Monday, March 6, 2017
Music Business/Law Tips - "Endorsement Deal Structures"
Talent compensation models when an artist enters into an endorsement deal (i.e., the artist promotes a product by appearing in an advertisement using and/or complementing the product) can be structured in a variety of ways, but 3 of the most common are as follows: (1) Flat Fee (the brand pays the artist a fixed fee to promote the product for a period of time); (2) Flat Fee + Bonus (similar to #1, but if the ad generates a spike in brand revenue that meets a certain threshold then additional fees are paid to artist); and (3) Equity Share (instead of a fee, or for a much reduced fee, the artist can share in a healthy percentage of the net revenues generated from the product sales and/or sometimes even an ownership stake in the company). Of course these types of deals tend to be geared towards a more famous artist, but endorsements (and similarly sponsorships) can exist at all levels, so these examples can be used as a guideline in negotiations. Ben McLane Esq benmclane.com