Why Do Japanese-Owned Publishers Still Have To Pay For Licenses?

by Justin Sevakis,

Mason asked:

There's something that I've been curious about for a while. Why do manga companies, like Kodansha USA or Viz, still have to pay licensing fees to companies like Kodansha or Shueisha when they're pretty much owned by them already; they pretty much ARE them. It seems counter-intuitive to me.

Counter-intuitive, yes, but there are good reasons why this is the case. Those American publishers, while being owned partially or entirely by their Japanese overlords, are legally separate companies, and North America is a separate legal territory. Whenever a manga or a book or an anime gets sold to another company for distribution in a foreign land, several people, and usually several different companies, need to get paid. When they get paid, they get a percentage or an amount based on, whatever the license fee was. These people include the author and their agent or estate for manga. For anime, we can also add every other company on the Production Committee, the head writer (series composition), some voice actors, and often music composers and publishers.

The licensor -- whichever member of the production committee it is that sold the rights to the foreign publisher -- has an obligation to the other shareholders to get a fair price for the sale. Sure, they might give a sweetheart deal to a "sister" company, but they can't just give it away for free, because those rights are valuable.

Things are different in the case of Aniplex USA or PONYCAN. Discs released by those companies are thought of as extensions of the Japanese publishing, and so an arrangement for distribution in North America is considered ahead of time. The production committee isn't expecting to get a big license fee for North America; it's expecting that Aniplex or Pony Canyon will distribute the title there, themselves, and that they'll get paid based on how well the title does. But those are rare cases, and most production committees don't like them very much. They'd much rather have the cash up-front.

All of those people and organizations have an interest in making sure they get their money, and some of them are powerful enough to nix a deal if they don't like what's happening. If their original publisher decided, "eh, forget all that money changing hands. I'm just gonna give the rights to my US division for nothing," they would be pretty unhappy. In fact, it would be a breach of many of the underlying contracts that produced the work in the first place.

So that's why, even when a publisher in the US is owned by the Japanese, they still have to pay for the rights to publish something from their parent company. They may be the only company that has access to the property, but it is certainly not something they can get for free.

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Justin Sevakis has worked in the anime business for nearly 20 years. He's the founder of Anime News Network, and owner of the video production company MediaOCD. You can follow him on Twitter at @worldofcrap.

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