Music as a Business LACC

The playlists of radio stations with oldies formats are not tracked closely throughout the music industry.

True

The word payola in the music business refers to _____.

bribes

Entities that place their own shelving in stores and continuously stock those shelves (thus, relieving the host store of dealing with this activity) are known as ______.

rack jobbers

Radio outlets whose song playlists are closely watched by trade papers, electronic song tracking services, and tip sheets are called _____ stations.

reporting

Most artist management contracts require a manager to loan the artist money under what circumstances?

under no circumstances

As a rule of thumb, what percent of revenues do streaming platforms pay for all rights to music?

70%

DIY artists must find a label to be featured on Spotify or Pandora.

False

In New York, most personal managers must be licensed by the state as booking agents.

False

Streams are easy for consumers to share and duplicate.

False

The "S" in SWOT stands for supply.

False

The best way for a client to avoid paying an unreasonable legal bill is to discharge the lawyer.

False

The rise of digital technology has reduced opportunities for small businesses in the music industry.

False

The technique used to secure journalists to post content about a company and its products at a negotiable charge is known as publicity.

False

To prevent being ensnared in antipayola regulations, record labels no longer include swag in electronic press kits.

False

When the label and retailer join forces in the placement of paid advertising, the joint effort is known as push-through advertising.

False

What does the "W" stand for in a SWOT analysis?

Weaknesses

A common method of settling disputes surrounding artist management contracts is to submit the issues to arbitration.

True

A hidden force in the marketplace is minimum advertising pricing where retailers agree not to market music lower than a specified floor price.

True

A sole proprietor owner is usually held personally responsible for losses at the business, which means the owner's own possessions are at legal risk.

True

All resumes should be sent out with an accompanying cover letter asking for an interview or an audition.

True

ArtistShare and PledgeMusic are among the crowd funding portals that focus almost exclusively on music.

True

Authoritarian leaders like to make all the decisions themselves.

True

Because companies face a myriad of problems, the best positioning for an applicant is to present himself or herself as a solution for the company's problems.

True

Because the music industry is fussy about copyrights, using third-party content in promotion materials of a startup music company without the expressed permission of the content's owner is fraught with risk.

True

Billing refers to the size, emphasis, and position of names in print ads, billboards, and screen credits.

True

Building a network of contacts is important because many career possibilities are never advertised.

True

Classical musicians are redefining performance careers by working as independent contractors.

True

Kickstarter - which is the best known crowd funder - takes a 5% cut of funds raised.

True

Labels sometimes have revenue-sharing deals for ads placed around their "editorial" content.

True

Limited partnerships are composed of one or more general partners and one or more limited partners.

True

On-demand music streaming permits listeners to individually select titles.

True

Sales and promotion tools help artists decide how to connect online with fans and potential fans.

True

Social networking sites like LinkedIn and Facebook can become vital tools in a job search.

True

SoundCloud is the streaming service most identified with discovering new music.

True

Spotify reported their ad-supported subscribers generated only a 10% gross profit in 2017.

True

Streaming platforms license master recordings.

True

The easiest way to acquire copyrights is to write your own original music.

True

The music streaming business is still a long way from maturity.

True

The type of financing that solicits fans and other outsiders to make small contributions to fund a DIY album is known as crowdfunding.

True

There is a cap imposed by the artist on the manager on the level of expense that may be incurred without the artist's consent.

True

Venture capitalists are pure financial entities that may focus on specific business sectors to exploit the investor's particular expertise.

True

What accounting method provides a snapshot of finances with what's in the pipeline - both what is owed but not yet paid out and what is due to come in but hasn't yet arrived - versus the cash method that doesn't account for any transaction that isn't completed?

accrual

Which is NOT an important social media website today where fans sound off about music preferences? a.) Facebook b.) Twitter c.) Tumblr d.) Billboard

d.) Billboard

Which situation would be the most ethically dubious? a.) Personal manager is also a licensed attorney b.) Licensed attorney is also a personal manager c.) Personal manager has an interest in an artist-owned publishing company d.) Lawyer represents artist in negotiation with company that they have an ownership interest in.

d.) Lawyer represents artist in negotiation with company that they have an ownership interest in.

