhones and Co-Founder of Amazing Exits Podcast.
Paul has already executed multiple major license agreements as both a licensee and licensor. Paul shared his knowledge what a typical licensing deal looks like, and how a brand owner gets started.
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Norman 0:02
Hey, everybody is Norman Farrar, a.k.a The Beard Guy here and welcome to another Lunch With Norm, the rise of the micro brands.
Norman 0:21
Alright, so today we are joined with a friend of mine, Paul Miller. He’s a veteran entrepreneur and incredible Amazon seller. I know you guys will know his brands. He’s going to be talking about something that we don’t talk about and that’s going to be licensing and what he’s done, the breakdown of a licensing agreement, and how he went in three years from zero to $4 million. So not a bad run in a couple of years. Anyways, let’s bring in Kelsey.
Kelsey 0:55
Hello.
Norman 0:56
Hey.
Kelsey 0:57
Okay. Happy Friday.
Norman 0:58
Yes, yes and I see you’re still trying to compete with Borat.
Kelsey 1:05
Nice. Yes. Movember, very nice. Movember is still a couple weeks to go. So we got Marcia here. Hello, Marcia. Yeah, so, I got a couple two more weeks ago. I think it’ll fill it by then. I got time. But first of all, I just wanted to say Happy Thanksgiving to those Americans watching us today. Yes. I’ve got a couple of things to talk about today.
Norman 1:36
Marcia, where are you from?
Kelsey 1:39
Marcia is actually a she won a contest and one of our contests. Yep. Okay, Angie. Hello, Angie and there’s Marcia, Hi. Yeah. Okay, so, we do have a contest giveaway today. So we’re going to do things a little differently.
Norman 1:58
What are you gonna do?
Kelsey 2:00
We didn’t have time to do it before. But, so it’s a 30 minute consultation with Paul about licensing. So if you are interested in this giveaway, you can go ahead and take two people in the comments. I’m going to be keeping track of everyone doing that throughout the show and I’m putting it into a name generator, and it’ll spit out a winner at the end of the show. So stick around for that.
Norman 2:27
Okay. Great. Very good.
Kelsey 2:30
All right and let’s see. If you have any questions about the show, put them on in the comment sections and just be patient. We’ll pop them up on the screen and get to them as soon as we can and Yep, follow us on social media. Facebook, Instagram, YouTube, hit that like button, ring that bell, smash that like button, ring that bell and yeah, enjoy the show.
Norman 2:54
Okay, and just one last thing, if you’re watching this as a replay, skip ahead, no need to while you do, I guess you do. You’ve already heard then, about the contest and what Kelsey is going to be doing, but go right over to the podcast and get into the meat and potatoes. Anyways, if you’re listening on my profile page, you can always go over to the fan page, which is Norman Farrar, a.k.a The Beard Guy and we’re gonna have a whole episode. You can check it out, content, all sorts of different things over there and also video clips that Kelsey puts together every week. So anyways, I think that’s about it. Sit back, relax, grab a cup of coffee. I’ve got mine here and enjoy the show. So let’s bring on Mr. Miller.
Paul 3:45
Hey Norm.
Norman 3:45
Hello Sir.
Paul 3:46
How’s it going today Norm? Thanks for having me on.
Norman 3:48
It’s a real pleasure. First of all, the very first thing I want to do, whenever I’ve got somebody on with that has an incredible podcast I want to give them, I know how hard it is to continually bring out content. It’s a tough job. You guys have an awesome podcast. You want to just talk about that for a second?
Paul 4:09
Okay, you caught me off guard here.
Norman 4:11
Yeah I know.
Paul 4:12
We talk about licensing. Me and my very good friend Kelly Anfibio who was a brand owner and recently, exited her business. She and I have put together a podcast called Amazing Exits and it’s all about helping to prepare Amazon FBA sellers to grow and exit their brand someday. So that’s what it is, amazingexits.com go there or just search in your your iPod app, your podcasting app for Amazing Exits, and you’ll see it there and we bring on all kinds of people like you and others anybody that can add value to that Amazon business for an eventual exit.
Norman 4:59
Perfect. Yeah. So Kelsey is going to post that in there. Guys, I listen to this podcast on a regular basis and I give Kelly and Paul two thumbs up. I mean it. It is a good quality podcast. So anyways, hey, let’s give a couple shout outs to Darwin. Great to see you back and we’ve got Simon back. Simon’s actually asking if this is a replay. No, it is live, sir and Marcia has got a question or a comment, Kelsey.
Kelsey 5:31
Okay. Yeah, Marcia, just want to share when I can years ago, I invented sidewalk chalk, in 1998 I licensed it to the world’s largest toy company. Since then, I’ve executed more than a dozen licenses. I’m happy to help any of you listeners who might want to know about product licensing as well. Happy Thanksgiving to your team. Gobble, gobble.
Paul 5:50
Hey, congratulations, Marcia. That’s awesome and that’s a very, well, congratulations and that’s one side of licensing that we’re going to talk about and my type of licensing is going to be the opposite of that. Well, I’ll explain that further. Later.
Norman 6:09
Okay. Yeah and one of the things I love right off the bat, is that you’re not afraid to expose your brand. Oh my gosh, Cozy Phones.
Paul 6:19
Darn it. You weren’t supposed to say that.
Norman 6:21
I’m sorry. Okay. Kill your camera up a bit.
Paul 6:27
Fully exposed right there.
Norman 6:29
There we go. Alright. So let’s talk about licensing. Where would you like to start?
