393 Test 2

The Talent portion of the Contract may include:

* Deadline for accepting the offer: CINDERELLA clause * typically ten business days to consider an offer * buyer doesn't want seller stringing them along * Force Majure clause * Act of God Clause * lack of performance beyond the artists' control nullifies the contract * important to look at in our business! * illness, accidents, means of transportation, labor disputes * Control of production and performance * most times the artist has control so the promoter doesn't add on acts without the artist's approval * Insurance requirement * liability insurance * injuries, damage, theft, etc * promoter carries usually at least 1 million in liability *Stipulation of PERFORMANCE LICENSING * promoter's responsibility to secure appropriate performance licenses from PROs

Flat Guarantee Deal

* Flat fee payed to artist for services * interests are not aligned!!! * COMMON FOR FESTIVALS

Term of Merchandise Agreements: Artist Royalties

* IGNORE page 294... *Artist Royalites: 1. Gross Sales (Adjusted) 2. Net Sales- more popular 1. for tour merch: superstar artists can be on a gross sales basis * after taxes, credit card fees, take a percentage of the (adjusted) gross * 30-40% * remaining pays production, hall fees, etc 2. most time: done on profit split based of net sales * net sales: gross sales minus cost of production, expenses: taxes, credit card fees and hall fees * net sales of that profit is split b/w merch company and the artist * like publishing deal * split can range: * artist 75/25% to merch * or 85/15 * EX: * GR -gross revenue * minus (taxes, credit cards)= AGR- Adjusted gross revenue * this is merch's GROSS INCOME * minus (hall fees, production expenses)= Net profit!- split

Ticket Sales

* One of the LEASE predictable forms of revenue, but MAIN source! *made by publicity (free ad) *product managers=recording company publicist *paid adv *short term: 3rd parties (TV, Radio) *long term sponsorships *based on net sales potential: gross minus costs *(comps/lost ticket sales) * ticket prices: what do we charge? very controversial aspect * single way to make/break the show * historically: ticket prices were suppressed: used as a loss leader for record promotion * since 1996 (after 20 years of hardly any change for inflation), prices have sky rocketed-doubled! *average is $70.00 * Face value of the ticket: BEFORE * surcharge fees * facility fees (historic buildings) * passing on the cost of running the facility onto the customer * special taxes can also be added on * calculated on past experience to project budgets * 60% rule * put ticket revenue projections at 60% of the capacity * deadwood: an unsold ticket * staples center: a combo of private and public funds

Licenses

* PRO license: blanket license through venue * rental fee may have a small fee to help cover that * day rate/festival rate for catalogue *Pyrotechnics License (or clause in contract) * Great White fire * fire marshal says, it goes

Issues the recording/touring industry has been facing: Secondary Retail market

* Scalpers, craigslist, resale markets * tickets bought from a licensed seller, then resold to a customer usually for a profit * promoter and artist are left out of this revenue! * the concert industry can't price their tickets properly... * Delivery is the issue... * industry has decided to JOIN secondary markets * ticketmaster secondary market: * TicketsNow * you name the price, take 15% of the sale * Stubhub: owned by Ebay, and AEG * BOTS: ticket programs that buy up everything in seconds to resell * BROKERS: berry's tickets * many of these secondary services offer services that aren't delivered; creating a bad customer experience!

Post Production

* Settlement process * tickets sold, merch sold * usually right after the show * larger shows-much later settlement for balance/audit * venue then transfers funds * following event * thank you letters, gift exchanges * DON'T underestimate the power of this * sometimes gifting is a production expense- into the budget?! * IRS is on the lookout-taxable income * Maintaining relationships for a concert promoter is paramount * recap meetings * very important for product management * to go over what went well (start positive), what didn't go well * suggested improvements * usually 1 week after the event * include all major stakeholders * promoter, venue, agent if possible * write down all of these notes! * prevent making the same mistakes

Permits

* Street Closures for your event, if its large enough * Sidewalk use permits * Ground up * Food permit, food/liquor license * constructing tents * amplified sound permit for neighborhoods * pubic works permit for electricity * sanitation permit for toilets, hand washing * one porter potty for 50 people * more for alcohol, more for female * more for accessibility- disabled, etc * solid waste removal for trash

2 Types of Merch

* Tour merch * sold on tour * Retail merch * sold everywhere else besides touring

TOUR PLANNING critical considerations: What, How and Who

* What * what to perform * what to offer the fans-meet n greet, sound check invites * How * flying, bus, etc * Who * road manager * merchandiser * opening acts

Revenue from Merch Sales

* Who benefits from merch sales? * the merchandiser * the artist * the venue * at festivals, promoters do make revenue from merch * acts as the venue, it is their festival * Revenue projections * per capita (per head basis) * based off experience *smaller capacity, higher expectations of merch sales, b/c loyal fans are most of the audience * amount of money that person spends on merch for the show * Merch company's don't like festivals, or stadium shows due to multiple artists and festival shirts * makes most money 30 min after the show! * don't care about customer service, just want to keep it moving *Advanced repayment is the threat that merch companies typically hold over the artist *the artist meeting the per capita revenue projection is one reason why the recoupment period would be started.