What type of stream involves serving music up blindly (users can't select specific tunes), but keeping the flow of music in a user-directed genre?

noninteractive

What percent of the music artist's gross income from work generated by the agency or otherwise eligible for commission do national booking agencies generally take?

10%

______ services are responsible for such projects as cover art and promotional one-sheets.

Creative

Labels typically outsource promotion effort.

False

Streamed music is never actually stored on consumer devices for playback.

False

"Synchronization," refers to the pairing of music and picture, mainly in the form of film and television.

True

Large, full-service booking agencies concentrate concentrate on representing acts at all levels, including unknown artists, that regularly appear in venues and towns of all sizes, thus being able to "fully serve" the industry.

False

Personal managers, as the name implies, are primarily responsible for the personal well-being of their clients, leaving most business decisions to attorneys and booking agents.

False

A "sunset clause" in an artist management contract provides a roadmap for an orderly de-escelation of the financial obligations between the artist and manager.

True

An unestablished artist needs a personal manager about the time the performer can earn more than union scale.

True

With the rise of concert tours as an income source, road managers handle all logistics of the touring.

True

For on-demand interactive, a behemoth in the free-with-advertising category is ______, which can be considered a sprawling video jukebox but without the need to insert a coin to play a specific song.

Youtube

Which company created an online store, which launched in 2003, that gave an early lift to online music with simple pricing for many singles, a closed ecosystem so music could not easily be pirated, and a vast base of portable players?

Apple

According to the representative organizational structure illustrated in your text, if a dispute arises who generally has the ultimate authority for decisions for a major act?

Artist

Audio-visual productions utilizing synch music are declining and aggregate payments are shrinking.

False

Talent agents or booking agents typically engage musical artists for what kind of work?

Concert or club dates

Because of partnership agreements, it's rare for partners to get into disputes about how to run the business.

False

A typical "key man" provision in a personal management contract protects the manager from the lack of performance by the "key man" in the deal, who is the artist.

False

Advertising involves getting local or specialty media interested in the company's "story", without having to pay them to print it.

False

Artists generally find termination of financial obligations to departing managers relatively simple.

False

Which clause gives the artist the right to terminate the agreement if a specific agent is no longer with the agency?

Key man

A lawyer who is said to "participate" in a deal has what role?

Receives a percentage of the deal value as a fee

If the streamer is a noninteractive platform, who typically handles the royalty collections for masters?

SoundExchange

Which streaming service has the highest number of audio tracks?

Soundcloud

Which is NOT one of the Web-based tool categories for independent artists? a.) sales/promotion b.) grant funding c.) finance d.) live touring

b.) grant funding

What is NOT a reasonable and useful investment for a beginning DIY artist? a.) buy a high quality video camera for $2,000 b.) spend $18,000 to start an in-house music publishing company c.) purchase comprehensive computer-recording system for $5,000 d.) download free graphics/word processing/website-creation software

b.) spend $18,000 to start an in-house music publishing company

Raising funds by soliciting fans and complete strangers online to finance an album project is feasible today because of which development in music industry economics? a.) Major labels no longer sign any new artists b.) There are major cost savings from using electronic as opposed to acoustic instruments. c.) The costs for recording music have been drastically reduced. d.) The costs for mass duplicating CDs have been drastically reduced.

c.) The costs for recording music have been drastically reduced.

