Iconic Dealmakers Part 7: The Escapades of Frank Sinatra, from Jupiter to Mars.

In this episode, the Dealmakers Barry Neil Shrum and Dennis Glenn Disney explore The Escapades of Iconic Dealmaker Frank Sinatra, a/k/a “The Chairman of the Board” of Reprise Records.   Sinatra garnered the title of "Chairman" when he established Reprise Records, which was later acquired by Warner Bros.  

Transcript

Episode 8

Christi Intro

[00.00.05]

 Welcome to Music Row Dealmakers, where we explore our world of making deals from Nashville's famed Music Row in the heart of Music City. We are the dealmakers. From composing to closing. Now here's your host Berry Neil Shrub and Dennis 

MRD - BNSesq 

[00.00.22]

 Disney. Welcome all you dealmakers out there. This is your fellow dealmaker, Barry Neal Shrum. When we get ready to analyze these deals, my partner Dennis Disney will join us in the studio. You are listening to our eighth episode of Music Road Dealmakers. From composing to closing. We thank you for listening. This episode is about the escapades of iconic dealmaker Frank Sinatra, aka the chairman of the board of Reprise Records. We've affectionately entitled it after the name of one of his songs, Life on Jupiter and Mars, which explains why Dennis is dressed like a martian in a green outfit. And I look like a Teletubby in the purple outfit. Just kidding. It is my privilege to announce that our podcast has posted over 148 listeners thus far, and is quickly climbing to 200. So let me thank all of those who have downloaded our shows or subscribed to our shows. If you haven't already done that, please do so wherever you listen to your podcast. And if you would consider donating to our podcast or broadcast, we would appreciate that. And while we're on the subject of donations, we want to thank our founding sponsor, Shure Microphones, for donating these wonderful microphones that we're using to bring you this podcast. We so appreciate their support and thank them. This podcast is always being brought to you live from Sram Disney's offices on Nashville's famed Music Row. You can find out more information about our law firm at Disney. Com. That's Disney as in walt.com. Finally, as always, we encourage you to call 800 dealmaker DHL, MKR or 33 two 5657. That's 803 32 5657. If you have any questions or comments or opinions about the deals or the topics we cover here, or you can send us an email at questions at Music Row dealmakers.com and we'll respond there. We would love to to find out your opinion. So we are in the middle of a series entitled Iconic Dealmakers, and we're on the seventh. Dealmaker Frank Sinatra, or Old Blue Eyes, is an entertainer, is known to almost everyone as one of those great crooners of the Bing Crosby ilk, or Johnny Mathis and all those 60s and 70s blue eyed guys or handsome guys that that would sing the songs that we all love and know the Christmas songs. While a lot of people may be familiar with Sinatra as a crooner. Most people probably don't know that he started his own record label, Reprise Records, and was a deal maker in addition to all of his other fantastic talents. So let's get started. Old Blue Eyes or chairman of the board. As I've indicated earlier, Mr. Frank Sinatra is regarded as one of the most popular entertainers in the 20th century. He is among the world's best selling artist with an estimated 150 million record sales globally. Frank Albert Sinatra was his name. He was born in 1915 to Italian immigrants and Adelina Garita and Antonio Martina Sinatra. Frank came from Sicily, or I'm sorry, Antonio. His father came from Sicily. And even in those days, Sicilian Italians were already known for an association with rampant organized crime within their region. Not all of them were, of course, gangsters. But you, I guess, phased in and out of that crowd. Indeed, young Frank spent a lot of time hanging out in the back of his father's prohibition era bar in Hoboken, new Jersey, which was allegedly, quote unquote, frequented by a numerous mob characters that would come and go. So. That's Frank's world that he grew up in. Frank saw the king of crooners in the 30s, Bing Crosby, singing when he was but a teenager. And so it's interesting that that is what made Frank decide that he wanted to become a singer. He immediately joined the glee club at his high school, and started singing in the clubs and bars around Hoboken when he could get admission. Of course, his father owned a prohibition bar, so he had his own little venue, so to speak. So these local nightclubs led to Sinatra being heard on the burgeoning new device called radio. Which led him to join Harry James. Another musician of that time, which in turn earned him an invite to join the Tommy Dorsey Band. Jazz Tommy Dorsey was a jazz trombonist who was a trombonist who was, in a way, the Frank Sinatra of Frank Sinatra's early time. When Frank arrived on the music scene in the 1930s, his voice was often compared to Crosby to his idol that he had heard when he was a teenager, but where Crosby was the fatherly, pipe smoking figure. Frank was a more polished, a slicker, well-dressed, quote unquote bad boy, and he nurtured that with a at least a lure of. Being mixed in with the organized crime figures he never admitted in fact denied being mixed up with organized crime. But it certainly seemed to be a part of what we would today call his schtick. Many bars and restaurants in which Sinatra was performing at the time were in fact owned by the Italian Mafia. As I said, the Sicilian culture bred a lot of that kind of thing. Crime families would often use these bars as a means of laundering money, and as meeting places for the members to do their their illegal business. So, but but again, despite all these connections, Sinatra always vehemently denied that he was a gangster or that he was in any way connected to the mob, or that the mob had anything to do with his success. Even so, his his bandleader, Tommy Dorsey tells a quite different story, claiming at least that Frankie came to him wanting out of this multi-year contract that he had signed with the famous trombonist. But Dorsey refused and instead demanded a third of Sinatra's earnings for life and an additional 10% to act as Frank's agent. 