Paul 6:34
Well, I do, I’ve kind of been open about my brand for quite a while because I think that licensing is a humongous opportunity for Amazon sellers and brand owners to differentiate and protect their brand on Amazon or anywhere, but specifically on Amazon, and the kind of licensing that I talked about and there’s really two different kinds where Marsha mentioned that she had an invention and she licensed it to a toy manufacturer. In that case, she’s the licensor, and they are the licensee. In my case, what I wanted to do was take my Cozy Phones, which is a headband, headphone and licensed somebody else’s IP, their property, their character and put it on my headphones. So, probably my most popular license is Nickelodeon Paw Patrol, for example and so we have a license with Nickelodeon to use their characters on our headphones and just give you another example. I also have a license through Hasbro now, for this guy, quick quiz. Anybody tell me who this character is? Let’s see in the comments. Anybody? Anybody? This is probably one of the biggest preschool characters worldwide. Anybody?
Norman 7:59
Nobody has kids.
Paul 8:01
Nobody knows. Okay, so this is PJ Mask and this is Cat Boy in particular. Okay. So this is a preschool brand, hugely popular preschool animated cartoon, and shoots tons of merchandise around PJ Mask. They’re like superheroes and this is one of the characters. So, my Cozy Phones which I created, this category of soft, stretchy headband headphones for kids. There’s usually speakers inside this headband. We licensed with Nickelodeon, Batman, Sesame Street, to put the characters that kids and parents love on our headphones. Okay, so what does that do for me, that differentiates me right now, where I do have copycats for Cozy Phones on Amazon, people doing different styles of my headphones. They’re not going to copy something from Hasbro or CBS Viacom, and their team of lawyers, right? So it protects us with that IP and it differentiates us because we’re the only ones we have basically. Although it’s not a legal exclusive, it’s basically an exclusive on those characters. So this type of licensing can be done for all kinds of products. I have another example for you right here. This is Camelback water bottle, right? But rotate it around.
Norman 9:35
Ah, there we go.
Paul 9:37
As you know, I’m a marine veteran and so I got my USMC water bottle. Guess what? This little sticker down here says it’s an officially licensed product from USMC. So the Marine Corps is selling licenses, believe it or not, if you want to make a T-shirt with this emblem on there and everything you’d have to get a license from the Marine Corps. So that’s another real simple thing right and so what happens is if I have an affiliation or an affinity for this brand, and I’m looking for water bottles, I’m gonna choose this water bottle with a brand on it that I like, versus something generic and you can just take this scenario over and over again, right and apply it to almost any product, whether it’s a kid’s category, or adult category. But it is complicated. That’s why I go out from time to time and speak about licensing. I think it’s a huge opportunity that people also have to understand. It’s also complicated, can be expensive, can take a long time, but really adds a lot of value to your brand.
Norman 10:37
Yeah, I know. I used to be working with this bracelet company, just, it was a pretty, pretty cool company. They went out and just got all the colleges, and then they went out and what was it? Some sports teams? The sales skyrocketed. Everybody, every woman wanted or, a lot of women that were going to Ohio State or wherever it was, they got these, this type of jewelry and we couldn’t believe how the sales just went up. But the other thing like, I think that we’ve got to it doesn’t have to be. But I like the idea that you’ve already had you were the original I when it came to the Cozy Phones, that style, you went out, you spent the money you got it developed, it was a unique product being launched on Amazon, which gave you something different, although you could like you said, you could do it on a water bottle. But getting out of that just jumping out of the gates with a unique product and spending that money, I think that’s First of all, I think that’s a great move and then second of all, going out and getting these licenses is almost like, yeah, you have to pay for it. But it’s kind of like the transparency program. Right? Got to pay for that too. But you have a team of lawyers that are going to help prevent these counterfeiters from coming on your listing?
Paul 12:09
That’s right.You know what else it does? It kind of legitimizes your brand, too, right?
Paul 12:15
When you put a, let’s say, an affiliation with Nickelodeon on there, for example, or a Sesame Street, people gonna say, these guys must be the real deal. Otherwise, how would they have an agreement with sesame street or Nickelodeon? Right? So and not only that, but you can then it’s a lot easier to make a pitch to say a retailer, for example, if you want to expand into retail, somebody who’s already selling, half a toy aisle full of Nickelodeon products, you come and say, hey, I’ve got another Nickelodeon product that fits right into your toy display or whatever. So it really adds a ton of credibility and legitimacy to your brand.
Norman 12:58
Also cross promoting you can go and get tons of other people, approach them cross promote, and people Hey, look, I have to talk when my kids, Kelsey remembers Barney. Well, I would buy the slippers. Yes, he had slippers and he would have the blanket anyone, he would have the pillow cup, if you combined all of those and now not only your brand, your product is getting promotion, but also all these other products that you can cross promote. Unless you’re the one that has the products, you can start cross promoting all the products together.
Paul 13:31
Right? Well, how about the keyword research Norm? Think about this, where you may have had a water bottle before or something like whatever it is headband headphone in the case of Cozy Phones. If you’re going to buy your kids something that’s Barney, for example, I know Kelsey has got to be loving this. Right and by the way, he’s got quite a ways to go before he catches up with you with his beard. But having a license opens up a whole new world of keywords to you, because you may not be looking for a headband headphone, you’re looking for a Batman gift, right? So if I can say, Batman gifts for toddlers, if I show up for that keyword, as Cozy Phones that I’ve got Batman in there as a keyword I’m going after it opens up a whole new world of keyword and search results for you that you wouldn’t have had access to otherwise.
Norman 14:30
Yeah, I never really thought about that on Amazon. But if somebody is typing in Batman, Marvel, whatever. Yeah, you come up. Great, great idea. Now, I know you said it’s complicated and I don’t want to get into complicated stuff. But if we had step by step, how does somebody get into it?