The starting point for an entrepreneur launching a business is a written document called a business plan that contains these points except which one? a.) resources needed b.) explanation of how profits will be made c.) articles of incorporation d.) identifying what might go wrong

c.) articles of incorporation

While revenue from the DIY model might seem very attractive at first glance, artists should keep in mind their direct income could reasonably be reduced by expenses for all except which expense item? a.) attorney b.) management c.) synch fees d.) producer

c.) synch fees

Which report shows the cash and cash equivalent entering and leaving a company over a specified period of time?

cash flow statement

Funding middlemen that demand upfront cash payments for crowd or other types of funding is usually a safe bet, because once they've been paid, they are required to deliver.

False

In building a network of contacts, only persons of high influence are worth cultivating, not peers or lower.

False

In interviews, it is wise to bring up negatives voluntarily, such as saying you left previous employment because "I didn't like the boss."

False

Streamers are prohibited from offering fractional ownership in themselves in addition to usual cash payments.

False

The acronym DIY stands for do it yourself.

True

Who is in the best position to handle the money if an act generates large sums?

business manager

Key players who help devise the marketing plan for release of a music album may include all of the following except _____. a.) promoters b.) advertising managers c.) publicists d.) album mixers

d.) album mixers

Many consider synchronized placement to be the new radio for _____, who are all but shut out of terrestrial hit radio rotation. a.) political activists b.) infomercials c.) podcasts d.) independent artists

d.) independent artists

Contracts must specify under what conditions audits can be performed and precisely who will be liable for the auditing expense.

True

DIY artists benefit from promoting their live performances via online platforms.

True

During streaming, if packets don't arrive in time or aren't processed quickly, the stream freezes until the data flow catches up, at which time playback resumes.

True

It was estimated that 60% of fans downloading the Radiohead release "In Rainbows" from the band's website paid nothing for the download.

True

Most company failures stem ultimately from poor management and not other issues such as marketplace conditions.

True

Most music-related professionals pursue "combination careers" where they work two jobs, such as the instrumentalist that teaches on the side.

True

Music industry executives particularly dislike advertising-supported streaming - the "free" option - feeling it generates inadequate compensation and devalues music in the eyes of the consumers.

True

Negative tour support is the money the labels has advanced to make up for financial deficits the artist incurs while on tour.

True

Not only does a corporate enterprise pay corporate taxes, but the investors also pay personal income taxes on dividends received from the corporation.

True

The aptitude tests that employment counselors administer to job seekers are useful for self-evaluation and to help job seekers find themselves.

True

The artist generally appoints a manager as his or her exclusive personal manager, while the manager's services to the artist are nonexclusive.

True

The bulk of streaming royalty revenue goes to performers and labels.

True

The business model of giving away recorded music and letting consumers decide how and when to pay for it is called freemium.

True

The general self-appraisal test in your text indicates that factors such as "need for audience approval" and "importance of money" should be considered.

True

The going rate for a personal manager's commission is usually in the range of 10% to 25%

True

The lower capital and overhead costs of the new economic order enables artists to sell their music for less yet retain a higher percentage of the revenues.

True

Typically an artist seeks a term of no more than two years for the initial term of a personal management contract.

True

What social media website was a major hub for consumers talking with peers about music preferences, but suffered a severe decline after peaking around 2008? a.) Myspace b.) Facebook c.) Google 360 d.) Twitter

a.) Myspace

Which is NOT among the basic types of structures to first launch a business? a.) public organization b.) corporations c.) sole proprietorships d.) partnerships

a.) public organization

Fanzines have relatively small circulations but are sought after publicity placements in music marketing because _____. a.) their audiences are proactive consumers b.) they are easy to find in the media landscape c.) of the frequency of their publication d.) music TV producers read them

a.) their audiences are proactive consumers

In addition to the personal manager, who should approve of the selection of a business manager, accountant, or auditor?

artist

Email mailing lists are most useful in marketing recorded music when assembled by the ______.

artist and record label

The marketing metric for subscriber loss is called ______, which is the percentage of cancelled accounts in a period - usually monthly.

churn

Which is NOT a drawback of using the corporation structure for a business? a.) complicated b.) expensive c.) double taxation d.) margin calls

d.) margin calls

A balance sheet that presents a company's financial position does not contain entries for ______. a.) assets b.) liabilities c.) equity d.) net profit

d.) net profit

Which report shows financial transactions over a specified period of time in terms of where the money came from, what was spent, and what was left over after all expenses were paid?

income statement

Overt pay-for-play is called _____ in terrestrial broadcast radio, where it is illegal under U.S. federal regulations, but those broadcasting regulations don't apply to online.

payola

Artists' managers attempt to travel regularly with their clients.