MRD - DGDesq

[00.07.55]

 Well, that didn't sit well with Frank or his friends. So there are several sources, one autobiography that support the fact that Willie Moretti, an underboss of the Genovesi crime family, convinced Dorsey. And I put convinced in quotation marks to let Frank out of his deal by shoving the barrel of a gun into his trombone tuning mouth. That, um, that, I guess, conveyed the message. So ultimately, while Frank may have denied the relationship with the mob, it was enough for the FBI to open a file on him in the 40s, a file that eventually grew to over 2000 pages, covering his various connections with organized crime, along with other elements. He had what we were today called left leaning views or more liberal politics, anti-racism and and things of that nature. And at the time, he was developing a burgeoning relationship on the campaign trail with Jack Kennedy, another figure that was under investigation frequently by the FBI. So after his, shall we say, forced departure from the Dorsey band, Sinatra signed a solo deal with Columbia Records around 1945, and released his debut album, The Voice of Frank Sinatra, which included a few hits like Someone to Watch Over Me, written by one of the famous songwriting teams of IRA and George Gershwin, and the ten inch vinyl went to the very top of the then early Billboard charts. Billboard was beginning to develop its own reputation at that point, so the first few years saw him climb quickly to the top of the Billboard charts, and he began to sell tens of millions of records, and he took off. But as many entertainment careers do. His career hit a brick wall by 1948. He was in a huge slump. And so when it rains, it pours, particularly for entertainers because their life is under a microscope. Frank Frank's career took the ultimate image nosedive when when a scandal about his affair with Ava Gardner engendered a divorce from his very popular and longtime wife, Nancy. So by 1952. Just four years later, Columbia Records dropped Old Blue Eyes from their roster. In the midst of all this. Frank was was not to be undone. On July 9th, 1950, the Lancaster, Pennsylvania Eagle Gazette ran a press release about a new artist, Frank Sinatra, who had at that time signed a $3 million contract with CBS to produce something called the Frank Sinatra Show for television, which of course, was also a fairly up and coming medium, as we've discussed in previous episodes. And this kept his struggling career from giving up the ghost and gave him the added boost. So as far as his music career goes, that that television special also gave him a little boost in credibility. It took only a year after Columbia had dropped him from the label for Frank to get back on his feet, and for him to sign up to appear in a Hollywood film, From Here to Eternity. And that was in August of 1953, which marked the beginning of the ultimate revival that led to the most productive and lucrative years of Frank's life, and is the reason we still know him today. Most likely. On March 13th, 1953, Sinatra met with Capitol Records, this time president Vice President Alan Livingston, and he signed a seven year record contract. Now, for those of you who are not in the music industry, a seven year contract, a recording contract is fairly standard. Typically today, those seven year deals are based not on an annual year, but rather on delivery of a product which marks the beginning of a period so they can actually last for longer than seven years. In the 50s, however, the seven year recording contract was just that. So the Capitol years produced many of the well-known standards that that we know today. I've got the world on a string. All of me in the wee small hours. I've got you under my skin. Come fly with me. And so that success, of course, led him to to meeting other people in the industry. And a lot of you who are familiar with with Sinatra's career will remember that he was part of an informal group known as the Rat Pack, which started in and around 1957 with with other crooners like Sammy Davis Jr and and others, Peter Lawford, Joey Bishop, Dean Martin, so, um, the Rat, Rat Pack. Engaged a standing event at the Sands Hotel in Las Vegas. And that's how that part of Frank's storied career came about. So fast forward to the end of the seven year recording contract with Capitol, 1960. Frank had begun to become discontented with Allen Allen Livingston, who was his contact, his promoter at the label and consequently with Capitol Records. So he entered the 60s with a thirst to get away from the more established recording industry and develop his own creative freedom. So he decided to use some of the wealth he had acquired over that that period of time, and his accrued royalties to start his own record label. He first attempted to create his own label by pursuing the purchase of a declining jazz label called Verve Records, and he began to negotiate with the founder of Verve, Norman Granz. But ultimately the the negotiations, shall we say, and a deal failed to materialize. And put that in quotes, because that comes from a couple of news articles, but that that just failed to happen. So when that fell through, when the deal with verve fell through. Frank exercised what we've talked about as his botany never go into a negotiation without having an A plan B, as it were. And so his plan B was that he was very fond of a Verve Verve executive named Michael Austin, known as Mo Austin, and he lured him away from Verve Records with a lucrative deal to a new venture that he called Reprise Records because, as he said, people will want to play the records over and over again. Thus the the re reprise part. So ultimately a Sinatra signed or started Reprise Records and positioned himself as a label that was artist centric is what we would call it today or are driven by the desire of artists. It's a label, he said, where artists were were promised creative control and were given guarantees that they would eventually gain. Quote unquote, complete ownership of their work, including publishing rights. Now, again, those of us in the industry realize those two elements are things which artists still crave and which many of us advise them to hang on to. So Frank became known as the chairman of the board at reprise, both nominally and actually. His artistic centric approach attracted many of those. Rat pack friends we had talked about before. So remember the context here, right? This all started with his departure from Capitol Records. Now, not to be outdone, Capitol Records had its own revenge in mind. As soon as Frank started Reprise Record, Capitol Records began to exploit their entire Sinatra catalog heavily because they were not going to let him have his his cake and eat it, too. So Livingston's quoted and Livingston, remember, is the executive that signed Sinatra to capital. He is quoted as saying in Charles L Granada's Sessions with Frank, a television documentary. We had so much Sinatra brought that product on the market that reprise could hardly get off the ground. And so there's a lesson in that that we'll talk about a little bit later. But this move by Capitol Records forced reprise to sell its new releases at greatly discounted prices. And as you probably know, when you have to reduce your prices, you reduce your return on investment. And of course, this nearly bankrupted the fledgling organization. Nevertheless, under the quote unquote chairman's leadership, Reprise Records launched and relaunched the careers of many well-known artists. Sammy Davis Junior included Ben Webster, Mavis Rivers, Joe Louis, Count Basie, and Frank even recorded with his his old idol Ben Cosby, who entered the picture again to fight back against capital. However, with their great resources. Frank would ultimately need an infusion in cash to the Reprise Records enterprise, so he set out to figure out a way to get that newfound cash. So in 1960, 

