Latest / The Licensing Exchange / Licensing in Motion: Steven Ekstract on the Future of Brands, Franchises, and Fan Culture
Transcript
- Announcer: You're listening to the Licensing Exchange, part of the Look Legal pods from the law firm Nolan Heinmann, lawyers for creative business makers. And now, here are your hosts, attorneys David Schnider and Greg Pan. David Schnider: We have with us today our guest, Steven Ekstract, who is the founder of Global Licensing Advisors. His company advises brands on licensing and strategic collaborations. Steven was the founding publisher of License Global Magazine and the brand director for Global Licensing Group at Informa Markets, where he oversaw licensing expos in the US and around the World. He was also recently inducted into the Licensing Hall of Fame. Steven, it's great to have you on. Steven Ekstract: Thank you. It's great to be here. Thank you for inviting me. David Schnider: And to get started, why don't you tell us, I know you didn't get started immediately in the licensing industry. How did you get into this business? Steven Ekstract: So my background is journalism. There used to be something called magazines that people may remember. I actually started my career in magazine publishing and I studied film and video in a university as well as with journalism minor. And I was particularly interested in sort of video was just taking off back then. And I was really interested in it from a technological perspective and how it was going to democratize just moving pictures in general and communication. My first job was actually working on a publication called Video Pro. It was a trade publication for professional video folks. And I then transitioned from there to working for entertainment trades. I worked for a magazine called Premier, which was a consumer magazine for people interested in film. So it's kind of a fan magazine for film buffs. I don't know if you guys remember it or not. It was pretty big in the late eighties and nineties, but again, like many magazines kind of went the way of the dodo bird. From there, I went to work for the Hollywood Reporter, which you guys probably are familiar with daily entertainment trade paper. And I was hired in their New York office. And that was a time in the early nineties when most of the major independent film companies were actually based in New York. New Line, Miramax, Gotham. And it was really the time of the independent film back in early nineties. the paper was super successful. It was a very exciting job. We were going to premieres and sponsoring all kinds of events and super exciting. I should go back a step. I was actually raised in a publishing family. My dad was a magazine publisher, trade magazine publisher. Steven Ekstract: And I literally grew up around it. My dad called me one day in 1997. he said, I've been approached by some investors that want to invest in a magazine about licensing. And I said, what's licensing? And he said, well, know, like when Disney puts Mickey Mouse on a watch, they're not manufacturing the watch. They're licensing it to a watchmaker. And I said, okay. Sounds interesting. Well. I want to launch this magazine and I need someone who really knows the entertainment business. Would you be interested in talking with me about it? was like, not really dad. I would prefer, you know, we have a really good relationship and I think it's best if we don't work together. Anyway, then he asked me to help him hire an editor, which I did. We hired an editor for him and hired up some staff and he kept pursuing me while I was at the Hollywood Reporter. And it just so turned out timing wise that the folks at the Hollywood Reporter wanted me to move to LA and I didn't want to move to LA. And my boss there said, who was in LA said, if you don't move to LA, your career is not going to go anywhere. You're going to just stay where you are in New York. So that kind of precipitated me thinking, you know what, this maybe going to start this licensing publication is not a bad idea. And I looked at the, I looked at the landscape. went to the first licensing show at Jacob Javits Center, which was in 1997. And I was pretty amazed by what I saw there. And then I looked at what the competition was. There was a couple other publications and they were really amateurish. And I thought, wow, we could really create a great magazine for this business. So I left the Hollywood Reporter in October of 97 and our first issue was planned for Toy Fair in February of 1998. So we had about three and a half months to get a brand new magazine launched, which is kind of crazy, but we were very entrepreneurial. We had the staff hired and I was able to bring a couple of people from the Hollywood Reporter to come work with me. And first week on the job, I got on the plane, flew out to Hollywood and met with all the studios. Studios were like thrilled. They're like, wow, a new magazine about licensing. You know, we had made a dummy, what's called a dummy of a magazine to show what it was going to look like. They loved it. I got Warner Brothers, Paramount, Universal, all the major studios except Disney said, we'll support you. We'll support you. We'll