False

Consumers seem to favor noninteractive streaming.

False

Contractually obligated to achieve maximum income for the artist, a personal manager is well-advised to accept every possible gig when the guaranteed fee is attractive.

False

Digital compression upgrades audio fidelity.

False

Entrepreneurship is a good option for everyone.

False

In transactional services, attorneys press the rights of their clients in court cases.

False

It's not that hard for a DIY artist to sell 50,000 units of a recording if he or she simply works at it.

False

Landing a job anywhere in the music industry is automatically building a career.

False

New artists usually pay personal managers lower percentage representation fees at the beginning of their careers because they simply can't afford to pay the percentages charged superstars.

False

On a revenue-per-play basis, streaming is far more lucrative than downloads.

False

Only after all the final language of a contract is agreed and the contract is singed, an attorney typically then drafts a "deal memo" to summaries the essential elements of the agreement.

False

Radio is no longer important in the promotion of recordings because it has been replaced by music TV and social media.

False

Several surveys in recent years reveal immense financial returns to artists from services such as Apple Music, Pandora, and Spotify.

False

Since a job interview is about the applicant, it's not necessary for the applicant to research the prospective employer company in advance.

False

Small startup businesses are exempt from business taxes and the requirement for permits for a certain amount of time.

False

Surveys show over three quarters of the population are happy with their job and career choices.

False

The DIY artist is pretty much alone without online tools to help provide promotional support for music distribution.

False

The distributors of a full line of music that service jukeboxes and small stores - venues that don't get the attention of labels and big wholesalers - are known as rack jobbers.

False

The music business even offers numerous opportunities, even for the poorly prepared.

False

The principal disadvantage of a sole proprietorship is that it is hard to set up.

False

Research suggests that people entering the workforce today will have, on average, twelve different careers.

False - book said 7

Which provision extended legal protections to digital platforms when third parties use their facilities to violate copyrights?

Safe harbor

An advantage to manufacturing on demand for CD duplication is that batches of CDs are duplicated in small amounts to match purchases and thus reduce unsold inventory.

True

As a practical matter, successful booking agents serve the interests of two different parties, the artist and the talent buyer.

True

While publicity is desirable because the cost to the label is relatively low, paid advertising has the potential advantage of yielding a large number of controlled impressions.

True

What is the most common commission cap range that artist unions impose on agents?

10-20%

After a contract is signed with a record label for an artist, which activity by the manager is likely to be most important? a.) induce label executives to attend showcases b.) encourage the label to promote the recordings c.) push label-affiliated publishers to come out with print editions of the artist's songs d.) seek out alternative back-up labels in case of noncompliance

b.) encourage the label to promote the recordings

Even a strong manager cannot expect to earn, over the long term, an income comparable to one of his or her successful clients.

False

An artist's contract with a personal manager should be... a.) transferable b.) nontransferable c.) never shorter than 5 years d.) a handshake deal

b.) nontransferable

The organization that represents commerce of recorded music in all channels is known as the _____

Music Business Association

Spotify is an example of what type of streamer? a.) noninteractive b.) subscription on-demand c.) dicovery d.) tethered

b.) subscription on-demand

If the personal manager in California wants to stay within the law, book gigs, and remain in the management profession, he or she needs to obtain a talent agent's license.

True

In California, only licensed talent agents are allowed to procure employment for an artist.

True

In retailing, the stock keeping unit is the code for each unique product that is in inventory.

