Union Pacific's cut!!

[IRONROOSTER]

QUOTE: Originally posted by dehusman

If anybody will bother to take the time to read the policy (which is available on the UP web site), they will see that there are 2 methods the model compaines can use to pay for the license.

One is a flat 3% on the WHOLESALE price of the UP marked models. So if you have a $100 retail engine that sells wholesale for $50, then the fee is $1.50. So the fee on a $100 retail engine is $1.50, not $5.00.

The other is for the manufacturer to pay 1/2 % of all sales. So that means the manufacturer can choose to pay 1/2 % on all the $50 wholesale engines ($100 retail) or $.25 (yes, 25 cents) on every engine of every roadname produced.

Dave H.

Glad somebody found the pricing info (its on the application), I didn't find it the first time around. Option 2 is not quite what your example says. "An annual fee of .5 percent (one half of one percent) of total licensee gross sales of all model railroad products will be paid to Union Pacific" This means not only 25 cents for every $50 engine, but also 25 cents for every $50 worth of track, buildings or whatever else the manufacturer makes and sells.

To quote the application again "Option 2 is based on the assumption that Union Pacific-branded merchandise comprises roughly 20 percent of average industry sales;
licensee applicants whose Union Pacific-branded inventory comprises less than 20 percent may want to consider selecting Option 1." I suspect most Manufacturers won't be selling 20% of UP branded stuff (not clear, but appears this will include the other logos also) across all their products and will go with Option 1. BTW they want it up front and not less than $100. (kinda of tough on the small guys)

Also, if the manufacturer adds it to the wholesale price, that price becomes $51.50 wholesale and $103 retail for 100% markup. That makes the fee to the consumer $3.00 on the $100 engine and $7.50 on the $250 engine (that rda1964 mentioned).

Plus, if the manufacturer wants something for his time (or his employee's time) to deal with this, plus something for having his capital (or a loan) tied up in the advance payment, he may (probably will) add another percent (or more) to the wholesale price which of course doubles for the retail. So now we're talking $4.00 added to the $100 loco (or more) and $10 (or more) on the $250 loco.

But it gets worse. When you buy that loco at your favorite hobby shop you pay sales tax in most states. If your sales tax is 5% (and many are higher) that 's another 20 cents on the $4.00. So you pay an extra $4.20 on that $100 loco and $10.50 on that $250 loco.

So here we are paying 4-5% more for that $100 loco. It may be pennies to UP, but it's dollars to us.
Glumly
Paul

[Anonymous]

QUOTE: Originally posted by cow_pi2003

this is insane! why does union pacific have to charge extra money? my layout is already advertising for them.

This is a misconception.

"Advertising" is designed reach a large number of potential customers and attract them to one's business.

Your layout, no matter how many visitors you have, is not attracting customers to ship their goods by Union Pacific.

Therefore, you are not "advertising" for them.

[Anonymous]

QUOTE: Originally posted by deschane

What's amazing to me is how people like ACL Fan can come across like their opinion is god's word! Or, Archie2 feels that this discussion is a "waste of band Width"! Both of you need to get off your high horses!!

Sorry if you don't like the it, but the legal reality is, UP has the legal right to enforce their copyright.

And the beauty of this forum is--I can sit on a high horse if I wish.

[Anonymous]

this is insane! why does union pacific have to charge extra money? my layout is already advertising for them.

[Anonymous]

What's amazing to me is how people like ACL Fan can come across like their opinion is god's word! Or, Archie2 feels that this discussion is a "waste of band Width"! Both of you need to get off your high horses!!

Some of the roads now owned by Union Pacific are: Southern Pacific, Western Pacific, D&RGW, C&NW, MKT, Cotton Belt, Mo Pac, C&EI, T&P Alton and Southern and the American Refrigerator transit Co.

[Anonymous]

Just a question, I don't model the UP, but there are lots of other railroads I'd like to feature in my layout, so... what railroads have been mercilessly devoured by the UP?

[Anonymous]

QUOTE: Originally posted by ShaunCN

Union Pacific has gone too far!!!! I will never buy a Union Pacific model again. Lets just hope that the other railroads don't follow Union Pacific and make us pay extra. Good thing I model Canadian National, I feel sorry for all of those Union Pacific modelers.

ShaunCN

I don't think UP cares if you never buy another of their models.

