The Four Different Types of License

If you want to publish and license your expertise it's important to know about the four types of license you can offer your licensees.   Being aware of what they are and the different rights they allow will help you to make an informed decision on what type of license to choose.   The four types of license for information products are...

Never sign anything if you aren't sure and if necessary seek legal advice  

(1) Resale Rights  License

A Resale  Rights License or  Resellers License is at the bottom of the pile on  the internet.   It usually has very little value because the product has come to the end of its useful shelf life.    In other words, its been sold by numerous buyers over a long period of time resulting in countless copies online.   This means its retail value is very low,  therefore the cost to buy a Resellers  License to sell these type of products is usually very low too.

  Basically, you profit the difference  between  what you  paid for the Resellers License and  what you charge for the product online.    This is the simplest form of license and  usually means that you can sell unlimited  copies  with unlimited profits.   While this might sound good, because these products are usually oversold and poor quality, in reality their earning potential is very limited.

However, for the some of the better products,  there is the opportunity to bundle  similar products together and offer them as a  bonus to a  higher value product.     This gives the  main product a USP and sets it apart from the competition.    Also, if it's a well packaged free bonus it could provide a real incentive to  buy the main product.

Of course the licensor dictates the terms of the license and any restrictions.   This can include where the product is sold and what you can charge.   Also, you can only re-sell what you've been given the licensing rights to and in the same format without any changes.    Where you can benefit is how it's marketed and to who within the terms of the license.   

Quite often a product is given away free with a Resellers License for viral marketing purposes.    This means you can sell it, normally at a low price.     If this happens, the licensor has usually put a lot of back-links and other information in the product to drive traffic back to his site.   It makes sense for you to sell it and keep all the profits because he's benefiting from all the additional traffic and resulting sales from his website.    

In effect you are providing free marketing for the licensor but if you are creative using products with a Resellers License they can be useful in helping to sell other products.

(2) Reproduction or Reprint Rights  License

What's included:

The reproduction rights refers generally  to digital media while  reprint rights  refers to  printed products.    You are buying the right to sell, duplicate and  distribute the product.    This type of license has  much more value than a standard  Resale Rights  License because  you  get a set of master copies.   This enables you to print and duplicate the master copies as  orders  come in.

Obviously it makes sense to keep a few copies ready to ship as sales are made but  when you run low,  just a get a few more copies printed.      Whether it's a manual,  multimedia on  USB or  software on disk, you  control the  whole  duplication process of physical information products.

You  will need to create your own marketing materials and  you  might get marketing graphics and copy as part of the license.    If not, ask if any are available and negotiate for those to be included.

Before you buy any license, it's important to establish demand first and know how you're going to sell it.   Who else is selling a similar product and what are they charging?   Ideally,  you've got  your own list of clients you know  the product would be a perfect fit for but if not, do your research first.

If you've licensed a digital product; for example  an online or downloadable course, software or website  then obviously there aren't any duplication costs other then possible  storage media for the digital product.   Apart from marketing costs, it's all profit but again, do your research.    You don't want to spend a lot of money on a license only to find you can't sell the product afterwards.

Lets look at an example:

Of  course marketing costs have to be deducted  from the net profit figure but you can see  the potential profit is very good!

Now  consider if the master reproduction/reprint  license allowed you to create PDFs from the manuals and upload all the digital content to a  password protected website.      Once clients had paid, they would be given access to the system where they could print their own documents if they wish and view the videos and download the app.  

Apart from the initial license fee and password protected website, it's all profit  because there aren't any distribution costs.

Once your license  is covered by the profit from sales, you only have to allow for reprint costs  if it's a physical product.   If it's digital and accessed online, you  only have to allow for the online set up plus marketing costs.

The process is very simple:

Here is another example.   Although the sales figures have  doubled, they are still modest if you are marketing nationally or even internationally.    The product has also been digitised for automatic product delivery.

Of course these are only fictitious examples but it does demonstrate the power of licensing information products and how they can add significant income streams to your business.

(3) Master Rights License

A Master License is the most useful and sought-after type of license but it's also the most expensive.   That's because you can sell the product reproduction and reprint rights (License 2) to others.     In other words you are giving your clients the  opportunity to reproduce the  product and sell it to their clients.

Of course, selling product  reproduction rights is more expense than just buying the product for personal use.  This  means selling reproduction/reprint licenses from a Master License can be very profitable.

What's Included:

You can still sell and duplicate the product if you want to but the whole idea of a Master License is to sell those rights to others.   You should get a return on your investment and make good money from your Master License very quickly once you start selling the reproduction/reprint rights for the product.  

In effect, you are giving others the opportunity to generate a good income by selling the  reproduction / reprint rights so they can sell the same product to their clients.    They are doing all the work of selling and duplicating while you make good  money from selling the licenses.

Working with the previous example but selling reproduction/reprint  licenses:

Obviously you can play with the figures but a Master License can be very profitable and all your profits are achieved without any duplication work.

In this example, after selling  just two reproduction/reprint licenses you have covered your initial investment for the Master License, after that it's all profit.   Remember, you  can still  sell the  product yourself so you make money both ways.

(4) Private Label Rights License (PLR)

The last type is a Private Label Rights License which simply means you can white label the product by putting your own name, business and contact details on it.    You  can also remove any  links  or other information  that might relate to the  product creator.

A PLR License also gives you the right to edit the sales page, graphics and content.   This enables you to totally personalise the product and add your own contact details.   While the advantage of  a Master License is to sell the reproduction/reprint rights, you can't edit the product or put your name on it.

By re-branding a product with a PLR License you have the advantage of setting it  apart and making it different  from others who have bought the same product.   Check within the terms of the license but you can  usually  change the  name of the product  too.

It's a great license to have to make the product unique and claim it as yours.   However there are a lot of poor quality PLR products out there so make sure what you are being offered meets your needs and justifies the price being asked.

All licenses should stipulate what you can and can't do with the product but in most cases you can't change the existing product format.   However,  a PLR License usually gives you the right to change the format e.g. text to audio and  use the product, part or whole for any means without restriction.  

For example:

Always read the small print of your license agreement to be absolutely clear about what you are and aren't allowed to do with the product.

License  you own products

Finally  instead of  just licensing products from  others,  it's worth  considering creating and licensing your own products from your  knowledge and  expertise.

If you have knowledge that will help people  save  time, make money or solves a specific problem then why not develop that into a product and  license it out  for  others to sell.    You  generate income from direct sales and from license fees.    

Unless it's a PLR product, you also get free marketing because as the  product creator your name and contact details will be  on all the products sold by your licensees.    This gets your name out to a far bigger audience than you  could ever reach by yourself!

Conclusion:

Obtaining an information product license can be a very good way to create additional income.    All you have to do is focus on sales and duplication when needed.    If it's a digital product you  don't even need to do that.    Once set up it's hands free.

The only disadvantage is that it will probably have the product creator's name and contact details on it.   However,  you can leverage their credability especially if they are well known in their field which will help sales.    Also,  licensing someone else's product doesn't stop you from building a list of buyers  you can sell your own products to later on.

All products ready for licensing can have a free listing on this website. If you need any help with getting your product ready for licensing and marketing it, please don't hesitate to get in touch using our contact page.