Entertainment Licensing & Branding Blog

Quite a while ago, the tax department told me that one of my brands did not have any value and would have to be struck from my company balance sheet.  I was surprised and asked the following questions?

1) What about the time I put in on writing the short story and screenplay to establish the concept and develop my idea?  Their reply was that no value would be given for my work.  The months of writing and time I committed to raising the funds to produce items based on the brand were not considered until I asked a few more questions:

2) What about the fifty bucks I spent on registering the copyright? I mean, the registration lasts until 50 years after I am dead and gone. Doesn’t that have any value.  Okay, they would recognize that the brand had a value of $50.

3) What about the Trademark costs for Canada and the United States of America? Okay, after providing proof, they acknowledged the $1,500 for this cost could be retained on the books.  After all, my Trademarks will last quite a few more years and are still valid .

4) How about the replacement costs for the board game?  They said that since it was not in production at this time, they would not give me any value for the camera ready artwork, plastic metal molds to produce the tokens and other materials associated with the board game design.  After a few discussions, it was made clear that some of the replacement value would be allowed if I could prove there was still a market for the game. This would only be proven by actual recent sales.  The amount to reproduce the preproduction materials was around $50,000.

5) I convinced them that global internet sales would be satisfactory for their purposes and put a board game up for sale on eBay.  It sold for $150 US - this shocked the government representative, who immediately told me that the sales price must have been an anomaly and I needed to sell at least three to get an average value.  So I sold two more at over $100 US to his dismay.  He thought I might get $12 each but had to agree that there was still a market for the product.

6) Then we realized that all the merchandise would need to be given a value and yet these assets would not be based on a sales price but on a manufacturing price and/or replacement value to make such products.  So I provided the cost to produce the posters, comics, mugs, t-shirts and other items related to my brand and worked out a value.

7) I requested one last time to be given a value for the time and effort I put into the original story and screenplay but got the standard argument that until the script sells there is no way a price could be granted.  I disagreed politely and stated that the value of my screenplay should be no less than the cost of photocopying the 118 pages at five cents a page.  He admitted that would be fair (I didn’t think it was fair but it was a start).

What if I sell the script for the Writers Guild minimum?  What if I sell it for $100 to a low budget producer or a friend?  What if it gets produced into a movie and earns $100,000,000?  What about the video game and graphic novel?

Even though I am willing to write and push all these variations of my brand forward there is a limit to what value the government revenue agency and/or any investors will allow.  So what is your brand truly worth?

Only your imagination knows if your brand is priceless or worthless.

The more you develop and diversify your idea/brand, the more valuable it becomes.  If you can’t sell the screenplay or get the film made, write the novel as this will allow you a second market to try and generate income from your brand.   The more you diversify the project, the better chance you have of success and increasing your brand’s worth.

Some people believe a project’s value is only based on the sales it has, but what if the brand has never been produced in any form yet?  Unproven…

Then the value is what you make others believe it is.  For example: If you get ten investors to put up $10,000 each - then it seems easy to say that the value must be around a hundred grand or more.  How do you convince people that your brand is worth that kind of money?

A worthy project/brand, a ton of confidence and a professional business plan.  I co-wrote a prospectus business plan that helped list my company onto a stock exchange and banked $800,000.  In a future post, I will be going over what should be in a proper business plan that will give you a good chance of raising real money with your brand.

First create a brand that is worth all the work of writing a business plan and going through the process of raising money, etc…  This will help increase the true value of what your brand is worth!!

How much are the rights to the TERMINATOR brand worth?

Derek Anderson and Victor Kubicek acquired the sci-fi franchise in 2007 for approximately  $25 million and produced  ‘Terminator Salvation’.  They are   looking to sell their brand rights as the  companies they own are fighting off bankruptcy and not cyborgs.

Anderson and Kubicek’s Halcyon Holding Group retained FTI Capital Advisors and have requested court approval to “evaluate strategic alternatives.”

The Original Terminator was released in 1984.  Production company Hemdale Film Corporation owned 50%  and creator James Cameron sold his 50% to his producing partner and future wife Gale Anne Hurd for $1.  They have since divorced.

