Pre-Negotiation Strategies
At the outset, a crucial observation is in order. N.B. (which in Latin stands for "nota bene," meaning "note well," and which in Hebrew stands for "nichtav b'tzido," which roughly translated means "it is inscribed in the margins," or which in English simply means "no bozos") that the column is entitled "Pre-Negotiation Strategies." Let it never be said that I aided, abetted, assisted, enticed, induced, inveigled or otherwise suggested that anyone should ever enter into an entertainment agreement (or any agreement with significant legal ramifications) without the assistance of competent counsel.
There are, however, ways that parties to a potential agreement may posture themselves so as to ultimately obtain more favorable terms at the negotiations.
Conversely, the industry teems with horror stories about individuals who conducted their affairs in total disregard for the rules hereinafter set forth and found themselves between a hard rock and a cafe.
As an entertainment practitioner for some years now, and a musician and bandleader for nearly two decades, I submit for your approval the Gospel according to Simenowitz.
Canon number 1: Thou shalt not shoot thy load prior to signing. Oft times, the mere mention of a personal manager conjures up a Mephistophelean image of a short, fat, cigarchomping individual. Armed with an American Express card and a hotline to hell, the manager is invariably successful in extracting from the neophyte artist such concessions as the infamous "first-born son clause" and other such niceties. The recent litigation involving Eddie Murphy did little to dispel such myths. The litigation involving Eddie Murphy did little to dispel such myths.
Ironically, the opposite is quite frequently true, even with unknown artists. Typically, a friend of the band or someone with similar aspirations is designated the band's manager. That person frequently finds him or herself making substantial contributions of time and money on behalf of the band. After a year or two, perhaps the "manager" begins to get cold feet and/or notice that the band's progress is not nearly as great as they had envisioned. Conversely, after the band has been together for a while and the members' personalities and individual and collective musical abilities have jelled, there is sometimes interest from a record label.
At this point, the manager, now more than just a little bit of paranoid, consults an attorney. His concerns at that point are usually twofold -- will he enter into a formal management contract and, more significantly, will his investment be protected.
Consider a similar scenario: A producer hears a band and desires to produce a very high quality demo tape or a few master "sides" in hopes of taking the band to the majors. The producer books and pays for studio time, and assists in the preparation of promotional kits consisting of bios, photos and tapes. After the masters are mixed, the producer presents the artist with a record production contract, a management agreement and a publishing agreement. The artist flatly refuses to sign them.
To fully understand how the above problems might have been avoided, a brief word about the nature of contracts is in order. A contract is defined as a promissory agreement between two or more people that creates, modifies or destroys a legal relation. For our purposes, the key definitional word is "promissory." Thus, a management agreement might typically contain a promise by the manager to assist, advise and counsel the artist and a mirror promise by the artist to exclusively seek such counsel and guidance from that manager. Stated yet another way, the manager is in essence saying, "If you promise to exclusively seek my management services for the term of our agreement and pay me commissions, I promise to assist you in your career and fulfill what other promises I make in the contract" (e.g. getting the artist signed with a major label within a specified period of time).
From the artist's point of view the same is true. "In exchange for your promise to try to enhance my career, I promise to seek your advice exclusively and compensate you according to our agreement."
Thus, at the bargaining table, each side must evaluate the ability of the other side to perform and weigh out the likelihood that the endeavors will be fruitful. This is the stuff that negotiations are made of. If, however, a manager or producer tips his hand in advance and spends thousands of dollars and hours, there is precious little incentive for an artist to accede to reasonable demands by a manager or producer at the negotiating table because at that point the manager's or producer's key negotiating tool, to wit, the ability to say, "If I do not get the commissions that I want, I will not produce (or shop) your tape," will have been lost. Similarly, without a prior written agreement as to how and when a manager or producer may recoup moneys expanded by him on an artist, the manager or producer will typically find himself behind the proverbial eight-ball and discover that the artist's attorney insists on a slow repayment obligation kicking in.
In short -- get it in writing and early in the game! A cagey artist will frequently seek a pre-contract "trial period." Managers and producers should fight extremely hard for a written commitment from the artist at the outset which can, in fact, include such a trial period (in which the manager might have to shop a tape or produce a press kit) as a condition for any options to vest.
Canon number 2: Thou shalt do thy damnedest to spread thy name throughout the land. This second rule applies primarily to artists. The rule is best illustrated by the old joke, "My dry cleaner is so fancy that I have to launder my shirts before bringing them into him." Similarly, anything an artist con do to improve his track record prior to a contract negotiation will enable him or her to seek and possibly get concessions at the table. Remember, if your last ten albums were certified platinum, there is a greater likelihood that subsequent albums will meet with similar success. Stated yet another way, there is less risk with a proven entity.
Query: How does one prove oneself? The answer is quite simple. Get as much of your act together as you can before you seek outside help. If the group has had photos taken and has a typed bio and high quality demo, there is much less for a manager to do, thus relegating him to the serious task of shopping a deal for the artist.
Similarly, if your band's EP sold 40,000 copies in two weeks, you will do significantly better at the bargaining table with a major label and score many more concessions (okay, a few more concessions) than if you went in totally unproven.
Significantly, under New York law, contracts which by their terms cannot be performed within one year are unenforceable. Thus, given the mercurial nature of the entertainment industry as well as the ever-shifting temperaments of artists and industry personae alike, one who waits too long before committing an agreement to writing will find himself with little more than broken promises.
