Selling your IP to one customer or one product at a time takes lots to time, money and resources. But there’s a better way. This is part 4 in the series on the different forms of licensing leverage. In this article, I’ll discuss how to use licensing to “leverage” other people’s customers and products to generate revenue.
Instead of spending all your time and money trying to get customers, licensing gives you access to customers ready to buy. A good example is a brand license. Licensing a well-known brand gets instant recognition among the brands’ current customers. That’s exactly what one speciality food manufacturer did. They partnered with a Boston seafood restaurant with over 60-year history, popular products and a built-in base of customers.
And because these are loyal customers, they’re more likely to buy your product. When you license out your brand to a licensing partner, you also get instant access to their customers. In this case, you don’t have to produce anything. You get paid every time your licensing partner sells their product with your brand to one of their customers.
When you leverage intellectual property, you are focusing on how many ways to license the cash flow rights. Some IPs generate lots of cash flow. Entertainment content, such as an animated movie or a TV show, is licensed into many product categories, such as apparel, toys and gifts. This is one way of leveraging IP through Other Peoples Products.
Apple’s iPod is another good example of leveraging other people’s products. The iPod created a need and demand for accessories. Since Apple doesn’t make these accessory products, they use licensing to partner with companies to create these accessory products. Examples include the iPod docking station, alarm clock radios featuring iPod docks, wireless Bluetooth receivers and other products that enable listening to the iPod through a vehicle’s built-in stereo, and iPod holding devices that allow users “to take their music with them” when they go running.
Apple leverages both its brand value and iPod technology and generates royalty revenue from every product sold. Licensing the iPod brand is also a great opportunity for savvy companies to produce all kinds of terrific products to make the iPod more user-friendly, enhance the listening experience, and generate a lot of money.
When you sell you get paid from one sale and customer at a time. When you license you get paid from many customers and sales simultaneously. The more you “leverage” other people’s customers and products, the more income streams you’ll create. And that’s how you sell new products and customers without spending a dime.