7 The Artist as a Business

Any business requires an understanding of what product or service they are providing, and to whom they are providing it. It is a basic mission statement. With the mission established, it becomes the job of the manager to refine the definition of who the expected customers of the artist will be, develop a plan to reach them, and to employ the people and other resources to create a support team.

It is clear that among the most important functions of the artist manager is to be the promoter and advocate for the artist and their talents. This is another way of saying that they are responsible for developing the artist as a brand, marketing the artist, and exploiting their talents—which is why this and many of the following chapters include sections on marketing and promoting the artist as a commercial entity. This chapter begins with a look at target marketing for the artist manager followed by the creation of the artist’s support team.

Understanding target markets

The job of artist management is to direct the career of an artist, and a very common activity of the manager is promoting and selling the star power of the artist to people willing to buy music and tickets to performances—this means there is a lotof marketing going on. The manager must keep a constant understanding of what is driving the buying decisions of music consumers, especially within the genre of the artist, and translate that information into revisions to the artist’s career plan. And the manager must be on the watch for opportunities to redefine the artist’s target market in order to build a larger fan base.

Defining an artist’s target market

A target market is defined as consumers and potential consumers with whom the artist’s music connects creatively and commercially, and they are the fans that have the willingness and means to buy music, tickets, merchandise, videos, and digital products from the artist. This target market makes up a segment of the larger general market of music consumers. In the marketing profession, targeting this smaller segment of a broader market is defined as market segmentation.

Ways to view market segments

There are numerous ways to look at segments of a target market, which we will consider here. The savvy manager should not assume that the marketing department of a record label is viewing the full career of an artist in terms of the label’s target market segment. As we know, the function of a label is marketing with the goal of selling recordings—not necessarily to sell tickets and merchandise. So it is important that the artist manager keeps a continuous look at trends in the genre, in music generally, at new product technology, and to pop culture to find all opportunities for their artists that might be in the marketplace. The manager should then adopt those opportunities into the formal career plan of the artist to be sure they have become integrated into the goals set by the manager and artist.

A good definition of market segmentation is “the process of dividing a large market into smaller segments of consumers that are similar in characteristics, behavior, wants or needs.” (Hutchison, 2005)

The last two methods of segmentation that help define the target market for an artist require considerably more thought and ongoing research by the artist manager in order to be useful. However, the artist manager who stays current in their understanding of generational attributes of the target market in areas of psychographics and behavioristic segmentation will be able to find subtle ways to reach consumers that others will not. An extension of this is to be continuously aware of changes within peer groups that might establish new attitudes to find opportunities, or to head off a consumer group’s flight from favoring an artist.

An example would be to look at the recording success of John Mayer. In 2001 his first album was released, and it performed extremely well in the marketplace. His two subsequent albums have been successful projects, but each has produced much lower sales than the previous album. The possible causes for the decline in sales are numerous but it raises these questions about the target market. First, has the marketing approach been modified to acknowledge that the 22-year-old fan who bought his first album is now approaching 30? They’re in a different place in their careers and personal lives now. And second, what has been done to embrace the special target market consumer characteristics of those who are now 18–22 years old?

An informed understanding of the target market segment can be one of the most productive tools an artist manager can use in managing the career of an artist.

Branding and image

A brand is typically the name of a product that consumers identify with in terms of the benefits it provides, so the artist’s name and everything associated with it create a brand name in the minds of the target market/fans with the benefit of being entertained. The name of the artist is a distinct brand, and like all brands it becomes the sum of all of the experiences the fan has had with the artist’s music. The artist as a brand and the associated image distinguish the artist from others and makes them recognizable through their distinct approach to music and performances. With the large array of cable music channels and the Internet, the artist has become multidimensional and has taken on the qualities of the purest form of a brand. While brand identification with labels such as Chess, Motown, Atlantic, and Def Jam has created a certain expectation by the consumer over the years, the brand relationship the music and ticket buyer has is with the artist, not with the label.

A key component of branding is image. A brand image is the way people feel about a product, and in this case, the artist. It is their emotional attachment to the artist based on their music and performances and how they respond to them. The image of the artist should be a reflection of their own values, but then it should also be a reflection of the values of those who buy their music and concert tickets—their target market.

We live in a world that requires we filter tens of thousands of commercial messages every week to quickly determine if they are relevant to us and our lifestyle. (CNN, 2007) With such a continuous assault on our attention, we’ve become very adept at spotting phony communications that are pointed at the masses with little originality. It’s the same with today’s commercial music. As a brand, an artist must be unique but fitting for the genre, consistent in the quality of their work, and genuine about their artistry. So it becomes the job of the artist manager to help the artist refine their image so it has a commercial edge but still maintains the values the artist brings into their work.

