American Idol

“The music business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs. There’s also a negative side.” Hunter S. Thompson

Ah, the money! What many of us are curious about, whether we admit it or not. At the end of the year, Pollstar and Billboard announce the top concert draws of the season and those who take notice of such matters can’t help but be impressed when The Rolling Stones rake in $138.5 million for the 2006 dates for their “A Bigger Bang” tour. And that’s after topping the list for tour dates in 2005 at $162.0 million. Their tour continued on into 2007, so it’s anyone’s guess what the final tally will be, but suffice it to say, they still have an audience willing to pay the price of admission. But then again, they are The Rolling Stones.

Coming back down to earth, what and how are mere mortal artists paid? Those who have been paying attention and do not suffer from memory lapses might recall the sad fact that sometimes they are not paid at all; new artists who land an opening slot on even a relatively major tour are often asked to pay-to-play for the privilege, in one way or another. But looking beyond that, here are a few of the more common payment scenarios:

The straight percentage

This actually is pretty simple and probably most common at smaller, pay-at-the-door venues where costs can be determined in advance and presumably don’t fluctuate wildly. The venue or promoter offers the artist a set percentage of ticket sales, ranging anywhere from 50% to 100% or even higher (!) for hot acts with a solid track record of drawing thirsty crowds, particularly those who are able to do so with a relatively minimum amount of promotion. The problem is, of course, you just never know. The hottest act on the planet could book a date at a legendary venue with career-enhancing acoustics only to find out they’re competing with a nostalgia or heritage band with fans so dedicated they make the Deadheads and Parrotheads look like slackers, and be left playing to a near-empty house. A hundred and five percent of next-to-nothing is pretty much next-to-nothing itself.

The flat guarantee

This is almost exactly what it sounds like. The promoter offers the artist a guaranteed amount for a performance and forks over a deposit to secure the deal. As might be expected, the amount offered is based in part on the size of the venue; a 1200-seat theater would typically have a smaller gross potential than an arena (notwithstanding Prince’s “3121 Live” performances), and that reality will be reflected in the guaranteed fee. Other considerations include the popularity of the artist and even the depth of the artist’s catalogue, particularly for relatively new acts – will fans balk at paying more than $20 to hear a couple of “hits” amidst a bunch of unfamiliar songs, many of which are almost surely what is not so fondly referred to as “filler”?

The appeal of a flat guarantee is that the artist is generally assured in advance that he or she will be able to cover tour expenses and then some, while the promoter theoretically limits his risk by not paying more than he can reasonably expect to recover in ticket sales and other revenues. Of course, few things in life are certain, and white-hot acts have been known to cool off fast enough to flash-freeze buttercups in a mastodon’s mouth. Some artists over-tour, some tour in support of albums which don’t perform as expected and generate little or no excitement, and some just have the bad luck to come along when the public’s periodic (and cyclical) concert fatigue sets in. In any case, a promoter who has guaranteed a six figure flat fee but sells only a fraction of the tickets available has a few options, including cancelling the concert date outright (preferably well in advance in order to avoid losing the deposit or even being required to pay the flat fee) or asking the artist to agree to let him “paper the house” or otherwise seeking some offset – perhaps a reduced rate for a future concert when (or perhaps if) happy days are ever here again.

And since a promoter who is forced to take a loss without sharing the pain is unlikely to be overly enthused about booking an act which left him twisting in the wind all by his lonesome, many artists are willing to negotiate, guarantee or no guarantee.

The percentage versus the guarantee

Simply put, this allows the artist to receive whichever amount is higher between the flat guarantee and a negotiated percentage of total ticket sales after deducting expenses, including facility fees, ticket agency charges, state and local taxes (if applicable), and other related costs. Theoretically, this allows promoters to attract artists who may feel they are worth more than they’ve been getting as a flat guarantee elsewhere and are eager for a shot at a higher reward they might not have “earned” in the traditional way, working their way up. This limits the promoter’s risk to some extent, since he won’t be obligated to pay the higher amount unless the concert actually is a success and ticket sales exceed the projections used to arrive at the flat guarantee. It also provides an incentive to artists to give performances that create buzz beyond the dedicated fanbase and ultimately fill the seats in ever-bigger venues.

The guarantee plus a percentage

New artists aren’t going to get this kind of a deal as a rule, but it’s certainly something to look forward to, assuming your career lasts long enough to have a shot at it. Once again, we have a guaranteed fee, to which is added a negotiated percentage of the net profits from ticket sales after all of the promoter’s costs (including that guaranteed fee) have been deducted. Hunter Thompson, if he were still alive, would probably suggest that the promoter’s costs might occasionally be inflated – see “pimps and thieves” – but a good tour manager will fight the good fight at settlement, keeping an eye open for padding, sleight of hand, and other forms of creative accounting, while remembering that not every battle can be won. At the end of the day (and the tour), these are symbiotic relationships, and when push comes to shove, the artist arguably needs the promoter more than the promoter needs the artist. Anyone who has followed the touring industry knows that hot tickets can turn cold without warning – where is Al Gore when we really need him? – and that the glorious summer of 2007 could give way to empty halls in 2008.

 A few not-so-random guarantees

North Carolina State Fair: Lonestar earned $57,500 for a performance in 2004. Clay Aiken got $100,000 each for two shows in 2004. In 2005, LeAnn Rimes and Phil Vassar split a ticket with a guarantee of $105,000, while Montgomery Gentry and Idol’s own Fantasia each merited $100,000 guarantees, Kenny Rogers got $63,500, and Josh Gracin got $15,000.

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