MRD - BNSesq 

[00.18.33]

 he starred in the original version of the movie Ocean's 11, which has been, of course, remade in that version, the 1960 version. He starred in that movie with his Rat Pack buddies. So he was a proven commodity as a film actor, a fact that he then leveraged in order to attract the attention of the executives at Warner Brothers, who made Ocean's 11 and began to negotiate a deal with them involving Reprise Records. So this was his plan to get a cash infusion into Reprise Records. The Warner Brothers executives enthusiastically pursued this deal that would ultimately bring Reprise Records into the Warner Brothers family, while giving them Sinatra as a member of their film repertoire and their stable of of of actors. and he would go on to make many other movies for water. So in the summer of 1963, Warner purchased two thirds of Sinatra's Reprise stake. This gave Frank his much needed infusion of cash, and with a newly acquired seat on the board of Warner, it cemented his title as chairman of the board. So the deal rescued reprise, which retained its core of talented executives including Mau Mau, Austin and Moe, of course, became increasingly indispensable to Sinatra. But while picking up Warner's muscle, their marketing, their distribution, everything that makes them the conglomerate that they are. And it gave Frank more creative freedom than ever. So it pretty much proved to be a deal made in recording industry heaven. Sinatra's phenomenal success at this new partnership, the Warner Reprise deal, peaked in 1965, which coincided with his 50th birthday, and that prompted Billboard magazine to proclaim that he had reached, quote unquote, the peak of His Eminence. So he continued to record for reprise for a long time, but the the label's roster rapidly expanded and began to diversify in the 60s and the rock era, and by the later decades it became home to an eclectic array of artists, including Hendrix, Neil Young Mitchell, Joni Mitchell later in the 70s. Those of us from that era are still retaining that the philosophy of the music or artist first. Reprise launched the careers of people like Fleetwood Mac, Chicago, Al Jarreau and just a whole slew of of others. It has a very storied and star, star studded history. So in 1968, Frank recorded his most famous song, written by Paul Anka, who wrote My Way. Anka was a singer songwriter himself, but this one was for Frank, and according to NPR, it has the most dubious honor of being the most requested song for funerals. I did not know that. So Frank in 1994 received the legendary award at the 1994 Grammy Awards, where Bono, no less introduced him as the chairman of boss. A year later, on his 80th birthday, the City of New York lit the Empire State Building a brilliant blue in honor of of good old blue eyes already struggling with health issues at this point. A fainting spells on stage. Memory issues as age would would get you. Frank would ultimately take the the retirement package of I guess Heaven and passed away on May 14th, 1998. One biographer described Frank as saying that he exemplified the common man, an ethnic 20th century American male who reached the top of the heap, yet never forgot his roots. 

MRD - DGDesq

[00.22.56]

 Whatever you call him, or whether you call him Old Blue Eyes, chairman of the board or just Sinatra, to me, he exemplified the kind of creative artist who takes their career into their own hands and builds a legacy for themselves. And after the break, we're going to share some observations about some of these iconic deals. And Frank, the iconic dealmaker. Stay with us. Will 

MRD - BNSesq 

[00.23.28]

 you? 

MRD - DGDesq

[00.23.39]

 Remember, if you want to ask questions. Give us a call at 800. 832 5657. Or send an email to questions at Music Rogue Dealmakers. 

MRD - BNSesq 

[00.23.54]

 I did it my way. 

MRD - DGDesq

[00.23.58]

 Thank you. Dennis. You know, when I first started researching for this, this episode on Frank Sinatra, I got more and more excited because there was a lot about him that is very interesting. And as we're going to get into a lot of a lot of things about his life that that help shape a negotiation strategy, one of the one of the most important things, I think that that our listeners can, can glean from Old Blue Eyes is his focus on relationships. And as you well know, you know, that is so important, particularly in the entertainment industry, on a, on a, on a very rudimentary level, that that is important to reflect in the contract. A relationship between two parties should be reflected in the deal that they make. And we often overlook that. I, um, you know, in that regard of relationships and, you know, I teach, um, mostly sophomore and junior students over at the Mike Curb School. And, uh, on the first day of class, I'll sometimes tell my students, look to your left. Look to your right. Remember those people's faces because 

MRD - BNSesq 

[00.25.14]

 one of them will fail. 

MRD - DGDesq

[00.25.17]

 Well, I do tell them that as well, but that's afterward. But I say introduce yourself to those people. Because even though they may just be, you know, a student like yourself right now. Yeah, 5 to 10 years from now, some of those people are going to have high level positions in the industry. You want to be in. And I think that's it's it's difficult to overstate how important that is. Do you agree? I 

MRD - BNSesq 

[00.25.44]

 agree. It's you know, a lot of my college classmates, I went to Belmont as an undergrad many, many years ago. They obviously moved on to certain power positions, if you will. Right. A lot of them are old enough now, like I am, that they've now exited those power 

MRD - DGDesq

[00.26.01]

 positions. They're a little weaker now, but 

MRD - BNSesq 

[00.26.04]

 a little weaker. But but no, I think your point is very well taken. And it's not not just those classmates. But when I first got into town, I was hanging out in studios a lot, and there was an up and coming engineer who then down the road became a major producer in town, or a background singer that became a solo artist signed to a major deal. You really don't know where these things are going to 

MRD - DGDesq

[00.26.30]

 lead. You really don't. And I have told people for decades now, especially about Nashville, but I think it's applicable to all industries and really all cities for that matter. Nashville is a small town and is a small industry. It is. And you have to get to know people and as as people have come into town and they are hopeful to sign deals and other things like that, I said, you've got to understand, don't even find jobs. For that matter, how many people have we met over the years who are just looking for a job? And they go, nobody advertises for jobs. Well, they can't because it is a small town, but it's it's saturated with people looking to get into this business. So what ends up happening is an executive at a label, or maybe it's even an HR person at the, at the the label or the publisher. They rely on personal references, right? They rely on a friend of theirs who knows somebody, because if they put just a general ad out there, especially in the old days, you had to do it in the newspaper or wherever. They're getting hundreds, if not thousands, sometimes of applications 

MRD - BNSesq 

[00.27.36]

 and resumes coming in. You 

MRD - DGDesq

[00.27.38]

 can't process them and you don't know who to pick and 

MRD - BNSesq 

[00.27.40]

 you don't know who to pick. You know, there's no way you're going to look at all this and then try to schedule some interviews. So you have to use some process to get through there. When I was teaching at Belmont as well a few years ago, I used to tell the students, take advantage of the internship program you have here as well. Yeah, to your point. Hey, where your classmates are going to be future executives leading this town. A lot of your professors, the adjuncts are doing that. Get to know them and then take advantage of your internships, because that's where you can, with the, if you will, imprimatur of Belmont. You get a bit of a referral. You know, they vouch for you a little bit. You get in there now you have to do the job once you get there, but that gets you through the door. And because of these relationships that have to happen in this town. You know, there's two things we've always heard about getting into this business and succeeding. One, it's who you know. Yeah, it really 

MRD - DGDesq

[00.28.36]

 is. It really, really is. 