Promotion of Music Products

* advertising through customer databases: * catalogue distribution * largely revolves around the acedemic year * co-op advertising * POS promotions * special promotions * clinics and workshops * put on by manufacturers * endorsees * to persuade educators to buy into the brand * brand ambassadors * may have a local following, band * attracts fans to products * NAMM SHOW * very powerful/important * manufacturers come, buyers come around and buy in mass

Label Support

* all is recoupable * viewed as marketing expense

Issues the recording/touring industry has been facing: Fan Engagement

* b2b model to d2c direct to consumer * like sheet music in 20s: sell as a product * sell other things like a fan experience * being used as a loss leader to sell merch and concert tix

Casual Fan

* can't name anyone in the band, might have heard the music * no record * tag alongs- come with friends

Full Line Retail Store Configuration

* carries a full line... * accessories * high profit margins, mass produced, expendable * support services for the smaller stores * revenue drivers * lessons, repairs, accessories

Retail Configurations

* chain stores * local stores * internet retailers

Sell-Off Rights- Typical Terms

* changing merchandisers is not uncommon, b/c there are many vendors *artist can suffer a royalty loss, can be required to purchase old merch to sell, liquidate or give to next merch * 60-90 days to liquidate any inventory they may have * the old manufacturer is not allowed to make new inventory during this time * make sure the artist has the right to buy the liquidated merchandise at cost plus 5-15% interest * labels usually own the art-album cover * not the artist OR the merchandiser * merch has to license album artwork from label * for 10-15% royalty

Issues the recording/touring industry has been facing: ownership vs. access

* convenience is of a higher value than quality and ownership * industry is moving from an ownership model to an access model * like cable TV * consumer content=entitlement * remix/synch/distribute

Promotional Tools

* customer data bases: prefered method of promotion * owned by the ticketing agent! ticketmaster! * use of social networks/email * low cost and targeting advertising * media/editorial coverage * news articles, music critics -in advance * paid advertising * print, radio, tv, outdoor advertising (billboards) * internet advertisement * facebook promotion * advertising rate: * radio is locked up by major advertisers * promotional sponsor and Venue * both are another source to access the market * credit card companies * give access to the event

Scaling the house

* determining where the price points are going to be (usually 3 tiers or price points)

Issues the recording/touring industry has been facing: Digital Distribution

* digital distribution is still a challenge * cannibalization of other revenue streams are eaten by moving from ownership to access * some artists are putting out windows of release to make more money * too many choices and no clear market leader * mistake with Napster in early 2000s, now instead of licensing to nobody, they are licensing to everyone * fragmentation of the consumer market * limitations on bandwidth * unlimited data is ending *mobile access to content * consumer attitudes of DRM (digital rights management) free content * license fee to each individual device is declining, consumer expects access to all devices

Familiar Fan

* doesn't own the record * maybe have heard the music-mildly interested in the event * wants to get out and have a good time * much more sensitive to price and CONVENIENCE

In-Kind Support (donation)

* donation of services is traded for deliverables * ex: photography * a lot of people do not put these into their budgetary projectory * is a problem when it comes to the next year's projections * victim of your own success * if you keep doing an event for less, they give you less * use it or lose it!

Term of Merchandise Agreements: Exclusivity

* exclusive to the merch company who can sublicense out * when merch company is working with venue/rider * may include radius clause * exclusivity to sell w/in 2 miles of the venue * nobody really enforces it

Manufacturers

* family run businesses started from an entrepreneaur * fender, remo, Vic Firth, Sabian, Zildjiansteinway & sons, alfred, * since the recession in 2008, things have been consolidating *larger manufacturers are starting to bypass wholesalers and go direct to retailers * exploded with the birth of rock n roll in the 1960s * now they are elderly people who may pass onto children, or sell * generally located overseas- outsourced *imports $3 billion in instruments from * canada * mexico * asia * Cheaper labor! * Significant manufacturers include Yamaha, Fender, Gibson, Steinway, Hal Leonard, Alfred, etc. * Fender Article

Cash Support

* free cash to attach name to tour * NOT frequent-only for big stars

Chain Store

* guitar center, sam ash Competitive Advantages: * many locations * tactile experience before purchasing * cheaper options * MSRP, can be sold to retailer at a discounnt * consumers therefore give small discounts * guitar center * 260 stores in 40 states * employs 9,000 people? * 100 music and arts stores * rent band/orchestral equipment * 2007-baine capitol * better buying power, wholesale discount

Advertising

* huge expense for shows! * bottomless pit-who knows how much to spend * during settlement, usually the marketing people are blamed *if there was a great turnout, they look at their budget and get "you spent too much on advertising." *If the turnout isn't great, they hear "you didn't spend enough on advertising." * common but fatal decision-ticket sales are not coming in, promoters start to cut expenses: advertising is cut first- counter intuitive!!! cut production instead * less advertising: less tickets sold *If there's any area to cut, cut the cost of production - not advertising * much better to negotiate venue fees * "touring is the purest form of direct marketing" * invest their time, money, and effort!