In 1990, Carolco Pictures, owned by producers Mario Kassar and Andrew Vajna, bought Hemdale’s position for $10 million then promptly released ‘Terminator 2: Judgment Day’.  However In 1997, Carolco went bankrupt, but the partners started C2 Pictures which purchased their old firm’s stake for $8 million and paid around $8 million for the remaining 50% from Hurd.

In 2007,  novice producers Anderson and Kubicek purchased the Terminator rights.  Anderson claims that the Terminator rights are now worth more than $60 million - twice what he and his partner bought it for. The box office and DVD sales seem to prove that ‘Terminator: Salvation’  is worth more than expected and should even generate more sequels.  Predicting future revenue for any entertainment project is hard to do but this franchise is on solid ground as long as the next story plot is compelling and draws the fans.

How many more times will such a powerful brand change hands, no one knows.  My guesstimate is that the Terminator Trademark and brand will be a viable entertainment asset for generations to come and will hold its value.

I look forward to the next installment, as do millions of audience members and fans.  Be prepared for the Rise and War Of The Machines

A great way to launch a licensing project is to write a spec script. For those who do not know what a spec script is - it’s a screenplay written on speculation with the hopes of selling it or to use as a sample of your writing to show the film and television buyers and agents.  A spec script  is like a demo tape for musicians or short films for actors and directors.

If you’ve never written a screenplay I recommend you read the following material:

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Screenplay by Syd Field - to learn the proper format and craft.

How to Make a Good Script Great by Linda Segar - to get the story perfect and edit it properly.

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Save the Cat by Blake Snyder - to learn what the buyers like and the formula certain movies are written in. Also Save the Cat Goes to the Movies by Blake Snyder - he breaks down films that we all know and love proving his system is the way to sell your scripts.

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Clause By Clause by Stephen F. Breimer - to understand the complicated contracts every writer needs to know.

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A Pound of Flesh by Art Linson - to learn integral information from a producer’s point of view.

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Fatal Subtraction by Pierce O’Donnell & Dennis McDougal - for insight into how a major studio deals with writers, screenplays and motion pictures.

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The Creative Hollywood Directory and any of it’s competitors - for addresses and contact information on all the players in the industry. The Internet Movie Data Base falls into this category.

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Obviously, the first step is to write a Spec Script and then rewrite it.  As I have stated in previous posts, getting your friends and any professional industry people you happen to know to read your screenplay is crucial to it being ready for submission to agencies, management companies, producers and studios/networks. Make sure it is the best sample of your writing skills before sending it anywhere.

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Sending a spec script to an agent, manager or producer is not as easy as it should be. Most do not accept unsolicited material, so the key is to convince them to request your spec script by first sending a Query Letter (I will be discussing Query Letters in a future post).  This form of contact will either get a positive response and you can forward your screenplay to them or it will garner a negative response or none at all (not unusual).

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If you get the rejection letter, then maybe you chose a contact that does not produce the type of film you wrote or you should contact someone else at that company or you should move onto the next company that produces the genre you are writing.  Either way, it is a numbers game and the more Query Letters you send out, the better chance you have of someone requesting it to read and the more people reading it will help the chance of it being optioned or sold.

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Spec writers should register their stories with the WGA (Writers Guild of America) the WGC (Writers Guild of Canada) and/or copyright their scripts with the Library of Congress or Canadian Intellectual Property Office.

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Hollywood has used this process in choosing new film and television writers for decades. It’s a way to find employment, a sale or at least secure professional representation (agents, managers).

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More importantly, it is a great way to improve your writing skills and

diversify your brand. Good luck with your endeavours.

Sandford Tuey

info@Playdigm.com

May 2010 be a wonderful and prosperous year for you and your families!

Over the next few days you should take the time to re-evaluate last years goals and move the things you did not complete onto this years To Do list.  Edit this list and delete those things that are not important anymore and revise your priority list so you can focus on the most important ones.

By reviewing the things you want to achieve daily it will motivate you to do them and finish these tasks.  By working on your goals as often as you can will help you achieve them.  This is only one method of winning and succeeding in life.

May your dreams come true!!!

Cheers!

Sandford Tuey

info@Playdigm.com

I have learned a secret about attracting interest from Agents and Producers.

1) Get a referral or introduction from someone who is represented by the agency or involved with the producer.  This is a best-case scenario.