advertise. And so we sort of had financial support and we launched and it was, we launched the Toy Fair February, 1998. And the magazine was really well received from there. It was just like, it was go. People were like, loved the fact that there was a really slick magazine for the licensing business and the coverage that we did. We really covered the waterfront, everything from brands to sports to entertainment, fashion, art, pretty much the entire gamut of all licensing categories. So we were very well received. And just after the first issue came out, we were approached by a company called Advanced Star, which owned the Licensing Expo owned a lot of them. They also owned Magic, which is the big fashion apparel trade show. And they wanted to acquire us. And we're like, well, we're not for sale. we couldn't even put a figure on, we're brand new. The guy who ran Advanced Star was kind of famous in the publishing business for just throwing money at stuff. And he just kept coming after us. And finally we kept 51%, sold them 49%. We kept editorial control. And it turned out to be a phenomenal opportunity because they owned all of these trade shows. We became the official magazine at all these trade shows and we were able to like expand and produce show dailies for these trade shows. Show dailies were very profitable. It turned out to be a great relationship and you know, they did a full buyout after three years. And at that point I decided I had fallen in love with licensing business and wanted to stay on. We started working very closely with the licensing expo folks. They also, that first year that they bought us, they had also purchased brand license Europe, which is the big trade show for Europe. And so working with the show folks, we were able to grow the shows by really kind of being the intel arm, if you will, for the expos. We were able to kind of tell them, here's what's coming down the pike. Here are the trends. Here are the companies. Making the trends happen. These are the people you want to go after to get as exhibitors. and so together we really built licensing infrastructure, if you will, of the business. was also like the late nineties was really a go-go time for brands. Brands were just getting into licensing in a big way. Hollywood has always been sort of the core licensing business, if you will. mean, Walt Disney is considered the granddaddy of all licensing, but brands were getting into it and there was a lot of art licensing happening on people like Warhol and the business just exploded and we were there and it was, you know, really beneficial. And of course there was bumps along the way. I mean, the first dot com boom that happened, there was about four companies that tried to create licensing marketplaces online back in like around 99, 2000, but it was too early and licensors and licensees just didn't get it and didn't want to participate. Those companies spent millions of dollars on marketing and ended up all going bust. And 9-11 happened and that really kind of hurt the economy. But each time, despite all of these bumps in the road, economic bumps in the road, licensing came back stronger and stronger. It's a very resilient business and it's just been growing by leaps and bounds. I mean the whole brand collaboration side of things has exploded as we know. You know, COVID actually was an accelerator for the licensing business. In tough economic times, licensing has really proven itself to be a marketing tool that just goes above and beyond and is a phenomenal way for companies to expand their business. So that's kind of the backstory of how I got into licensing. David Schnider: So I'm curious, what were those early licensing shows like? I've been going for about 15 years, but that was well after they started. Steven Ekstract: The shows before my time were actually at the New York Hilton and they were tabletop. They were all tabletop, was quite democratized. Everybody from Warner Brothers to, some small little licensing agency, they all had little tabletops and they had their little signs and that was that. When it moved to Javits in 1997, that's when they actually were able to really expand. I remember going to the show in 1997, at Javitz it was the first show and Universal was showcasing their second Jurassic Park film. And they created this entire Jurassic Park universe in their booth. It must've been about 10,000 square feet. And it was just spectacular. I mean was floored by, know, I'm going to trade shows my entire life, but they created this environment. I was like, wow, this is really something. For the studios as well, that late nineties was a transitional period. the studios had really become very dependent on home video revenue. Starting from the early 1980s, the home video business became almost 50% of their revenue. And by the nineties, everything transitioned from VHS and beta to DVD. And that was now falling off because of the internet and the studios were trying to figure out where can we make up this revenue stream? And so they really started getting much more serious about licensing. Disney's always been very focused. Licensing was always a core business strategy for