Term of Merchandise Agreements: Hall Fees

* important part of the negotiations * venues charge a hall fee to vendors *When venue gives labor, gets a variable return of the percentage of total sales-hall fee *risk losing $ if cut their cut of sales doesn't cover labor and direct costs * merch company contracts out services from the venue- * uses venue staff, sell and rack merch delivered by the master licensee * typically 15-30% * taken from GROSS onsite sales * in this industry, gross onsite sales means * LESS sales taxes and credit card fees- * roll of 10-13% * usually in merch agreements, hall fees are capped at 30% * merch company is a slave to the agent, who negotiates hall fees and don't participate in the profit! no incentive to lower fee

Merchandise

* increased importance while record sales have decreased *rivaling Ticket industry! * merchandisers are very similar in concept to record labels * manufacture goods, oversee sales, and pay the artist a percentage based on sales * operational contracts/agreements differ * Label: Advances are recoupable but not returnable * MERCH: are recoupable, returnable with possible interest * agreement term differs too * profitability: t shirts/hoodies/stickers

Enthusiastic Fan

* knowledgeable about the music * may own the record * want to see the live show if possible * spend slightly more than the average price * more sensitive than super fan to price,date, and location

Issues the recording/touring industry has been facing: When to go on sale?!

* months before the event * promoter gets an idea of how much revenue will be earned * ppl forget about it, so marketing/promotion costs * weeks before the event * hype of the event, sense of urgency * less marketing fees * disadvantage: makes the promoter very uneasy about sales * sweet spot: 4-8 weeks before the event

Insurance

* must carry COI: certificate of insurance * minimum liability: 1 million dollars is standard * venue and production company also need to carry insurance * concert insurance, spectator liability, event cancellation insurance * artist non-appearance options can be added to insurance * weather insurance * pyrotechnic insurance

Expense budget for Marketing/Promotion

* no real formula * some sort of flat rate per ticket expense for initial budget after artist costs, etc * 3-6$ per ticket first, then gets refined * social media is used only for some genres like EDM- go where your market is * classical artists rely on traditional methods - go where the fans are.

Cash flow management issue

* owe money that you don't have * need to pay vendors, etc but haven't seen income yet * promoters are paying for a lot, before a ticket is even sold

Issues the recording/touring industry has been facing: If tickets don't sell....

* papering the house * give away tickets with deadwood * brings foot traffic for concessions, merch, and sponsorships * close of sections with curtains, move customers up

Issues the recording/touring industry has been facing: Concept of pre- sales

* permanently changed the ticket sale industry * a selected audience are allowed to buy tickets before everyone else * superfans, banks, selected sponsor customer lists * used as a barometer- to make sure fans are engaged

TOUR PLANNING critical considerations: WHEN

* record release schedule: usually after the release of the album * more crowded to tour now * see what's going on when you want to tour there-competitors, local events * over 70% between april and september- spring and summer due to open amphitheaters * artist availability * how recently was that artist there in the market? * every 16 to 24 months * fall/winter seasons are slower due to sports schedules * indoor, small clubs are busier during winter * who else is touring * major festivals: anchor date * venue availability

Issues the recording/touring industry has been facing: Consumer Attitudes

* revaluation of music * recorded music has been devalued in some ppls eyes * our culture/generation believes that music is free * industry needs to learn to survive on lower profit margins and multiple micro transactions

Merchandise Settlement Process

* settlement with the venue at the end of the night * Can take weeks to see revenue, but at least see proof of sales

Specialty Shops

* small niche markets * customers will often travel a great distance for the service * offer experiences that cannot be offered online *instrument repair services *lessons *loan, rent, or buy used *knowledgeable sales help *Music Product Industry is dominated by specialty stores *mass merchants have limited product lines

Super Fan

* someone who attends the event no matter what, where, or how much it costs * willing to pay double, miss family events, drive in the snow

Expense Projections for a Tour

* start up costs * overhead- how much to start it * designing the show * rehearsals- halls like center stage in noho * deposits for venues, artist guarantees * running expenses * how much to keep it going * transportation, lodgings (maybe part of hospitality rider) * meals- food, water * crew wages, side musicians, dancers * sound, lights reinforcement-local rentals * equipment-staging (union house-labor costs) * projections-cheaper * can be included in the technical rider- amps, etc * instrument rentals * venue rental costs: flat fee, surcharge (production expenses on a weekly basis * Entourage expenses * manager, assistants, friend family travels

Radius Clause

* stipulates that talent may not announce and/or perform another concert in a certain radius, geographical region for a defined period of time * from date of execution, to usually 30 days after the performance * radius is typically 90 miles * promoter is selling a limited resource: access to an event * protects the interests of the promoter * anchor dates: big show dates that are important-like festivals

Promotional/Marketing Support

* support the tour, only from a marketing/promotional standpoint * sponsorship DELIVERABLES (sponsorship activations): * TICKETS! * Logos on all kinds of promotional material * back stage passes * meet and greets with artists * ACCESS to the artist * sponsor giveaway items during the concert * sponsor name on artist websites * private concerts for key corporate clients * signage at booths, merch space, etc * GOT to see how much these activations cost prior to taking sponsor * sponsor activation mediaries are common and needed