I will say this again, for those who missed it before:

UP is in the business of making money by transporting goods.

Manufacturers who use the UP logo make money for their company by using UP's property (logo, colors, etc.).

UP is well within its rights to ask for a cut of the money someone else is making from their copyrighted property.

"Flattery" or the supposed "advertising value" of people running models of their trains is pointless. No one is going to look at your model of a UP loco and say, "Hey! I think I'll ship my next load by UP!"

As for the issue of greed, you're spending $75 on a P2K locomotive, but you'd be unwilling to buy it if it cost 5% more? So you'd stop modeling Union Pacific if that engine cost $78.50 instead? How about a $10 boxcar. It would run you a whopping $10.50.

Relax, folks. Go back to the Athearn Is Discontinuing Blue Boxes!!!!!! thread.

Model Railroaders sure like to complain.

[Jetrock]

QUOTE: Originally posted by bcammack

UP will discover that they are spending dollars chasing dimes. That and the cost in "intangibles" like public goodwill make this a money-losing proposition.

This is an excellent way to put it, and the ratio is about right--from what I've heard, they will end up spending about $3 million a year in their effort to prevent unlicensed reproductions of the Southern Pacific logo, and stand to make, maybe, about $300,000 in licensing fees.

I wonder--do railroad museums owning engines with UP-absorbed logos have to pay too? That could get ugly at places like the CSRM, which owns plenty of CP, SP, UP, WP, SN and other UP-affiliated restored equipment...wouldn't it be a crime to have to repaint the one existing SP cab-forward on the planet with a fake roadname just to satisfy some corporate greedhead's desire for control?

[Anonymous]

It is a question of how far a company can take this sort of thing. Will Boeing want a cut of all the B-17 models sold? Will GM ask for a percentage of any Camaro model bought by a youthful enthusiast?

We are trying to promote a hobby that has to compete with video games, electronic toys, etc.
Why should we be hamstrung by a large company that
was, up until now, getting all the free advertising and exposure that anyone could ever ask for?

I think model train manufacturers should simply delete any reference to Union Pacific on all model train and hobby products. A hobbyist could then decide if he wants to pay extra simply to satisfy corporate greed. Personally, I DO NOT!!

[bcammack]

UP will discover that they are spending dollars chasing dimes. That and the cost in "intangibles" like public goodwill make this a money-losing proposition.

It is one thing to charge a sum of money for the right to reproduce the likeness of a logo on a product to formalize the relationship and quite another to demand "a piece of the action". That's greed and it is stupid greed considering the fact that people that model the UP have a positive emotional attachment to the railroad and act as goodwill ambassadors for them, gratis. It is a quid pro quo that has served all parties in good stead for decades.

Is it their "right" to do what they wish with their logo? You bet. But you can win a battle an lose a war that way.

Regards,
Brett C. Cammack
League City, TX

[Anonymous]

I cannot believe how much bandwith has been taken up over this, both here and on other forums. It's obvious that few of you are really interested in the facts or have taken time to look into them. Once again emotion trumps reason on the Internet. Sad.

John

[lupo]

asking 3 - 5% is tooooooo much, but if they want that and give me a garantee then that the model you buy is 100% UP prototypical, like they use the right color yellow maybe It is not that bad,
(I order much of my locs and UP stuf throug the internet and sometimes what you see is NOT what you get thus not what you want)

[ShaunCN]

Union Pacific has gone too far!!!! I will never buy a Union Pacific model again. Lets just hope that the other railroads don't follow Union Pacific and make us pay extra. Good thing I model Canadian National, I feel sorry for all of those Union Pacific modelers.

ShaunCN

[Anonymous]

Again, why has this issue just arisen, after 100 years of what appears to have been a
symbiotic relationship between the railroad and the model railroad industry and its’
customers?

[dharmon]

As the owners of the logo(s), unless a court decree or prior existing agreement exist that says they can't, they can do pretty much whatever they want to with them. I don't think the model lobby is strong enough to win over UP. So, I see three choices...if you model UP or one of its victims....1) you can suck it up and pay the extra cost.. whatever that turns out to be, 2) you can get good at making your own decals, or 3) don't buy it.. Model companies are in business too. If demand for UP stuff declines then they will make less of it and therefore less will go to UP..I don't model UP specifically, so I can do without a few more UP cars..........I suspect that this cost however will get spread across the cost of the line to minimize impact on buyers, so we will all be paying a share to UP.

keeping the edit feature alive, kause thiss morning mi spllng snot two gud

[Anonymous]

If it only adds about $8.00 to the loco, I really don't care as long as they still make them.