Disney, but for the other studios, it was just like one-offs. And then in the early 2000s, they all discovered franchise films, right? First it was Marvel, then from there, they all just became very dependent on franchise films because they saw the revenue stream that they could create. And had you said to me when I worked at the Hollywood Reporter in early 90s that franchise films were gonna be a thing, I would have said, you're crazy. People like independent films, it's Quentin Tarantino, but it's really interesting when you look at how the business has transitioned and changed. Right now, I don't know if you guys go to the movies, but you see these popcorn containers that are like, you know, selling up to $80, they're collectible and it's brilliant. If you'd have said to me 10, 15 years ago, Oh, they'll be selling popcorn containers for $80. I would have said, you're crazy. It's never going to happen. I remember there was a company out of China called MTime in China. They were selling merch in movie theaters and they wanted to bring that to the U S and people said, it won't work. It'll never work. It'll never work. But you know, people aren't going to buy merch when they, after they go to a movie. They're going to go to Walmart, but it is working. And so never say never to anything. That's one lesson I've learned in the business is you could scratch your head and go, I don't get it, but there's the opportunities are always there. Greg Pan: When you're talking about franchises, I mean, I think the licensing industry together with Hollywood, a lot of it's based on predictability. You see licensees are a little bit hesitant when picking up new properties. They like to see a movie performed first and then they jump on a sequel. They want to work with known properties. I think on the one side, that's great for licensing. Those type of properties are going to get a lot more attention, a lot more licensees, a lot more space in retail. On the other token, for Hollywood, it kind of forces them to just throw their eggs in one basket and the franchises, they're less willing to take risks because they know that there's less revenue just from the fact that it's not part of a franchise. It's not a sequel. It's not from a known property. Do you think there's any way to break that cycle? What's kind of the, what's your kind of thoughts on that? Steven Ekstract: I think we're already seeing the cycle being broken with companies like Netflix, right? Netflix is kind of they're changing the dynamic because number one, they're streaming a streaming company, but they seem to have a better understanding of their audience and know what their audience wants. And so they are really focused very much on franchises, but franchises that go beyond just the streaming, get into experiential, whether it's doing plays or whether it's doing cafes or whether it's doing activations in cities. So I really like what Netflix is doing. They're very smart about what they're doing. And also they're bringing unknown IP to the viewers, right? And like Squid Games, for example, who would have thought that Squid Games would be what it is. It's from Korea and it's kind of this Greg Pan: Right. Steven Ekstract: It just doesn't fit the mold of the superhero franchise films. And yet it's become a franchise for them. Same with Stranger Things. That's become a franchise for them. And I think all of us can learn from Netflix, right? Like it used to be, everybody learned from Disney. Disney was kind of the Harvard Business School for licensing, right? Look at what Disney is doing for, at least for the movie companies, right? Look at what Disney is doing and look at the franchise they're building and follow the leader. Now I would say to you, know what Netflix is the new Disney. Netflix is doing things that, that Disney just doesn't have the bandwidth to do. And again, it's because of the changing demographics, it's changing technology, but I think there's room for everyone. Right. And also, you know, to your point, licensees do tend to play it safe and they do look for like the big franchises, but when you think about what the costs are and you guys know this because you represent a lot of companies that that are trying to negotiate licenses, right? You go to Disney and you want a license for whatever their latest big hit it's going to be. They won't even talk to you for less than like a $250,000 minimum guarantee, right? They don't want to get you, you know, for newer licensees getting into the business who don't have those deep pockets. They can't take a Disney license. They need to look at other properties. They need to look at alternative, whether it's maybe a video game or anime. I mean, anime has performed incredibly well, right? And there's a lot of alternative entertainment. What's coming down the pike with creators from YouTube. And that's another business that I'm currently focused on is called Xtracks Licensing Summit. And what we do is we look at what are the trends in alternative entertainment beyond Hollywood that licensees can get on board with and retailers can get on board with that aren't going to cost a fortune, but they can get on board and sort of