Dynamic pricing

* the airlines/cruises * depends on WHEN you purchased the seat * profit maximization: plane will fly with or w/o full seats * prices vary dramatically- ticket sales reflect this-opposite of planes * ticket sales are low, then increase closer to the date * concert folk can talk about their prices

Term of Merchandise Agreements: Advances

* vary wildly * are recoupable and returnable, with interest * artist is required to perform a minimum amount of shows and per capita * repayment: * Advanced repayment is a threat that merch companies hold over the artist *the artist meeting the per capita revenue projection is one reason why the recoupment period would be started. * triggered by: tour not starting on time * minimum number of shows, ppl in seats

Budgeting Concerns

* very critical part of everything, including touring * least interesting for creatives * look at budgeting as a TOOL * planning tool vs mathematical exercise * SHAPES vision of the event/tour * focus creativity on goals of the show * common reasons shows lose money: * underestimating expenses * overestimating revenue * budgeting/tracking are very important * tracking is a never-ending task! * based on quotes, experience and your gut * contingency fund: 5-10% of your expenses for unforeseen expenses *leave a cushion! * don't just throw it in a folder! track it as you go * be conservative with your revenue projections

TOUR PLANNING critical considerations: WHERE

* where your fans are * calculated by album sales * soundscan: 1991 * now streaming/social media data is useful * mix of primary, secondary and tertiary markets to create a sensible route * tour routing: based on a map * distance between shows/wear on musicians * VENUES: * capacity * aesthetics * some artists want a certain vibe/association * seating configuration * general admission or assigned seating * availability * AGREEMENTS * four wall deal: * just booking the place, shell only-provide everything else

Classical Arts Music Timeline

*1960s, 70's, and 80's à Huge creative explosion. *Congress created the NEA - National Endowment for the Arts. *It's an independent grant agency that supports the classical industry. *Between 1958 -1969, Leonard Bernstein was the conductor for the New York Philharmonic, and sometimes this would be recorded and broadcast over PBS. *Leonard Bernstein would come out and talk about the music as well to educate people about the classical arts. *It was later taken over in the 1980s by John Williams, (1980 - 1993), who was the conductor of the Boston Symphony Pops Orchestra. *In the 70's and 80's we see a rise in the adapted score for film. *They primarily adapted classical music. *In the 80's things start to change. *There was some controversy around the NEA because taxpayers were funding it. *It all changed when Robert Mapplethorpe had an exhibition with some controversial photography that was partly funded by the NEA. *We see orchestras in the 1990s begin to increase their audience engagement. *Film music is often a gateway to classical music. *now 2,000 symphony orchestras in US

Non Profits and Arts Administration

*Although this isn't a widely publicized sector of the industry, it's a very important part of our industry. The Grammy awards, NAAM, RIAA, etc. are all non-profits and operate differently. - Symphonic music, chamber music, jazz, opera, choral music, ballet, dance, and even some church music. Historically the arts industry has been separated from

ADA

*Americans with Disabilities Act: 1990 * legislation that changed many things for the better, but affects venue world * accessible seating * always have them on hand * in each section/price point-no discrimination

Percentage Deal

*Artist and promoter split percentage of proceeds * usually artist: 85%, promoter: 15% * the split is from NET revenue! * this is gross sales minus concert production expenses, venue rental, marketing/promotion expenses, etc

Institutional Print Dealer

*Educational *Ex: JW Pepper

Versus Deal

*Flat guarantee VS. a percentage deal-- whichever is GREATER for artist

LSO Live Recordings

*London Symphony *offer conductors/musicians a stake in profits versus up front payments

Non-Profit Organizations

*Most arts organizations are funded by a non-profit organization. *Non-profit organizations are allowed to make a profit. *Surplus revenues aren't allowed to be distributed as profits or dividends - they're put back into the organization.

Block booking

*Promoters do dates, venues, production and promotion for a series of concerts

Gross Potential Net Potential

*Seat capacity times the average ticket price *Gross potential minus comps (artist guests, radio and press seats for promotion)

Ad mat

*Term for reusable print materials *artist change minor dates/times to use the entire tour

Concert Promoter Responsibilities

*Ticket Sales *Artist Merch *Sponsorship Deals *Stage set up/break down *Event Staff *Financial Accounting/Settling *Safety Regulations -these are negotiated b/w NP & local promoters, artist & venue

TOUR PLANNING critical considerations: WHY

*To build a fan base *Historically, it was to promote record sales and to make money

Control Sheet

*Tool that lists the event details: -facility -date/time -producer (mixer?) -artist -road manager -stage -lighting/sound -dressing rooms -loading dock -performance licenses -union jurisdictions

Structure

*Typically non-hierarchical. *Non-profits and arts organization rely heavily on boards, committees, and volunteers. *This can create a very complex and bureaucratic organizational structure. *Many non-profits are led by a board of directors. *These board members are generally volunteers and are not paid. *The board makes the policy, which then the full-time staff carries out. *Board members aren't selected for their art or knowledge - it's typically "who has a lot of money that we can get on our board?"

Non-Profit Staff

*Usually non-profits are famously known for running off of extremely lean staff. *Link from board of directors and full-time staff is called the executive director. *It's a demanding and sometimes awkward position to be in. *In addition to an executive director there may also be an artistic director. *The exec director would handle the business and the art director would handle the art.

