Understanding Common Touring / Concert Promotion Contracts and Making a Profit

A contract or agreement is always needed, whenever you want to do a job, regardless of your profession. In the entertainment world, especially for the musician profession, the contract becomes the most important thing. The contract will decide your obligation as well as the rights that you will receive. Without any knowledge about how this agreement works, you will only fall into the prey of those scammers who want to make a profit from the gullible you.

The best way to avoid any scam or other kinds of activities that will only give you nothing but trouble is having a good backup. An experienced booking agent is one of them. However, we have to admit that not every musician has a chance to get help and even in touch with these professionals. In the end, he or she will be vulnerable to the scammer.

So, we take the first method to prevent the problem. You need to understand the contract and how it works, especially regarding the payment and such. For that reason, we will give you a simple explanation about the promotion contract and the payment you can get or charge from it. At least with this knowledge, you will know what you have to do, whenever someone gives you a contract for your service as a musician.

Level Deal

The deal basically is based on the place where you perform and how frequent you will play. For example, you play at a specific bar twice a week, every Thursday and Sunday night, for a certain period of time. Then, the payment you will receive will be affected by the ticket sales. Usually, the person that in charge of keeping the ticket will ask the guest about the artist that they want to see. More people see your performance means more money you will get. However, this kind of contract is the best choice to get more fans. You play regularly and can easily attract more people to become your fans.

Residency

A residency implies the craftsman will perform routinely at that setting all through a specific day and age. A typical model is playing on a set night consistently for multi month, for example, each Friday for the long stretch of July. This is normally payed in view of a percent of “entryway” (a.k.a ticket deals) and it very well may be part in view of what number of individuals really turn out to see you. This implies the individual at the entryway asks every visitor who they came to see and maintains a count in control to decide the amount to pay every craftsman. Residencies are a decent apparatus for creating specialists to assemble a fan base since it allows them to develop in that market by playing all the time.

Plus
A plus deal is a set number plus an additional percentage once expenses are met. For example, 30,000 plus 80% over 42,000. This means you will be paid a guarantee of $30,000 plus the potential to make an extra 80% once the promoter has covered their expenses – including the guarantee that they pay out to the artist before making a profit (this profit is called back end). The most common percentage is 85%, which means that after costs are covered, 85% of the profit goes to the artist and 15% goes the the concert promoter. This type of offer is good for the artist because they are guaranteed a set amount of money and have the potential to earn more if ticket sales are high. You can also use this information to set up an equation to determine the number of tickets you need to sell before you get extra money.

For example, if your band was offered $600 plus 85% over $1,600 and tickets cost $10 each, this means that you will be paid $600 regardless of ticket sales. This also tells us that the promoter’s expenses for the show are $1,600. So ticket sales need to be more than that in order for you to get paid.
Let’s go back to those 9th grade algebra lessons:

  • Say that the number of tickets sold is represented by the letter T. T must be greater than $1600.
  • T > $1600
  • Tickets cost $10 each so each time a ticket is told it will give us $10 x T. So, we can put it together as
  • $10T > $1600
  • T > 160

This means you would need to sell more than 160 tickets in order to make additional money off of this show. This is great information that you can use to help you negotiate in order to have the greatest chance of making money if you don’t believe you will be able to sell that many tickets- perhaps by asking the promoter what costs could be reduced or considering increasing the price of tickets (keep in mind though that you want your fans to be able to afford a ticket!)

Versus
In this deal, the artist will be given two options and paid based on whichever ends up being more money. It can be based on either the gross profit (before expenses are taken out) or the net profit, so keep that in mind when you are negotiating because it makes a difference. The best way to explain this is probably with some examples, so let’s take a look.

Example: $2000 versus 60% of the gross door receipt. This means you will either be paid $2000 or 60% of the income, before expenses.

  • If ticket sales amount to $6000 then .60 x $6000= $3,600
  • In this case $3,600 is higher than $2000. So you would earn $3,6000.
  • If ticket sales amount to $3300 then .60 x $3300 = $1980.
  • In this case, $2000 is the higher option, so you would earn $2000.
  • Just like with the percent deal, you can calculate the ticket sales that would be needed in order to make the percentage a better deal.
  • In this case you want 60% of the ticket sales in dollar to be greater than $2000.
  • .60 x $10 x T > $2000
  • This can be simplified to $6T > $2000
  • T > 333.33

This tells you that you would need to sell 334 tickets in this scenario in order to earn more more than $2000.

Percentage
A percentage deal is similar to the plus deal except that it does not include a guarantee. This means it’s the biggest risk for the band and the safest option for the promoter. The artist gets paid a percent based on either gross or net profit.
Example: 80% over $5,000. This, like the plus deal is based on net profit and already accounts for expenses. It means that you will get 80% of the money earned beyond $5,000. In this circumstance, if the show earns $9,000 total, you will earn 80% of the extra $4,000 earned beyond the initial $5,000 requirement. So you would get .80 x $4,000 = $3,200. If the show only earns $4,000, you get paid $0 because the initial requirement of $5000 was not met and the show has not earned a profit.

  • We can also do some math here to determine the ticket sales necessary for the artist to earn any money. Let’s say tickets are $10 each again.
  • $10T will give us the total revenue, but we need to subtract the expenses to determine the threshold.
  • $10T – $5000
  • This equation gives us the total profit ($10T is the revenue – the expenses of $5000), but the artist will only earn 80% of that so:
  • 80($10T – $5000)
  • This will let us calculate how much the artist will earn but the goal is to earn more than $0 so we will set the entire equation to > $0
  • 80($10T – $5000) > $0
  • If you remember math from high school (honestly, I’m not sure how I do!), we can simplify that to
  • $8T – $4000 > $0
  • $8T > $4000
  • T > 500

So, the artist must sell more than 500 tickets in order to earn any money from this deal.

Hopefully, this cleared a few things up and can help you navigate the world of touring and booking more easily. Admittedly though, it’s been a while since I’ve studied algebra so please feel free to correct any mistakes you find as well as share your experiences with booking shows and making money playing live.

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