become partners and build from there. And I think there's tremendous opportunity there. And one of the reasons that I wrote the book, Brand Licensing for Dummies, is to help new licensees to understand the business and to understand all of the technical aspects of getting into the business from legal to contracts to retail distribution, but also to help them understand what the costs are involved for years. For at least the last 25 years, I feel that so many phone calls from so many companies that want to get into licensing, they want to license, they have no, and you guys know this because you probably deal with it too, they have no concept of the costs involved. can't tell you how many companies have called me and said, Hey, Steven, can you get me the license for some a property? Right. And I'm like, well, you know, it's going to cost you, you're going to have to put down 250, 250,000 or so just to get the conversation started. I want to get the license and then like, if it works, I'll pay for it. Call me when you, after you read the book. Okay. David Schnider: Let's talk about both the books and Extracts, but let's start with the Extracts because I had the honor of being able to speak at the first one and the great event, but what prompted you to start that? Steven Ekstract: The pandemic was coming to an end and having been in the business for 25 plus years. One thing I know about the licensing business is it's a huge networking business. Licensing is, I think our association says it's like $360 billion a year at retail worldwide. But the number of people who are actually involved in the deal making, it's a relatively small number. Arguably eight to 10,000 people. Okay. That are actually making these deals. Right. And then there's a core group in like Los Angeles and New York between the major licensees and the major license source. That's in the high 100s, right? So these people love to network because relationships are very important in this business. Being able to know that you can trust someone with your IP, if you're a licensor, you want to be able to look that licensee in the eye, sit down with them, break bread, have a drink, whatever it is and feel like I can trust this person with my IP. They're not going to screw it over. They're not going to screw me or the license. So the networking aspect is really important in our business. And we went two years with no trade shows and no face to face. Everyone was masked up. Everyone was doing zoom calls. And I just felt like there's a huge need to get back to business and back to face and people networking. And I also saw the need for educating high level executives about those other properties instead of just chasing after the Disneys and the Netflix and the Universal franchises. There's hundreds of other properties out there that are going to perform really well at retail and are performing really well at retail, but they need to be showcased. And so I wanted to create a way to showcase these properties to the community, licensees and retailers being the community and licensors being the presenters. And just so that folks could understand that it's not just 10 properties that you want for the year, right? You need to look at more and figure out a strategy for what's coming down the line from where trends are coming from where they're going to be in two or three or four years, because licensing is about the future, right? No one's going to license the expo and trying to get a license for 2025. They're looking at licenses for 2027 or 28 or 29. So we're a futures business and you have to really understand where the trends going to be in three or four years. And that's hard to know because we don't have crystal balls. don't, I don't know, but I do a hell of a lot of research to try to keep my hand on the pulse of where new properties are coming from, what Gen Z and Gen Alpha are looking at. And you know, David, you were at the September event where we presented Skibidi Toilet, right? None of us old guys, I had never heard of Skibidi Toilet before. Now when I came home and I said Skibidi to my kids, they're like, dad, how do you know that? Right? David Schnider: That's exactly what I was thinking of. I had to go home and ask my kids and they said the same thing. Steven Ekstract: And my, my niece who was 14 at the time said to me, skibidi that's like, we use that as a term. She's like, that's now in the vernacular, right? Like that's actually, it's become like a verb, right? skibidi. So yeah, finding the trends and presenting them early on so that licensees from each other's can get on board those. And you know, skibidi has done extremely well. Bonker's toys sells out at Walmart. Right. With their skibidi collection. It's, know, when you made it to Walmart, you're in the mainstream. Right. Greg Pan: On that topic. So a lot of these YouTube property, other properties that get popularized on YouTube or social media, you look at the views and they're in the tens, hundreds of millions. Now retailers tend not to invest like Bonker’s Toy, no no discredit to them. They're a toy company, but they're not like, they're not a Hasbro or Mattel. Why aren't the top toy companies