2) Check out a copy of the Hollywood Creative Directory and/or subscribe to the Internet Movie Data Base Pro (IMDB.com) to locate agents and producers contact information.  First, call to confirm the contact information is correct and the person is still with the firm.

3) Contact these agents and producers with a Query Letter - you only get one chance to make a first impression, so ensure this is a professional document with no mistakes.  If you need to know what should be in a Query Letter contact me or seek this info online).

4) I have learned that ‘No’ means “Not Right Now”.   Never take ‘No’ or the lack of a response from those you contact negatively.  It’s just the business.  Get used to it.  The key here is to stand out from the million other screenwriters.  Be creative but in a very professional way!

5) By creating a one sheet poster and synopsis to go along with your Query Letter can improve your chances of being contacted. This has worked for me and I recommend it highly as it shows you are moving your project forward.

6) Of course the main ingredient for getting interest is to write a great script with the potential to make money for a producer.  This gets serious interest because it is not ‘Show Friends’ it is ‘Show Business’.  Just as every screenplay has to be written in the proper format - so does the financial side have to make sense.  The days of art films is fading fast - some say it is already dead outside the indie market.  Ensure your screenplay make a profit.

7) Follow up with ways to remind your new contacts who you are and that you exist.  Postcards, updates on the progress of your script/project, additional elements and talent that are interested or you have managed to get attached to your project (writer-producers are the way of the future).  Have an artist design the movie poster and send it out - this has opened doors that were closed to me before.

The more professional people you surround yourself with will improve your chances of getting your film made.

I have been in the entertainment industry since 1985 (Licensed and Produced the Bruce Lee game (endorsed by the Bruce Lee estate) and co-wrote a game with Robert Ludlum titled Robert Ludlum’s Game of Counter-Espionage.  Now I focus on comics/graphic novels and screenplays (one script optioned and another turned into a comic series).  Focus on your goals and you will reach your destination.

Good luck with your endeavours!
Sandford Tuey
www.Playdigm.com

info@playdigm.com

It’s snowing in Vancouver.  Usually we don’t have a white Christmas but this year could be the exception.  It is below zero (unusual temperature for us).  Makes the holiday season more real when it’s cold and nippy.

During the holiday break I intend to write a lot (two of my screenplays need editing), also need to develop a couple contracts for projects that will start in 2010 and of course, share the spirit of Christmas with my family and friends.

Which means I will be back to writing more posts in January 2010, but will manage a few between now and New Years Eve.

So have a great holiday season (whatever way you celebrate) and a happy new year!!

Cheers everyone!

Sandford Tuey

info@Playdigm.com

The staff of Playthings, announced that the Los Angeles appeals court stayed a pending court-ordered recall of MGA Entertainment’s BRATZ dolls.  This allows the doll’s to continue to be sold.

Chief Judge Alex Kozinski and Circuit Judges Stephen S. Trott and Kim McLane Wardlaw of the US Court of Appeals for the Ninth Circuit filed the stay Wednesday following an appellate hearing on the case earlier in the day.

“The Court’s stay is good news for all Bratz fans and for anyone who cares about fair competition,” said Isaac Larian, CEO of MGA Entertainment. “It keeps Bratz on the shelves, allows MGA Entertainment to continue meeting consumer demand for new Bratz products, and prevents Mattel from taking control of the billion-dollar international Bratz brand built by MGA Entertainment while the Court makes its final decision. We are gratified by the Court’s decision and look forward to receiving the Court’s decision on our appeal.”

The judges would see MGA and Mattel to attempt to settle the dispute over Bratz’s future through “expedited participation in this court’s mediation program.”

Last year, a court ruled that Bratz’ creator, Carter Bryant, had been under contract to Mattel when he designed the initial concept and hence granted Bratz rights to Mattel. MGA was subsequently ordered by U.S. District Judge Stephen Larson to stop selling Bratz dolls at the end of 2009 and transfer all related material to Mattel.

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I find it interesting that even though the rights to the BRATZ doll line are now the owned by Mattel, MGA still gets to sell their version of the brand throughout another Christmas season.  As we all know, ‘It’s all about the money and using the court system to make more money.’