Non Profit Volunteers

*Volunteers are very important to the non-profit world. *This is a critical labor pool in the arts admin world. *They often function as event volunteers - sometimes they can sell season ticket subscriptions or be a part of other fundraising. *They tend to be people who want to give back, and students.

Current issues with Arts Organizations

*audience development *outreach to school *discounting tickets for people under 40 *social media/websites *The New York Met have released operas in movie theaters *Use of technology as a loss leader to drive ticket sales.

Internet Store Fronts Mail Order Outlets

*easy access, undercut local music stores, unlimited market *Centralized warehousing, less out of stock, mass amouts

Combo Store

*focuses on rhythm section/combo group

Term of Merchandise Agreements

*generally last one touring cycle OR until the advance is recouped, whichever is LONGER * if you take a huge advance and don't sell, you are indentured

Cost of Insurance

*liability, event cancellation * largest determining factor of cost: GENRE * break it down to a multiplier based on capacity/attendance * classical: 15 cents per attendee * rock: 50 cents per attendee * heavy metal, rap, hip hop: over a dollar an attendee * high cost of insurance, has caused promoters to go in w/o insurance! * event cancellation insurance: based on the entire event expense budget * 1-2% of entire budget

Permits and Insurance

*promoter is usually required to carrier insurance: * personal injury, property damage insurance, and clause that requires they carry all permits and licenses

Concert promoters

*take risks, pay acts, market shows and sell tix! -middle person between the artist and the audience -take on a substantial managerial role/risk (agents do not) -Personal service -Required skill sets in a good concert promoter -knowing venue/vendors -knowing market -good negotiater -detail oriented -ability to delegate -project/budget management skills -knowing talent -relationships with promotional outlets -radio -media -promoters' job: stimulate interest in the event -tour routing-make it special! occasional -rule of thumb: want to end your show with your audience wanting more

Shrinkage

*the loss of product or variances in inventory usually due to theft, giveaways - and usually there's an acceptable shrink. *They generally try to hold it to 1% *"don't worry about losing pennies when you're losing dollars." * using merch as a bartering system

Tour Merchandising

*the reason an artist chooses a merch company * relationship artist's team/management has with the merch company * advance amount being offered by merch company * used to be a piggy bank for artists * royalty rates offered-splits *15-22% because artist brings foot traffic * merch company's ability for retail distribution-physical stores * sub-license to another merch company to get into physical store * another split?! * product development

Music Products Industry Market

*this market caters to the educational markets and hobbyists * focus shifts to the artist themselves instead of the instrument * deep connection with the educational market * high school educational programs are a gateway for musicians * this is where people have traditionally ended up-in the music product industry * offers an increased level of predictability, stability, and those interested in education

Artist billing

*usually expensive/important in the contract * artist advertisements- marketing * huge area of fighting b/w promoters and agents * the font size and location * no artist on the same line, above, etc * agents negotiate hard for billing, because it influences later festivals

Promoter Contract

*venue *agents *merchandisers *light/sound *insurance *transportation/hotel *food/beverage *police/fire department *security

Live Nation

-$5 billion in revenue! -22k events/year -over 100 venues -Own venues -Own ticketing agencies -Ticketmaster! -(duplicated for significance)***1996 telecommunications act: birth of live nation was a result of the radio deregulation *In 2005, Clear Channel then spins off the concert promotion business and makes a separate publicly traded company called Live Nation. *By 2007, Live Nation popularizes the 360 Deals with Jay-Z and Madonna. *They're the guilty party on this thing. *In 2010 Live Nation merges with Ticket Master. *Now as of today, Live Nation controls performers, venues, ticketing agents, and the promotion machine to make it happen. *It's a huge vertically integrated operation

SFX Broadcasting

-***1996 telecommunications act: birth of live nation was a result of the radio deregulation -SFX broadcasting : Robert Sillerman -the 7th largest broadcast radio in America in 1996 -he went into concert promotion business, buying 2nd largest promotion company -provide synergies to radio and promotion -use his radio station to promote concerts -2000: SFX merges with former radio competitor -sold broadcasting company to clear channel: -SFX merges with Clear Channel and became Clear Channel Entertainment -It represented the merger of the largest concert promoter with the largest radio conglomerate. -2003: clear channel is selling over 50% of all tix in America -There was too much vertical integration. -2005: clear channel spins off the concert promo business and makes a second publicly traded company called Live Nation -2006: Live Nation remains last holdout buying House of Blues -2007: live nation popularizes the 360 deal with Madonna, Eminem -2010: live nation merges with Ticketmaster, and absorbed management -performers-front line management, own venues, ticketing agent, and promotion buz -NOW Rober Sillerman is doing the same thing to EDM

CLUBS (midsize/small-size in book)

-100s to 2k -most numerous -downsize=small capacity -lower net potential of revenue -cater to music-lower production costs

Theaters

-5k-10k seats -Nokia theater, The Wiltern -dedicated to stage -more intimate experience -up-charge of tickets -better sound -configurable: take the seats out -has a roof- no weather issue -route for popular artists who are not HUGE artists -lower production costs, more likely to break even

