An Interview with Susan, a Houston based attorney practicing entertainment law.
This interview was recorded via cell phone. It turned into a spirited back and forth conversation that provides much insight into the real world play of negotiations in the entertainment industry. We decided to limit the scope of the conversation to emerging talent negotiating their first contract with a record label.
I have attempted to capture the spirit of this conversation by transcribing her comments and observations in their original form. In this way I hope to provide the reader with a sense and trajectory of this interview. Consequently, the sentence fragments that appear in the quotes are intentional.
The following provides some background on my interviewee. She has requested that her name be changed for the purposes of privacy. Susan is a partner in a legal firm out of Austin, Texas. She practices corporate and entertainment law as well as insurance law. She is essentially a people person who balances her professional demeanor with her sense of fair play. In my opinion, these traits make her a strong advocate who will know when to make a deal and when to get the best compromises in a realistic fashion, and, know when to walk away from a deal.
During our talk she provided the following observations on these points.
Using objective criteria
Susan suggests the individual who enters a negotiation with a recording label thoroughly research the label. Have they ever been sued? If so, what were the circumstances? What sort of talent have they already contracted? She suggests that any reputable label will be willing to have new talent speak with their clients prior to negotiations. What kinds of deal do they typically offer new artists? If the label requires new talent to pay any up-front fees for marketing and promotional services, they are to be avoided.
One practical demonstration regarding objective criteria she points out is the duration of the contract that is typically long in the initial stages of negotiation. “Most courts will not entertain a law suit that extends beyond two to five years,” she said. Her conclusion pertains to any label that insists on a protracted agreement—in this regard, the company likely to be unwilling to negotiate from a principled model.
Separating the people from the problem
“Every negotiation has a personality of its own.” Since most of the larger labels include negotiations with several individuals this just makes it more complicated. “The trick is to find the individuals in the negotiation that seem with whom you best communicate and use them as a primary contact. Often—if good communication is achieved early—they will be inclined to advocate your position to others who are taking a rigid position on the various items on the table.”
Susan suggests much of what we discussed in this class on a regular basis. She notes that the best negotiations occur when the individual demonstrates a willingness to negotiate. If, for instance, the label is asking for a long-term contract and will not negotiate the point after extensive conversations, then it is better to not sign. Some record labels will require the artists to pay back contributions over a period of time.
However, there are individuals in the industry who may be difficult to deal with and be aggressive in their efforts on the new artist’s behalf. We briefly discussed David Geffen, whose reputation for positional negotiation guided by bottom line profit, has a reputation for supporting his talent with the same aggressive nature. Thus, the situation might be difficult from a personal and professional perspective, while still having value over the long-term.
BATNA
Susan stipulated that emerging talent prepare for difficult negotiations with the larger labels. Often, their agreements are not in the best interest of the performer and will lead to difficulties if the performer signs an agreement that may seem beneficial in the short-term but—in reality—is detrimental in the long-term. One such BATNA might involve starting up an independent label that will later gain the respect and interest of larger labels.
Leverage and power
Susan advised larger labels often extend a substantial benefit to the new artists in certain circumstances. The newly emerging artist in the industry must be willing to strike some deals with the devil simply because it is in their best interest. If the trade off is delicate and unsure, it is best to leverage your own power as a talent by creating an environment where two or more labels are involved. The greater the demand and potential the artist demonstrates, the greater the degree of artist’s leverage and power.
Interestingly, Susan claims that choosing to develop an independent label may create more leverage and power that can be applied to future negotiations. In one scenario, she described the negotiation with the label came to a stalemate.
“My best advise to them was to pass up the deal and to refocus their energies on an independent label. My role in regard to this band then became one of corporate lawyer rather than mediator. They were somewhat uncomfortable with this alternative path and that was understandable. However, I coached them to consider this alternative as their best alternative to the negotiation at hand. At some point the decision would have to be theirs. The label was flashing $30,000 at them and this was a large sum of money for them. Their short-term thinking was overriding their long-term objective. The label gave them a few days to decide and I told them I would negotiate the best deal possible for them. It was not an easy situation for me because I saw all sorts of loopholes in this agreement that could possibly have extreme negative implications in the long run. My best advice is to create a BATNA—as you call it—that you can commit to and be willing to run with if necessary. They eventually took the $30,000 offer. I negotiated the best deal I could for them and cautioned them about the possible negative repercussions of the contract. Ultimately, however, it was their decision.”
Appreciation
Susan advises that it is best to let the label know that their efforts are appreciated while not appearing too ingratiating. She suggests that appreciation is a “two-way” street that creates a sense of team driven goals and objectives that sustain long-term benefits. She also agrees that being easy in negotiations is a delicate balance between ensuring the label meets its contractual obligations and misapplication of what meager leverage an emerging artist may have. She relates this back to the notion of carefully examining objective criteria throughout the initial negotiation process and the duration of the contract. Nonetheless, she agrees positive acknowledgement of a label’s efforts goes a long way in establishing a positive professional relationship.
