Negotiation Techniques: 5 Types of Deals, Part 2
Andy J - Music Business
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Now that you have some basic negotiation savvy, it is time to become familiar with some of the standard types of deals used when negotiating performance dates. I also suggest the various situations for which each deal is best suited. Keep in mind, however, that every negotiation can be as creative as the individuals participating. If the following standard deals require some tweaking to suit a particular situation, feel free to explore all of your options. Most booking personnel with whom you shall be negotiating are familiar with these standard deals and may be more comfortable using one of them to finalize your negotiations.
Five Standard Types of Deals
- Straight Percentage
- Straight Guarantee
- Guarantee Plus Percentage
- Guarantee Versus Percentage
- Guarantee Plus Bonus
Straight Percentage. A straight percentage is a percentage of the ticket sales or the income taken at the door. The key to this negotiation is to come up with the appropriate percentage. This deal is often offered when a performer is not known in a market and the promoter is not willing to risk any up front money or guarantee. Percentages can range from 100% of the door on down. Typical percentage splits are 65-70 percent to the artist and 35-30 percent to the venue. When negotiating this type of deal, it is important to build your value in the marketplace in order to get the promoter to agree to the highest percentage rate possible. Then, it is up to you to see that the show is well promoted and get a good audience. With the promoter having very little at risk, it is unlikely they will put much effort into promoting this date. It would be advisable to get some idea of the promotion the promoter is willing to do and include that in your contrac
- This deal can be very advantageous to a performer under certain circumstances. When an artist has a very strong following in an area with a loyal fan base and large mailing list, a straight percentage, especially a high percentage, can often net the artist a higher fee than some of the other deals we'll discuss. Artists who produce their own shows at local venues and are savvy self-promoters with good media connections, are perfectly suited for a straight percentage deal. Quite often, most guarantees that club owners offer are far lower than the amount an artist can net with a straight percentage under the above circumstance.
However, if you are unknown to a market, a straight percentage may not be a good deal. The promoter may be very interested in using a straight percentage to reduce the risk to the venue. When touring to unknown markets, make every effort to negotiate some guarantee to cover basic expenses. At least you know the venue is risking something on your behalf. They might actually make some efforts to promote the date so they recoup their minor investment.
A Straight Guarantee
A straight guarantee requires the promoter to offer the artist some money. As a new performer to the venue, that amount may be very low—$50 or $100 is not unheard of. A straight guarantee assures you of some income when building audiences in new markets. Some artists, who have reached a certain level in their careers, can ask for much large guarantees and are quite satisfied with the straight guarantee. The key to these negotiations is coming up with the guarantee that works for both parties' budgets.
As you being to draw larger audiences and perform in venues with greater seating capacities, it is important to determine whether a straight guarantee will be adequate compensation. Now you must consider the seating capacity, ticket pricing, the venue's budget and weigh that against the guarantee you are discussing. When all the figures begin to show a profit far outweighing your guarantee, it may be time to begin incorporating some split percentage deals above the straight guarantee.
Guarantee Plus Percentage
This deal is determined after considering the seating capacity, ticket prices, gross income potential, expenses, (including artist guarantee) and the acts' draw potential. After all the figures are calculated, you will be able to determine the amount, if any, remaining after all expenses. At that point you may negotiate a percentage of the overage, (the amount left over after expenses), to be split with the promoter. Again, standard percentage splits range between 65-70 percent to the artist and 35-30 percent to the venue, but anything is possible. The greater the demand for the artist, the more the act is better able to command larger guarantees and percentages. The percentage of the overage will then be added to the artist's guarantee to make up the complete fee to the artist.
You may begin to see how this deal can be advantageous to an artist who has a large draw. This deal is win-win for both parties, rewarding the artist and the venue for each of their efforts in making the date successful.
Guarantee Versus Percentage
In this case a guarantee is set and then a percentage is determined. The artist receives whichever amount is greater. Again, ticket price, capacity and gross potential need to be calculated. In this deal, if the ticket price is $10 and the seating capacity is 150, the total gross income potential is $1500. Perhaps you agreed that the guarantee is $500 and the percentage is 75% of the gross sales. In this case 75% of gross sales is greater than the $500 guarantee. The artist would get the 75% or $1125.
If, however the deal is 75% of the net after expenses, (in this case all the expenses, including artist's guarantee, equals $1000), then 75% of the net is only $375. The artist would get the greater amount, the guarantee of $500.
The key to this deal is whether it is a percentage of the gross or the net. Always "try" to make this deal based on the gross. Most bookers will want to make it based on the net. Do the math for each deal to determine how the numbers will eventually work. Always have a calculator by your phone when negotiating. Once you determine this deal is not producing the numbers you would like to see, suggest a guarantee plus a percentage especially when the promoter insists on a percentage of the net (after expenses). The percentage of the split will most likely be lowered from 75% in this case.
Guarantee Plus A Bonus
Numerous promoters like this deal because it is easy accounting. By using a guarantee plus a bonus, the artist is rewarded with bonus amounts above the guarantee based upon blocks of tickets sold or income.
For example, a venue has 300 seats and the ticket price is $10 equaling a gross potential of $3000. The venue's expenses are $1000. The artist's guarantee is $1000. This suggests that the artist's guarantee be based on 100 seats sold. Bonus amounts are determined by calculating the overage, ($1000) and the number of seats remaining to be sold above 100, (200 seats remaining). Most often the number of seats is divided into blocks, in this case four blocks of 50 seats. As each block of 50 seats is sold, the artist will receive an additional amount of money, in this case, $200 for each block. This deal would then add $200 at 150 sold, 200 seats sold, 250 seats sold and 300 seats sold. If the show sold out at 300 seats, the artist fee would be $1000 guarantee plus $800 in bonuses for a total fee of $1800. This left $200 for the promoter. It is more likely the bonus amounts may be lower to give the promoter a larger percentage of the overage, perhaps $150 or$175. It is also possible that a single bonus amount is offered after a predetermined number of seats are sold.
The benefit of this deal is that is easy to calculate. The problem is, no bonus is given for partial block sales such as 120 seats instead of 150. In that case, a guarantee plus a percentage provides an advantage since it accounts for every seat sold.
The other way to work this deal is to base it on income rather that seats sold. For instance, if we use a $10 ticket price and 300 seats with a $3000 gross potential, the promoter may choose to bonus the act after a specific income amount, such as $1500. The amount of the bonus is calculated after determining the expenses and the guarantee. A single bonus amount or incremental bonus amounts may be offered. This works well in situations when a low guarantee was set to reduce risk and the act does much better than expected.
These five deals are the standard in the industry, but don't let that restrict you from creative deal making. There is no end to the options available when attempting to negotiate a deal that will work for you and the promoter. The key to any negotiation is, knowing what the options are and which option will work in your specific situation. Good luck.
Jeri Goldstein is the author of, How To Be Your Own Booking Agent The Musician's & Performing Artist's Guide To Successful Touring 2nd Edition UPDATED. She had been an agent and artist's manager for 20 years. Currently she consults with artists, agents and managers through her consultation program Manager-In-A-Box and presents The Performing Biz, seminars and workshops at conferences, universities, for arts councils and to organizations. Jeri has released a 3-hour seminar on CD-ROM, Marketing Your Act. The Seminar is set up in 5 modules with information about Marketing, Creating Effective Promotional Materials, How To Access the Media, A Marketing Template and Niche Marketing. No expensive conferences to attend-learn at your convenience to boost your career. Her book, CD-ROM and information about her other programs are available at are available at Performingbiz.com or phone (434) 591-1335 or email Jeri.
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