Paul 14:51
I’ll try to break it down pretty simply. I give an hour long presentation on just the nuts and bolts of licensing and how to get started. First of all, there are tons of resources out there. I think licensing.org will get you into the Licensing Industry Management Association, which is LIMA. Alright, so there’s huge infrastructure out there available that supports licensing. There are licensing consultants, there are licensing agencies, there’s Paul Miller, people can reach out too. I have consultants that I’ve worked, I can refer people to, it starts really, I think a great place to go is the licensing show that happens in Vegas every year and this year’s count. But in this place that I went first, someone recommended it to me, when I first got started, I was looking for a way to grow and protect my brand. I was calling around people like you Norm to say, Hey, I got something good on my hands, but I’m afraid I’m going to get ripped off. What would you do and this particular friend of mine said, I would try licensing and I said, What do you mean? He said, Yeah, think about this ABCD and well that’s a great idea. How do I start? He said, I think that show is coming up in Vegas and that was probably two months from then, I booked myself on the show as an attendee, okay and at the licensing show, mostly the licensors are all there. So, Marvel, Viacom, Nickelodeon, everybody’s there, their job is to sell their licenses. Okay and prior to the show, you can go on to the site, register as a potential licensee and put your product up there, explain what you’re looking for and you can make appointments with people at their booths. So that’s normally what, that’s what I did, and I made appointments. Now you can do that, today just go into LIMA. I think even without being a member, you can at least see the exhibitors list, you can reach out to people on LinkedIn, type in licensing. Say, again, I don’t want to give away any of my contacts at Nickelodeon. But let’s say you say Warner Brothers licensing, right and you’re going to find all kinds of people there, even on LinkedIn and they’re going to have different expertise. So normally, you might have someone who handles electronics, apparel, housewares, whatever that licensing department is going to have a lot of different specialties in there. We can just reach out to that person directly is one way to do it and so the way that I did though, once I connected on the licensing website, prior to that show, I actually had an author reach out to me from a children’s book series, it’s called The What if Monster, she reached out to me and said, I think this would make a great cozy phone. I have thousands of people in my audience and I’d love to be your first license or this is one of the things I talk about, Hey, you don’t have to start off big. This is a one page we did a one page licensing agreement between her the author, and me, the brand owner, no minimum guarantees involved, straight 5% royalty and we had a deal done and product in place by the time we both got to the licensing show and I think she was awarded like Up and comer of the year something like that. So that was really just down and dirty, easy. Didn’t take a lot of lawyers and a lot of expense. But, this lady had 10,000 followers on Facebook. She’s traveling to every school around the country giving presentations, and she’s got products that go along with it. So she’s like a mega influencer in her category and I was able to take that success story. When we did go to the Nickelodeon say, look, we’ve had success in licensing with just a small product and demonstrated some initial success.
Norman 19:01
My dad is always on top of these types of things and he came home, I always remember this. Back in the I think it was the 80s whenever Wayne Gretzky was going into the NHL. So he was playing for Sioux Sainte Marie, which is a Junior A Team and he came back and he says, I don’t believe it. This is bull blah, blah, blah, blah. He goes, I’m trying to get Wayne Gretzky. He owned a skate company and so he was negotiating for the licensing rights for Wayne Gretzky to sign off on his skates. Gretzky loved the skates, but the agent came in and he goes, they were trying to charge me $10,000. What would that be worth now?
Paul 19:48
Can you imagine?
Norman 19:49
Can you imagine? But yeah, and I want to just go back too. Kelsey had tons of these when he was growing up, but it doesn’t have to be a sexy product, right? He used to get into licensing with ink pads, wood handle stamps, wall decorations, you remember the stencils we got into? With that, there’s so many things that they’re almost, they’re not brown bag products. They’re not sexy products, but they were just the average products, and most of them either arts and crafts people would like or kids would like, and man, things.
Paul 20:31
Yeah, it’s amazing. You could license just with artwork, there’s actually a program that Merch has right now. The print on demand service of Amazon. There, and I’m not exactly sure how to get into that program, but I saw a presentation on it, where there have certain licensed stores have made their collection, artwork collection available, and you can actually create a merch licensed product and then submit it to them, they have to approve it. Right and then all sudden you’re selling a mug or a T-shirt with licensed artwork on it. So, I mean, there’s a super simple way to get started, right?
Norman 21:14
Yeah and another one. You know Dave Kutner?
Paul 21:18
Yes.
Norman 21:19
Okay, so Dave’s got a program out right now. I think it’s out right now about selling on Etsy. Same thing. You go in, you set up your licensing, and then you can blast it out on these hundred products. So yeah, I think it’s a great idea. Anyways, I’ll try to post this in the chat what his course. I don’t even know if it’s out there yet. I have seen it. But I’ll get the information and if anybody’s interested in checking that out and going down the licensing side, it’s a huge opportunity and it’s Etsy and from what I understand Etsy right now, I know for a fact is doing great. The people that are doing print on demand on Etsy and if you’ve got a license, it’s pretty cool. So let’s talk about, we’ve talked about kind of setting it up. By the way. Javits still going on, when I used to be really into licensing. It was the Javits Center in New York.
Paul 22:22
Well, the licensing Expo, the big one is normally in Vegas and then Toy Fair, which is the real, the Big Toy Show that happens at the Javits and there’s usually a side by side licensing event with toys because toys are obviously, it’s really the biggest category, toys and entertainment. go together.
Norman 22:44
Hey, Kelsey. It looks like we have either comments or questions coming in.
Kelsey 22:49
Yeah, we’ve got a whole bunch and I appreciate you bringing up Barney on the show and my love of it.