Arenas

-5k-20k seating -like festival sights, a fast growing venue model over the last 10 years -multipurpose venue with a roof -catered to sports teams (bit of booking problem), but more configurable than stadiums -built with music and sports in mind -production=more flexible -emphasis on suites sales- luxury boxes -about 15 seats -restroom and catering -corporate clients -ex: Bank of America buys a box to schmooze seats out -UK is popular with arenas -MSG=Madison square garden arena

Rider

-An addendum to the contract: rides with the contract * production rider-spells out requirements for the performance * riders have grown increasingly large in length! * from 6 to 100 pages! * a savvy promoter will ask for a standard rider to get a sense of the effect it will have on costs

AEG Live

-Anschutes Entertainment Group -Real estate developers -managing venue/real estate property site -then started buying -vertically integrated -band merch -more holistic -built LA Live -Doing the same thing in Vegas and Sacramento -includes Concerts west, Messina Group

Today's Concert Promotion: more vertically integrated

-Live Nation/AEG Live -promoters work for these big corporations -much wider ray of revenue streams-not dependent on tix sales -concessions, -parking -merch fees -annual holders -sometimes smaller promoters go into a joint venture with a big guy to handle venue while they handle artists -control the biggest festivals and ticketing companies in America -BILL SILVA

Split Point

-Number based on sales -the artist and promoter split this balance

facilities fee

-Venue gets a few dollars per ticket at Face Value on a sliding scale

Complimentary Tickets

-a huge problem in our business * as people move up the ladder, they expect more free tix/swag * Opportunity cost: lowering potential revenue * very abused in the music business

Back-Timing

-a management technique * requires first to detail every task you need to complete the event * in the ideal time that you need! * then start with the event, and put those tasks in reverse order * always going to end up with not enough time * start squeezing in things * get all ducks in a row, where pressure points may be * planning sheet! * PG 279 * can extend past the event into reflection

Festival sights

-accommodate 10k to 120k people -weather problems as well -generators: gas=fuel costs! -sanitation- running water -building a city from the ground up! -very profitable -a lot of talent lined up, less costs there?

The Music Product Industry

-encompasses the manufacturing, distribution, and retailing on physical music products: 1. musical instruments 2. music accessories 3. print music 4. instructional materials * method books, audio/video of learning to play 5. support services * lesson/instrument repair ** globally 17 billion ** US 7 billion

Soft ticket buyers

-festivals, fairs, casinos -the venue has ulterior motives-casino=gamble -buying talent is a loss leader -festivals/fairs: -not concerned with talent -one component of overall revenue structure

Hard-ticket talent buyers

-goal: profit from selling tickets -business model: ticket sales=primary revenue source

Stadiums

-largest pre-existing facility -seats over 30k, up to 100k -bigger financial risk -open air risk -limited to spring and summer -not made for music-so must cater to it -build a stage! -can't 'fly' lights, etc -can be dangerous! -very expensive -Have to book around the venue's schedule -increase expense/production

Event production

-may look easy, but there are a lot of things that can go wrong -risky business for those involved

historical perspective of the live sector

-prior to the birth of the recording industry,live performance was the primary way to hear music -even as the recording industry grew, touring was still an important part of the industry. -touring=profit -rock n roll: dominance of the recording industry -mid 1950s led to decline in live performance for rock n roll to recording industry -1960s-90s: record industry viewed touring as a marketing expense, to brand the artist (development) and sell records -through ticket sales, merchandise, etc was the way artists made their $, and venues made money from tours -erosion of record sales resulted in live performance industry becoming main stream of revenue -during 60s: local/regional promoters on that basis, not national yet -late 60s- promoters started forming companies that have more buying power -talent buyers -economies of scale, and spreading the risk over a number of shows, as to not lose all the eggs-cross collaterization is ok in the live sector -artists demand- no longer provided equipment... much more money needed for artist to travel -capacity/tix sales started to rise to pay for artist demands/equipment -no longer is it a form of artist development -throw baby bands on the road to gain fan base who buys all records produced -as artist brings their own production, promoter becomes less centered with production -concert promoters role changes: projects management, venue relations, risk assessments -consolidation of this industry: -dominated by large conglomerates

Buy Back Agreements

-putting a hold on people in the band -right of first refusal to artists' next tour- dibs -promoters: power -locked up venues on hold and had buy-back agreements - Spread risk over multiple shows - Cross-collaterize shows -promoter delves into larger revenue making concert on the multi-city tour to make up for a poor selling concert

Performance Agreement Contract

-relatively simple, couple pages -aka personal service agreement: Face Page **statement of date **time **minimum length of performance *billing for advertising *fees *payment schedules * statement of performance location * promoters may not own their own venue * may need to have proof that the venue is secured * Payment terms * 4 different fee structures * How is the form of payment? * half up front, half later, 90,10 * who are you paying, with what?

