MIS Ch 16 - 18, 24

NON CONCERT Range for Royalties received by music entities in the Merch Business.

range from 8% to 14% of the wholesale price of merchandise— sometimes referred to as manufacturer's net revenue.

For merchandise sold at concerts: Royalty Rate

royalty rates to artists are boosted to 15% to 22%, since artists create foot traffic for vendors.

Tour Support

support from labels to subsidize the cost of concerts to create buzz that would drive fans into record stores.

Concert Promoters

take the risks, pay the acts, market the shows, and sell the tickets.

Venue Trade Association

the International Association of Venue Managers.

The Agent

the artist's agent negotiates on behalf of the music talent(artist). Agents work on commission and their job is to present the offers that reap the greatest possible fees.

The face page defines:

the basic information: time, date, place, length of show, how the artists' names will be billed (how they will appear in advertising), the agreed-upon fees, and payment schedules.

Tree key players move and shake the concert promotion industry:

the event promoter, the artist's manager, and the tour-booking agent

Contracts between agents and promoters: consist of which two parts:

the face page and the rider.

What are some usual unexpected leaks in cash flow expenses?

the lack of delegating the costs of contracts for city police and fire departments with respect to security arrangements.

Define Four-walling

the promoter takes all the ticket sales money and assumes full financial risk if ticket sales are insufficient to cover some of the operating costs that would otherwise be absorbed by the venue. Under that arrangement, the venue has guaranteed revenue but no upside.

Define: "Promoter of Record"

the promoter that handled an artist's most recent concert in a given area.

Billing

the relative position in which a performer or act is listed on handbills, posters, etc. it is common to see font size of opening acts must be 50% or less than the size of the headliner's name.

Deadwood

unsold tickets.

Paper the House

when promoters give away tickets (or sell at rock-bottom prices) so the audience doesn't seem embarrassingly small.

Dynamic Ticket Pricing

where ticket prices can be changed instantly based on online demand, a practice pioneered by airlines. Promoters are attracted to the concept as a way to capture more of the value of their tickets that might otherwise get resold for more money.

The four (4) common talent fee structures utilized by concert promoters:

"Flat Guarantee"- pays a flat rate, usually 50% in advance, 50% after performance. Used in festivals Advantage: You get paid no matter how many tickets are sold "Straight Percentage"- Net revenue = less customary expenses (venue rental, box office fees, marketing/promotion). 85% (Artist) 15% (Promoter). Promoter covers all his expenses, what is left over is split Disadvantage: at the mercy of ticket sales Advantage- aligns promoter and artist interests "Versus Deal" - a guarantee vs. a % (whichever is larger) Disadvantage- used as a way to low ball artist "Plus Deal"- Guarantee plus a %. Used in larger tours. How the promoter's profit is calculated is what is different. Promoter's profit at 15% is calculated as an expense. Est expenses, multiply by 15%, and then add that back into total expenses. Promoter is guaranteed to cover his expenses. Artist is offered a guarantee

The four (4) common types of performance agreement riders

"Technical rider"- shows various requirements of artist stage production. Rig points, Stage plot, lighting plots, Crew parking, Power requirements, Sound inputs. "Security Rider"- lets promoter know what security concerns of the artist are. Warranty that promoter and venue will engage adequate security to reasonably protect artist and crew: Security meetings, Backstage security, Credentialing, Stage barrier description. "Merchandising Rider" - defines terms and conditions that venue must follow in exchange for a % of sales. Use venue staff to sell merchandise. In exchange for providing staff and resources, venue takes a cut. Artist has exclusive right to sell all non-food/beverage items - venue has the right to sell the food/beverage. "Hospitality Rider" - request for food/beverages/accommodations of artist. Food, drinks, catering, Hotel accommodations.

The duties of an Executive Director/General Manager of a nonprofit performing arts organization (Beyond Fundraising)

- Supervise the work of the staff. Hire and fire - Organize and supervise volunteers - Direct long range planning - Prepare Budgets - Work with artistic director in the conception and implementation of programs - Negotiate contracts for professional services - Supervise technical matters relative to live performances - Handle press relations and public relations

Who are some prominent Hollywood Promotion Agencies?

- William Morris Endeavor Entertainment - Creative Artists Agency - ICM Partners

Experienced Promoters project their budget on this situation..

60% house, meaning 40% of the tickets just won't sell.

