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Licensing Agreement

Licensing Agreement


Licensing agreements can cover anything from playing a song to creating a brand new product line. Companies often license out the ability to create a product line to manufacturers, so all of the work and risk falls on the manufacturer. There are an enormous number of licensing opportunities in the entertainment industry. 

What You’ll Need

  • One of the scenarios below 
  • The licensing articles from 3.1


Music Scenario

Joanie Johnson started out as a YouTube singing sensation. When Mickey Morris, co-owner of the newly formed Big Double Music production company, noticed her, he knew she could be a superstar. After a brief negotiating period, they signed a recording contract for three full-length albums. As part of the contract, Joanie did a lengthy national and international tour. 

The first album wasn’t a huge hit. It didn’t get much attention, and Joanie was a bit disillusioned. But the second album went crazy. One of the singles blew up immediately, and everyone learned about Joanie Johnson. She went on tour for a year and all of her shows were sold out. After recording the third album, Joanie was exhausted and needed a break. She had fulfilled her contract with Mickey and wanted to take it easy for a while and live off of her royalties. The royalty checks were much smaller than she expected. It seems she was still paying off the costs of the first album and not yet making much money. She was too tired to go on another tour and not yet ready to record another album.

Her manager suggested she consider licensing her image, and she began to look into ways to do this. She contacted a manufacturer who was able to make clothing, dolls, and other fan memorabilia. The manufacturer has offered to cover all costs of manufacturing and distribution and pay Joanie a 10% royalty on all sales for a year. She gets final approval of any new product. She loves the idea of doing nothing and collecting her percentage, so she agrees. Now she wonders what other ways she can license her image or work and make even more money. 

Film Scenario

Alexa Lopez and her company, Sunshine Productions, successfully completed filming of her script. Alexa was able to secure a pretty well-known celebrity for the lead role who was looking for an indie feature to star in during time off. The film was such a success that it was accepted into the Sundance Film Festival. Alexa immediately began writing the sequel. The character she had created became extremely popular, and Alexa wanted to build upon that and create more content around the character.

A popular streaming company wanted to buy the rights to the film and the character to create an original TV show. Alexa refused to sell all of her rights in the film and the character. She has lots of plans to create a brand based on the character and the film. She offered to give them a license to use it in order to create the show but she wouldn’t give up all creative control. The company refused, so Alexa moved on, completed her second script and began filming. The actor from the first film was so attached to the character and so impressed with the success of the first film that he agreed to star in the sequel.

During production, Sunshine Productions got a lot of entertainment media attention, which led to a huge anticipation for the film. A major theater company that promotes indie films has offered to license the new film to show in its theaters. It has 50 theaters nationwide and will agree to show the film for four weeks. To minimize its risks, the theater will agree to a profit split to pay the licensing fees instead of an upfront payment. Sunshine production will get 50% of all the profits from showing the film. Alexa agrees because she doesn’t want to have to go through a distributor and she’s certain the film will be a huge success. 


Create a written document using Microsoft Word that explains the following:

  1. What is the subject of the licensing deal? How did it come about?
  2. What are the terms of the agreement? Was it a good decision to sign it?
  3. Which party benefits more from the deal? Why do you think so?
  4. What would you do differently if you were the manager? What if you were the manager representing the other party?
  5. Identify at least two other licensing possibilities and explain why you think they’d be a good choice. How would the artist go about finding and signing those deals?

Incorporate the concepts and terminology learned from this week’s readings into the paper, demonstrating how the methods you use to plan and manage your business reflect the concepts learned about in this week’s material.


  1. Save your completed project as a MS Word document or PDF.
  2. Name your project as follows:LASTNAME_FIRSTNAME_Licensing
  3. Upload your document to the LMS and submit. 

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