The symbol of the brand comes in the form of a trademark or service mark or both. A trademark is a symbol that represents the brand and distinguishes it from other products. Artists who choose a symbol as their trademark should also trademark the text of their name in order to protect it in its commercial use. Where trademarks define the sources of products, a service mark give the source of services, and in the case of an artist, the service they provide is entertainment. Both kinds of marks generally are protected if they are regularly used in business, but for assured protection of their exclusive use by the artist they should be registered with the US Patent and Trademark Office.

Related to trademarks is a doctrine referred to as an individual’s right of publicity. This generally means that people have the right to control the commercial exploitation of their names, their image or likeness, or some other distinguishing aspect of their person—even having a very distinguishable singing voice. In 1989, Bette Midler declined an offer to appear in an automobile commercial so the advertising agency hired a sound-alike singer instead. Midler sued and won $400,000 with the court saying that she had a “property right to her distinctive singing voice.” (US News & World Report, 1989)

Many states, including California, New York, and Tennessee, have passed laws or accept the common law practice of protecting a person’s right of publicity. This protects the use of an artist’s brand or image for commercial purposes without permission to do so. In the UK, the principles behind the right of publicity have not been supported, though the courts are more willing to consider the concept today. (AHRC, 2007)

A final note about image: the artist must keep a contemporary look and sound in order to remain a good fit with current music. Pop culture moves quickly between trends, and it is important for the artist to maintain an image that doesn’t change too quickly or dramatically, yet still is in sync with the times.

The artist’s support team

A basic set of professionals is needed to help the manager put and keep the artist’s career on track.

Booking agent

The booking agent is the individual who connects an artist with most paid performances, and among the largest booking agencies in the world are the William Morris Agency, and Creative Artists Agency. While agents book live performances, they are also involved in negotiating artists to appear in commercials, arranging tour sponsorships, and for appearances in television specials. Agents do not get paid from the sale of recordings or from songwriting. In all cases, however, an agent is the person responsible for negotiating the fee an artist will charge a promoter for a concert performance or for an entire tour. Some larger booking agencies have what is termed a “ responsible agent” who is the primary agent who receives offer letters from promoters and then creates proposed contracts for bookings for the artist manager’s consideration. Artists are exclusive to agents for their performance bookings, meaning that there is only one agent that represents the artist for live performances.

The booking agent for major artists is required to coordinate available live performance dates with the manager and the record company in order to fill as many paying dates as possible—and that the artist is willing to do. For their work as an agent, they are paid 10% of the value of the shows they book, so a $10,000 booking earns an agent $1,000. Some agents will reduce their fees for major acts and larger tours because even small percentages on this kind of booking can generate considerable commissions for them.

As a practical matter, agents who book small venues may charge higher than 10% in order to make it worth their while to handle lower paying engagements. Typically, too, these small venues do not require the use of performance contracts required by the unions, though it is advisable to use union language to protect the artist.

Paid performances that the agent is not responsible for are appearances on television talk shows. This kind of performance is considered promotional in nature, and payments to artists who appear are minimal compared to fees charged to promoters for concert appearances.

Attorney

Nearly every activity the artist will have in the commercial side of the music business will involve promises in exchange for payment. How those promises are framed and how the compensation is planned become the heart of a contract, and the advice of an experienced attorney can assure the interests of the artist are represented in business agreements.

The attorney who becomes part of the artist’s support team should be an entertainment lawyer and someone who is very familiar with the music business. The attorney must be a specialist who has a daily working knowledge of contract provisions, an understanding of the personalities with whom they will negotiate, a solid reputation within the industry, and experience deep enough to be familiar with most of the circumstances an artist will encounter during their career. Some artists have relied on lawyers who are not within the mainstream of the music business, and that has been adequate for them, but the best advice to protect an artist’s career is to use the skills of one who is experienced and works it day to day.

Publicist

Publicists on the artist’s team work for the manager and they are the conduit to news and information from the artist to radio, television, cable, newspapers, trade magazines, consumer magazines, Internet portals, and the World Wide Web. They have relationships with key information gatekeepers at relevant media outlets, and are trained and experienced in knowing the needs of editors and decision makers. They maintain databases of their contacts and they understand how to get stories about artists placed in the media.