For those in the know on this mixed up license scenario, the key is to ensure the license and ownership terms are clear and identified in the contract between the Licensor and the Licensee.  See my Clause-by-Clause breakdown of a complete Licensing Agreement to ensure your brand does not end up with a similar fate.  Scroll down…

Cheers!

Sandford Tuey

info@Playdigm.com

I thank Playthings Magazine for the educational use of the copyrighted article above my personal remarks.

Juggling physical objects takes as much coordination as multitasking mental tasks, projects and goals.  Many people pride themselves on the ability to do many things simultaneously, but is there a limit to the number of things a human can achieve at one time?

Ever try to comb your hair and brush your teeth at the same time? Done it.

Or walk, chew gum and Twitter?  Okay, that is easy.

How about juggling a chain saw, bowling ball and flaming torch?  Seen it and was very impressed.

To juggle many things effectively needs practice or we put our success at risk.  Having too many goals can dilute our ability to complete each individual project as fast as it could have been done if it was our sole priority.  Giving one or two goals/tasks our full attention, allows these to move forward quicker.  What about when there is nothing else you can do at the moment to advance your Priority A goal?

From my own experience, I keep track of the progress of each goal/task to ensure that I don’t fall behind on one because I allocated too much time to the others that I enjoy doing.  It’s common nature to do the things you like to do more than those that you really would rather not do.

Having too many goals can become overwhelming and cumbersome. Some goals start out easy enough but when we add more to our mental plate they may overlap or conflict with each other. Ever had two clients or investors want appointments at the same time and date?  Quantity of goals can hurt the quality of your goals.

Be like a pro and keep only a few projects moving at once. Choose to put one, two or three in the air at any one time and you will have more success plus complete them faster then if you have ten or more going simultaneously. Your efficiency will go up and your stress will go down.

Mind you, you can have more projects on the back burner and keep shuffling those that become active or have more forward movement then the ones you are focusing on.  That way, a project never gets totally cold or dead and everyone knows a dormant project can become the talk of the town once a major element becomes attached (star/director/producer/studio or writer) or media coverage draws heat.

Once a month take a break and assess which of your goals are really worth juggling and in what priority order. Focus on those with deadlines or need to be addressed immediately. The others can be worked on the weekends or in your spare time.

By prioritizing the important goals and spending the necessary amount of time, you will achieve better results faster and more efficiently.  Success breeds success and positive attitude, which in turn, leads to more goals being completed faster and so on…

So choose two or three major goals/tasks and put them on the front burners. Move the less important ones to the back burners.  Once one is completed, move another from the back burner to the front and repeat.

Don’t get me wrong. Always have seven to ten projects/goals in the fire and deal with the hottest one at the time.  You will find that the most important iron may become cold or be on hold until some one else accomplishes something.  While you are waiting for others to catch up, focus on your next most important thing on your list and so on.  Once the main priority project/task is red hot again, carry on with it.

Of course if you have the people to assign some of your tasks/goals to, then delegate away.

Don’t forget to play hard too. Vacations can  freshen the mind and body allowing you to refocus on the tasks/goals at hand even more.

Over time you will actually accomplish more by juggling less.

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Contact Sandford Tuey at info@Playdigm.com and get your questions answered.

When there is a breach of a Licensing Agreement this causes a conflict between the Licensor and Licensee.  Problems of this nature are usually due to the Licensee not living up to the full agreement in some way. Rarely is it the fault of the Licensor (who really just wants to earn income on their Property the Licensee wants to utilize.

If the Licensee is not able to correct the problem within an agreed upon time frame (usually stated in the Agreement), then a material breach has been  made and the Licensor may take legal action to either have the Licensee correct the breach or have the licensing contract terminated.

What needs to be done is ensure that in the licensing contract there are clauses that plainly state what consequences will happen if - a, b or c breach is not corrected within a clearly defined time period. This way it is evident to all parties involved what will happen and it helps judges overseeing court cases make good, quick decisions and fair compensation settlements during the legal process.

The other way to solve this matter is to have the Licensee agree that all the possible breaches, even minor ones, are considered total material breaches of the contract and to have the penalties and/or compensation defined for each breach clause. It is hard for either party to argue in court that they were not in a total breach if the phrase is stated plainly that it is (in every breach clause) and what exactly will happen if this breach is not corrected within the proper time limit.