Norman 22:55
Oh, yeah. No, no problem.
Paul 22:57
Can you sing the song for us Kelsey, do you remember?
Kelsey 23:01
Maybe at the end of the show.
Norman 23:02
I love you. You love me, we are happy family.
Kelsey 23:09
We do have quite a bit of comments and questions. Okay, we’ll start with Dr. Koz. Can you give an example of basic license terms you have executed so we have an idea of the economics?
Norman 23:23
Oh, he’s a mind reader. That was my gonna be my next question after these questions.
Kelsey 23:25
Sure it was.
Norman 23:28
It was.
Paul 23:29
Sorry, can you repeat the question please?
Kelsey 23:32
Can you give an example of basic license terms you’ve executed so we have an idea of the economics?
Paul 23:39
Yes. Alright. So I’m going to explain the basic structure of the license and some ranges for terms. Okay. There we go, as fast as I can. So a license usually is for a period of time. So let’s say it’s a two or three year license. So let’s just say it’s a three year license and in this case, because I’m mostly familiar with kids license, entertainment licenses. So, let’s use that as an example without any particular brand. But let’s say that it’s a TV show character that you want to license and you’re talking actually to the licensing professional in that organization and we’re talking about a three year license, so there’s a three year license, okay, that’s the time period, and then where are you going to sell it? North America worldwide, whatever. So, in this case, say North America, so there’s the time involved, where you’re going to sell it. Then there’s a sales channel where you’re allowed to sell sales channels, online, retail, all of that right and which in that case, are you talking about selling it directly to the consumer? Use it on a retail price, wholesale, FOB? These are all terms that have to be defined in the contract. Okay, so there’s now we got the time, the geography, the type of sales, okay and then you get to the all important royalty, right? The royalty is normally a percentage of sales. But that can be different, whether it’s a retail sales, wholesale or FOB or distributor, each one of those could have a different rate. In general, I think the okay place to start, if you’re talking about direct to consumer, you’re probably five to, it could be anywhere from five to 15% of the retail price. Okay, let’s say that you’re 10% of retail, you’re probably somewhere around or five, sorry, let’s say you’re 5% of retail, then you’re probably 10% on wholesale. Does that make sense? Because your wholesale, basically the licensor is getting the same royalty there. But once it’s out of your hands as the manufacturer, the wholesaler, the licensor has no ability to collect royalties from like the second party reseller. So that’s why you have to collect the royalties on the wholesale amount. Okay, so let’s just say that it’s, again, just let’s use a number of 10% and don’t worry about what type of sale it is. So you’re going to have to report quarterly to the licensor, usually quarterly, what your sales were and write a check for that royalty amount, okay. Now, over the life of that contract, you have what’s called a minimum guarantee, that is the minimum amount of royalties you’re going to pay for the whole contract. So we’re going to go draw your experience and my experience. We’re going to come up and what the requirements are of the licensor, what that minimum guarantee or MG might be. So they may say, Well, we want a minimum of $20,000 guaranteed in this contract. So you’re gonna guarantee just like a personal guarantee that you’re going to pay that, whether you sell 10,000 items, or no items at all, you have to pay that money. But the royalties as you go ahead and you’re going through your reporting, you’re working off your minimum guaranteed quarterly, let’s say your first quarter, you earned $5,000 in royalties, so now your MG is still 20,000, but you paid 5000 of it, right? So you work down your MG as you go and then if you go beyond your MG, of course, you’re going to continue to pay royalties at that royalty rate specified. Okay, so you’ve got the royalty rate, you’ve got the minimum guaranteed for the whole contract and then here’s the one that it takes to get started. That’s the advance. Okay. So when you sign that contract, normally, the licensor is going to ask you for an advance on the MG. Does that make sense? So let’s say the MG was $20,000 for a three year contract, they might ask for a third of that upfront upon signing. That way you have skin in the game from day one and they know that you are going to be incentivized to get that product out in the marketplace. Because remember that the incentive for the licensor, not only is to make money on the license and honestly, half the time, that’s not even their main goal to make money on the license.
Paul 28:37
They want that product out there. It’s brand building for them. Right? So although the royalties are really important to their program, they’re using licensing as a way of brand expansion. So royalty percentage, minimum guarantee, contract length, and the percentage of whatever. Well, there’s still the royalty but it’s calculated in different ways. So did I confuse you enough Norm?
Norman 29:11
No, I mean, it’s perfect. Oh, one thing I do have to ask. I just had a friend that got a really great deal with DC, and Batman, Superman, different really cool signs. But what was interesting is along with the agreement, they’re doing a lot of the push with them, they’re helping promote. So we’re going to talk about that? Like, the advantage of a DC Comics promoting.
Paul 29:47
So yeah, thanks. That’s a huge advantage that I failed to mention in the beginning: the advantage of licensing is that you have access to this incredible pool of marketing materials right? Now, it’s not like when we just pop up an advertisement on Amazon and you decide what looks good, and you put it out there. When you’re working with a licensor you need to get your promotional marketing materials approved. So that’s, adds a little bit of complexity. But many times they’re having social media programs that you can piggyback on, television advertising, opportunities to get into much bigger, let’s say it’s a movie release, or something like that, these guys are planning their promotional and they’re merchandising two years out from a big entertainment event and at some level, you can be involved in that. It could be something, one of the things that we talked about was one of my licensors was an amusement park. They have gift stands and shops, and amusement parks worldwide and we get our merchandise in there. So, there’s a lot of marketing opportunities, in addition to opportunities to be introduced to, resellers who are already selling those products. So, Nickelodeon might have a big relationship with Target and they can make that introduction to you. Right? To the buyer, who’s already buying their other Nickelodeon products.