looking at these properties that are tens of millions of views on YouTube, but they'll look at, you if a movie performs well, say it does 100 million in the box office in the US, that's 10 million viewers. There are YouTube videos that have much, much higher viewership. How come those brands are not getting the same value recognition tools at a retailer? Steven Ekstract: So I'm going to say that the bigger you are, the slower moving you are. Okay. It's the dinosaur metaphor, right? The dinosaurs kind of all stood there when the meteors were coming down and wow, look at those bright lights coming and boom, they were gone. Where as the smaller animals were like, we better find a cave to hide in. I mean, it's a similar situation. They're not mainstream. They're not mainstream. They are. YouTube is mainstream, but I think behemoth toy companies don't see that yet where they're seeing it, but they're coming in a little late. The other part of that is that both Mattel and Hasbro are trying to be less about making toys and more about extending their brands and becoming brand management companies. What Mattel did with Barbie, absolutely stunningly brilliant. I mean, it's definitely a Harvard business school example of how you bring back a brand, right? It just is absolutely brilliant. But you know, they had to focus all for, I don't know, at least five years, they were focused on bringing back Barbie. So it probably took their focus off, you know, whereas a Bonker’s Toys, you know, small guy, small company, young thinking, Hey, let's follow more Gen Z is going right. And Gen Alpha, let's look at what they're looking at and let's see if we can have some successes. And they have, right. And if you talk to Bonker’s, the only properties they go after are YouTube properties. That's it. Yeah. think the bigger the company, the harder it is for them to turn the ship. Right. We're going through a complete transition, how people consume media and all of us, right? Think about how fast we went from no internet to all of a sudden smartphones. History will look back on this era as being like, wow, it was, it's revolutionary, right? What we're going through, we're still in the early childhood phase of the digital revolution. And those that can kind of jump on board and take advantage of it, they're going to be successful. And those that don't will just stay where they're at. Greg Pan: Yeah, I kind of see it as dinosaurs, given that we've existed before the internet, the next generation and they've only seen the internet. That's the only way they know how to interact and view and consume media. So it's going to be a different beast when we're all gone. What do you see to brands like the Skibidi Toys who have these massive viewerships, don't really, their weight isn't really considered in terms of licensing. What should they be doing to build a licensing program? Steven Ekstract: Exactly. You can be kind of a flash in the pan and we see this all the time. Is it something that's going to trending now and then it's going to fall off, right? Or is it something that you can build into a franchise? So the Skibidi is, they're trying to build a franchise. The big question is, will they be able to get the film and a TV series and everything else out in time to take advantage of it? Or in two years, will people have forgotten what skibidi was? And look that's the challenge that you have with any of these properties. Ryan's World is a great example. Ryan's World was really one of the first digital creators, children, digital creators with toy unboxing to get like a significant licensing program. Right. But here's the problem. Ryan grew up. He's not a kid anymore. Right now he's 13, 14 and you know, they created an animated series around him, but thinking, well, that'll keep him as a child forever. But kids are fickle, right? We don't know what they're moving onto and kids are moving fast. That's the other thing, right? Everything is moving at warp speed. So one of the things that we talk about my partners in Xtracks, and I talk about is speed to market. And we really try to focus on telling our audience speed to market is everything. Licensing tends to be a very slow, methodical business, you guys know, cause you work behind the scenes, right? It can be two years before product is on the shelf, right? We can't work like that anymore. can't be certainly not from on in the entertainment side of the business on the brand side. Yes. But on entertainment, you cannot work two years behind just because things are moving too quickly now. So how do you get your product manufactured and on the shelf faster. And that's really the challenge, particularly since we've all been so dependent for years on manufacturing in Asia, right? So you have to wait, you have to tool up in particularly on the toy side, there's a tool, there's tooling, there's all kinds of testing, there's manufacturing, there's approvals, and then you have to wait for it to ship. And then of course, now we've got the tarriff situation, right? Where a couple of months ago, licensees were telling me we're not taking any shipments. We're just going leave it on the boat and let it rot. So speed