Cross-Collateralization

A key point of negotiation between artist and promoter is addressing whether the promoter can deduct shortfalls from concerts that sold poorly from other tour dates that sold briskly. This is called Cross Collateralization. This can occur when the same concert tour has a multi-city schedule. Usually there is a limit on how many low-selling dates in a single tour can be used to deduct from overall artist pay.

What is a PR Specialist?

A specialist which has contacts in the press, knows who to work with in the editorial process, and devotes time when promoters cannot.

Who issues contracts between Agents and Promoters?

Agents.

National Promoters often negotiate a share of the net receipts to pay the local promoter: What is the common calculation for net receipts?

Box office income minus (-) Expenses.

What financials does a prospective promoter need?

Cash to cover their expenses before the first ticket is sold, Expenses start with renting a concert hall, advertising performances, producing tickets, securing liability insurance, and making advance deposit payments to talent.

Arena's Geographic Exclusivity

Contracts will usually state that an artist cannot play a venue within a certain distance of the hosting facility for a specified time period.

Performance Rights in Concerts

Contracts will usually state that an artist cannot play a venue within a certain distance of the hosting facility for a specified time period. With some exceptions, venues are responsible for securing the performance rights license (and not the artist or tour promoter). The fee is typically a small slice of gross ticket revenue, so the payment is a sliding scale. And the fee is due even if the performing artist is the sole composer of the performed works.

What are the splits between artists and promoters?

Custom dictates that this percentage be divided in an 85% to 15% split, with the larger number going to the artists

Scaling the House

Deciding how many of which type of seats will be sold at what price.

Net Potential of an Event

Deduct the value of tickets designated for the artist's guests, and giveaways (Radio promo etc.) from the Gross Potential.

How do promoters book artists?

Direct to artist (Beginning Level) or through the artist's agent (Sophisticated level).

Merch - how are licenses issued?

Each category of product typically gets an exclusive licensee, meaning for example that only one company manufactures coffee mugs. IN some cases a master licensee handles all or broad categories, keeping some for itself and sub licensing to others to cover a wide array of products.

Licenses or permits a concert promoter may have to secure for the production of an outdoor music festival

Force Majeure - Insurances - Performance licensing- Power- Zoning - Security - Sanitation

Current product sales leaders in the music products industry

Fretted instruments Sound Reinforcement products (Pro Sound)

Retail sales leaders in the music products industry (configurations)

Full Line retailer (Guitar Center) Combo Stores (Guitars, bass, drums, P.A.'s-don't offer everything) Specialty Shops (High end, occupy niche market)

How do promoters pay rent to venues?

In selecting venues, promoters can usually rent the facility for a flat fee or a flat fee plus a percentage of the gross ticket sales.

Good/services segments in the music products industry and what retailer configurations have the competitive advantage in each segment.

Instruments ,Accessories, Print music, other instructional material, support services. Configurations: Full Line retailer (Guitar Center) Combo Stores (Guitars, bass, drums, P.A.'s-don't offer everything) Specialty Shops (High end, occupy niche market)

Who is the largest concert promoter and owns ticketmaster?

Live Nation

Sources of philanthropic and market funding for nonprofit arts organizations:

Market Funding: individual and Subscription ticket sales. Merchandise Sales, Broadcast Rights. Philanthropic Funding: Grants, Sponsorship, Donations, Endowment (Mike Curb)

What percentage do agents usually allow promoters to profit from gross ticket sales?

Multiply the total expenses by a percentage—usually 15%—and this is the sum that agents traditionally allow the promoters as profit.

Marketing is divided into which two divisions?

Paid and Unpaid

Name two trade publications who print talent and booking directories:

Pollstar and Billboard

How does radio sell air time?

Radio stations sell air time in 30- or 60-second units, with fees based on the station's rate card.

Reselling occurs in which market

Secondary Market

Scalper

Someone who purchases large quantities of goods (usually tickets) early with the sole intention of re-selling them at a higher price at a later date (closer to the event).

Six different venue configurations:

Stadiums, Amphitheaters, arenas, festival sites, theaters, mid/small sized venues.

The pros and cons of the six (6) different venue configurations. Which configurations tend to be the most profitable for concert promoters?

