Already a Bloomberg.com user?
Sign in with the same account.
(Corrects perfume release to September, not 2013.)
Isaac Larian, who founded MGA Entertainment, the company responsible for the hyper-sexy Bratz dolls, knows a thing or two about marketing and controversy and image-making. So does pop music star Lady Gaga. A line of Bratz dolls in her image must have seemed so promising. Instead, the dolls are in limbo, and the once-happy relationship has turned adversarial. MGA is suing Lady Gaga and her representatives for more than $10 million for failing to approve the dolls it had designed for release this summer.
Representatives for Lady Gaga and her merchandising company, Bravado (a division of Vivendi’s (VIVHY) Universal Music Group) call the lawsuit ill-conceived and meritless. “Lady Gaga is confident she will prevail,” her publicist, Amanda Silverman, wrote in an e-mail. Oliver Herzfeld, the chief legal officer at Beanstalk, a business that brokers these types of deals, says that such public disputes are rare. He also says that Lady Gaga’s contract should have given her almost all the power. “It’s not a partnership. Her brand is very valuable,” Herzfeld says. “There should be a lot of safeguards. It should be lopsided.”
According to the lawsuit, which was filed in New York State Supreme Court on July 24, Bravado approached MGA at the end of 2011 about creating a line of Lady Gaga dolls, some of which would include sound chips that would play her music. MGA’s suit says the company regarded this as a “once-in-a-lifetime opportunity” and agreed to “advance a whopping $1 million to Bravado,” the most it says it ever paid a licenser. MGA also promised to pay a royalty rate of 15 percent of the wholesale prices to Bravado. MGA estimated that it could sell $28 million worth of Lady Gaga dolls in the fall.
About a third of the way through the 32-page complaint, the reading gets fun.
In March, Bobby Campbell, vice president of the Atom Factory, Lady Gaga’s management company, supposedly reviewed samples of the dolls and sent a note to MGA with some feedback. He said that Lady Gaga loved the dolls but wanted to make a few changes. “Facial structure should be more supermodel-like—think a prettier version of Gaga,” he wrote. Also: “Let’s discuss how the removable heads will work.” He sent another note about the outfits they wanted to move forward with or explore; among them were the Born This Way zombie outfit and the Monster Ball fire bra and panties.
A month later, with no further word from Lady Gaga’s team, Larian contends that he sent a note to Campbell and Tom Bennett, Bravado’s chief executive. “Guys! This is getting ridiculous and beyond unreasonable. At least we need to pick up the samples today so we can show buyers. We have paid $1 million for these rights. Please respond.” Bennett did respond this time, writing, “Please be patient. … We love you, we love your company, we love the product. … Believe in us as we believe in you.”
But apparently Lady Gaga had other ideas. On April 23, Bennett supposedly called Larian to tell him that she wanted to delay production and shipping until her new album was released in 2013. “It makes more sense to do this when she’s able to approve a doll that she’s happy with and able to support with promotion,” wrote Troy Carter, the chief executive of Atom Factory, to Larian in early June. Larian said that MGA would lose credibility with retailers if the dolls weren’t available when he had promised. Then he filed the lawsuit.
Meanwhile, Lady Gaga kicked off her Born This Way Ball in late April in Seoul and will end her world tour in Cape Town in December. Her perfume, Fame, is still scheduled for release in September.