Norman 31:29
The other thing that I like to add is, you can go so for marketing, it makes it a lot easier. Let’s say it’s Batman. Okay, so now you’re stuck with this minimum guarantee, you got it on Amazon. Amazon sellers, or buyers might not think of Batman signs. So it might have lower search volume on, but you’ve got the ability to go on to Facebook. Anyway, type in Batman, just find or on Instagram, find people who belong are interested with hashtag Batman or Superman and then target them, or try to find influencers, give them a bloody whatever it is and now you’re going to push that information out on their influencer networks, while you’re doing your own marketing on Facebook, or Instagram, contacting the people, look, if I’m into Batman or Superman, and I want to decorate my house or give my kids products like that. If that shows up in my newsfeed, I’m going to pay attention to it.
Paul 32:43
Absolutely. The ability to market to those brand loyalists, or those fans is amazing and the data is out there. Just like you said, you can find the people who are following those brands.
Norman 32:59
Right. Okay, Kels, I think there’s a few more questions.
Kelsey 33:02
Yeah. So one from Nathan. Did Paul ever get any crazy hazmat reviews with his Cozy Phones? It seems like Amazon might latch on electronics products for kids.
Paul 33:14
I have had to deal with hazmat issues. Just getting things approved normally. Yeah. Especially when you get into wireless and batteries and things like that. Battery related.
Norman 33:30
That’s a great question. These are just pain in the butt that we got on Amazon. So, what about knocking off? Have you had any people try to knock off products and you had to defend it? Or how did you deal with it?
Paul 33:47
Ah. I was in a good mood until you brought that up Norm. Yeah, so we are the category creators, right? No one ever did a character headband headphone for kids. So it’s very frustrating to see the knockoffs and yes, I do have quite a few knockoffs. So people have taken our designs and slightly modified them. I’ve been pretty open about my brand for a couple of years now. I can tell you that most of the people who are knocking us off are foreign sellers. Some are manufacturers. I happen to know specifically that one of my first competitors used to work at my factory.
Norman 34:28
Are you kidding?
Paul 34:29
Yeah, left effect, saw the success, left the factory, created a knockoff product and so we have, one of the ways that I’ve dealt with that is obviously through licensing, continue to differentiate product and things that they do not have access to and then we’ve also used all the different IP strategies on Amazon. We’re brand registered, we’re trademarked, we’ve had people use our brand name before, we’ve had people use similar brand names. For example, I’m Cozy Phones, C O Z Y, somebody else tried to make KOZ Yand we’ve successfully removed them from Amazon. I do know, I know the brand. So I know that they popped back up with a new name. Okay, so it’s a little bit of whack a mole going on. But we continue to whack them, we continue to lead the category and try to innovate and stay ahead of the copycats and crush them when you can.
Norman 35:38
So next question is you’ve got these knockoffs coming out from foreign countries, let’s say, China. Do you have any protection with a trademark? Did you create a trademark in China to make sure that they didn’t go that route and try to block you from exporting your product?
Paul 35:57
I’m actually working on that right now.
Norman 35:58
Okay, good. Alright. So and oh, I guess we should talk about that for a second. So with some of the bigger brands, mid size the bigger brands, there are some people that are seeing the success. So Paul’s got a great product. Sometimes you’ll have somebody, typically in China, so if your product manufacturers in China, they’ll go and trademark your name and then what happens is you go to export the product, it’s blocked at customs and then you can get it, it’s just a pain, it’s a real pain to try to get it released. The best thing to do is get a trademark from China. It’s not expensive, and it will protect you from any of this stuff.
Paul 36:49
You have a partner that does that, don’t you Norm?
Norman 36:52
Yeah. I wasn’t plugging my partner. But yeah.
Paul 36:55
I mean, if I’m gonna tell people about that, you might as well give them the URL.
Norman 36:59
Yeah, just head over and talk to Afolabi over at Honu. But anyways, Paul, stop.
Paul 37:09
Come on. You have a great service.
Norman 37:13
Well, yeah, check it out if you’re interested. Again, yeah, this is not about me. But check it out on Google as well.
Paul 37:23
We’re just saving some people some keystrokes Norm.
Norman 37:26
Okay. What a guy. Alright. So there’s probably not, this is an interesting question and you’re probably how long a piece of string is going to be your answer. But is there any cost to get started with licensing outside, like any general cost for your guaranteed minimum?
Paul 37:48
So, like I said, everything is negotiable, right? So if you’re starting with a smaller brand, and again, I highly recommend, if you can, say find an influencer and so an influencer can do a license too, right? One of my favorite stories and I think you probably know him, maybe Rick Cesari on George Foreman Grill. Yep. Right. So Rick has been a friend of mine for a while now and he licensed George Foreman to do the George Foreman Grill and that’s kind of like the ultimate influencer, right? You can go down a few notches from George Foreman and find an influence in your space, maybe you’re making kitchen products, and you can get a hold of a celebrity chef, and you may be able to negotiate no minimum guarantee. So everything’s negotiable, in terms of royalties, minimum guarantees, and so forth, depending on who you’re working for. But let me talk about the expense of getting started because it goes beyond the licensing contract, right? So basically, you’ve got the contract. So you’ve got a minimum guarantee, you have advances and things like that. But the other expenses that are involved, if you’re using a licensing consultant, that person may charge you a fee to help you secure the license, review the contract and all that, you definitely are going to want to have an attorney, review the licensing contract. You’re going to have somebody specifically that understands licensing, because there can be a lot of gotchas in there and so you’re going to have attorney costs associated with that. You’re going to have product development costs associated with developing that product. It’s not the same as you and I, send you the sketch to China and say work on this and send it back to me. Because you’ve got to go through a very well defined approvals process with a licensor. In my case, I sought out a designer who understood licensing because they already speak the language of the licensor. They are familiar with these submission systems, almost every one of them has an electronic submission system. So , you’ve got to log into their approval system, upload images, upload specs, and go through this approval process. You don’t want to have to do that with some designer who’s never done licensing before. Because you, let’s say, they’ll give you a style guide for the license. For example, let’s say Batman, here’s the style guide for Batman. Here’s has to be black, the eyes or yellow, or whatever it is. A good designer will know how much they can get away with modifying the style guide, right? You don’t get to modify very much, I’ll tell you that right now and if you do, that design is going to get kicked back to you and it’s going to take you longer for approval. So in summary, legal expenses, maybe some extra consulting expenses, some other product development expenses, in addition to your contract expenses, and then probably packaging too, is going to be many times you’re going to require special approved packaging versus some generic packaging.
