2. Images and Merchandising
Licensing and Royalties 2

3. Chapter Objectives Define the term image.
Describe the role of merchandising in entertainment marketing.
Discuss how the United States government controls endorsements.
Describe the role of sponsorship in entertainment marketing.
Explain the importance of entertainment product licensing.
Explain aspects of royalties. 3

4. The Impact of Image
The public image of a celebrity can make the difference between success and failure.
image a mental picture or concept of something or someone
When a celebrity or a company is in the public eye, there is an increase in the opportunity to make a profit from merchandising.
merchandising the variety of promotional activities and materials that complement and support the advertising effort 4

5. Endorsements
The Federal Trade commission (FTC) defines endorsement as any type of advertising done by a person who reflects his or her own opinions, beliefs, findings, and experiences that are separate from those associated with the product’s company. 5

6. Controversy of Endorsements
Celebrities must use the products they endorse.
The political opinions of celebrities may have an adverse effect on the endorsement.
The personal controversies of a celebrity may have an adverse effect on the way the public views the endorsed product.
Companies do not want the image of their product damaged. 6

7. Sponsorship
Sponsorship occurs when a company supports an event, activity, or organization.
In return for money, the sponsor is provided with some type of advertising at the event.
Sponsorship is a crucial aspect in sports and entertainment. 7

8. The Need for Sponsorship
The money from concert ticket sales does not cover the cost of a tour.
Advertisers may ask for advertising space on the stage, concessions, T-shirts, and event programs.
Marketers keep track of how many times fans see the sponsor’s name at an event and the sales of the products being advertised. 8

9. Why Sponsor? Companies seek a return on their sponsorship dollars.
return the amount of profit that is given back to the sponsor for the sponsor’s initial investment or sponsorship
Calculating return for sponsorships is difficult, but should be seen as an increase in sales. 9

10. Sponsorship Risks
Companies want to be associated with a popular person who has a positive public image.
Federal laws dealing with tobacco and alcohol sponsorship have become stricter.
The federal government regulates the practice of wealthy companies that sponsor events that could be inappropriate for children and teens. 10

11. Selling the Image Merchandising Endorsements Sponsorships Direct
Indirect
Tie-Ins
Endorsements
Sponsorships 11

12. What is the purpose of the FTC? 1.
What is merchandising?
What is the purpose of the FTC?
Give an example of what a company might gain in return for sponsoring a musician. 2.
Quick Check Answers
Merchandising is the variety of promotional activities and materials that complement and support the advertising effort.
The FTC’s purpose is to ensure that the American free trade market system follows legal and fair exchanges.
The sponsor gets advertising on the stage, on shirts, in event programs, and at concession stands. 3. 12

13. Overview
Licensing and royalties are major aspects of both the sports and entertainment industry.
licensed products goods or services that legally use logos or images owned by other companies or people
Entertainment-related companies utilize merchandising and sell licensed products. 13

14. Licensing
Licensing is required when the owner of an original image or a product gives legal permission for a fee to another company or person to copy, manufacture, market, and sell reproductions of the original item. 14

15. Licensing Music and Royalties
Licensing applies to music, software, motion pictures, and videos/DVDs.
A songwriter and publisher of a song may charge a licensing fee when an artist and label want to record that song.
Artists, writers, and publishers receive royalties, or a percentage of record sales or fees for broadcast performances.
There can be several agents between the artist and the record company that deduct money from the artist’s profits. 15

16. Paying for Entertainment
Profits from entertainment products pay for the expense of producing the products, with only a portion going to the artists themselves.
When music, movies, and software are illegally downloaded and distributed from the Internet or products are pirated, many people are affected.
The user of a pirated product can be prosecuted. 16

17. Making It “Big”?
Performers can make additional income, based on their public image, through endorsements and sponsors.
Companies can earn income through merchandising, licensing, and royalties. 17

