HELP: Questions about licensing/private labeling my information products for someone else to sell.

by magentawave 13 replies
I have a website that sells information products and got a call from someone that wants me to repackage my current information into a big physical package (DVD's, CD's, printed manuals) that would probably sell for around $500.00. He wants to advertise it with magazine ads and sell it through his own website.

Him calling me now is interesting because before he called I was in the process of creating a big physical product and advertising it online and offline because I know I can make a ton of money from this. The thing is that I have several reservations/questions about how to handle this and am open to hearing opinions from others...

1) Since I know I can do this myself and was even in the process of doing this, should I say "no thanks" to him, thus keeping a much larger piece of the pie for myself? Or should I take the attitude that I can't do everything myself and create a product package for him and see this as another income stream for myself? He specifically told me that if I'm not interested that he will find someone else with the same knowledge I have to "partner" with. So with me or without me, he says he is going to do this.

2) If I do this with him, should I private label this physical information package? If so, do you have any recommendations for how to do this?

3) Like I said before, he wants to "private label" my information and sell it through his own website. Well, part of me is a little paranoid that he could steal my information at some point and completely cut me out of the process.

4) Any advice, thoughts, recommendations on private labeling versus resell rights versus licensing versus joint ventures and how to go about doing it?

Thanks very much.
Steve
#main internet marketing discussion forum #information #labeling #licensing #licensing or private #products #questions #sell
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  • Profile picture of the author thecableguy
    Just a thought, but I think Dan Kennedy used to have some kind of "resell" license where he would do the fulfillment for the resellers. I think the licenses cost less than a normal "reprint" license, but they kept a portion of the sale and did the fulfillment and customer service. That way they also built a customer list at the same time (I think) and could control the product quality.
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    • Profile picture of the author magentawave
      Yes, I also want to build a list of buyers and offering the services of an fulfillment company is probably the best way I can do this and still maintain the level of control I will need. It can't hurt to ask so I just sent an email to Dan Kennedy's support to see if they offer information on licensing, etc., so thank you.

      I wonder if anyone can recommend an awesome fulfillment company?

      Steve



      Originally Posted by thecableguy View Post

      Just a thought, but I think Dan Kennedy used to have some kind of "resell" license where he would do the fulfillment for the resellers. I think the licenses cost less than a normal "reprint" license, but they kept a portion of the sale and did the fulfillment and customer service. That way they also built a customer list at the same time (I think) and could control the product quality.
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  • Profile picture of the author Istvan Horvath
    Well, in my books "private label" would mean that I buy the rights from you and I will sell all those info-products as my own stuff, under my name. You are NOT making any recurring income (so you shouldn't worry about that part!): I pay a one-time fee and bye-bye.
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    • Profile picture of the author magentawave
      Good point and if that is the case then that is not the way I will structure this deal. The only way I will want to structure this will be for me to be getting a serious piece of the pie.

      Steve



      Originally Posted by Istvan Horvath View Post

      Well, in my books "private label" would mean that I buy the rights from you and I will sell all those info-products as my own stuff, under my name. You are NOT making any recurring income (so you shouldn't worry about that part!): I pay a one-time fee and bye-bye.
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  • Profile picture of the author Istvan Horvath
    You see, in many courses, training manuals etc. that's exactly what they are teaching - what that guy was planning to do. In some places they refer to it as the "publisher model".

    Meaning: go find experts who already produce(d) great content, make a deal with them... where they provide the valuable, unique content but they don't know anything about IM... so pay them peanuts and market the product = make millions

    Yes, you could make a partnership with him (don't even mention "private label" in that case!!!) to joint your efforts and make a great product and market it to a wider audience. Just be very careful how you word your agreement and be very clear about all the details!

    Good luck!
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  • Profile picture of the author craig j
    If it was me I'd either work out some partnership arrangement with at least a 50/50 split and a very solid legal partnership agreement or offer PLR rights for a significant amount that takes into account the profit potential of what he plans. Since you say you want a serious slice of the pie then I'd definitely recommend a partnership and that'd be my preference too.

    With a partnership agreement you can retain copyright and control over the product as well as some control over how it's marketed.

    If he's not open to an agreeable partnership arrangement I'd just go back to plan A and do it yourself. Even if he does go ahead and partner with someone else it sounds like there's room for some healthy competition in your market, you'd maintain full ownership and control over the product and the marketing and depending on the product he chose he may even be a possible JV partner for you and vice versa.
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    • Profile picture of the author magentawave
      Originally Posted by Istvan Horvath View Post

      You see, in many courses, training manuals etc. that's exactly what they are teaching - what that guy was planning to do. In some places they refer to it as the "publisher model".