MRD - BNSesq 

[00.28.38]

 I don't know. I'm sure I can find them, but I don't know of anyone offhand who came into town completely unknown, and it just took off for them, even if they didn't know anyone when they got here. They had to meet people while they 

MRD - DGDesq

[00.28.54]

 were here. You have to get out there and mix it up and meet people. And that dovetails into the first point. I think we can discuss about negotiating and making deals. You know, the more informal approach to negotiating focuses on the mutual benefit of each party. It's called the modern style of negotiating, and it emphasizes the relationship between the parties. You, you know, you listeners may be familiar with that, that old phrase, you know, you want to deal. That's a win win for both parties. That, of course, reflects the benefit of the bargain. But the modern win win approach seeks to build relationships, strategic relationships like the one you and I were just talking about. And and like what we tell our students, it's focused on their needs and their interest. And through that relationship, you seek to develop a synergy between the parties, and then that relationship can go on for a long time. Both of us, you know, are members of the entertainment law and ends of court. And among those people are people you and I both have done deals with over the course of three decades now for for you. And so you got to look at the long term relationship. And frankly, there's no point in executing a contract if you're you don't have a relationship with the other side because the contract should reflect that relationship. 

MRD - BNSesq 

[00.30.21]

 Agreed. You know, the idea of you've heard this axiom, the whole is greater than the sum of 

MRD - DGDesq

[00.30.29]

 the parts. And 

MRD - BNSesq 

[00.30.31]

 that's why you come into contract. That's why you partner up with people. That's why you go into these deals, is because together you're hopefully bigger, stronger, faster, whatever. Then on your own you can scale quicker, etc. but the relationship, if it's not right going into it, man, it's it's just brutal. And you and I have both experienced that where we've gotten into deals or our clients rather have gotten into deals. Where, for whatever reason, they're not having fun, they're not making money, they're not doing whatever. And they call us up and say, can I get out of this deal? Right. Getting into the deal is a little easier than getting out of the deal, I'll put 

MRD - DGDesq

[00.31.13]

 it that way. But maybe one of these days we'll do another podcast on litigation, which is where that ends up exactly. But if you have a good relationship with the other partner, the other party, it's amazing what can be done, even if you don't always agree. I know, especially when I was in management, we tried to treat our label and publishing partners for our clients truly as partners or even the booking agents. We don't do something performance wise in terms of a calendar or an event or the type of event without, hey, what do you think about this? We don't go do something from a performance or recording perspective without talking to our label partner, even for that matter, a lot of the self marketing that artists would do. Many, many times we would say, hey, wait a minute before you go there, this might. You know, implicates something happening on the label side. We need to call them and just bring them into the mix and see if they're okay with it. And if they're not, then let's not do it. Let's figure something else out. And so it's that give and take relationship that you have to have back and forth to really make these things work, even if those things are not in the contract per se. Right. But to make it work, it's like a marriage. And we've talked about marriages a lot in, in the vein of a recording contract. 

MRD - BNSesq 

[00.32.32]

 Mhm. It really becomes like a marriage. Well in a way marriage is the earliest form of contract when you think about it that way. And, you know, the important element in any marriage is communication, just as you were speaking about and so extremely important. And contrasting to that synergistic win win modern approach is what a lot of people view as the more traditional approach. And when you think about the deal maker, some people look at that old traditional method and it is. I would say diametrically opposed to the modern approach because it focuses on us versus them. And that approach is is a win lose situation in most circumstances. And if you're dealing with somebody on the other side that is taking that traditional approach and focusing rather on synergy, they're focusing on two sides of the equation, looking at it like a strategic competition. It's a form of warfare. It's a type of a game for those people that creates a situation where your objectives are actually opposing. If you're if one person's objective is to win and the other person is trying to figure out how to make a win win, that's never going to work out. It's a short sighted approach, I believe, and it fails to establish relationships, in fact. You and I both know lawyers who can take this approach, and some people look for those, um, bulldog lawyers, you know, who can go in and get it done. But it almost always is confrontational, predatory, intimidating, and from my experience, frequently fails to to achieve a deal. It's one thing John F Kennedy said, that that's always stuck with me. And of course, I didn't hear him say this live. I was only three years old when he died, but I've seen it in quotes many times. He said, you can't negotiate with people who say, what's mine is mine and what yours? What's yours is negotiable. 

MRD - DGDesq

[00.34.45]

 I always like that. It's very similar to some some marriages, you know, for. But the old joke is the wife says, what's mine is mine, and what's yours is mine. Okay. Not even negotiable, you know. Yeah, yeah, it's our dear. That is not you. That's just an old saying. I'm not saying anything about our marriage. 

MRD - BNSesq 

[00.35.02]

 That's now 41 years into our journey together. So. 

MRD - DGDesq

[00.35.06]

 Yeah, if by compromise you mean agreeing with me, we're on the same page. Exactly, exactly. Well, you know, the whole thing about, I think you might have said. Or I might have seen it in our notes about. It's almost the old school way, is almost like a form of warfare. It is. And even the jargon and the vocabulary that gets used, it's a campaign. We're going to attack the other side. We're going to do whatever. And it very much used to be that way for sure. Squeeze every dime you can, every bit of juice out of that turnip, leave nothing on the table. Right. And in the modern terms, you're absolutely 

MRD - BNSesq 

[00.35.44]

 right that first of all, it never works. I believe that in what's called the law of diminishing returns. So the longer it takes you to squeeze every bit of juice out of that turnip and leave them, never leave anything on the table. You've lost more time. You've incurred more legal fees, potentially, etc. and you look back and go for what? All it did was sour people on the relationship before it's even gotten started. That's not a great place to be. No. 

