Term
| What is the formula that defines Profit? |
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Definition
| Revenue + expenses = Profit |
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Term
| What question does a mission statement answer? |
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Definition
| Answers: Why are you in business? |
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Term
| What is a vision statement? |
|
Definition
| Your view of future of industry or market |
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Term
| What is a values statement? |
|
Definition
| Your code of ethics or operating principles |
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Term
| What are the 2 strategic questions to consider before going into business? |
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Definition
1. What do I want to accomplish?
2. How much am I willing to risk? |
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Term
| What are 3 key elements in any music business? |
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Definition
1. What’s the business or product?
2. What’s the market or target customer?
3. What is the revenue stream? How does everyone get paid? |
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Term
| What 3 things should you do before going into business? |
|
Definition
1. Market overview
2. Feasibility study or risk analysis
3. Business plan |
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Term
| In what types of entities are businesses organized for tax and legal purposes? |
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Definition
Sole Proprietorship
Partnership
Corporation - public & private
LLC (Limited Liability Corporation) |
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Term
| What are the four major record labels? |
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Definition
| Universal, Sony BMG, EMI, WEA |
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Term
| Who is the customer in the music business? |
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Definition
| Whoever pays you directly |
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Term
| Define the two kinds of competition? |
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Definition
Direct = same product category
Indirect = any product that goes after same target customer’s attention |
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Term
| What are the 5 key aspects of business? |
|
Definition
1. Product development
2. Product delivery
3. Sales & marketing
4. Accounting & finance
5. Management |
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Term
| What are the 4 key responsibilities of management? |
|
Definition
1. Planning
2. Organizing
3. Motivating
4. Controlling |
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Term
| What 3 conditions must be met before starting your own business? |
|
Definition
1. Business plan
2. Funding
3. Comfortable taking risk |
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Term
| What are 8 benefits of writing down your business plan? |
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Definition
1. Road map
2. Measuring stick
3. Opportunity management tool
4. Stress management tool
5. Catalyst for your best work
6. Competitive weapon
7. Fund-raising tool
8. Team-building tool |
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Term
| Who can also benefit from the business plan? |
|
Definition
| Investors, Employees, Partners |
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Term
| What are the 3 things that a business plan describes? |
|
Definition
1. What you are going to do
2. How you are going to do it
3. The Consequences |
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Term
| What are the 5 chapters of a business plan? |
|
Definition
1. Description of company (15%)
2. Description of products (15%)
3. Market overview & strategy (35%)
4. Management team & organizational overview (25%)
5. Financial summary (10%) |
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Term
| What section is the largest portion of the business plan and carries the most weight with financial people and investors? |
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Definition
| Market Overview and Marketing Strategy |
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Term
| How long and detailed is a business plan? |
|
Definition
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Term
| What is the plan’s 6th chapter and what does it include? |
|
Definition
6th chapter: appendix or reference section
Organizational chart, job descriptions, sample materials, etc. |
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Term
| What 4 key questions does a brand positioning statement answer? |
|
Definition
1. What business are we in?
2. Who are our customers?
3. What makes us special?
4. What’s in it for everybody? |
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Term
| What is the “Elevator Test” and what is it used for? |
|
Definition
What do you do?
Networking |
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Term
| What is the biggest challenge facing any music person or music business? |
|
Definition
| Competing for attention at all levels |
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Term
|
Definition
| Developing products & exposing themfor sale to specific customers |
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|
Term
|
Definition
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Term
| What are the four functions of marketing? |
|
Definition
1. Planning & positioning product
2. Communicating with target market
3. Managing customer relationships
4. Advertising and promotion |
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Term
| What are the four functions of sales? |
|
Definition
1. Achieve Sales Objectives “hit the numbers”
2. Participating in Events
3. Managing Sales Territory
4. Handling Administrative Tasks |
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Term
| What are the 7 links in the marketing chain? |
|
Definition
1. Product strategy – identify goods/svcs.
2. Pricing strategy – what market will bear
3. Promotional strategy - advertising
4. Sales channel strategy & place of business – intermediary, sale, location
5. Salesforce strategy – who, how much
6. End-user & buyer profiles
7. Competitive environment |
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Term
| What are some examples of music industry products (goods and services)? |
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Definition
| Live performances, secure bookings, provide management services, recorded music, entertainment experiences, original compositions, learning experiences, identity items, songbooks, and sheet music |