Norman 41:20
Okay, before we get to the next question, Kelsey, just want to go through what we’re doing the giveaway again, because I know it’s gonna be a little bit different than normal.
Kelsey 41:32
Okay, yeah. So all you need to do is either post, take two people in the comment section, or just post a hashtag, I want Paul and you’ll be entered.
Paul 41:45
I’m about to go viral.
Norman 41:47
There we go.
Kelsey 41:50
Once that happens, I’ll enter you into this little generator that I made and I’ll even put on the screen for full transparency and we’ll pick a winner that way. So it’s a 30 minute consultation about licensing with Paul, just put the hashtag, I want Paul or take two people, and you’ll be entered into the contest.
Norman 42:12
You got to remember what we’re talking about today, is really scratching the surface and if you are interested in that, and you’re interested in this giveaway, Paul’s time is invaluable. You’re going to get like he’s a leader in this. So to be able to go and talk to him for 30 minutes, I’m gonna add my I’m gonna tag a couple people too Paul, hopefully I win. Alright, so we got a couple more questions, right Kels?
Kelsey 42:40
Yes Simon. Let’s do Simon’s question. Okay. When selling licensed products on Amazon, will they require a copy of the license agreement or an authorization from the grand owner?
Paul 42:55
I was gonna say maybe.
Norman 42:59
It’s Amazon.
Paul 42:59
Yeah. Be prepared to have it. It’s a license. Right. So I honestly have not been required to show that I am an official licensee. Isn’t that crazy?
Norman 43:12
That is.
Paul 43:13
It’s nuts, right? I say officially licensed all over my listing and everything else and I’ve never had also have never had anybody do IP complaints against it, which they could. I’ve had other IP complaints where I’ve used a brand name of a compatible electronic device or something like that. But you should absolutely be prepared to show that you do have a license. Okay.
Kelsey 43:45
Okay. Let’s see. We’ve got comments.
Norman 43:50
Darwin’s got something?
Kelsey 43:53
Yeah. Okay, let’s do Darwin’s first. Okay, I think this is more of a comment. I’m considering licensing for sure. I like doing things that most people won’t, but I just don’t know how a low level seller would look appealing to a high level brand and she goes on to say, wow, I just thought about it. I have a really cool beach idea for kids that is not on Amazon but can be easily knocked off. It’s water related. Anything Finding Nemo could work well. How would I approach a company like that?
Paul 44:25
So if I was trying to find Nemo, I would find out who’s handling the license first. First thing is, I’d start googling. I’d say Finding Nemo licensing and do your research and you can find out who’s handling the license, sometimes the company handles that directly and many times they have a licensing agency that you have to go to. Okay, and so once you get into the organization, then you have to find the right person to talk to. Okay, if it’s a beach towel, that goes under maybe accessories or something like that. Depending on the size of the organization, they’re going to have categories, or people handle only electronics, or only apparel, and so forth. So keep digging down until you find the right person, whether it’s in LinkedIn, or Google or whatever, and get on the phone or shoot them an email. I mean, that’s their job, their job is to vet licenses and even if you’re a smaller seller, sometimes it’s just a little gravy for them to add that license. Or you might get lucky, like I did my first time. The people saw my product, I showed him significant sales on Amazon and they fell in love with it, they said, this is gonna make great and guess what we get to be the first ones in this category with a license and they like that. They like being unique.
Kelsey 45:52
Yeah, Simon even said, I searched for the Disney licensing manager on LinkedIn and messaged them, they’re keen to sell to you and will respond quickly. We also have a great deal with Warner for Batman, these agreements are super simple and relatively cost effective.
Paul 46:09
Awesome, congratulations.
Kelsey 46:12
Yeah, I think so much as a question. Also interesting would be his thoughts on how to pick the top three perfect licenses to apply to your product?
Paul 46:22
Wow, that’s a good question. I wish I had the answer. So, how to pick. To me, when I think about product license fit, this is what I call product license fit, right? I’m saying, who is, if you want to build an avatar of your perfect customer. You say, Well, who’s my customer? Who’s my end user and really, what do they want? Right? So if my end user is a preschooler, and we know that they like things like Nickelodeon, Sesame Street, PJ Mask, that’s where I approach it from. If my end user is for some adult products, for example, if my end user is an adult product, an adult who’s going out to football games, and wants a headband headphone that keeps our head warm, then maybe I have to figure out which football teams they like, right? So it really comes down to appealing to the end user. That’s where I start, like, and I have some brands that I’ve licensed, which were not that great. Some say, classic, kids entertainment brands that just aren’t that hot anymore and although I love them, because I grew up with them, that doesn’t mean that today’s kids love them. Right? So you also want to look at, what is that brand doing and what do they have upcoming? Do they have a movie launch coming up? Are they gonna be hot? ? So that’s the way I look at it.