      Meaning: go find experts who already produce(d) great content, make a deal with them... where they provide the valuable, unique content but they don't know anything about IM... so pay them peanuts and market the product = make millions

      Yes, you could make a partnership with him (don't even mention "private label" in that case!!!) to joint your efforts and make a great product and market it to a wider audience. Just be very careful how you word your agreement and be very clear about all the details!

      Good luck!
      Yes, thank you.





      Originally Posted by craig j View Post

      If it was me I'd either work out some partnership arrangement with at least a 50/50 split and a very solid legal partnership agreement or offer PLR rights for a significant amount that takes into account the profit potential of what he plans. Since you say you want a serious slice of the pie then I'd definitely recommend a partnership and that'd be my preference too.

      With a partnership agreement you can retain copyright and control over the product as well as some control over how it's marketed.

      If he's not open to an agreeable partnership arrangement I'd just go back to plan A and do it yourself. Even if he does go ahead and partner with someone else it sounds like there's room for some healthy competition in your market, you'd maintain full ownership and control over the product and the marketing and depending on the product he chose he may even be a possible JV partner for you and vice versa.
      IF it was to be a partnership, then it would have to be at least a 50/50 split in profits with me retaining control, and maybe a 60/40 split would be more appropriate.

      He would be spending money on advertising and running the ads, and everything else would be my responsibility - provide content, package the content (printed manuals, DVD's, CD's), order processing/shipping, customer service/refunds, etc., etc. And see, that is a bit of a dilemma for me because once I have personally set up all the stuff I just listed, then setting up a little advertising agency front, and negotiating for the best deals and running the ads isn't really that much more to do, you know what I mean?

      I don't get a bad feeling from this guy but the other issue is that he has a domain sitting there that he really wants to use for this project. He wants to build a brand with this site. Yes, his order page could have links to my order processor (so I can maintain control and build my list), but that also means it would be easy to divert the orders to his own order processor later if he wanted to rip me off. I know I'm being a bit paranoid here, but still need to consider these things. And because of the "branding" thing he wants to create with his own site, he also wants to use another similar sounding domain to create an affiliate network.
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  • Profile picture of the author amylimcd
    UPSIDE THOUGHTS:

    You can definitely license your product/content etc. to another business and grant them the right to private label the product. The most important thing is not to and never to grant exclusive rights or licenses- this way you can still do whatever you want to do.

    You can set up the financial model any way you want but I would strongly recommend an annual fee and then a royalty for each copy sold. This way you get a perpetual and ongoing stream and if he terminates the agreement, he can no longer sell it (this means the more investment he makes into promoting the product, the more your income stream from this arrangement will grow and be a stable and long term profit stream for you).

    Generally, with a private label deal, the other party is not allowed to change any part of the product other than the branding- this is the quality control you need to insist on and makes it easy when it comes to determining what he can and cannot do with the product.

    You also will need to think about whether you want ATTRIBUTION or not. Some deals require it- where the other party will have to disclose you are the original product creator. Others, especially those that care to protect their own brands, do not allow the disclosure so that you have no worries about your brand being diluted by their activities. The answer to this depends on a lot of factors- your business model and intention and those of the partner.


    DOWNSIDE THOUGHTS.

    I would not worry so much about stealing your information. If you are in the information marketing business, this is always a risk. First people steal content all the time and the more popular the content, the more it gets stolen. It is a part of doing business. But if you ask any of the big time information distributors, they would never limit distribution (via affiliates, distributors, resellers, partners, etc.) because the upside is always worth it.

    Second, IDEAS are not copyrightable- so anyone can just buy your product and then take the ideas and create a competitor or complementary product.

    Bottom line is to make sure you have a very clear arrangement and you have the proper legal contract and terms reflecting the arrangement. A good lawyer will make sure all the required legal protections (like indemnities and limitations of liabilities and warranties) and remedies are part of the deal.

    Hope this helps

    Amy
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    • Profile picture of the author magentawave
      This helps a lot and thank you very much. My questions/comments follow...

      1) I realize its all negotiable, but if I charged an annual fee and a royalty for each product sold, how much would you consider charging for the annual fee and royalty for products selling in the $300.00 to $3000.00 range (we might do seminars later for as much as $5000.00 per attendee)?