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Term
| What are the 6 phases of product life cycles? |
|
Definition
0. Research & Development
1. Introduction
2. Early growth
3. Late growth or shake out
4. Maturity or saturation
5. Decline |
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Term
| What are the 3 key factors that influence pricing? |
|
Definition
1. Supply and demand
2. Pricing conventions & traditions
3. Sales & marketing ability |
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Term
| What are the 3 basic pricing strategies? |
|
Definition
1. Low-cost producer – generic, control internal costs, undercut
2. Differentiation – designer, perceived advantages/qualities
3. Hybrid |
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Term
| What typically happens in the music industry with unrealistic pricing? |
|
Definition
Can’t make a living
Pricing out of the market
Costs get out of control
Inaccurate or limiting image or reputation |
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Term
|
Definition
| Create indelible images of you/product in minds of target customers |
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Term
| What are 10 types of promotional tools? |
|
Definition
1. Advertising
2. Publicity
3. Sales literature
4. Demos & collateral materials
5. Direct marketing
6. Trade events
7. Key influencer relations
8. Identity items
9. Showcase performances
10. E-commerce |
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Term
| What are 3 key questions about your promotional strategy? |
|
Definition
1. Do I have to use all 10 tools?
2. What can I afford?
3. What if I can’t do all of it myself? |
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Term
| Who are the four main players in maximizing a music career? |
|
Definition
Personal Manager
Attorney
Business Manager
Agent |
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Term
| How many songs should be included on a demo CD? |
|
Definition
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|
Term
| Why is it important to have the best song first? |
|
Definition
| To make a good impression |
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|
Term
| Who is the first person on the artist’s “team”? |
|
Definition
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|
Term
| Why should an artist be cautious about in getting a lawyer to shop a CD? |
|
Definition
| Credibility – only what they believe in |
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Term
| What suggestions does Passman give to screen the “sharks”? |
|
Definition
Get references
Consult team
Look beyond sales pitch
Who will do work?
Fees
Personality
Keep on probation |
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Term
| To what two positions in a corporation can you compare the role of a personal manager? |
|
Definition
| A COO and a General Manager |
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Term
| What are the 7 items listed as major aspects of the manager’s job? |
|
Definition
COO & General Manager: Develops image & career plan
1. Helps with business decisions: Label, publisher, fees
2. Creative process: Producer, songs, photographer
3. Promotion & publicity
4. Assemble management team
5. Coordinates tour with agent
6. Liaison with record label
7. Buffer for outside world: Handles details, requests |
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Term
| What is the typical range of commissions that a manager earns? |
|
Definition
|
|
Term
| What is the typical term of a management agreement? |
|
Definition
|
|
Term
|
Definition
| Time from commencement of record to end of promotional activities |
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Term
|
Definition
limits manager's income after termination
typically provides “step-down” over time
15% in first 6 months after split
10% in following 6 months
5% in following 6 months
0% after 18 months
full commission for 5 years after term, thereafter nothing |
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Term
| What is a key man clause? |
|
Definition
| If person you hired, retires, dies or leaves company, you can legally terminate contract |
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Term
| What is the role of the Business Manager? |
|
Definition
Accountant
usually certified professional (CPA)
Business manager provides more than just accounting services
pay bills, collect income, do payroll, budgets, tax planning, shop for best insurance (life & health), investment analysis, audit royalty accounts |
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Term
| What credentials or licenses are required to become a business manager? |
|
Definition
|
|
Term
| Why is it risky to have family members as a business manager? |
|
Definition
| It can ruin a relationship |
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Term
| How are business managers customarily paid? |
|
Definition
| Paid hourly, monthly retainer, %, or combination |
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Term
|
Definition
| spend time negotiating deals -% of the deal basis |
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|
Term
|
Definition
Advance payment, fees deducted
Guaranteed amount every month |
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Term
| What are a client’s options if an attorney reveals a conflict of interest? |
|
Definition
1. Hire another attorney
2. Waive conflict |
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|
Term
| What is the role of an agent? |
|
Definition
|
|
Term
| What unions may regulate agents? |
|
Definition
| AFG, SAG, Equity, AFTRA, DGA, WGA |
|
|
Term
| What does franchising mean? |
|
Definition
| May operate under union contracts |
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|
Term
| What is the standard fee for an agent? |
|
Definition
Standard fee 10% of gross wages
Agent paid directly from source & remits fee to client |
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Term
| If an artist doesn’t have a manager, who does the agent report to? |
|
Definition
|
|
Term
| What does a distributor do? |
|
Definition
|
|
Term
| What does A & R stand for and what do they do? |
|
Definition
| Artists & Repertoire: Finds talent |
|
|
Term
| What does the promotions department do? |
|
Definition
|
|
Term
| What are the 4 major record distributors? |
|
Definition
| Universal, Sony BMG, EMI, WEA |
|
|
Term
| What is a true independent distributor? |