MRD - DGDesq

[00.36.14]

 And if you enter a contract with those people and actually get something signed, now you're stuck with people who have squeezed every bit of blood out of you. And do you want to work with those people? Right. And I don't have anything else to give now. Right. So if you ever want to come back to me and try to do something different or better or more, I got nothing left. Right? So don't 

MRD - BNSesq 

[00.36.37]

 do in my. My advice to people is don't worry about that. Yeah. There's times to make that up down the road. You know, you can always amend contracts later and bring stuff in. You can do those sorts 

MRD - DGDesq

[00.36.48]

 of things as you develop the relationship that gets back to the other approach. And, you know, there's a great book on negotiating that I've read a couple of times. It's called Getting to. Yes. And frankly, I forget the authors forgive me out there, but go look it up on the internet. I'm sure you'll find it. It identifies four critical components in the modern approach. One is to separate the people from the problem. And that's hard to do. That's one of the reasons I think, that politics these days is that us them kind of warfare approach. You know, it's the people on the left that are causing the problem. No, it's the people on the right. We need to separate the people. You and I have a lot of discussions. We're on different sides of the political spectrum. And so I happen to be right. But. Well, of course. But but we have to separate the 

MRD - BNSesq 

[00.37.43]

 people literally, by the way. Yeah. True. But we have to separate the people from the problem and focus on the needs of the situation rather than the positions. And that allows us to develop options for mutual gain using objective criteria. And that's one of the problems in negotiating that a lot of people let get in the way. Well, I deserve this. Well, that's a subjective criteria. You can't go into a deal and say, I've got to have all of these things because I need them, I want them. Well, okay, we can try. But you got to be objective about this thing. Let's take a record deal, for example. Right. And you are. This comes in and he says, okay, I know these people give big advances. I want a $500,000 advance. Well, 

MRD - DGDesq

[00.38.42]

 you can't do that. You got to look at it objectively. If that label gives you a $500,000 advance, first of all, they're going to recoup it. But second of all, that's coming out of their budget. They've got shareholders to think about. They can't give $500,000 to everybody that comes along. So. But an artist doesn't think that way. 

MRD - BNSesq 

[00.39.05]

 You know, I had a conversation just this week with an artist writer, and he's looking at a new publishing deal, and he asked me about what type of an advance do you think we could get, right? And I told him, I said, well, based on what I know of your history and what I've just recently done, you're probably going to get somewhere in this range. This range, right. Which is not six figures, most likely. No, it was under six figures. Well, it was under six figures annually if you added up to three years of the deal. Right. It got over six 

MRD - DGDesq

[00.39.42]

 figures. Got close? Yes, 

MRD - BNSesq 

[00.39.43]

 but it was under six feet. And I said, and this is a writer who got that deal, who has a long history, and he's hadn't big radio songs. He's had these things happen. And so the best that I think you could get would be under that. Now, when you go as far as you can push it as best you can, but you've got to be realistic and you have to understand what the market's like. And the market today is different than it was five years ago or even ten years ago, where some of those massive, really massive advances may have happened when the markets 

MRD - DGDesq

[00.40.19]

 changed. The market has changed a lot. And, 

MRD - BNSesq 

[00.40.21]

 you know, no company in the entertainment space in particular when they're doing these deals. They don't want to set precedent with you or with any of their other writers or artists. And all these people talk. They're not supposed to. But let's be, you know, they're backstage at a festival and they're chatting about something or somebody leaked something to the media. It happens. So they don't want to set precedent either. And so they're fighting against some of that. But I guess the point to it is when you're looking for one of my leverage points, and how do I focus on my needs rather than positions. You have to to put a realistic eye on that. And and if you take in what we've just talked about, we're not squeezing the turnip dry all the time. As I've told people, my favorite phrase these days is you're playing for the second contract. That's what you're doing, especially if you're a new artist. So don't make it so confrontational and and and off putting now and not fun and squeeze everything out of it to where you can't get to the second contract in particular. It's a long life and long history. And oh, by the way, if you write hit songs or if you have a hit record or two, you're going to make it up in your royalties anyway. So, you know, let's just be realistic and understand what we're playing for. You know, interestingly, we're going back just real quick to that win win idea. I had a client years ago. And I never really confronted him on it. I probably should have. But over and over again I kept seeing that his philosophy was if I win and you win, great. If I win and you lose, I'm okay with that too. 

MRD - DGDesq

[00.42.02]

 Thank you very much. 

MRD - BNSesq 

[00.42.04]

 I mean, eventually I just stopped working with him. The 

MRD - DGDesq

[00.42.06]

 last deal I want to do with you. Exactly, 

MRD - BNSesq 

[00.42.08]

 exactly. And you don't want that. Which leads me to what we've talked about before. Finding new customers or new clients. It's infinitely harder and more expensive to always find those new people, those new clients, those new opportunities than it is to work well with the ones that you have from the very beginning, and stay with them for years or decades. It 

MRD - DGDesq

[00.42.31]

 gets back to that, that principle of relationship that we've been been exploring. One of the things you mentioned in your example of the young artist who's asking you what kind of an advance he gets, was the existing client who had an A history. Right. And that leads us to the other thing you mentioned, which is leverage. And, um, you know, a lot of our listeners aren't going to understand what leverage is and how it works in a deal. And so let's explore that. Bouncing off what you said earlier. So what is leverage? Leverage is, is is what you need in order to obtain something that you want. It's self-interest and it's power that one party has over the other. There's an old episode of Seinfeld where George just wants to get the hand. Remember that episode? And by that he that's what he meant. He wanted to get the upper hand, as it were. He never gets the hand. So the hand is leverage. Frank Sinatra used this, and I talk about it. I talked about it in the introduction as because he became successful as a film actor. But in the meantime, his his career as a recording artist had kind of dwindled. Right. And so he ended up buying Reprise Records or forming Reprise Records, and that did really well. But then it started to go downhill. As you know, Dennis, in this industry it is waves and troughs. If you stay in this industry any length of time, and that was what was happening to Frank Sinatra. But when Reprise Records started to suffer because of some of the shenanigans that Capitol Records was pulling, he went to Warner Brothers and used opportunity as a way to leverage a deal with them. He gave them what they wanted, which was him starring in some of their movies, and they gave him what he wanted, which is marketing and distribution for Reprise Records. What a great use of opportunity. 