“I once had a client sit in on a negotiation. I prefer to keep the artist away from the table until some sort of definitive contract has been drafter. Typically the first draft of the contract is rarely the last as I do not want to build up the expectations of the client. This client insisted on participating. To my surprise the artist opened up the negotiation with an acknowledgement of the label’s concerns and thanked them for the opportunity to speak with him directly. A few moments later a delivery of Starbucks’ coffee and Danish arrived with her compliments. She then politely excused herself saying she had complete faith in the negotiations. They were dumbfounded as was I. We did broker a good contract and the label went from a 20-year agreement to 3 to 5 years with periodic review. They slightly increased her initial budget for the first CD and provide her with a bit more assistance in marketing and promoting an upcoming tour. This rarely happens in my experience. She showed appreciation for their concerns and it worked like a charm. She definitely made my job that much easier. So, yeah, showing appreciation goes a long way at times.”
Dealing with negative emotions and dirty tricks and/or tricky tactics.
“Unfortunately, not all negotiations go quite as well. This is a very competitive industry and sometimes labels just entrench themselves in questionable tactics. It’s very easy to give into the initial emotion and requires one to simply let these sorts of things roll off their back. I couldn’t honestly say that notions of principled negotiation will realize the desired result. But yeah. I always try to let the initial negative emotions and dirty tricks be put on the side. Especially if they are in the early stages of negotiation. Sometimes they just realize that their tactic isn’t having the desired result so the will ‘change the game plan,’ as you suggested. The trick is to know when to cut your losses.
Ultimately Susan feels that responding to negative emotions and dirty tricks perpetrated by the negotiator is a slippery slope that—even if a deal is finally reached—will ultimately lead to legal entanglements that will have a direct and indirect—or adverse—effect on the performers career. In these situations she examines the contract even more closely than usual, asks for definitions of vague terms, and ‘suggests’ that these definitions be included as an addendum to the final contract. “I’m never really comfortable with these sorts of situations so I typically have one of my partners review my notes and documents for an objective opinion.” Again, she strongly recommends avoiding any such deal where the underlying dynamics of the situation does not “feel right.”
Mutual benefit
Susan also points out, many labels have a certain criteria by which to define mutual benefit. She suggests that these sorts of labels do exist and that mutual benefit can be powerful tool in negotiating a final contract. “The artist must first be very clear in regard to their own objectives,” she states, observing that “that—conversely—companies who take an adversarial approach by positioning themselves with rigid non-negotiable standards will often demonstrate behaviors that will continue over the length of the contract.
Susan is a plain talker who—while not necessarily familiar with the literal principles of principled negotiation—demonstrates them in her approach to law and negotiation. What most impressed me about this attorney is her sustained belief that there is significant opportunity in creating inter-dependence.
Susan represents me in my professional dealings. I have provided her with a questionnaire that reflects key questions regarding the successful negotiation of a contract. Once she responds in greater detail the results will be posted on this blog. The questionnaire follows:
Thank you for your time: This questionnaire is designed to determine the most effective strategic negotiation practices that yield mutual gain. The terms below are taken from two texts: Getting to Yes: Negotiating Agreement without Giving In (Roger Fisher and William Ury) and Beyond Reason: Using Emotions as You Negotiate (Roger Fisher and Daniel Shapiro). I have provided brief descriptions of key terms. However, it would be of great benefit if you would offer your personal understandings of these terms.
It is my hope that these questions will provide food for thought for you in your present and future negotiations. The information, comments, and observations you offer will remain completely confidential and used for research purposes only.
Thank you for taking a portion of your valuable time and please feel free to contact me if I can ever be of benefit to you in your future endeavors.
- Using objective criteria. Do you concentrate on the merits of the problem and not the mettle of the parties? Be open to reason, but closed to threats (Fisher and Ury 83).” What is your understanding of the term ‘objective criteria’?
- Separating the people from the problem. “Negotiators are people first (Fisher and Ury 18).” Have you ever been in a situation where you have had to separate the people from the problem? If so, why? Describe the situation and the outcome. How did you prepare in this regard prior to your negotiation? What is your understanding of the concept?
- A BATNA—Best Alternative Negotiation Alternative—is a back-up plan in case the desired outcome of your negotiation fails? How do you develop this plan?
- How important is leverage and power to you in negotiation strategy? What is your understanding of the terms ‘leverage’ and ‘power’?
- Do you feel that appreciation for your opposing negotiator’s point-of-view is important in reaching a mutually beneficial conclusion to the negotiation?
- Affiliation. What sort of affiliations do you make with your opposing negotiator? What do you feel is important for you to know about your opposing negotiator? Or are affiliations not part of your strategy?
- Where or what is the distribution of power in your negotiation? What is your understanding of the term ‘autonomy’?
- How important is keeping your status in your negotiation strategy?
- How do you perceive your role and your opponent’s role in the negotiation? What is your understanding of the term ‘role’?
- What impact do negative emotions play in your negotiations? Emotions are human—both negative and positive. How do they impact your ability to negotiate a successful deal?
- How important is mutual benefit in your negotiation strategy where both parties are satisfied and look forward to future negotiations? Describe a situation where this succeeded? What were the consequences? Briefly describe a situation where this failed. What were the consequences?
- How do you deal with dirty tricks and/or tricky tactics (misinformation, manipulation) in your negotiations? Have you ever been placed in a situation where felt dirty or tricky tactics were justified?
- I would appreciate any other comments, suggestions, and observations you may want to contribute.
Post-Script: As a result of this interview Susan has offered to take part in my future endeavors in the capacity of advocate. Principled Negotiation works and this is proof of it.