The major labels and many independent labels provide a publicist for the artist because they are interested in promoting a current recorded music project. But the artist who is assigned a label publicist is sharing their attention with every other artist who has or is planning the release of a recording. The artist manager should not be reluctant to employ an additional publicist whose focus is only on the artist and who is under the direction of the manager. For a new artist, the manager will not likely choose to have a full-time publicist, but well-connected publicists are available who are willing to work on a project-by-project basis, thereby giving the manager a way to contain expenses in a budget yet have a publicist on the team.

Publicists charge a few hundred dollars to write and distribute a news release. For part-time, ongoing services for an active artist, they charge between $3,000–$4,000 for three months, plus expenses. A full-time publicist becomes necessary when an artist releases a nationally-distributed recorded music project, and costs for these services can be $4,000 per month or more. Another publicity-related cost is a photo shoot, and depending on the needs of the artist it can range from $500 to $10,000.

Business advisors

There are four business advisors that could eventually become part of the artist’s team. One of those is a banker. An artist will begin acquiring financial assets that will require safekeeping, and a checking and savings account, and a safe deposit box will become necessary tools. Likewise, the artist will need credit cards for expenses on the road, access to lines of credit, and perhaps loans to help finance their career. Having a good relationship with a banker can assure the artist will have access to these important financial tools. There are no direct charges by a banker for their advisory services, but they recapture their costs in the form of monthly account charges for credit, savings, and checking services as well as receiving interest on loans and credit card balances.

Another advisor that the artist will need is someone who can recommend appropriate insurance coverage. The artist will need liability coverage for their mode of transportation going to and from performances; they will need general liability insurance to be sure that neither they nor anyone associated with the live performance injures someone accidentally; they will need life insurance for their family in the event it is needed; and they will need insurance for equipment that is taken on the road which is used for performances. Charges for these policies will vary depending upon how much coverage is needed by the artist, and the cost of an insurance advisor is the commission they earn when they sell the policies. An advantage to artists who join unions like AFTRA or the AFM is that they are sources that can help meet some of their insurance needs at a reasonable cost.

In the early stages of an artist’s career the manager may handle the routine collection of earnings, making bank deposits, and writing checks to pay expenses. But as the artist becomes more active and earnings increase it will become necessary to hire an accountant to handle these matters. Accountants who specialize in the music industry have experience that will keep the artist from developing liabilities such as income tax in other states or other countries, and they can take away the accounting task thereby clearing more time for the manager to focus on career development. Charges by accountants vary depending on the needs of the artist. At the beginning of an artist’s career, an experienced bookkeeper may be adequate to handle simple transactions and routine tax accounting, but as the career begins to mature an accountant or a certified public accountant may be required though their service charges are higher than the other options.

A business manager is someone who handles income and expenses of an artist and who assures that what remains after the bills are paid are deposited or invested in ways that build wealth for the artist. Some business managers are accountants, some are certified business managers, and some are certified public accountants. Whatever levels of business management the artist requires, it is important that the reputation of honesty of the business manager is solid, and that both the artist and the manager have unwavering confidence in their expertise. Though there are other ways to compensate a business manager, those working in the music business typically charge up to 5% of the amount of money handled on behalf of their clients with a cap on the amount they may earn.

Alternative forms of business for the artist

The artist will have options that will determine the formal business type they will take. As these alternative forms are presented for basic informational purposes, it is important to remember that those who will help the artist and manager decide which business form is best will be the artist’s attorney and accountant. It takes professional advisors to recommend a logical organization that takes into account how the artist’s business will be organized and what the tax consequences are among the alternatives.

Proprietorship

A proprietorship is the initial business form that a solo artist typically assumes. This business form is where the individual declares that they are in business for themselves, and they are their own boss. They are not liable for anyone else’s actions except for those who they hire. It is an easy business form to create, and there is little regulatory accountability to the government. The key drawback is that there is unlimited personal liability when someone chooses to sue for accidents or negligence.

Partnership

This business form is the most common chosen by new artists who are actually a named group of performers. This occurs when a group of people pool their talents and professional resources to become an artist, and they are generally easy to form. Courts will support the right of any member of a partnership to act on behalf of all partners but they will also acknowledge that all partners are liable professionally and personally for any lawsuits brought against them. Most groups beginning their careers do not have a partnership agreement though it is very important to have one. Even a handwritten agreement by the partnership members will serve to forego some of the inevitable disputes that will occur between members. As an aid to groups who find themselves without a partnership agreement, Appendix C of this book includes an agreement form that gives guidance to bands or groups to form a formal partnership, and updated versions will always be available at the website www.artistmanagementonline.com. Contract forms suggested by this book or its website are for educational purposes, and are not intended to represent final contracts. In other words, always seek advice of an attorney for the final details of the agreement.