18. Music to Your Fingertips
Internet service providers such as AOL often have content agreements with major music labels—in AOL’s case, Warner Music Group. The sharing of content works both ways:
Operating an e-tail business on an electronic channel—the Web—can be costly, due to design, delivery, returns, and operating expenses.
Though Many larger dot-com companies crashed in the 1990’s, small stores like Harris Cyclery of West Newton, Massachusetts, actually increase sales using a basic Web site. Today, a third of Harris’s bicycle business rides in on the Web to get hard-to-find parts and personal service.
Describe an e-business’s home page to your class after viewing one through marketingseries.glencoe.com.
The music draws people to the site, and subscribers are exposed to the music. Music marketing is integrated into the regular user interface, or the program that lets users navigate the Web. Users can do more than just listen to a new album: They can download exclusive tracks, artist information, and interviews.
For more information on sports and entertainment marketing,
go to marketingseries.glencoe.com. 18

19. Explain the meaning of licensing. 1.
What are three types of entertainment companies that use merchandising?
Explain the meaning of licensing.
Who are at least three participants in a record who may share royalties? 2.
Quick Check Answers
amusement parks, studios, and record companies
Licensing involves companies and individuals receiving money for others to use images, logos, etc. that these companies or individuals own.
Answers may include songwriter, publisher, and artist 3. 19

20. Checking Concepts
Explain how image affects the entertainment business. 1.
Merchandising uses strategies that involve packaging, displaying, and publicity of a successful product, theme, or personality. 2.
Sponsors provide critical money or other valuable resources for events and companies to stay in business. 3.
The public images of celebrities can make the difference between success and failure. 1. 2.
Describe how merchandising develops from a successful image.
Checking Concepts Answers
The public images of celebrities can make the difference between success and failure.
Merchandising uses strategies that involve packaging, displaying, and publicity of a successful product, theme, or personality.
Sponsors provide critical money or other valuable resources for events and companies to stay in business. 3.
Define sponsorship in entertainment marketing.
continued 20

21. Checking Concepts Differentiate between sponsorships and endorsements.4.
Licensing occurs when a celebrity lends his or her image to give approval of a product in commercials or other advertising. Sponsorship occurs when a company supports, usually financially, an event, activity, or organization in exchange for advertising. 6.
An endorsement occurs when a celebrity lends his or her image to give approval of a product in commercials or other advertising. Sponsorship occurs when a company supports, usually financially, an event, activity, or organization in exchange for advertising. 4.
Sponsors’ advertising can be seen by millions of viewers several/ many times in the course of the event, so sponsors get a definite return on their investment. 5. 5.
Describe the returns associated with sponsorship.
Checking Concepts Answers
An endorsement occurs when a celebrity lends his or her image to give approval of a product in commercials or other advertising. Sponsorship occurs when a company supports, usually financially, an event, activity, or organization in exchange for advertising.
Sponsors’ advertising can be seen by millions of viewers several/many times in the course of the event, so sponsors get a definite return on their investment.
Licensing occurs when the owner of an original image or product, including creative works, gives legal permission for a fee to another company or person to copy, manufacture, market, and sell reproductions of the original item.
Define licensing. 6.
continued 21

22. Checking Concepts Critical Thinking
Explain why illegal downloading may have harmed the music industry. 7.
Free downloads ultimately cost the artists and all people involved in producing a CD; essentially, they reduce the ability of many people to make an appropriate living. 7.
Licensing is critical to the entertainment industry in at least two ways. First, selling licenses provides revenue immediately. Second, every time a licensed product is sold or used it advertises the original image that was licensed. 8.
Critical Thinking
Checking Concepts Answers
Free downloads ultimately cost the artists and all people involved in producing a CD; essentially, they reduce the ability of many people to make an appropriate living.
Licensing is critical to the entertainment industry in at least two ways. First, selling licenses provides revenue immediately. Second, every time a licensed product is sold or used it advertises the original image that was licensed.
Discuss the importance of licensing in the entertainment business. 8. 22

23. Customizable Slide 23

24. End of