[dehusman]

If anybody will bother to take the time to read the policy (which is available on the UP web site), they will see that there are 2 methods the model compaines can use to pay for the license.

One is a flat 3% on the WHOLESALE price of the UP marked models. So if you have a $100 retail engine that sells wholesale for $50, then the fee is $1.50. So the fee on a $100 retail engine is $1.50, not $5.00.

The other is for the manufacturer to pay 1/2 % of all sales. So that means the manufacturer can choose to pay 1/2 % on all the $50 wholesale engines ($100 retail) or $.25 (yes, 25 cents) on every engine of every roadname produced.

The place where the fee will be highest is the low end items where the wholesale and retail prices are closest or where the person does a lot of direct to consumer sales. In that case the fee on a $3.00 set of decals would be 9 cents.

The $5.00 figure that keeps popping up is the "estimate" that people keep throwing out is either bad math, the manufacturer adding an additional 2-4.5% themselves for bookkeeping or an uninformed number to scare people.

Whether or not I agree or disagree with the policy, I at least would like people to get the math straight.

Dave H.

[IRONROOSTER]

QUOTE: Originally posted by rda1964


The counter-argument is that its the UPs logos and they are unquesionably able to charge for commercial usage of their property. Individual users, ie modelers, do not have to secure a license to paint the side of a car or station. Commercial sellers of UP copyright logo and emblems are required to secure a license, which will run a few percent of the retail revenue generated.

All this strikes me as a lot of handringing and whining over an obvious nonissue. If you can afford $250 RTR diesel locomotives and $20 cookie-cutter box cars you can afford the extra dime on a $3. set of decals.

Randy

Ah, but they don't want a dime, they want 3-5% (I've heard both quoted), which is $7.50+ on your loco. They also want it for every railroad they acquired directly or indirectly. While they have a right to their UP logos (there may be an issue of whether the AAR granted a blanket license to model makers some years ago) it probably is a little shorted sighted to use a heavy handed approach in this case. Philosophically, I would think that for the fallen flags whose logos the UP does not use (and never has), there is no public interest in granting them exclusive rights. We the people (through Congress) grant these intellectual property rights to benefit the common good. I would argue that there is no common good served here.
Enjoy
Paul

[Anonymous]

Sheesh, see if I buy a UP item. If every railroad gets a cut of the monies from licensing the logos etc fine. But making us pay extra? I dont think so.

The UP is a fine railroad. And certianly one of many things that keep this great country going... But they dont need to worry about publicity when there are plenty of models being bought, built, sold and traded.

[Anonymous]

The counter-argument is that its the UPs logos and they are unquesionably able to charge for commercial usage of their property. Individual users, ie modelers, do not have to secure a license to paint the side of a car or station. Commercial sellers of UP copyright logo and emblems are required to secure a license, which will run a few percent of the retail revenue generated.

All this strikes me as a lot of handringing and whining over an obvious nonissue. If you can afford $250 RTR diesel locomotives and $20 cookie-cutter box cars you can afford the extra dime on a $3. set of decals.

Randy

[Anonymous]

WOW, As announced yesterday on CBS news by Dan Rather, Union Pacific is thinking they should receive a commission on the use/sale of their name, color scheme and the names and color schemes of their merger partners on all model railroad/toy train pieces of equipment!

This means an additional cost would be added by the manufacture to
every item they sell which has Union Pacific and all U.P. merger partners. This includes to my limited knowledge; Union Pacific, Southern Pacific, Cotton belt, C&NW, D&RGW, Western Pacific, etc., etc.

Are you O.K. with this?

Personally, I feel you should receive something, when you pay
for something. What will you get by paying a commission to U.P.? If anything, U.P. should be flattered by the fact people build models of their RR. These modelers are advertising for the Union Pacific and probably should be receiving a commission for their hard work! Also, if the use of their (U.P.’s) name by model railroaders has been a sore point, why has it taken 100 years of model railroading for them to make this an issue? Why didn’t the U.P. folks back in the classic toy train era feel they deserved a commission?

This idea is extremely ill conceived and (I feel) very bad publicity for the UNION
PACIFIC!