Corporation

A corporation is a very formal business form. It requires filing a charter with a state’s Secretary of State and often with the assistance of an attorney, and it is regulated by government. However, it is easy to transfer ownership of the shares one owns, and for the artist, it protects them from liability because a corporation is a business entity, thereby, shielding the artist. It doesn’t mean the artist will not be sued personally because of acts of the corporation, but it provides considerable protection to the artist from the earlier forms of business discussed.

Limited Liability Company or partnership (LLC)

Many times, a limited liability company is a very attractive alternative for an artist or a performing group when compared to a corporation. An LLC operates and functions very much like a partnership but it gives the members of an LLC the protection from personal liability the way a corporation does. Like a corporation, an application for an LLC is filed with the state’s Secretary of State and a charter is issued. Depending on the state in which the LLC is chartered, it can have as few as one member. (North Carolina Secretary of State, 2007) A variation of the LLC is the limited liability partnership, which carries many of the same attributes of an LLC. The limited liability partnership requires at least two members, and chartered LLP’s in most states protect the individual members of a partnership from liability claims though they are required to demonstrate adequate insurance and assets to settle any claims that might be brought against them. The UK has similar provisions in their most recent enactment of a law permitting the establishment of an LLP. (HMSO, 2007)

The Internet: A primer for the artist manager

The Internet is viewed variously in the music business as being either the technology that could ruin the recording industry, or, it is the entity that will give new opportunities for music creators and performers. Whatever the reality is, the Internet must be a part of the artist manager’s promotional strategy for their clients. The reason this section is included in this book is to give the artist manager a very basic understanding of the Internet and the terminology that will be useful when communicating with webmasters about websites for their artist clients.

A brief history

What is known as the Internet today began as a network for information exchange between colleges in the 1960s. It was text-based, meaning there were no photos or other graphics—just text. In the late 1980s Tim Berners-Lee saw the potential for a World Wide Web of interconnected computers that would have the capability to exchange data of all types, and created the first browser in 1990 to facilitate that sharing. (Berners-Lee, 2006) His proposal for the World Wide Web had three provisions. They were:

A very small World Wide Web was launched in 1992, and the creation of the predecessor to the Netscape browser was introduced a year later. Today, Internet Explorer is the browser of choice by a large majority of users, and the World Wide Web has grown to well over twenty billion pages. (Markoff, 2005)

What is the World Wide Web?

First, a definition of the Internet is necessary, since it is different from the World Wide Web. The Internet is a colossal number of interconnected computers with the intention of sharing information and communicating. The Internet is essentially hardware that consists of computers and their physical connections.

What creates the World Wide Web (Web) is software. When specialized software is added to a special-use computer, it can become a “server” that allows access to the Web by multiple users. An Internet service provider (ISP) is the company that is paid to host a website, and has a server or servers that are the access points for their subscribers to the Internet via the Web.

The importance of a domain name

A domain name is simply the registered name of the artist with a dot-com suffix, and registering it should be one of the first things a manager does on behalf of an artist. The domain name becomes the address to the most valuable piece of real estate the artist can own on the Web. It isn’t necessary to have a physical website created or space on a Web server in order to reserve and register a domain name. For less than $10 US per year, an artist’s name can be registered on sites such as Yahoo and GoDaddy. Both services offer a free search service to see if the artist’s name is available. When the artist’s name is registered, they have a domain name reserved until the manager has the time and resources to arrange for the creation of the website for the artist.

Some artist names are easily misspelled by fans for visitors to a website, so it is always advisable to register all of the likely misspellings of the artist’s name, too. When the webmaster creates the artist’s website, they can cause the domain names with the misspelled derivations to be directed to the correct website.

What happens when someone registers a domain name that is the artist’s trademarked name, and wants to charge a large sum to “sell” it to them? Can the artist be held hostage? There is a possible solution. The Internet Corporation for Assigned Names and Numbers (ICANN) can transfer the name to the artist, but it will be after there has “been agreement, court action, or arbitration” to provide them with terms of a settlement. (ICANN, 2001) The resolution policy ICANN will consider is as follows:

As in any issue that is as involved as this one, always seek the assistance of an entertainment attorney.

Some of the things to consider in the registration of a domain name for the artist are to register it in their name with the dot-com suffix. There are other suffixes such as dot-net and dot-org, but Web users are likely to try the dot-com domain name first to find the artist. If the artist’s name is not available, consider easy-to-remember alternate variations of a domain name that includes the artist’s name.

