By Jaineel Aga
Have you ever wondered why folks wear UCLA or NASA sweatshirts in India? Would you, never having studied at NID, wear an NID sweatshirt when you’re out and about? In fact, foreigners don’t go to their local H&M and buy IIM sweatshirts. Why not?
India has cricket, Bollywood, more awe-inspiring historic characters than the population of some countries, and yet the licensed artworks presented to Indian consumers are western copy-pastes. Licensors have not yet adapted to ‘Bharat’ and are only connecting with the affluent globally travelled sliver.
A refreshing example of contextualising characters to better connect with the target audience is the release of the Peppa movie in China to commemorate the “Year of the Pig”. We, on the other hand, still only have Tony Stark wearing a sherwani as the “checkbox” on localisation.
India needs a paradigm shift from myopic ‘minimum guarantee’ agreements resulting only in increased licensee churn, to long-term symbiotic relationships where the licensing partner selection is not about the highest bidder, but one that does the most justice to the brand. To encourage product and concept innovation, licensors must support experimentation and ensure licensees have enough room to fail while trying, through a greater cool-off period, exclusivity, longer product development cycle, lower royalties and cross collateralisation of minimum guarantees across financial years.
At the other end, owing to the poor track record of contract enforceability, licensors have not been able to trust licensees with sales report numbers determining royalties, creating a trust deficit among businesses. Then, understandably to secure their interests, licensors resort to high minimum guarantees, causing the addressable market size of licensing partners to shrink.
Why haven’t we leveraged technology to solve this trust deficit? Perhaps, simple API integrators that allow a plug-in to their e-commerce storefront — Shopify, Amazon or Store POS — to auto generate relevant sales data to confirm the sales numbers of the licensed merchandise?
Counterfeit merchandise is another issue caging the industry’s potential. For instance, we would give one of our global IP partners a daily list of counterfeit products listed on Amazon that directly competed with the products we were selling. Unfortunately, the local teams representing the IP in India didn’t hold the necessary copyrights to take legal action against this infringement. They needed to route this through their global teams usually in the UK or the US, with little on-ground context. We don’t even have the systems to differentiate between official licensees and counterfeit sellers! It is not uncommon then for products of legit licensees to erroneously be “blocked” instead of a counterfeit seller.
Seizing the moment
Where do we stand globally? Nowhere, yet. There is no blame to be assigned, just a lot of opportunity to take advantage of. IP holders and brands must move beyond ‘agents’ to represent their licensing portfolio in India. We must appreciate the fact that copy-pasting legal formats and terms applicable to western countries end up dissuading a number of potential licensees in India. This requires some heavy lifting to understand the realities of our consumer market, IP laws and supply chain issues to create a symbiotic and localised strategy to grow the licensing pie in India.
This is an opportune time to embrace different forms of licensing in India. With a potential customer base of 1.3 billion, electrifying Indian start-up ecosystem energy, ample liquidity of venture capital in the D2C space, and the bold vision of Indian entrepreneurs, I am bullish on the licensing potential we are sitting on. It will come with an infusion of new ideas, technology adoption and a strong will of new licensing participants to take the road less travelled.
The author is co-founder and CEO, Planet Superheroes