Penalties for breach of a Licensing Agreement can range from immediate termination of the contract to financial penalties and other concessions that both parties need to agree to during the creation of the Licensing Agreement.

Of course, the best case scenario is to have both parties live up to the Licensing Agreement in full.  Some of the above could also be taken into consideration for almost any contract.

Sandford Tuey

Entertainment Licensing and Branding Specialist

info@Playdigm.com

With every Licensing Agreement there should be attached a one page summary of the agreement that highlights the Property being licensed and what the most significant conditions and terms are.  Here is the Schedule ‘A’ used in the Licensing Agreement between my corporation and the American Automobile Association, which allowed the usage of the AAA logo on my educational board game titled - THE FRIENDLY FREEWAY.

SCHEDULE A

PROPERTY:  AMERICAN AUTOMOBILE ASSOCIATION Name, Motif and Logo as described in diagram section of this Schedule.

Here was the diagram of the three A’s within an oval circle with the words American Automobile Association underneath it.

LICENSEE PRODUCT DESCRIPTION:  Educational Board game titled:

“THE FRIENDLY FREEWAY”  including and/or all components, designs, characters, and reference materials including with this game design, Copyrights and Trademarks.

TERRITORIES:  WORLD WIDE.

INITIAL TERM:  Three (3) Years From _____ to _____.

TERM OPTION:  As per this Contractual Agreement.

ROYALTY PERCENTAGE:   7.5 % from Net Wholesale Price or 75 cents  whichever is greater.

SPECIAL PROVISIONS:  Refer to this Contractual Agreement.

LICENSOR and LICENSEE can also sign the bottom of Schedule ‘A’.  That way any one can see that the parameters of the entire understanding between the two parties is outlined on one page and agreed to because both signatories have signed the Schedule A as well as the actual Licensing Agreement.

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Schedule ‘A’ is an important attachment to the actual Licensing Agreement since it visualizes and describes the Property that is going to be licensed.  Most Trademarks are diagrams and need to be shown to get a good representation of what they look like and to ensure there is no misunderstanding between the two parties on what is really being licensed.

The Licensee Product description is important to clarify what exactly will be allowed to use the Property on.  Put every version of the product(s) that will be utilizing the Property, including all any and all advertising and marketing materials.

Some contracts allow for World Wide usage of the Property, where others will allow only one country or a group of nations.  Make this as clear as possible by naming every nation if you do not have World Wide usage.  This will ensure there are no misunderstandings on where the Property can be used.

The Term can be for any time period agreed by both parties.  I recommend that you put a clear date from and to, with possible extensions if any are allowed.  Ask for no less than three years.

Royalty amounts can vary from contract to contract and here is where the skill of a good Licensing Specialist can help secure a deal but also a great royalty price.  This negotiation stage is the most important and my expertise is in this area.  Several times I have been able to secure a better royalty rate and/or contract conditions than the lawyers representing both parties, all because of my previous licensing negotiation experience and skilled win-win-win techniques that legal counsels do not specialize in.

In this Licensing Agreement I believed it was in our interest to have a percentage based royalty (7.5 %) because the Canadian currency was rising, yet the American Automobile Association desired a fixed royalty rate of seventy-five ($.75) cents to ensure a minimum fee per product sold.  That is why there is both a percentage royalty rate and a minimum fee royalty rate.

Any Special Provisions or Additional important facts can also be included.

Having both Parties sign the bottom of the Schedule ‘A’ allows for only this one page summary to be shown to third parties, instead of the entire Licensing Agreement (to prove there is an agreement for the usage of the Property).  It also helps make it look more official.

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For the beginning of this series of posts, start at the first one dated Sept 14, 2009 (scroll down).

As most of you know, I am not a lawyer or an accountant and I recommend everyone seek their own legal counsel, accounting and tax advice in all contractual matters.

I provide consulting services and more details are on the ’services’ page of this website.

I hope this contract breakdown helps you understand the intricacies of a Licensing Agreement. Should you have any questions contact me at info@Playdigm.com - please put ‘Your name’ & the word ‘Licensing’ in the subject line of your email.

Thank you.

Sandford Tuey