to market. think what we have to do is we have to see more manufacturing moving back to this side of the pond. I think we're already seeing it like more manufacturing in Mexico. We also need a government that understands that we're a global economy now and we don't have the manufacturing capabilities here in the US to do this. So we actually have to have partners around the world and make peace with them and figure out ways to do that. There's a lot of moving elements and I'm optimistic. feel like because after 25 years of being in the business, I continue to see the business, the business has gotten stronger and stronger despite some major, major issues that have happened over the years. David Schnider: You talk about the tariffs as we're recording this in the summer of 2025 products coming in from China are facing 30 % tariffs. There's some uncertainty about whether they will go up or down. How are you seeing that impact the licensing industry at this point? Steven Ekstract: It's tough. I mean, every licensee I talk to is, you know, ⁓ dealing with this, you know, it's a little less on, on soft lines because you can do print on demand here in the U S and the print on demand business, by the way, is just on fire as you can imagine but certainly with hard goods and it's not just toys, it's home furnishing, it's cosmetics. So much of that comes from China. Those 30% tariffs are killing people's business. When you're dealing with retail, retail is only going to be able to absorb so much as far as price increase. And then they're going to ask the vendor to take the hit. But the margins on these products are very thin to begin with. What we're seeing is smaller companies just can't withstand this. They don't have, they don't have the financial wherewithal to withstand this. And we're going to see a lot of small companies go out of business. And it's a shame because personally, I don't think this needed to happen. Do I think that we needed to renegotiate? Yes. But I think you renegotiate in a mature adult fashion. You don't do it with these threats. Investment infrastructure first and then you have something to bargain with. Greg Pan: I do optimistically, but I'm a New Yorker, right? And so I've actually watched Trump since the eighties, right? And so I know Trump and I know his personality and he is, he's a business guy, but he's filled with bluster. He's blustery, but he's also not stupid. He knows that in order to stay in power and to keep his Republican base in power, we can't have a recession. So I believe that we will all of a sudden have a miracle with China and we will negotiate and we'll find some pretty, it may be 10%, it may be 20%, it won't be 30%. And frankly, I think the Chinese government wants to negotiate too because they're having economic problems as a result of these tariffs. We're interdependent on one another and we need to just find ways to work together. So I think we'll be well and I think it'll happen quickly. I think I'm optimistic. I do not think we're going to have a significant recession as a result. David Schnider: Yeah, you said something to me at the licensing show that stuck with me when we were talking about this issue. said we're an optimistic industry and we always find a way. Steven Ekstract: We are an optimistic industry. have to be right. It's look, every licensee is taking a gamble, right? You're gambling on a property, even if it's an A, what I call an A-list property like Star Wars. I can't tell you how many companies have taken Star Wars licenses and not been able to sell the product. Just because it didn't line up with what consumers want. A Star Wars toaster? Nah, sorry. But they had Star Wars toasters, right? Just because you have an A property doesn't mean you're going to... So you're taking a licensee is always taking a risk. It's a gamble, right? The licensor too is risking. They're taking a gamble when they do the license because frankly, their brand can suffer if products don't sell. If products end up in discount bins or products end up at a discounter that's not good for the brand either. We have to be optimistic and we are a risk taking industry. We just are. And you have to have a certain appetite for risk to be in this business. Greg Pan: And the retailers here, the retailers probably, obviously, take the most risks. Steven Ekstract: Absolutely. The retailer is taking the most risk. The retailers are able to move relatively quickly to move stuff off if it's not moving. And they also, they usually negotiate a pretty good financial deal for themselves. The licensee tends to take the hit and then the licensor also will take the hit because the licensee can't make the minimum guarantee and they have to get relief or sometimes not really, but oftentimes the licensor is willing to give relief. And that's the other part of our business is the ability to be negotiable. Right. It's really important, but look, the strength of licensing is all about partnerships, right? And you're stronger when there's more than one, because it's not just the licensor that's taking a risk, not just the licensee taking a risk. It's not just the retailer out and taking the risk. It's all of them