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Licensing 101: A Paradox of Piracy for Licensing Business Part 1

23 Feb 2015

Hi all and sorry for my extended absence.  Has been a busy period around Pacific Licensing!

A few years back the Chief Marketing Officer of a relatively young company with a wildly popular brand made the off the cuff remark to the media that he “welcomed” piracy as a sure sign of his brand’s popularity.  Of course, he got into considerable hot water with the licensing division at his firm and in many specific regards it was an ill-considered comment.

However, it did also have a certain ring of truth to it to the extent that a lot of pirated product in the market DID speak powerfully to consumer demand, and that the opposite scenario – the day when there is NO counterfeit product bearing one’s I.P. in the informal market – might be cause for even greater concern.

In Asia, whilst the amount of copyright infringement is still staggering, I would say the trend is away from pirated product (at least in the consumer products licensing space) as Asian consumers have become (in some places gradually, in others rapidly) highly aspirational; and with increased spending money in their pocket, they no longer want knock offs, rather, aspire to the original, authentic brand products.  Especially when considered in the context of relevant and reachable consumers – piracy in general is becoming less of a problem in Asia.

What I mean by relevant and reachable is the consumer living in a major urban area with plenty of modern retail, who is ready to spend, for instance, $15 or more on a t-shirt, or in any event, a premium price to cover the royalty associated with IP (as compared to a blank t-shirt).  For those consumers that are not able to spend that much on a shirt, or are not in a key metro area with access to modern retail – well, the fact that this consumer might buy a $5 counterfeit t-shirt in his local night market doesn’t directly affect sales to my target consumer (though there are indirect effects, see below).  This is not to suggest that it is a victimless crime, but relatively speaking, the impact is peripheral.

So, in this very broad and superficial way, we can say that seeing your products knocked off is a good thing because it means characters/brands are popular.

More on this topic next time.