Brand Licensing: Capitalism’s ‘Necromancy’ or ‘Taxidermy’?

In a recent LinkedIn post, Lee McCabe offers a sharp critique of brand licensing, likening the practice to “capitalism’s version of necromancy.” McCabe argues that the model, while financially attractive, often prioritizes short-term profit over genuine brand vitality, leading to the exploitation of consumer memory rather than the revival of beloved names.

McCabe’s post begins with a provocative assertion:

Brand licensing is capitalism’s version of necromancy. Reviving dead brands for one last round of commercial exploitation.

The core of McCabe’s argument centers on the mechanics of brand licensing deals. As the author explains, licensing groups typically acquire only the intellectual property – the name, trademarks, and logos – of defunct or struggling brands, devoid of their original operational assets, product capabilities, or even physical presence. This “shell” is then licensed to various manufacturers who pay royalties to affix the brand’s logo onto their own products.

The Cynical Mechanics of Brand Licensing

McCabe details how this model manifests across the retail landscape, citing examples like Juicy Couture perfume sold at discount retailers long after its trend-driven heyday, Nautica bedding and luggage appearing far removed from its maritime origins, and Aéropostale T-shirts continuing to be sold internationally by licensees. The former prestige of Barneys New York is now reduced to a private label, while Brooks Brothers offers “athleisure” lines that would be unrecognizable to its founders. Even the iconic Toys R Us brand exists as little more than a logo in airport pop-ups.

According to McCabe, consumers are aware of this dilution. “Consumers aren’t stupid. They know the difference between a brand and its corpse. But at $19.99, they’ll buy the corpse anyway,” he writes, highlighting the transactional nature of these purchases.

Monetizing Memory Over Meaning

The fundamental issue, as McCabe sees it, is that these brands are not being genuinely revived but rather “flogged.” Each licensing deal, in his view, extracts the remaining equity, diluting the brand’s original meaning in pursuit of immediate margin. This process transforms the brand name into a “husk,” traded until its value is depleted.

These brands will never come back. Because they’re not being rebuilt, they’re being flogged. Each licensing deal extracts the last drops of equity, diluting meaning in exchange for margin.

McCabe further elaborates on the growth imperative for licensing companies. Once scaled, their growth strategy relies on acquiring more distressed brands, creating a cycle that feeds on corporate collapse. “Each new acquisition plugs the revenue hole left by the last brand’s exhaustion,” he notes, contrasting this with genuine brand building.

Metrics of Decline: Royalty Yield Over Relevance

In this industry, McCabe argues, success is redefined not by brand vitality or cultural relevance, but by financial metrics like “royalty yield” and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). This financial focus is particularly appealing to private equity firms, who are drawn to the “asset-light” nature of these deals, which offer high multiples with minimal capital expenditure or inventory risk.

In this world, success isn’t measured by brand vitality, it’s measured by royalty yield. EBITDA replaces relevance as the key metric.

McCabe concludes by differentiating true brand revival from the practices of brand licensing. While licensing firms may claim to be “reviving” brands, McCabe asserts that genuine revival requires “creative conviction, product innovation, and consumer connection” – elements absent in the licensing model. Instead, he posits:

Licensing firms will say they’re “reviving” beloved brands. But revival takes creative conviction, product innovation, and consumer connection. Licensing takes none of those things. It just monetizes memory. This is not brand management. It’s brand taxidermy. Beautifully preserved, entirely lifeless.

McCabe’s analysis paints a stark picture of a business model that capitalizes on nostalgia, ultimately leading to the slow death of once-iconic brands.