combined. They're all risking together and together they're stronger. And I think it just, it makes for, for, you know, significant success in most cases. Greg Pan: Yeah, you've emphasized very much that this is very much a relationship driven industry. It's people who know each other, it's people who work together maybe at one point. You work with people you trust. Does that make it difficult if you're a new brand or a new licensee entering the industry? What did you recommend they do to kind of enter in this game, understand who they're playing with better? What kind of support do they need? Steven Ekstract: Yeah. And that's what we write about a lot in the book, right? When I did my contract with my, with the book publisher, Wiley who owns the For Dummies brand. And they said, we want you to write Brand Licensing for Dummies. And I said, okay, but you know, there's three major constituencies out there and it's hard to write for all of them. There's the licensor, there's the licensee and then there's a retailer. They're like, no, we, have to have one focus. So pick one of the three. So we picked licensees and the reason we picked licensees is because usually the licensor knows what they're doing, right? Licensor already knows about licensing or if they're a major brand, they'll hire an agency. If they don't, if they don't know, or they don't want to be bothered with it, they'll hire an agency. But there are so many licensees that are getting into the market. We live in a creator economy. So there's so many new companies getting in that need to understand what the parameters that are involved in, in a licensing deal. So we wrote it from the perspective of the licensee because we felt like that was the largest constituency that needed to learn about licensing. But look, the book is really focused on A, you need to go after a brand that is well known. I like to separate brands, the A, B and C brands. The A brand would be Star Wars. The B brand would be let's say A. Steven Ekstract: Coca-Cola and the C brand would relatively new brand that maybe made a lot of success in licensing. Yeah. Greg Pan: We got Roblox. Steven Ekstract: Well, yeah, but Roblox has moved up pretty quickly. yeah, you could say that with the A brand, you're paying a much higher guarantee. Most of the categories are already filled. So you're going to have a tougher time getting in, just coming up with it. You have to have a unique product that doesn't exist in the market to even get the license or the licensor is slicing and dicing the category. So they've got 15 licensees in backpacks and then you get a very narrow window. You've got retail, discount retail, right? That's all you got. We try to explain all that in the book. We also try to explain if you're new, you need to use experts. You need legal help. You need to use the law firm that understands licensing and has done licensing deals before. You can't use your brother-in-law who's a real estate attorney to do a deal for you. You know, I think there's this misconception that, if they're a lawyer, they probably took a class in IP law at school and they could do the contract for me. So we're very specific about that. We talk a lot about licensing consultants. Like if you're a licensee and nobody knows you, go out and hire a licensing consultant who has been in the business for 20 or 30 years has done business with all the major brands, has that trust factor and can get you in the door, right? Cause you need to be able to get in the door. You also have to have the financial wherewithal to be able to come up with the cash to make the minimum guarantees. And you also need to have the retail distribution. Like if I'm, I've got this brand new product, but I've never sold it before. Greg Pan: So who your retail partners, Steven? Steven Ekstract: I don't have any. Well, in a lot of cases, a large licensure can help there because they have retail development teams, right? Someone like Disney has, they have an office in Bentonville. have an office in Minneapolis. They have people there and they can call their buyers and say, Hey, this guy just came into my office with a brand new product that you guys don't, that nobody has on retail shelf and they want to, they want to put Star Wars on it. What do you think? Hey, it sounds great. Of course getting into Walmart, getting into Target, getting into those large retailers, you have to be vetted, right? They have to know where are you manufacturing? What are the factories that you're using? So it's complex. The business of licensing is complicated. And that's why we wrote this book and we kept it simple was to really kind of give people a roadmap of from A to Z. What do you need to know in order to get a license negotiate it properly for yourself so that you're protected, get it manufactured, get it to retail, and then, and then how do you market it? Greg Pan: Do you think there's anything that licensees worry too much about when they're doing these deals that is less of a deal or on the other side? Is there anything you think they should worry about more? Steven Ekstract: Yeah, I think one thing they should worry about more, and we really emphasize in the