Paul 48:07
Sorry, I’m gonna add on, there’s also cost involved. Somebody just mentioned Disney. Disney minimum guarantee is maybe way out of reach for most people. Right, but another guarantee for another brand, maybe within reach. So.
Norman 48:26
So you really, you’re suggesting, like building personas for your audience, just understanding exactly who you’re targeting as specific as possible?
Paul 48:35
Right, right. Yeah. A really great example and a good friend of mine runs a company called Kids Embrace. K I D S and the word embrace, in their car seats. In fact, they introduce us to the Batman series. So we are licensed through them and they have a line of car seats, which are all licensed. So Spider Man, Batman, Paw Patrol. I think, Marvel, DC, comics, the whole thing and it’s all about appealing to what that kid likes. Right and bottom line is, that’s it, and of course, you have to appeal to the parents too. But the parents are buying something that they want their kids to use. So when the parent is who is making the buying decision, they’re buying based on what the child’s preferences are.
Norman 49:27
Okay.
Kelsey 49:30
Okay, let’s see. Oh, it looks like we have a first entry Darwin and just to let everyone know, Darwin is a guy. I think I said she a couple of times, but sorry, Darwin.
Paul 49:44
Darwin also got the Cat Boy reference right.
Kelsey 49:47
Yeah, Darwin on me. For a new product that is designed by me, would you recommend testing the product on its own first, validate that people actually like it and then go for license?
Paul 49:58
Yes, I’d say you’re going to have a very little chance of getting a license on an unproven product. Yeah, and that’s exactly what I did. So I proved the product with our own original designs and then we went for license. Most licensors are going to ask you to show them some proof of success.
Kelsey 50:17
Okay, great. So I think that’s it for questions. There was a, just some comments, but it’s more like a conversation going happening and yeah, if anyone else is interested, hashtag I want Paul in the comments and you’ll be entered into the contest. But that’s it on my side.
Norman 50:38
Alright great. So Paul, are there any other items that you want to talk about regarding licensing? Because I know, you can go on and you’ve talked for hours on licensing. This is a 45 minute podcast. Are there any other points that you think we should be talking about that people should realize if they’re going to go and pursue licenses?
Paul 51:04
Yeah, I just realized it’s not easy. It’s not fast.
Norman 51:08
It’s like Amazon.
Paul 51:10
Right. Yeah. It’s not passive. It’s something that you have to commit to and it’s a long term commitment, it’s going to be expensive. It can be frustrating. You don’t get to call all the shots all the time, you have to work with a licensor, you have to get approvals. There’s going to be expenses involved, you have to do reporting. So you need to be serious about it, if you want to get into it. But I believe that the benefits outweigh the commitment.
Norman 51:44
Okay.
Norman 51:47
What was it? I just had something, I forgot what I was gonna say. Oh, shoot, oh, yeah, I know what it was. VAs, you can get them to do a lot of this work and a lot of the reporting and the back and forth. So what are some things that you could provide or give VAs to take the onus off of you, and loosen up some time when you’re doing all this?
Paul 52:13
Well, I think reporting is probably you already hit the note, hit that on the head right there that they can easily do the reporting for you. Go into your systems and report the sales and so forth, that are necessary to do that. May or may not be able to do some research. So, research in terms of route, uncovering licenses that may be good for your brand, right, and then who to contact. So those basic things, and then maybe even some design work in terms of if I said, Look, we’re going to do a Batman license, but I want to see other complementary products that already have Batman on them. So in terms of doing a little background work for designs work, then you could have them collecting all the Batman products that you can find, you say, Well, I like that approach, right? We’re gonna use this approach on our product. So those are just the ones I can think of off the top of my head.
Norman 53:24
Yeah, while you’re saying that I was thinking, yeah, dig and do market research. New trends, see if the product is actually trending?
Paul 53:36
That’s a great point, Google Trends is probably a great tool to use for that.
Norman 53:42
Yeah, so there are a lot of things that they can do and including, like taking, you’re talking about images. Here’s one. So I’m not sure if you’ve ever done this. But if you’ve gone out and taken different images, and you’ve gone to a focus group or over, it could be PickFu. Or it could be Usability Hub, show the different images to people, just do an artist, you could either just do a rendering or just the image itself, and see which image works the best.
Paul 54:13
I like that. Yeah, when you’re talking about doing a product design with licensing, you can go in lots of different directions. You are limited by the creative that they give you. But how you apply that creative could be a dozen different ways. So, I like the idea of using PickFu and say, Hey, here’s Cozy Phones or whatever. Here’s our top 10 picks, which one do you like best?
Norman 54:40
Right? Because for me, if I’m going to pick Batman, I’m going with Adam West with the pow and nobody else will but I would. Okay, so just to round this off, we’re coming to the end here. Let’s just kind of go through those action steps one more time. It’s just very quickly we don’t have to get right into it. But just 1234.
Paul 55:02
So I’m going to put one before the others that I already mentioned. I made a short free course, it’s at nextlevellicensing.net and that will really talk about the basic steps.
Norman 55:18
Oh, great.
Paul 55:19
nextlevellicensing.net. I do have a paid course, which links up to that course. But nobody really needs to do that right now. But go to nextlevellicensing.net and they’ll review the basic steps. But the basic steps are, you have to do you kind of get an idea of what licenses you might be interested in. You do some research, do some outreach to contact those licensors and see if they have an interest, they’re going to ask you for your sales, and what your products are all about. A lot of times, then they’re also going to ask you for a proposal. That is you have to provide them some of your sales numbers and some basic information about your product and if they want to move forward, then they’ll provide you with a draft contract and where you’ll specify the term and length, the geography of you can sell in, the sales channels, and you can sell in the royalty rate, the minimum guarantee and the advance, right and then if you can get all that down pat and you have an agreement, you’ve used an attorney to review the agreement, executed the agreement, then you get into the development phase, or you have to provide artwork of your proposed design that gets approval, then you have to usually provide samples, packaging, the whole thing, approvals, approvals, approvals, until you get your final approval for production, then you get to go from there, then it’s time to go into marketing.