A URL

A universal resource locator is merely the Web address for the artist’s website after it has been created and loaded onto a server. The artist has a domain name of “yourartist.com,” which becomes a universal resource locator on the Web when it takes on the address of http://www.yourartist.com.

Web hosting services

These are companies that will set aside file space for the artist’s website on their Internet servers. They are the physical location for the website, and it is from here that people using the Web acquire access to it. The cost of space on a server like this depends on the amount of file space required for the artist’s website. For example, if the artist plans to feature large audio and video files it will require a greater amount of space on the server. Costs for server space on hosting services is relatively inexpensive, so even larger files that showcase the artist will provide more promotional benefit than their costs. Remember, too, that there is no geographic limitation on where the hosting service is located. Find one on the Web that has a good reputation and a competitive price, and it can be located anywhere.

Some Web hosting services say they are “free,” but the price the artist pays is having banners and other advertising sharing each page. Using so-called free hosting services sends the message to visitors that the site and the artist are amateurs.

Content

Content for a website consists of all of the resources that are presented to the visitor to the website. Tom Hutchison published a list of the basic elements of an artist’s website, and it serves as an excellent guide for the artist manager to ensure these key content elements are included on the site.

These are the basics needed for the site, but there must also be a commitment by the manager to assure that the site receives regular updates and maintenance, and it is important that this is done by someone who is being held accountable for that responsibility.

A key feature that must be designed into the artist’s website is a way to capture information about visitors. This is done by using a “form,” which is nothing more than a page that opens on the site with spaces for visitors/fans to enter information that will be used to update them on the artist’s activities such as upcoming CD releases or tour dates that have been added to their schedule. Capturing information about visitors is perhaps the most important function of an artist’s website because it gives the manager and the record company the data necessary to specifically target people who have an interest in the artist.

Content on a website is just a set of files that is organized by Web design software. Creators of websites may use HTML, or hypertext markup language, to write code that generates Web pages. However, there are a number of software packages to create websites that are essentially drag-and-drop, meaning they are developed and designed with mouse clicks. Among the more popular are FrontPage, Dream Weaver, and WebStudio. Using WebStudio’s templates for Web pages, it is possible for a novice to create an acceptable and functioning website in a few hours. This textbook maintains a continuous website with links to sites and services noted in this chapter, and to other information useful to an artist manager at www.artistmanagementonline.com, and it was created using WebStudio software.

Mining the Internet for information

Among the tactics used by labels of all sizes and many artist managers is to visit social networking websites to search for individuals who fit into the target fan base of the artist. Though it can be tedious, the artist manager can find geographic information about individuals so they can email them when the artist will be in the area for a performance. They can also determine individuals’ musical tastes that are similar to the music of the artist by searching these sites for similar artists, and capturing contact information with people who are fans. Communicating about tour updates, new music, and other news becomes a part of the routine that draws people to the artist’s website.

MySpace and Facebook were early social networking sites that opened the door for hundreds of other social networking sites with hundreds of millions of regular users. Consider all of these sites as potential sources for information about the specific target market of the artist. Type “social networking sites” into your favorite search engine to get a current listing of places to go to mine for information to add to the artist’s database.

The artist manager who uses strategies like those noted above will give an advantage to artists in their client list, and will make them a player in the latest definition of grassroots marketing.

References

AHRC, Arts & Humanities Research Council, 2006, Research Centre for Studies in Intellectual Property and Technology Law, “Personality Database: United Kingdom,” www.law.ed.ac.uk.

Berners-Lee, Tim, 2006, bio at www.w3.org/People/Berners-Lee.

CNN Headline News, January 15, 2007, reporting that American consumers are exposed to 9,000 commercial messages each day.

Franks, Patricia, 2003, Designing Effective Websites, Education To Go, www.ed2go.com.

Hutchison, Tom, Amy Macy, Paul Allen, 2005, Record Label Marketing, Focal Press, London p. 20.

HMSO—Her Majesty’s Stationery Office, 2007, Office of Public Sector Information, www.opsi.gov.uk.

ICANN, 2001, www.icann.org/udrp/udrp.htm.

Markoff, John, 2005, “Debating the Size of the Web,” The New York Times, August 16.

North Carolina Secretary of State, 2007, www.secretary.state.nc.us.

U.S. News & World Report, 1989, “A U.S. patent on famous voices,” U.S. News & World Report, Nov. 13, 1989, p. 19, Thompson Gale, Middle Tennessee State University.