MRD - BNSesq 

[00.44.45]

 Yeah. You know, the part of the gift, I think of great business people. Is seeing that opportunity is seeing through the fog or the the forest and seeing that out there. That's the opportunity I just have to navigate my way to there and and make it happen now. And sometimes you work backwards. Obviously you go, hey, let's start with the end game of what I'm looking for. And I sort of retro engineer it back to where I am now, and you find your paths for that. But the opportunities or opportunity I think is hidden in so many places that we're not aware of. You know, there's this old it's credited as a Chinese proverb that says that the Chinese characters for chaos are two one meaning danger, one meaning or crisis, and one meaning opportunity. I, I did a quick research and I thought, hey, this would be great to use this in this episode. And so apparently that's not actually 

MRD - DGDesq

[00.45.48]

 accurate. It's close, as most wives tales or myth myths are close, but not not completely accurate. But basically what it does mean is that. In these situations that we think are maybe out of control or just completely uncertain, you know? And sometimes the uncertainty makes it feel like we're out of control. Right. Yeah. But within that, what you have to do is stop, take a breath. And we've talked about being able to pause. We've talked about this before. Take a pause, look at the situation and then assess where things are. So what it means for looking into opportunity really means about finding those favorable, advantageous circumstances, time or how do we grow the business and what do we need to do to partner up? A lot of it does require letting go of ego to attack those opportunities, in my opinion. Hey, I want to be king of the hill, but for me to really be king of the hill, I need to step over to the side for a while until we need to partner with someone who can then scale us up. Okay. Maybe it needs to happen, but there are a few things. You know that if you're looking at opportunity, that some of the key aspects for that are like, what are the favorable opportunities I just mentioned? So are in favorable circumstances. So what that means is in our situation here, what's good, what's bad, what can I. Where can I find an opening? There was something that. Came up just in the last week or two here at the office, and I remember talking to Vanessa and a paralegal and I said, I think I want to go in that direction with that client, not because it's going to pay us today, but I see that opening a door to the people they're dealing with. That's where the payday really is. So let's work with this client. Work well with them because I know they will open an opportunity for us. 

MRD - BNSesq 

[00.47.49]

 So you're looking at those circumstances. Maybe it's a timing thing, which is hard to define off the cuff, but it's it's one of those where are we and is and is this a suitable time to connect? Might not be right. Maybe we need to wait a few months or a year or whatever, you know. Is there a way for us to step over in that direction and that scales us faster and quicker? I mean, we you know, I've talked about how we grow the business. We've talked about that a lot. There's opportunities there that we've explored. You know, they didn't pan out yet because they weren't good for us timing wise or others and said, okay, that's which is fine, but every opportunity is desired for now. I'll put it that way. Well, 

MRD - DGDesq

[00.48.29]

 the way I look at opportunity as a lever is that the the party who is offering the biggest opportunity has the greatest leverage. And if you think about that in terms of a record deal, for example, then that delves into uncertainty. We'll talk about uncertainty a little bit more as a as a lever. But. Think about the record label, right? Why is it the record label can get away with having clauses like the controlled Composition clause and work for hire for the sound recording and all of these things which, generally speaking, are unfavourable to the artist. It's because the artist doesn't have any opportunity as a counter leverage. The only leverage they have is that the label has some interest in them, but the label is presenting the greatest opportunity, so they have the greatest leverage they have. As George said, the hand. 

MRD - BNSesq 

[00.49.28]

 Well, it's usually a golden hand. That's what everybody looks like. You know, your 

MRD - DGDesq

[00.49.32]

 golden rule. It's a good way to put, you know. Wasn't that a James Bond film? 

MRD - BNSesq 

[00.49.37]

 So let's have a little back and forth here on that. I just wanna make sure I'm understanding what you were saying. Yeah. So the opportunity that the label was bringing that you just mentioned, is that an opportunity for the label or is that an opportunity for the artist? Because the way I 

MRD - DGDesq

[00.49.54]

 see it, it's both. But it's a it's a perceived opportunity for the artist. And that's really the important part because that's the two parties in the deal to give the label the leverage. It has to be a perceived opportunity on the other side because that gives them the leverage. In other words, the artist will do almost anything. 

MRD - BNSesq 

[00.50.15]

 Gotcha. It's an inverse 

MRD - DGDesq

[00.50.16]

 relationship. It is. So 

MRD - BNSesq 

[00.50.18]

 I've I've got the clout, the leverage to make these things happen. I the other side sees that if I pair with them, I have an opportunity. 

MRD - DGDesq

[00.50.27]

 Oh yeah. Yeah. So it's 

MRD - BNSesq 

[00.50.28]

 an inverse relationship. It is. Okay. I got you saying I was a little confused when you first said it. I thought, well, I see that more as opportunity. It's really for both sides. We all know that. But I see it as an opportunity for the artist to have resources put around them they wouldn't otherwise have. Potentially, the opportunity for the label is we're signing what we believe is a unique talent that will again contribute to and grow our label. I mean, that's the opportunity they would be 

MRD - DGDesq

[00.50.57]

 seeing. Yeah, but you have to remember a company like a record label, which is owned generally for listeners information by a conglomerate who has billions of resources. Right. That may be what the way they are looking at the artist is not necessarily as an opportunity, but as another feather in their cap, as it were, another product. Because there's literally thousands of other people that would also fit that bill. And so, you know, they're taking a chance on you is the way they look. It's a risk for them. 