book is, is approvals. think particularly given, we talked earlier about the trends in the business and how quick trends move and fast. And I think licensees, if they'll, if they, if they get a license for something that's trendy, they want to get it to market quickly. And oftentimes they'll shortcut the process, the licensing process, the old adage of I'd rather ask for forgiveness than permission thinking, right? And the retailer too is sometimes at fault here because the retailers calling the licensee and saying, hey, we need that product. How fast can you get it to me? My customers are demanding it, right? We've seen this and you guys have seen it, I'm sure. Time and time again, the licensee will shortcut the process and maybe not get the full approvals just to get the product onto the shelf as quickly as possible. But that can backfire and create a lot of problems. And one of the examples we use in the book that's that is a little bit different, but we talk about what happened with Wicked dolls on the first run, that whole website fiasco. And that was one of the largest licensees in the world, Mattel, right? Mattel working with Universal is the second largest studio in the world. Mistakes happen, right? That's why product approvals are so critical, right? And packaging approval, all those approvals were so critical to be done because otherwise you end up with consumers who are pissed off brand that gets distressed. Right? So. Greg Pan: Yeah. when David and I were closer with licensees and audits on you, think you might not expect it. You might think they don't want to audit you. I think I paid my royalties. What could be a problem? Licensors, especially the big ones audit their licensees. It doesn't matter. They like you. Doesn't matter if they hate you. You're going to get audited. So if you missed an approval, doesn't matter if you paid those royalties, it's going to show up on an audit report and they're going to be asking for a lot more money. Steven Ekstract: Yep. Yep. And that's another focus. Another big focus of the book is, is royalties and explaining to new licensees, not to take it personally, that this is what licensees do. They will audit and not to take offense and not to feel like they think you're stealing from them. It's just part of the process and to be prepared and to make sure that everything you do is on board. And look, we also know, cause you've seen it, I've seen it and pretty much anyone who's been licensing for a while knows that there's licensees that will, how they report sales sometimes is a little creative and they end up getting audited and they end up owning money and they end up having to pay for the audit. And that's kind of part of the growth of licensing is that the business has grown up in that regard. Like major licensure now are much more on top of this and we're dealing with software that's much more on top of it. And now with artificial intelligence, it's going to change the game even further. David Schnider: I think licensees are often shocked when they get those audit reports. They understand there might be an audit and they might have to pay some money, but I think they don't expect that each contract is different. But a Disney contract has gross invoice billing penalties. They end up getting a bill that's more money than they ever made on the product. And it's very difficult to deal with. Steven Ekstract: Yep. Yep. Yep. David Schnider: All right. Well, Steven, it's been great talking to you before we wrap up. Why don't you tell people where they can find the book that you and Stu Seltzer wrote and where they can find out more about the Xtracks Summit. Steven Ekstract: Amazon, you can find the book. It's called Brand Licensing for Dummies. It's on Amazon or Barnes and Noble dot com. It's available in bookstores, but definitely available online at Amazon and Barnes and Noble. And yeah, I think for anyone that's getting into licensing or any companies that have new employees that they need to sort of teach about the business, it's a great learning tool. And again, what makes it great is we've kept it simple. We've kept it really simple. It's easy to read, easy to get through. Yeah, I think it'll be a valuable tool. David Schnider: And then what about the Xtracts? Where can people find out more about? Steven Ekstract: Xtract Summit. it's our website is www.entertainmentxtracks dot com and also we'll be doing Bentonville again next year, next June. Yeah. David Schnider: And if people want to work with you and global licensing advisors, how do they find you in your company? Steven Ekstract: So again, my email, I'll give you my email is steven @ globallicensingadvisors dot com. I'm relatively, I'm pretty responsive. So send me an email, steven @ globallicensingadvisors dot com. And if I can't help you, I can find someone that can. Yeah. David Schnider: Excellent. It's been great talking to you. Very insightful, and we appreciate you coming on and spending some time with us. Steven Ekstract: Thank you. Thank you guys so much. Greg Pan: Thanks so much, Steven. Announcer: Thanks for listening to the Licensing Exchange. 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