Amphitheaters

-seats 5k-30k -also have weather issues -advantage: built around a stage -facilities-bathrooms -lights, sound usually there already -80s & 90s=many amphitheaters built -ease of booking b/c no cater to sports team

Ticketing Agent: Ticketmaster's Business Model

-sells over 100 million tickets online per year -investing heavily in outlet and telephone sales -nationwide phone service to buy tickets -went to venues- have them outsource tickets to TM -TM profit: surcharge -then the surcharge is split -changed what was an expense for venues to a profit! -TM would guarantee the manifest -one stop shop -venues buy into it! -exclusivity to TM -now TM has the contact with the customer -collecting customer DATA -then sells it for promoting! -VERY powerful!!! -just purchase competitors if threatened -frankenstein technology- patched databases together -$ can make up for sloppy operations -agreement with fed gov: * allow AEG to compete * AXS= competitor * Fred Rogen *** Now venue and ticketing agents are in between the artist and the agent

Private event buyers

-small private parties to large corporate events -artist industry doesn't like to talk about -huge revenue stream -talent can command much higher fee -barred from other streams of revenue like merch -different motivation from a buying perspective

Evolution of Ticketing

-ticketing has greatly evolved since 60s and 70s -more of a profit center and source of information -before: ticketing was a cost the venue had to pay -artist had to work with the box office at each particular -venue -manifest- real estate of buts in seats- 1k or 1,020???? shady practices, accounting problems

Venues

-unlimited amount of artists, not venues -venue owners have a LOT of power -Diff. types: pg 290 (in order of capacity) Most PROFITABLE: -festival sites -huge net potential -arenas -theaters -size, production capabilities, etc

what is the state of the live performance industry?

-very profitable -significant growth in recent years -nothing will ever replace the live experience -biggest change: massive growth of large festivals

C3 Presents

-was the largest indie promoter in America -purchased by Live Nation -lalapalooza and other festivals -125 million dollars for 50% stake

What determines the cost of a show?

1. Artist caliber 2. Venue prestige 3. Economics of the city its in * generally determined by the headlining act... COST based pricing * should be based on fan base, demographics, seats available * point of negotiation- some artists keep low prices to sell out, help fans, but leave money on the table * usually b/w artist manager/agent and promoter to seal the deal on ticket pricing * perceived value of the seat * selling little pieces of real estate * Manage the ticket manifest * seats come out of the manifest- * reserved for disabled * obstructed seats * seating kills-taken out of manifest

Principal participants in the live sector

1. Concert Promoter -buyers of talent 2. Agents & Manager -sellers of talent 3. Venues 4. Ticketing Agent -largest: TicketMaster

The 4 Fee Structures for Talent Agreements

1. Flat Guarantee Deal 2. Percentage Deal 3. Versus Deal 4. Plus Deal -all are between the promoter and the buyer

Sources of Philanthropic Funding

1. Grants 2. Sponsorships - generally corporate sponsorships 3. Donations Criticisms

4 Types of Sponsorships

1. Label Support 2. Cash Support 3. Promotional/Marketing Support 4. In-Kind Support (donation)

Music Product Users

1. Professionals *smallest group 2. Hobbyists *amateurs 3. Schools/Colleges *75% of sales!

4 Types of Fans

1. Super Fan 2. Enthusiastic Fan 3. Familiar Fan 4. Casual Fan * There are more casual and familiar fans, but should market to Superfan/enthusiastic fans! * if you get the superfan, they talk to others * fan is short for fanatic!

4 Types of Riders

1. TECHNICAL RIDER * input lists, lighting, sound, staging, power requirements * Travel, hotel, food, band gear 2.Security rider * level of security, operations, who's allowed backstage-credentials * description of what is protecting the artist on stage from crowd * clause that demands all beverages sold are not sold in glass containers 3. Merchandising rider * defines the terms/conditions the venue must follow to get some of the merch revenue..? 4.Hospitality rider * what makes the artist comfortable * hotel accommodations, ground transportation, dressing room, catering, etc

3 common revenue streams in touring:

1. Ticket Sales 2. Merchandise 3. Sponsorships

Sources of Market Funding

1. Ticket sales. Typically arts orgs only earn 30% - 65% off of ticket ​sales. ​It's hard to engage young people. 2. Subscription sales (season ticket buyers). Think of the Staples ​Center. Season tickets are usually tickets + some value added good ​or service that is packaged together and then marked up for a ​perceived value pricing. This is the non-profits' preferred model. ​The arts org gets a pile of money all at once with season tickets. 3. Record sales 4. Broadcast rights - whether it's PBS or ABC

Current Challenges in the Music Products Industry

1. cuts in arts and education * Texas takes music very seriously * the rest of the country looks to them for educational taste 2. cost of labor vs quality 3. industry consolidation * old mom and pops are selling out, not passing on * from private companies into large conglomerates * good: economies of scale * bad: quality/brand diluted 4. Big Box Retailers * continuing to be an issue * sells introductory instruments! * devaluation of music products along with records * stocking crappy instruments * bad experience with first time playing * critical customer segment 5. Technology * electronics and synthesizers are competition to instruments 6. digital distribution * Print music people * piracy, digital distribution

Music Product Sales

1. fretted instruments-guitars/electric bases 2. Sound reinforcement products; Pro Audio- $ related products (PAs) 3. printed music- school music * recording products * piano * Used gear has become an issue for the industry * Constituency: Manufacturers VS Retailers * distributors/wholesalers can be a bridge, but less important

2 Types of Non-Profit Revenue Streams

1. market income (earned) 2. philanthropic income (contributed) *The non-profit world has typically not been able to thrive off of market-based income. *They then have to make up for lost money through philanthropic income, aka donors. *Performing Arts Organizations only earn 30-65% of their costs of operation...