      2) Would you consider putting a "no-compete" clause in the agreement so if/when he does terminate it that he can't sell a similar product for X days, months, or even years?

      3) Would an arrangement that included an annual fee and royalties involve him having to buy the physical products from me - and maybe even the fulfillment of orders (so I could build a list) or would you grant him permission to use whomever he chose to manufacture the products (i.e. printed manuals, DVD's, CD's) and fulfill orders?

      4) ATTRIBUTION: Are you saying that the downside for me in being mentioned as the product creator/author is that it could "dilute" the value of my own brand? What are the upsides and downsides for both of us if I were to use Attribution?

      5) If I went to a lawyer to have an agreement like this created, what is the term I would use to describe this kind of agreement?

      6) Do you think sites like legalzoom.com would work for creating a legal contract like this? http://www.legalzoom.com/legalforms/...-Material.html or http://www.legalzoom.com/legalforms/...tten-Work.html Assuming they have something customizable that applies to my needs, perhaps I could create the agreement online and then give it to an attorney to check out after so I'm not spending a fortune hiring a lawyer to do the same thing but charging me a lot more?

      I'm taking notes here, so thanks again for your insight.

      Steve


      Originally Posted by amylimcd View Post

      UPSIDE THOUGHTS:

      You can definitely license your product/content etc. to another business and grant them the right to private label the product. The most important thing is not to and never to grant exclusive rights or licenses- this way you can still do whatever you want to do.

      You can set up the financial model any way you want but I would strongly recommend an annual fee and then a royalty for each copy sold. This way you get a perpetual and ongoing stream and if he terminates the agreement, he can no longer sell it (this means the more investment he makes into promoting the product, the more your income stream from this arrangement will grow and be a stable and long term profit stream for you).

      Generally, with a private label deal, the other party is not allowed to change any part of the product other than the branding- this is the quality control you need to insist on and makes it easy when it comes to determining what he can and cannot do with the product.

      You also will need to think about whether you want ATTRIBUTION or not. Some deals require it- where the other party will have to disclose you are the original product creator. Others, especially those that care to protect their own brands, do not allow the disclosure so that you have no worries about your brand being diluted by their activities. The answer to this depends on a lot of factors- your business model and intention and those of the partner.


      DOWNSIDE THOUGHTS.

      I would not worry so much about stealing your information. If you are in the information marketing business, this is always a risk. First people steal content all the time and the more popular the content, the more it gets stolen. It is a part of doing business. But if you ask any of the big time information distributors, they would never limit distribution (via affiliates, distributors, resellers, partners, etc.) because the upside is always worth it.

      Second, IDEAS are not copyrightable- so anyone can just buy your product and then take the ideas and create a competitor or complementary product.

      Bottom line is to make sure you have a very clear arrangement and you have the proper legal contract and terms reflecting the arrangement. A good lawyer will make sure all the required legal protections (like indemnities and limitations of liabilities and warranties) and remedies are part of the deal.

      Hope this helps

      Amy
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      • Profile picture of the author amylimcd
        Hi Steve - My answers are below each question. These are just my thoughts.

        Originally Posted by magentawave View Post

        This helps a lot and thank you very much. My questions/comments follow...

        1) I realize its all negotiable, but if I charged an annual fee and a royalty for each product sold, how much would you consider charging for the annual fee and royalty for products selling in the $300.00 to $3000.00 range (we might do seminars later for as much as $5000.00 per attendee)?

        MY ANSWER: This is totally negotiable and should be catered to something that motivates the partner to sell more- a royalty is typically a percentage of the sale price.

        2) Would you consider putting a "no-compete" clause in the agreement so if/when he does terminate it that he can't sell a similar product for X days, months, or even years?

        MY ANSWER: It depends. During the term of the arrangement, it is common to require this but then he would likely want a higher royalty. Sometimes, it is okay to let them sell other products (most product creators do not care if their affiliates sell other similar products). After the term, it could be possible but you need to check with a lawyer in your state as to whether it will be enforced (many states will void these as against public policy).



        3) Would an arrangement that included an annual fee and royalties involve him having to buy the physical products from me - and maybe even the fulfillment of orders (so I could build a list) or would you grant him permission to use whomever he chose to manufacture the products (i.e. printed manuals, DVD's, CD's) and fulfill orders?