Norman 56:55
That’s a whole other ballgame. You come back, that’s what we’ll be talking about.
Paul 57:05
Okay.
Norman 57:06
Okay. So there is Oh, okay. Thank you. I see, excellent presentation Paul. There you go. I thought it was great, too. It was laid out really well. He made it really easy. Yeah, I think it’s great. So I think we’re gonna wrap up, unless anybody has any last minute questions. Once again, you’ve got a couple of minutes before we do the draw. If you want to tag two people that are in the comment section, or say, I love Paul, boom, you will be entered into the draw that will be live in a couple of minutes. Alright. So how do people get a hold of you?
Paul 57:43
Well, thanks so much again, Norm for the opportunity. I really like LinkedIn a lot. So just look up. Paul Miller Amazon, search me on LinkedIn. I think it’s the real Paul Miller is my LinkedIn address. You’ll be able to find me there if you do Paul Miller Amazon, or Paul Miller Cozy Phones, that’s probably going to be your best bet. So connect with me on LinkedIn, I actually looked at LinkedIn messages from time to time. So happy to be there. You can again go to nextlevellicensing.net, take that free course and of course, you’ll get stuck on my email list there. I don’t email very often. When it comes to course marketing, I’m lousy, so I don’t email a lot of people.
Norman 58:32
Okay, so Kels?
Kelsey 58:37
Yes?
Norman 58:38
Do we have a winner?
Kelsey 58:39
Yeah, well, we only got one entry. Okay. So, Thanksgiving, people are away. But, it looks like the winner is Darwin.
Paul 58:53
Congratulations Darwin.
Kelsey 58:54
So Darwin, just email me at k@lunchwithnorm.com. I’ll put it in the comments, okay and you are the winner. So email me.
Norman 59:08
Yeah, that is actually a great, really great giveaway. Spend a half hour with Paul, you’re going to learn a lot. So congrats. Alright, Sir.
Paul 59:20
Congratulations Dawin. I look forward to speaking with you.
Norman 59:24
All right and I guess that’s it. We are going to have you back and we’re going to be talking about maybe marketing of licensing, just like we were talking about and until then. Well, thanks a lot for coming on.
Paul 59:35
Thanks. Thanks very much. I enjoyed it.
Norman 59:37
Alright. We’ll see you later. Okay, so you abruptly cut Paul off in the middle of him saying Thank you, my gosh Kelsey.
Kelsey 59:48
Sorry, Paul.
Norman 59:49
Quick on the trigger. Okay. So, everybody, thanks for joining this podcast today. Kelsey, let’s do your thing.
Kelsey 59:57
Do my thing. Okay, so it looks like we got a lot of likes. 11 likes going so far. Let’s bump those numbers up even more. Smash that Like button. Ring the bell. I’m noticing just already the YouTube comments today have been amazing. You guys have been having conversations. There’s some friendships made in the YouTube comments. Oh, that’s great.
Norman 1:00:18
I saw that. I thought it was pretty good. It was funny.
Kelsey 1:00:21
Alright. Yes and a Facebook group. We have a Facebook group. It’s Lunch With Norm Amazon FBA & eCommerce Collective. You need to answer three questions to get in. It’s a piece of cake. You’ll be able to do it and yeah, let’s see. Happy Thanksgiving to our American viewers.
Norman 1:00:43
Yes, Happy Thanksgiving.
Kelsey 1:00:45
Yeah, I guess next week, we were still working out the topics for the guests.
Norman 1:00:53
Khierstyn, if you’re listening.
Norman 1:00:57
No pressure.
Kelsey 1:00:59
Khierstyn Ross, coming back for Monday and then we have Brian Johnson on Wednesday and Carlos Alvarez on Friday.
Norman 1:01:09
What a lineup, that’s gonna be great.
Kelsey 1:01:12
Then the next week we have Afolabi, Cassandra and Kevin and we got a stocked lineup.
Norman 1:01:20
Okay perfect. So one of the other things I want to talk about that I don’t usually talk once a while I do. But guys, this is an online Amazon podcast, if you want to check out something and I’d love to get your feedback. As long as it’s positive. No, all feedback. Check out I Know This Guy. It’s a podcast about interesting people. It’s not about sitting on Lamborghinis, flashing money. It’s about failure, and how people came back from failure to success, how did they dig out of it? What did they learn from it and just moving forward? It also talks about some really cool backstories on how they went from being young. All the different challenges that they may have had to where they are. So check it out, it’s I Know This Guy, it’s another podcast that I do. Which just it’s not anything to do with eCommerce, although there are some really cool eCommerce guys that are on there and ladies. Alright, so until next time, thank you so much for coming on to the podcast today. Thanks for participating live. We’re trying to provide some really cool giveaways on each podcast. We hope we can continue to do that all the time and I think that’s it.
Kelsey 1:02:39
Yeah. Keep growing the stash. See, I’m getting support. People love it. Melanie loves it and Okay, that’s it.
Norman 1:02:50
You do what you do.
Norman 1:02:54
Alright, guys, see you next time and oh, one last thing. Join us live Monday, Wednesdays and Fridays, every noon, Eastern Standard Time. See you later and have a great day.
