Hey everyone,
I know a lot of you have questions about “Life after G8″ (the Live Product Search “Success” stage). Unfortunately, there is no standard answer. Every sponsor/licensee and every product is different. But I can offer some insight into what happens “after G8″ so that you will have a better understanding of the process. Some of this information has been posted before in the forums, but I believe it is valuable to continue to communicate with you the realities of commercializing your products.

There is one thought that all of us here at Edison Nation want to make sure is understood throughout our community – everyone at Edison Nation is working on your behalf. Edison Nation makes money on your licensed product only if you make money on your licensed product. Search and submission fees do not cover the costs of reviewing, presenting and licensing the products. Gold Membership subscription fees do not cover the costs of developing, maintaining, upgrading and running EdisonNation.com. It is always in Edison Nation’s best interest to do everything we can to license a product and to encourage the licensee to merchandise the product as quickly and effectively as possible. That is the only way the submitter of the licensed product or Edison Nation makes money.

First, once a Live Product Search or an As Seen On TV Search closes, there is typically a 30 to 60 day period during which we continue to review all submissions and prepare, schedule and make the presentation of the “best” submissions to the sponsor. There are two factors, each with potentially long lead times, that dictate this time frame: (1) the total number of submissions and time it takes to review each one (multiple times by multiple people); and (2) the schedules of those individuals who the sponsor chooses to view the presentation and choose the products they will consider for licensing. This group of individuals can be as few as two and as many as twelve – the bigger the group, the further out the date of the presentation.

Let’s assume that the Live Product or ASOTV search to which you submitted has closed, and your submission has been chosen to be presented to a sponsor (I will use the term “sponsor” to refer to both the actual sponsor of an LPS and the various ASOTV partners to whom we present ASOTV search submissions.) Congratulations – you have advanced to G7! At that point, under the terms of the Innovator Agreement which you signed electronically when you submitted your product to the search, Edison Nation has six months in which to exercise its option for your product. There are many activities that occur during that six months period, some on the Edison Nation side and some on the sponsor side.

Your submission is typically one of 40 to 80 submissions that are presented. From that group, the sponsor typically chooses five to ten products on which to perform in depth due diligence – market research, competing products survey, potential manufacturing sources and costs, etc. Our agreement with the sponsors allows them 45 days in which to conduct this due diligence. However, if the sponsor is still undecided at the end of those 45 days, we believe that it is in everyone’s best interest to allow a reasonable amount of additional time in order to maximize the possibility of a license. By this time, perhaps as few as three but more likely four months have passed from the time your product advanced to G7.

Now let’s assume that your product is one that the sponsor licenses. The next step is to negotiate the licensing agreement. While general licensing terms are discussed when a company agrees to sponsor a search, an agreement for a specific product cannot be negotiated until this point in time. Many factors – price point, cost, potential market, promotion and media budgets, etc. – impact the deal points, such as the minimums (a minimum number of royalty dollars the sponsor/licensee must pay to Edison Nation to maintain their exclusive license) and the formula by which these royalties will be computed and paid by the sponsor for your product. Depending on the amount of time the respective lawyers have on their hands, these agreements can and often do take several weeks to be completed. As some of you have already experienced, we may occasionally request an extension from you of the six month period so that these negotiations can be finalized.

In order to facilitate the licensing of your product, Edison Nation may spend a considerable amount of money to illustrate or improve the product’s design, produce prototypes and samples, file for intellectual property protection, develop the creative identity of the product (name, logo, and packaging), etc.

Once the licensing agreement for a product submitted to a Live Product Search is signed, the licensee pays a “success fee” (an advance on Edison Nations’ future royalties, if any, from the licensee) of typically $5,000, of which you get 50% as an advance on your future royalties, if any. Typically, the licensing agreements for products that are submitted to Live Product Searches grant the licensee 18 months to develop and market your product and generate royalties to Edison Nation and thus, to you. The licensing agreements for products that were submitted to As Seen on TV searches have considerably shorter deadlines (which are negotiated on a case-by-case basis) in which the licensee must generate royalties. In either case, the licensing agreement always contains a minimum amount of royalties that must be paid by the licensee to Edison Nation once this initial deadline is reached. If the licensee does not meet the initial deadline for generating royalties, or pay the minimum amount of royalties after the initial timeframe, it loses its exclusive license and Edison Nation may license the product to one or more additional companies.

The execution of the licensing agreement is merely the beginning of a long and exciting journey that will inevitably present many additional obstacles to the ultimate commercial success of your product. In inventing, as in life, there are going to be disappointments. There are many things that could happen or not happen that could slow down or entirely halt the process of commercializing your product. In fact, there have been a few products which Edison Nation has licensed to sponsors which have not been commercialized by the licensee. Undoubtedly, this will happen again in the future.

Some of the more common but by no means all of the reasons that a licensed product can be delayed or never make it to market are:

• adverse changes in the state of the economy as a whole;
• adverse changes in the financial condition of the licensee;
• poor market test results;
• changes in the strategic direction of the licensee;
• personnel changes by the licensee – perhaps the buyer who chose the product is no longer involved and the new buyer wants to go in another direction;
• unexpected negative results from licensee’s market research;
• necessary changes in design, materials, etc.;
• unforeseen manufacturing issues;
• environmental or other regulatory concerns;
• higher-than-expected manufacturing costs; and/or,
• any one or more of many other potential obstacles.

Once the license agreement is executed, Edison Nation has little control over the licensee’s development process or ultimate commercialization activities unless the licensee fails to meet either its deadlines or minimums, as outlined above. We can – and do – support, cajole, encourage, etc., the licensee, but that is all we can do.

Each time a product is chosen for licensing, the submitter receives a letter which contains much of the information contained in this post. Edison Nation then communicates with the submitter periodically on the status of the licensee’s development and commercialization activities for their product. The timing and quality of the update is entirely based on the timing and quality of the information we receive from the licensee. As you can imagine, some licensee’s are eager to share and some will not share any information. Again, once the licensing agreement is executed, Edison Nation has no control over the flow of information unless the deadlines or minimums are missed.

Despite all these hurdles, there have been and will continue to be successes. Currently, two Edison Nation products – Emery Cat (from Season Two of Everyday Edisons) and Mister Steamy (from Season Three of Everyday Edisons) – are phenomenally successful As Seen On TV products and can be found in almost any specialty and “big box” retailer (Wal-Mart, Target, Walgreens, CVS, etc.). Pressix, from Season One of Everyday Edisons, is now in Cuisinart, Kitchen Aid, Home Zone, Walmart, Test Rite and Simple Human branded garbage cans. The Murtagh hoe, also from Season One of Everyday Edisons, will soon be a part of the Kobalt tool line in Lowe’s Home Improvement Stores. Total Wrench (also from Season Three of Everyday Edisons) will soon be sold in Home Depot stores. These are but a few of the advances we have made, and we are confident there will be many more to come.

I’m sure you’ve noticed that our largest successes to-date stem from seasons of Everyday Edisons. That’s simply because we’ve been working on them the longest and it takes time to bring a product to market and turn it into a breakout hit. The Live Product Search successes are just around the corner from their time to shine!

We cannot stress enough how important you, the inventors, are to Edison Nation. You are the lifeblood of the community and without you, we would not exist. And the only way we will succeed is for your products to succeed. Please know that the entire Edison Nation team is always advocating on your behalf to ensure that your product becomes a profitable reality. So please be patient, remain positive and maintain your resilience – and your sense of humor!

Happy Inventing!

Kelly