Dealing the Hits

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In 2000, Sting, traditionally a highly bankable artist, was falling short of sales expectations with his then new album Brand New Day. His management team sought alternative means of promotion and struck up a deal with Jaguar to do a kind of musical product placement. Sting's single, "Desert Rose," was placed into a music video-influenced Jaguar spot of the same title. According to industry insiders, Sting waived his customary licensing fee in exchange for a certain number of ad runs and a mention of his album in the spot. The plan worked - Sting's record sales shot up, as did Jaguar's auto sales.

"Sting was one of the biggest breakthroughs in this business," explains Lloyd Simon, founder and president of Production Advisors, a New York-based service that assists advertising agencies in selecting and licensing music for commercials. Simon, an entertainment lawyer and MTV's first director of legal business affairs, from 1981-86, helped broker the deal between Sting and Jaguar. "When the spot aired, all of a sudden other artists - popular and lesser-known ones - took notice."

Since then, Production Advisors has brokered countless licensing deals. Two ad splashes in particular involved lesser-known bands - Dirty Vegas, whose "Days Go By" drove the 2002 Mitsubishi "Re-Mix" spot for Deutsch/Los Angeles; and Basement Jaxx, whose "Where's Your Head At?" was canned for Pringles and Grey/New York. While the labels, artists and music publishers took a traditional cash payment for the music, the ads made obvious contributions to record sales, as well as obvious contributions to the hip quotient of the advertisers.

With a lot more at stake these days, some agencies that customarily negotiated music licensing in-house have turned to Simon and his team to plug up all the legal holes and negotiate a better deal. Not only can copyright law be extremely complex, it produces a lot of people with their hands out, although they may not be so visible when you're ready to pay. "The nature of copyright law has become more complicated because of all the sampling in today's music," Simon explains. "This can mean three, four or five different artists on a single song. But once ownership is determined, we work with the agency to establish levels of exclusivity; national, regional or worldwide rights; additional use of the music in showrooms or for on-hold music; and the duration of the license. We need to be thorough, because money is saved by setting terms at the start as opposed to renegotiating later."

Simon notes that agencies are most guilty of overlooking the residual payments to artists - something that will cost very little up front but may bite back hard on the way out. "I know of a situation where an agency licensed a song but never spoke to the artist, and they had to settle with him for the same $150,000 fee they paid the publisher," Simon recounts. "People ask, what added value are we? Well, if we'd been there we would have saved them $150,000."

Simon also feels that through his team's connections, bulk buying, negotiating skills and industry knowledge, the cost of hiring his company won't add to the bottom line. "An agency may purchase a $100,000 license without knowing that a publisher will sell it for $70,000. Right there you've covered our fee may times over." (Adam Remson)

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