Stadiums: the largest facilities for concerts, these multipurpose venues offer seating of 30,000+ and typically are configured for sports events. Since such facilities are not designed for live concerts, they require extensive setup/teardown of concert stages. Amphitheater: Outdoor venues typically seat between 5,000 and 30,000 and are used primarily in good weather/summer seasons. These are specifically designed for concerts, with permanent stages. Festival Sites: Outdoor locations used seasonally typically accommodate between 10,000 to 130,000 patrons for day long or multi-day concerts. For operators, these venues are attractive because low overhead costs, resulting in some of the industry's highest profit margins. Arenas: smaller than stadiums, these indoor venues typically seat between 5,000 to 20,000. Arenas often have luxury private suites - premium-priced seating areas that amphitheaters lack. Because they are multipurpose facilities, they typically require extensive modification to install stages. Theaters: venues designed for legitimate theater can be easily adapted for concerts and typically have seating for 1,000 to 6,000 people. Mid sized Venues: Designed for concerts, these indoor facilities have ready-built stages typically have capacity for between 1,00 - 6,500 persons. With this low-capacity seating, however, they don't offer potential for outsized profits, as do the larger venues, even in a sellout. Small-sized Music Venues/Clubs: Music and comedy clubs dominate this category of indoor venue, which sometimes provide beverage and/or meal service for patrons at their seats. Because seating is typically less than 1,000, capacity limits revenue potential and seats are sometimes moveable chairs. But these facilities have built-in stages, which reduce costs.

The four-tiered fan-type model (from most engaged to least engaged) commonly used in concert marketing and promotion

Super Fan, Enthusiastic Fan, Familiar Fan, Casual Fan.

The ways leftover merchandise is handled:

The artist may have no responsibility, might have to suffer a royalty offset, or might be required to purchase unsold goods at or slightly above cost (for the artist to sell online, sell in bulk to a liquidator, or hand over to the next merchandise licensee)

Gross Potential of an Event

The capacity of the venue (the number of seats that can be sold) multiplied by the value of an average ticket equals the gross potential of the event.

The three most common sources of tour revenue for performing artists:

Ticket sales, Merchandise, Sponsorships

True or False: Riders usually start out with a standard contractual text, which parties will then alter by mutual agreement in negotiation. In many cases, changes to the standard text are cross-outs and insertions literally written by hand. The more ticket-selling clout of the artist, the more the artist can negotiate in terms of money, control, and hospitality benefits.

True!

True or false: Most promoters will require to see a rider before making an offer.

True: Promoters understand that there are sometimes rider requirements that can kill a deal.

List the common personnel in which promoters must enter into written agreements before artists can take the stage.

Venue Management, Talent Agents, Merchandisers, lighting and sound suppliers, insurance companies, transportation firms, and caterers. etc.

When getting booked, what does venue management generally offer?

Venue management generally furnishes the stage manager, box office manager, maintenance crew, and ushers.

Facilities Fee

Venues specifying they get a few dollars per ticket on a sliding scale for tickets sold priced at a specified face value, such as $25.

What is Ticket Master?

a company which handles ticketing transactions at company-owned and third-party facilities.

What is a rate card?

a list price based on estimates of how many listeners (in what demographic categories) tune in and at what times of day.

Identify a Rider (Technical rider)

a more-detailed document attached to the face page that details the artists' requirements. They may include the following: (a) travel arrangements; (b) hotels; (c) food and beverage catering; (d) technical needs, such as band gear, sound, and light systems; (e) size and number of dressing rooms; and (f) any other detail the artist finds critical for performance.

Define Split Point

a number based on ticket sales and at which point the act and the promoter divide the balance.

How is the merchandise sector the music industry different than the recorded music industry?

advance is recoupable, returnable with interest

Length of a Merchandise Contract?

can run across a multicity tour or one or more album releases.

With the lion's share of ticket sales going to the top stars, promoters and larger venues such as stadiums make their money from ancillaries. Define ancillaries:

car parking, food/beverage, and licensed merchandise sales etc.

Radius exclusivity clause

exclusive rights to sell merchandise before show to prevent pirated things etc. to come into the sales zone.

What is a promoter media mix?

how much they want to spend on newspaper, radio, mail, online, and television ads.

What are key responsibilities of promoters?

orchestrating ticket sales, organizing sale of artist merchandise at the event, assisting in securing sponsorship deals, financial accounting, and complying with a myriad of live-event safety regulations.