True

It is possible for an artist to work with an agency on a nonexclusive basis or even with no written agreement at all - a soc-called handshake agreement.

True

It is the manager's responsibility to limit the frequency of performances to avoid exhausting the artist's energies.

True

Labels generally prefer artists have weak personal managers, so they can better influence the direction of the artist's career.

False

Lawyers are required to charge artist clients only an hourly fee or a flat-fee retainer.

False

Legal ethics requires that when negotiating on behalf of a band, each member of the group must have an attorney representing his or her interests as an individual.

False

The music business always spends more to market recordings to North America than in the rest of the world.

False

To save time and legal fees for beginning artists, most experts advise having one experienced attorney represent both parties in a negotiation.

False

Under state law, an artist may only grant "power-of-attorney" rights to a manager who has passed the bar exam in that state.

False

In lawsuits such as the Rosa Blasi case or the Ke$ha case cited in your textbook, the artists were pursuing which central legal argument?

Management firms illegally served or crossed the line as agents.

What type of equipment comprised 88% of listening by Pandora users in 2017?

Mobile devices

An artist may work on a nonexclusive basis with an agency contracted to work with the artist in a limited or a specific territory or kind of performance.

True

An artist must warrant to the personal manager that the artist (whether an individual or a group) is the sole owner of the professional name.

True

Despite the low payments per unit, the aggregate streaming is a bigger opportunity for rights holders than downloads.

True

For an artist with the goal of securing a record contract, a reasonable period of time for a personal manager to achieve that objective is one or two years.

True

For most music business attorneys, the majority of their time is spent with "transaction" work as opposed to litigation.

True

Generally, managers in New York are not union affiliated.

True

Individuals entering into contract negotiations are, by definition, adversaries.

True

Special material includes songs, patter, and routines created exclusively for the artist, used particularly in live performances to make the act distinctive.

True

With the streaming revolution, catalog music gets more play because of easy access - old music is always in stock on digital platforms.

True

Which on-demand interactive streaming service bundles music with video offerings from corporate siblings in the Google ecosystem?

Youtube Music

The trend is to release a recording at the same time around the world ______. a.) to thwart piracy by making legitimate recordings available at the same time b.) for economies of scale c.) for ease in cross-collateralization d.) because it's then easier to promote a hit in one country to others

a.) to thwart piracy by making legitimate recordings available at the same time

A wholesaling organization is a(n) _______. a.) retailer that sells concert tickets, recordings, and license music merchandise (the "whole" range) b.) intermediary to get merchandise to those who actually sell the product to consumers c.) full-price retailer that doesn't discount d.) retailer that doesn't sell singles, but only "whole" albums

b.) intermediary to get merchandise to those who actually sell the product to consumers

Which element is of keen interest to radio program executives when evaluating a song? a.) If the chord progression is similar to past hits b.) The royalty rate of the recording artist c.) If the song is getting airplay in other geographic areas d.) Confirmation that Sound Exchange represents the title

c.) If the song is getting airplay in other geographic areas

Which was the first launched streaming service? a.) Deezer b.) Apple Music c.) Napster d.) Slacker Radio

c.) Napster

Which provision is not a common feature of union agreements that franchise or license a booking agent? a.) limit on length of artist contracts b.) restriction on nonemployment procurement activities c.) limit on jurisdiction to a 300-mile radius d.) ceiling on commissions

c.) limit on jurisdiction to a 300-mile radius

Albums that aggregate numerous one-time hits from various artists in a new genre-specific recording are know as _______.

compilations

A key element to a good marketing program for a recording release is having a memorable element that will bait potential audiences, which is called a _____.

hook

The marketing of a new release today requires a unified, overarching plan, called _____ marketing.

integrated

Streaming parses and compresses content that is then transmitted independently in digital pieces, called _____, to receiver devices.

packets

What's the word for industry advertising not aimed at the consumer but rather at concert venues, record stores, and other entities within the music business?

trade