        MY ANSWER: It can go either way, but if he is going to private label it, he is likely going to be creating his own physical product packages. If you want to have rights to the customer and more product control, it becomes more of a typical affiliate relationship.

        4) ATTRIBUTION: Are you saying that the downside for me in being mentioned as the product creator/author is that it could "dilute" the value of my own brand? What are the upsides and downsides for both of us if I were to use Attribution?

        MY ANSWER: Yes, if you name is on the product he sells, then you will be looking more closely to his marketing, and other business activity to ensure that it is consistent with your brand, etc.


        5) If I went to a lawyer to have an agreement like this created, what is the term I would use to describe this kind of agreement?

        MY ANSWER: It falls under a Joint Venture Agreement/Business Development Agreement and can be expensive as there are so many varying factors. The more you can term sheet (have your business arrangement in place with specific terms) the deal, the easiest it is to draft (and the cheaper it is for you since most lawyers charge by the hour.

        6) Do you think sites like legalzoom.com would work for creating a legal contract like this? Permission to Reprint Published Material | LegalZoom Legal Forms or Copyright License Agreement (Written Work) | LegalZoom Legal Forms Assuming they have something customizable that applies to my needs, perhaps I could create the agreement online and then give it to an attorney to check out after so I'm not spending a fortune hiring a lawyer to do the same thing but charging me a lot more?

        MY ANSWER: I don't know as I am not familiar with their services. If the intellectual property of the product is integral to your business and to you (i.e., responsible for a significant percentage of your income), the more important it is to make sure your are protected - i.e., lawyer. If it is a small component of the big picture, then the more risk you can take with trying to do it yourself with forms.

        The problem with this kind of legal agreement is that it is not a standard one (like a confidentiality agreement or privacy policy)- so it would seem almost impossible to find a form out there that would address all or even most of your deal points- but if you can find someone else who has a similar arrangement and take their document- that might be the best approach for using a form as a starting point.

        Cheers!

        ___
        I'm taking notes here, so thanks again for your insight.

        Steve

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  • Profile picture of the author sal64
    Depends... in this case, I'd be looking to control the process.

    If he is paying for promotion, then he is also entitled to his leads.

    What about a royalty basis?

    The main thing is to handle distribution. One arrangement I have for a $1200 product is that the partner takes the orders.. sends me my cut and then I fulfill the order.

    50/50 might be a bit rich if the person is paying for advertising, so that's why i suggest a 20% - 30% royalty (and I believe that int he USA, getting paid a royalty gives you some nice tax breaks as well).

    Make sure that it is stated that you can also sell the product in your name, and that there is a minimum price floor as part of your agreement.

    Overall, it sounds like a good opportunity.
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    • Profile picture of the author magentawave
      Hey Sal, or anyone else...

      1) So are you the one that is shipping the product, or do you have a fulfillment house do it for you?

      2) Since you handle shipping, does that mean that you don't use the list of buyers?

      3) Did you create a legal contract for this deal?

      Thanks
      Steve


      Originally Posted by sal64 View Post

      Depends... in this case, I'd be looking to control the process.

      If he is paying for promotion, then he is also entitled to his leads.

      What about a royalty basis?

      The main thing is to handle distribution. One arrangement I have for a $1200 product is that the partner takes the orders.. sends me my cut and then I fulfill the order.

      50/50 might be a bit rich if the person is paying for advertising, so that's why i suggest a 20% - 30% royalty (and I believe that int he USA, getting paid a royalty gives you some nice tax breaks as well).

      Make sure that it is stated that you can also sell the product in your name, and that there is a minimum price floor as part of your agreement.

      Overall, it sounds like a good opportunity.
      {{ DiscussionBoard.errors[3381880].message }}
      • Profile picture of the author sal64
        Originally Posted by magentawave View Post

        Hey Sal, or anyone else...

        1) So are you the one that is shipping the product, or do you have a fulfillment house do it for you?

        2) Since you handle shipping, does that mean that you don't use the list of buyers?

        3) Did you create a legal contract for this deal?

        Thanks
        Steve
        1) Yes I do... No I do not. quantity isn't that great to be honest. And he sells my product. So my situation is different to yours.

        2) No, I don't. It's an extra revenue stream for me. A bonus.

        3) No, just a handshake agreement.

        Your situation is different because some wants to relabel your IP.

        From what I understand, I can only suggest that (a) you have a royalty agreement in place and (b) you make it a non-exclusive license.

        Hope this helps.

        Sal

        3)
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