EXPENSE PROJECTIONS WHY do things go wrong?

1. overestimating revenue, underestimating expenses * all about the details, * more detailed, the better * calling vendors and getting quotes 2. event producers/concert promoters should have a basic knowledge of concert production * speakers * lights * concert management 3. expense projections for a tour- 2 categories *Start-up Costs *Running Costs (see next card)

Plus Deal

A Flat guarantee PLUS a percentage * common structure used for today's TOURS * for arena/class tours * the artist guarantee and the promoter profit is considered an expense * before it is split, everyone is getting a guarantee of some $ * then whatever is leftover is split after expenses * promoter and artist profit are expenses-traditional 15/85 * PROMOTER MAKES 15% OF EXPENSES * page 276=basic plus deal * first, calculate total revenue * how many tickets you sold, minus comps * gross potential=sold every seat at stated price * minus what you gave away/didn't sell * also minus production, marketing/promotion expenses: net potential * roll in artist fee and promoter profit: now become expenses * book: SPLIT POINT, break even point * revenue-expenses=revenue split 85/15 * INTERESTS ARE ALIGNED

Boxscore

A music Metric: -tracks box office activity -tries to figure out how many tix sold and how much profit -does not calculate or track attendance -data is reported to billboard -voluntarily by concert promoters

Pollstar

A music Metric: -venues, promoters, agents, all report to pollstar -IMDb for the touring live industry -You can find out artist's managers, booking agencies, venues, etc. -You can also find venues within a certain radius where you can see which ones are available for a certain date. -self reported -take it with a grain of salt, look at larger trends

AGI

Adjusted Gross Income

ACA

American Composers Alliance *1937 *publisher

AMC

American Music Center *career development, funding, and performing/studying opportunities

APAP

Association of Performing Arts Presenters

APM

Audio Performance Management

Net Receipts

Box office income minus expenses

Local Stores

Competitive Advantage: * more knowledge * increased customer service * instrument rentals/repairs/lessons * repairs/lessons bring in traffic! * foster a sense of commuinity in local players in the music scene * position themselves as a supporter of the lifestyle of music * LOYALTY * their own stages! * Internet/Mail Order * musicians friend: guitar center * sweetwater * seriously undercut music stores

CPB

Corporation for Public Broadcasting

Philanthropic Based Funding

Criticism: *Organizations are often shielded from market forces and over time this lack of competition. *This can insulate the org from the audience and they can lose their audience. *The amount of energy, resources, and time to convince old people to give endowments is quite a lot, instead of producing and preserving the arts

Market Based Funding

Criticism: *The cultural contributions of people are incalculable so they shouldn't have to worry about ticket sales. *Too much time is spent focusing on gaining a new audience and alienating all the old people - even though the old people are the ones who donate through philanthropic funding

Promoter's profit

Front end: expenses times 15% (.15) Back end: 15% of balance remaining after deduction of expenses and promoter's allowed profit from GROSS ticket sales

Papering the House

Give away free tickets to fill seats and promote

Largest Retailer in Merchant Space

Guitar Center

High Arts Management Companies

IMG, Opus 3, CAMI (Columbia Artist Managemet Inc)

IATSE

International Alliance of Theatrical Stage Employees *union contract

Venue Trade Group

International Association of Venue Managers

ISCM

International Society for Contemporary Music *used to be League of Composers

ISPA

International Society for the Performing Arts *advancing high arts globally

Cooperative Ad

Manufacturer and Merchant share the cost of advertising

Leading trade organization for the music products sector

NAMM (National Association of Music Merchants)

NACA

National Association of Campus Activities

NEA NEH

National Endowment for the Arts National Endowment for the Humanities

NMC

National Music Counsel *chartered by Congress *serves music associations!

NP

National Promoters *need local promoters for appropriate venues, seat prices, and local promotions with radio and retailers

Non-profits' tax designation

Non-profits have a special tax designation *There are two that are important: *501 (c)(3) is a charity *nof-for-profit: orchestras, ballet companies *501 (c)(6) is a trade organization.

Bill Graham

Northern Californian Concert Promoter Pioneer

Amp

Pandora's launch of data/visualization tools

Promoter of Record

Promoter that did an artist's most recent concert in the area "right of first refusal"?

PBS

Public Broadcasting Service

Metropolitan Opera

Radio station that started broadcasting in 1931 and still is

SRO GA

Standing Room Only General Admission

SACD

Super Audio CD

average ticket price

now the highest it has ever been! -$85.00

Concert Promotion Talent Agreements

performance agreements are significant: -promoter=talent buyer * 2 parts to it: * contract * rider * buyer will reach out to agent and give them an offer * deal memo * basic fee structures (what is up front vs backend) * many talent agencies have these forms to fill out online * the start of a negotiation-not a yes no thing * once an agreement is reached: contract

Four-Walling

promoter takes ticket sales and assumes the financial risk if the sales don't cover operating costs that would otherwise be absorbed by the venue