|
Definition
| Independent distributors handle large number of minor labels – usually specializing in particular genre |
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|
Term
| What does the term record include? |
|
Definition
Contractual definition: both audio and audio-visual device
any other device now known or hereafter devised
Any kind of delivery of music for consumer use |
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|
Term
| What are the two meanings of “master”? |
|
Definition
1. Original recording made in the studio
2. Recording of one particular song (”cut”) |
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Term
| Record companies compute artist’s royalties based on what? |
|
Definition
Artist royalty = % of wholesale price (PPD) for each record sold
Multiply royalty % times wholesale price to find out how much you get
10% of $10 = $1 royalty |
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Term
|
Definition
| Give away free records (15%) |
|
|
Term
| Can retailers return unsold records to the record company? |
|
Definition
|
|
Term
| What is a “reserve against returns”? |
|
Definition
Return privilege 100% -
penalties for excessive returns
not sure what will be returned – withhold portion of royalties to cover returns |
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|
Term
| What does “liquidating the reserve” mean? |
|
Definition
| within 2 yrs of shipment, royalties on these paid to artist |
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|
Term
|
Definition
| taking royalties received & applying to amount advanced to artist |
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|
Term
| What does union scale mean? |
|
Definition
|
|
Term
| Are advances returned if not enough records are sold to pay it back from royalties? |
|
Definition
|
|
Term
| What is cross-collateralization? |
|
Definition
| Record Company can recoup advances for current record deal from all past or future record deals or under any other agreement with them. |
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|
Term
| How many sales is a gold album? |
|
Definition
|
|
Term
| How many sales is a platinum album? |
|
Definition
|
|
Term
| What does a bullet on the Billboard chart indicate? |
|
Definition
| Record moving up strongly on Billboard Chart |
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|
Term
| What is the purpose of an escalation of royalties? |
|
Definition
| royalty increases based on sales |
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|
Term
| What does the term “all-in” mean? |
|
Definition
| artist responsible for paying producer & mixer |
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|
Term
|
Definition
| includes recording costs and any amounts paid to artist as an advance |
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|
Term
| What is a “formula for advances”? |
|
Definition
| Automatically increases or decreases deal on future albums based on sales |
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|
Term
| What does pay-or-play mean? |
|
Definition
Play your music or Pay you off
Usually at minimum union scale |
|
|
Term
| What is the difference between firm albums and option albums? |
|
Definition
Firm album - Company obligated to record
Option album – company not committed to record |
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|
Term
|
Definition
|
|
Term
| What does commercially satisfactory mean? |
|
Definition
| They can approve or reject recording until it’s a “commercially satisfactory master” |
|
|
Term
| What does technically satisfactory mean? |
|
Definition
|
|
Term
| What is a controlled composition clause? |
|
Definition
| Lower songwriter royalties paid to artists who perform their own songs |
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|
Term
| What is the purpose of a guaranteed release clause? |
|
Definition
| artist can leave if record is not released |
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|
Term
| What does “A & R” stand for? |
|
Definition
|
|
Term
| What are record one royalties? |
|
Definition
| producer paid for all records sold |
|
|
Term
| Does the producer receive an advance? |
|
Definition
|
|
Term
| Who usually hires the producer? |
|
Definition
| Whoever pays the legal fees |
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|
Term
|
Definition
|
|
Term
| Do mixers usually receive flat fees or royalties? |
|
Definition
| They usually get Flat Fees |
|
|
Term
| What does exclusive mean in a record contract? |
|
Definition
| Artist cant work for anyone else unless approved by label |
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|
Term
| What is a sideman performance? |
|
Definition
| non-featured appearances on others records |
|
|
Term
| What does an independent record promoter do? |
|
Definition
|
|
Term
| What are merchandising rights? |
|
Definition
| rights to put name on products |
|
|
Term
|
Definition
| record company makes up for actual losses from tours |
|
|
Term
| Which unions receive payments per record? |
|
Definition
|
|
Term
|
Definition
| Tracks retail record sales |
|
|
Term
|
Definition
| record company sends artist detailed royalty statement 2x year |
|
|
Term
|
Definition
| allows artist accountant to check books to see if info on royalty statement is correct |
|
|
Term
|
Definition
| a middleman who buys from all record companys and sells to small stores |
|
|
Term
|
Definition
| lease floor space and put in racks of records |
|
|
Term
|
Definition
| license with label to manufacture and distribute CD's |
|
|
Term
| What is a loan-out company? |
|
Definition
Limits their liability
Tax-deductible retirement contributions
Eliminates deduction for unreimbursed employee expenses |
|
|
Term
| What is an inducement letter? |
|
Definition
| a document signed by artists agreeing to perform services |
|
|
Term
| What is an independent production agreement? |
|
Definition
Major-distributed independent label signs with major
Single Artist Deal
Multi-Artist Deal
Set up like loanout – but Artist doesn’t own the middle company |
|
|
Term
|
Definition
| Production Entity has “partnership” with distributor instead of receiving royalty |
|
|
Term
|
Definition
Company agrees to manufacture record & distribute as wholesaler
Independent label then sells it at wholesale price to distributor less distribution fee (20-25%) |
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