Friday, February 13, 2009

The perils of licensing dead people

In other blog posts in my Empoprise-MU blog, such as these from February 7 and November 30, I've written about the problems that Devo faced when they wanted to place a particular video on their DVD. The problem arose because the video was of a song by Jimi Hendrix, and the Hendrix estate refused to approve its appearance on the Devo DVD. (Yet the Hendrix estate licensed the "Liquid Experience" drink. Go figure.)

It turns out that I actually know a bit about licensing, having worked at a licensing company for a few years. Many of the licensed products that we sold featured living people or fictional characters, but we did have some products that were licensed images of people who had passed away. I'll confess that I didn't work with the licensing portion of the business (Glenn Hendricks, if you're out there somewhere, want to write a guest post?), but you can get close enough to it to realize that approvals for licensed products are sometimes difficult to get.

I suspect that it's harder for people who die young, such as Jimi Hendrix. I'll grant that the John Wayne estate isn't going to allow anything, but estates of people who die young have to worry about the raw emotions of people who are grieving over the death of the star, and then think it's "sacrilege" when the dead star's likeness is used to promote some product.

Take the example of Nike, who licensed the use of the song "Revolution," even though the surviving Beatles AND the widow of John Lennon opposed the project. (You'll recall that the Beatles did not own the rights to the song; Paul McCartney's former friend Michael Jackson did.) Nike had to tread carefully:

The Nike ads that ran using the “Revolution” music, however, were well received by many who saw them. The ads — showing a collage of quick-cut sports scenes that fit well with the music – were generally upbeat and energetic. They were purposely crafted by their producers to have the look of a grainy black-and-white home movie. The producers said they wanted the look of a “a kind of radical sports documentary,” and in 1987-88, the ads likely had that effect. One showed a few quick clips of professional, well-known athletes — including very brief appear- ances of John McEnroe and Michael Jordan. But there were also lots of shots of amateurs doing their own sports things – from joggers and tennis players, to toddlers, rope skippers, and air guitarists. Some Madison Avenue managers at the time thought it was a coup for Nike to have had the Beatles’s original music in the spot, calling the music “a very, very powerful tool.” Others weren’t so sure, pointing to the anti-war demonstrations of the Vietnam War era when the song was first aired, suggesting that association might be the more powerful one.

So why am I thinking about this whole issue? Because another dead star is being licensed by his estate.

Bob Marley's family has teamed up with a private equity group to handle licensing of the late Jamaican reggae legend's likeness, trademarks and themes on retail products ranging from apparel to video games.

The private equity group is Hilco Consumer Capital. Here's Hilco's "news article" on the deal (yes, the article includes the phrase "according to people familiar with the matter," and yes, the article appears on Hilco's own website):

News Article

Reggae singer Bob Marley's name and likeness have been slapped on unauthorized merchandise since his death in 1981. Now, the Marley family and a private equity firm that invests in retail brands are preparing a major push to license Mr. Marley's likeness, trademarks and themes to apparel, food and even video games.

Hilco Consumer Capital, which has compiled a stable of retail brands including Halston and Ellen Tracy, this month invested some $20 million for half of House of Marley LLC, a joint venture with the Marley family, according to people familiar with the matter.

Hilco Consumer Capital is jointly owned by Hilco Organization, one of the country's biggest retail liquidation firms, Mr. Salter and several other executives, Goldman Sachs Group, and Cerberus Capital Management LP.

House of Marley marks a new twist on an increasingly profitable sideline in retail liquidations. Hilco and rival Gordon Brothers Group are snapping up the rights to defunct retail-store names, such as Sharper ImageCorp., Bombay Co. and Linens 'N Things.

They revive the names through licensing deals for name-brand merchandise which is often sold exclusively to a particular retailer as a point of differentiation.

Hilco is separately negotiating to acquire rights to instant-film creator Polaroid's trademarks and to Fortunoff, a well-known New York jewelry and silverware retailer, according to these people.

"There is life after these companies go away," said James Salter, chief executive of Hilco Consumer Capital, a unit of Hilco Organization. "It's just the retail aspect of these businesses that were broken."

Mr. Salter said the first step for the Marley venture is combating the companies that use the name without permission. The company will spend "as much money as it takes" to stop counterfeiters, he said.

By cracking down on counterfeiters responsible for an estimated $600 million in annual sales worldwide of Marley products, he believes the brand could be a $1 billion retail business in the next few years. House of Marley would earn a royalty of 5% to 10% on sales of licensed products, according to a person familiar with the matter.

The House of Marley will sell the rights to produce products under the brands Bob Marley, Tuff Gong, Catch A Fire and One Love. One of the company's first priorities is creating Marley Lager, a Jamaican beer featuring the singer's likeness. The marketer hopes to add headphones, snowboards, posters, screensavers, among other products, Mr. Salter said.

"We want our legacy and our name to be firm in the world," said Rohan Marley, 36, who designs clothing under the brand Tuff Gong, named for the record label that was started by his father's band, the Wailers.

The Marley family also owns an organic coffee plantation in Jamaica that is developing Bob Marley Coffee, which Mr. Marley said will be on the market later this month.

Mr. Salter got a call from a music industry executive in October, who informed him that the Marley family was looking for a partner to help market the brand for a younger generation.

A month later, he was at the Miami home of Cedella Marley, the singer's daughter, who also designs apparel. As the Marley grandchildren played soccer in the backyard, Mr. Salter and the Marleys hashed out a deal over spicy Jamaican fried fish and corn.

"Dad's legacy continues to grow," said Ms. Marley. Hilco will develop products and events to celebrate what would be Mr. Marley's 65th birthday, which will take place a year from now. The deal between Hilco and the Marleys was signed on the night of Feb. 5, a day before what would have been Bob Marley's 64th birthday.

Mr. Salter said he views the Bob Marley brand as one likely to resonate with the changed mood of American politics.

"The Marleys stand for something, peace and love," said Mr. Salter, who has hired brand guru David Lipman to run the marketing side of the business.

So, will consumers line up for Bob Marley screen savers? Time will tell.
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