Anatomy of a Deal

Anatomy of a Deal


I get calls everyday from entertainment attorneys and artists asking how I get such great deals for artists. It’s easy, really, and I’m happy to share it with the world. The only negotiation that is successful is one where both sides walk away happy. If I do a deal with someone, both sides have to walk away feeling like they came out with the better deal, or the resentment will build up and affect the artist adversely. Think about it….if I offer to sell you a brand new Navigator fully loaded, 22s, TVs in the headrest, DVD and PlayStations, etc and I charge you $150,000, no matter how much you love that truck, you’re going to feel played when you find out it was worth half that. It’s the same with label deals--the artist has to feel like he (or she) got a great deal, and the distributor/major label has to feel like they got a great deal. It’s really all about managing expectations.

The first thing that needs to be done is the groundwork needs to be established. There must be some sort of a buzz on the artist that wants to do business with a major label or a distributor in the music industry. There must be some sort of compelling attraction, and reason, for a major to pick your label or your artist. Talent is NOT enough. Labels have access to every artist in the world, receive demo tapes by the truckload, and know everyone in the business shopping an artist or label to them. If you want them to pick your label, or your artist, you must stand out and be noticed above all the others. And you have to stand out with an incentive to them. This is why I believe my deals are superior; not because I am smarter or slicker or have better access, I am not and I do not. My deals are the bomb because they work—everyone knows what they are getting, everyone walks away happy, and I never pair folks together who can’t make each other money. I am able to look at the same situation through everyone’s eyes. I know which labels can work which style of rap best because I study the industry. I have the ability to fill needs all around the negotiating table. Everyone walks away getting what they want for the most part, provided they know what they want. And you can do this too.

Right now, there are artists that are standing out to the major labels around the country. They are watching them closely to see if the benefit that they offer, is worth the label or distributor making the effort (and expense) to sign them. Remember, when a major label signs an artist, that’s a multi-million dollar investment. In today’s economy, labels spend between $1 million and $2 million marketing and promoting an artist (of which the majority ends up coming out of the artists’ share eventually, but the label still has to put the money out upfront and take the risk). If you want a major label to take the risk on you, or your artist, they are going to need to see that you are the best choice out there, and there’s a lot of competition.

Each major label has a department called “A&R Research” which are on the front lines of finding new talent that are creating a buzz in their own regional area (either through radio and/or regional sales), and although when they call you it doesn’t mean you are getting signed (there’s an infinite level of people you have to get through before you get a deal), it does mean you are getting noticed. I asked Selim Bouab, who just went from A&R Research at Def Jam to Director of A&R at Epic, how he finds artists. “I have a network of people I trust around the country, who give it to me straight. I’ve developed a relationship with people in every area around the country to tell me what’s really selling, what the buzz is on the street, and who’s hot and who’s not,” says Selim. “At Def Jam it was a bit harder than at Epic, because Def Jam wants artists with crazy through the roof sales and like 300 BDS spins already.” They are Def Jam and feel they are the #1 label right now, so they can be very selective. They don’t sign many artists this way; they didn’t sign any of the artists Selim brought through who had a legitimate buzz on the streets (although they tried), which tells you how competitive it is. Many artists feel they can bring a hot song to radio and get a deal that way, but history tells us something different. “If they are getting radio play, it’s important, but it doesn’t mean people will go and buy the record,” says Selim.

An independent retailer outside of Atlanta whom I recently met said the same thing. VicXL is a retail store owner: Backstage Music in Riverdale, GA (just south of Atlanta), runs a magazine, and has a video show called Hip Hop Encounter on UPN in Atlanta. He says, “I have seen so many artists get big radio play, but don’t sell records. Sometimes that just happens, so labels are very careful about signing an artist who gets only radio play without sales to back it up. In fact, a major label would be nuts to sign an artist who is getting radio spin without the sales to back it up. Last year I saw a rapper getting 140+ spins at radio, and I think I sold 2 CDs. ” So, while radio play is a plus (even though it is very hard to get for an independent label or artist), sales are still the key.

So what is Selim looking at now? Paul Wall and Chamelionaires out of Houston are selling and getting radio play throughout Texas and Louisiana. They were set up beautifully for the past few years on Swisha House mix tapes. Rashida is getting 130 spins in Atlanta but the retail reaction isn’t there yet; JMC and Ronin out of St Louis have a song that has a beat that’s driving the song but no real retail yet; Blizzard out of Nashville, a female MC, is beginning to get spins but it may be too early to talk about; and T.I. who was signed to Arista, but may be available now, is getting attention from Puffy and Cash Money--he gets so much love in Atlanta. These aren’t the projects Selim is signing, it’s what he’s watching right now to see where they go and what happens with them to determine if he should sign them.

The bottom line for someone putting out records in today’s climate (major labels who released 60 records last year, have cut back to half of that this year), is to build a buzz on the streets, sell as many records as possible (with a bar code for SoundScan), and try to get as much radio play as is feasible. It ain’t easy, but folks are doing it all around the country and that’s your competition.