MRD - BNSesq 

[00.51.36]

 It is a risk I would push back a little by saying what the majors are doing and particularly the majors, they play a market share game. And so how do you gain market share? You sign as many people as you can and you have the biggest selling or biggest consumer projects, right? That's really what it comes down to. So yes, they do see it as we have an opportunity to put a feather in our cap, as you said. But with that feather they have to see the opportunity. That one, we're going to keep growing our share of the market just in terms of pure size and overall revenues. But then we also have the opportunity to maybe break artists in a way that want to attract even more artists to us. So I, I see it. I know because I've worked on both sides. I've not been an artist, but I've managed artist and I've been at labels. And so I know the types of conversations that they end up having now at the macro level. At the end of the corporate chair level and the board of directors level for these conglomerates. It's not quite as granular as we may be talking a little bit about here, but at the label level, the divisional level and through their staffs, they're very much talking kind of like what we're talking about, which is why do we want to sign artist A we have a chance to sign an artist B what's the difference? Because we can't sign both right now, right? Do we still have limits to budgets? And we still have limits to the type of mix on our roster. The majors have obviously have a lot of females, every genre, a lot of males and every genre, a lot of bands and every genre. But at the divisional levels, they are not as competitive. In other words, they they're not going to sign Carrie Underwood. And then someone else is exactly like Carrie Underwood. That would be defeating for them. So they have those conversations, and they have to make the choice to assign Carrie or sign Carrie. Two which one do I do? And that is looking at the opportunity. But we believe Carrie Underwood can do this. Carrie two might do that. I believe maybe not as strong, you know, that type of thing. So all those things come 

MRD - DGDesq

[00.53.41]

 into play. And that leads us to the second lever. We have opportunity. And then there's uncertainty. And uncertainty gets tricky because in every negotiation almost every decision we make involves a certain degree of uncertainty. So the trick here is to avoid the uncertainty being used as a lever against you. And when you start talking about weighing in on one artist against another artist, that is the leverage they might have over the label, because the label is not sure whether that artist is going to be successful because they've got, let's say, a million followers on Instagram, or this one who goes out and tours and has an instant touring base, which one of the we don't know which one. And so it would be up to one of those artists to use their leverage of uncertainty. To to negotiate the better 

MRD - BNSesq 

[00.54.38]

 deal. Great point. So you've got the Instagram Stories. We'll say that. And we've got the touring star and part of what their pitch has to be. Let's assume for the sake of debate right. Musically they're consistent. They're the same. Yeah. So now you bring in those other aspects. Well, wait a minute. For the Instagram star. They don't have a the the touring base. So that might limit certain things. Or you may have to throw and label more tour support which puts more risk back on you. Well, hey, I'm a great touring artist over here. All you got to do is throw a few shekels, let me go record some songs. You know which 

MRD - DGDesq

[00.55.13]

 is. Which is less uncertain. And so I've got an instant audience paying me money over here. They may or may not be paying me money. And this person may or may not know how to go out and tour and interact with an audience. So you see the uncertainty leverage coming in there. 

MRD - BNSesq 

[00.55.31]

 And on the touring side, you have instant test marketing, right? You're playing this live in front of people. They're going to let you know immediately 

MRD - DGDesq

[00.55.39]

 whether they like that song or whether they like that riff or whatever 

MRD - BNSesq 

[00.55.43]

 on Instagram. They may see it but may never comment. Does that mean they did or didn't like it? I don't know. Right. I know I'm not. I'm not necessarily the Instagram Prime target audience, but I'm on it. I'm I am on a 60 year old bald guy. You're not the target. But you know, but there's a thousand posts I see that I never comment on that. I like that's that's pretty cool. Yeah. I don't have a relationship with that person, so I'm not going to sit them like, oh, they've already got 5000, 10,000 likes. 

MRD - DGDesq

[00.56.12]

 What is mine. What are they in mine for? Yeah. 

MRD - BNSesq 

[00.56.15]

 You know, so we don't really know that. I don't think a lot of that's a great barometer all the time. It's great for discovery and other things you can use it for, but it's not necessarily a great barometer for how. Well. A deal might go for you if you're a label. 

MRD - DGDesq

[00.56.30]

 And when we talk in from where we've already talked about the uncertainty and sort of the converse of that, the opportunity, that's where both sides need to evaluate possible outcomes, because that's how you can kind of discern some of these things, assess the probabilities of the outcomes, make educated predictions. And to do this I recommend, you know, sitting down and thinking about the outcomes that you expect from the deal you're trying to get. Evaluate what are the desirable components of it. If it's a recording deal, do I want to be able to get a larger advance? Do I want to try to get a reversion clause so that maybe I get some of my stuff back at some point? All of those things. Think about anything that you would desire in the deal, and then understand the other side of the equation. Are they going to desire that and why not? And you know, how do those complement each other? And then look at the outcomes that might be acceptable, though not necessarily, you know, what your ideal is the acceptable outcomes. And then you can start, you know, mixing and matching those. And you can start to form your strategy for negotiating the deal that way. So, you know, we 

MRD - BNSesq 

[00.57.52]

 had one of our earlier podcasts, we've touched on it here a little bit about knowing who the other side is. And you just touched on it as well. That's so key to putting these deals together. It is if you go back to the top of this episode, if you have a relationship with, with the people you're trying to do negotiation with, then that goes a long way, obviously, because you already know who they are and how they think and how they operate, and the types of things that are important to them and not important to them. That's hugely invaluable. So you build those relationships. One of the things that you and I do quite frequently try to do as often as we can is we we do go and network. We go. We do ten things meet new people. Take people out to lunch just to get to know them, that type of thing, because of what we need to do for our clients. So when you're when you're looking at that and you understand or get an understanding of what the other side will or won't do, it helps you to work to your point of saying, well, I want this to happen, but I now know that they have corporate policy that that just doesn't work. So I want my guy to go in there and beat them up trying to change their mind. 

MRD - DGDesq

[00.58.59]

 Yeah. And piss them off and piss them off. The can we can we say that on a podcast? I guess we can. Well, you 

MRD - BNSesq 

[00.59.05]

 said progenitor a few weeks ago, 

MRD - DGDesq

[00.59.08]

 so, yeah, I think we can. Progenitor 

MRD - BNSesq 

[00.59.10]

 the progenitor? That's pretty much. Yeah. 

MRD - DGDesq

[00.59.13]

 Understanding. And you and I both. And you're going to know who I'm talking about when I say this. No. General counsel for a label. Who you and I both have a good relationship with, and to the point where if a client comes to us and says, I want this in the contract and we're dealing with that person, we can say, look, that's that's against their corporate policy. I can tell you he's going to say no. All day long. There's no point in me even bringing it up. And that again feeds back into that modern approach to developing relationships with these people you know, you're going to be working with again and again and again. It's not just the music industry. I've got people who are in the medical industry, and that is as small of a world as the music industry, and you can template that to everything, and you're going to be dealing with the same people when you're in a singular industry, entertainment or music or whatever. So, you know, relationships are so important. So kind of to wrap all this talk up about the opportunity lever and the uncertainty lever, we've got a couple of more to deal with, but I've got a quote from F Scott Fitzgerald that said, where he said one should be able to see things as hopeless, yet be determined to make them otherwise. So I think if you can approach a deal that way, man, you know that there's a lot of wisdom in that that will say there 

MRD - BNSesq 

[01.00.44]

 is. You know, I did a few years ago, I did a, um, I don't call it a deep dive, but I dove into. The definition of the word hope, since if Scott used it here. Yeah. And the definition that has stayed with me now for several years is hope is defined as a confident expectation. It's not a wish. It's not even just an expectation, but it's a confident expectation. That's really the the substance of hope. I like that. So when you're saying when he's saying here, I want you to be able to see things that are hopeless, that means, hey, I have no confidence at all that I'm going to get anything, okay? But I'm going to be determined to try to move that around. I do like that. I think that's a great attitude, if you will. Yeah. 

MRD - DGDesq

[01.01.35]

 To find define the opportunity in the uncertainty. And that's why I kind of wanted to wrap those two up together, because that's exactly what we do when we make deals, right. We don't know what the outcome of our deal, Mike is going to be, but and often we can't predict it. But we can have, as you say, that confident expectation that we're going to get a good deal. And I think when you have when you start there, that's good. 

MRD - BNSesq 

[01.02.05]

 Let me back up just real quick on confidence. Confident in, I guess, even expectations. So how do you become confident in something? You become confident through study, through training, knowledge building relationships, through knowledge, all these things. So when someone comes in and says, well, I hope to get a deal. Really? Why do you know anybody? Have you met with them? Have you talked with them? Have you studied who they are and what they want? No, there's no hope. You're going to get a deal just because you want a deal. And there's a difference between, you know, wanting and actually having a hope that you're going to get it. And and I think people miss that. They really just think, well, I sing, I sing nice, I got some nice songs. I'm hopeful I get a deal. No, you you're you're really you're wishing you get a deal and you're not going to get a deal because you don't bring that other piece of the puzzle to the table, either yourself or with your team, which is are those people around you doing those things? They're studying, they're creating relationships. They're opening doors and creating opportunities for you to step through those types of things. That's how you develop. Real hope is doing that. And on the uncertainty front, there's a quote from years ago I won't bring it up on who did it. It's a variation on on one. But the gentleman said, you know, there are known knowns. That means there are things that we know, we know, and there's also things that are known unknowns. We know that we don't know certain parts of this. Right. But there's also unknown unknowns. Those are the things that we don't know, that we don't know. 

MRD - DGDesq

[01.03.43]

 How do you know? You don't know. 

MRD - BNSesq 

[01.03.44]

 We don't. We know that there's we know they're out there. And that's the one that's the most difficult. Yeah. That you try to suss out if you can or there are things I don't, I know that I don't know. And if I don't know them help me know them. So yeah. And you know and known unknowns, it really does refer to the risks that you're aware of. You know, I saw this one example about this phrase that says such as cancelled flights where you it's a risk, you know, that the flight is cancelled, but you don't know yet what the ramifications of that be. When do I get my next flight? Can I get it out tonight or tomorrow? Do I need to change airlines? We 

MRD - DGDesq

[01.04.22]

 don't know that. But what I do 

MRD - BNSesq 

[01.04.23]

 know, my flight's cancelled now. My unknown is what are my next steps? And? And that's what we do in all dealmaking. You know, we we come to the table knowing certain things. And that's great. We also know that there's certain things we don't yet know. No. And we seek to find those out. But the ones that always mess you up, man, are the those unknown unknowns. 

MRD - DGDesq

[01.04.46]

 Yeah, there are some things you just can't find out. And the more information you have about the deal, about the person you're dealing with, about your client, about their needs, the more research you do on a deal, and that's probably one of the most important parts of deal making is the preparation, knowing all the information you can know. Now, yes, there's going to be some things you don't know, but you got to dig in and do the homework. That's that's the main. But that's 

MRD - BNSesq 

[01.05.13]

 why in all your communication with the other side, you put that phrase, I'm reserving all rights 

MRD - DGDesq

[01.05.19]

 reserved. All right. 

MRD - BNSesq 

[01.05.20]

 Because there's things I don't know that I don't know. And so I'm reserving the rights that if it pops up, I, we can adjust. 

MRD - DGDesq

[01.05.27]

 We need to do something about it. So the third leverage lever is the lever of timing. And, you know, timing affects deals in a lot of different ways. Timing plays such a critical role in even the flow of negotiation, but it can also be used effectively as a lever if somebody needs a deal desperately. You've got great leverage over them. And that's another thing. A record label typically has over a young artist. They think they need that when they get the opportunity to take it. And there's no one more vulnerable in a negotiating session situation than someone like that, someone desperate to make it happen. But it goes more beyond just knowing when to make your move. It involves an understanding and and really a science about your timing as well as the timing of your counterparts. And I know you know a lot about this, Dennis. What are some examples that you could give about this? Well, 

MRD - BNSesq 

[01.06.33]

 especially when I was back in the label world days and I was, excuse me, I was running marketing programs. A lot of the opportunities came up ill timed for our fiscal year. We just couldn't do them. I'm out of budget and even even if I haven't spent all the budget, I've committed it elsewhere and we're still 2 or 3 months away from looking at our budget planning for the next fiscal years. That becomes a timing issue that that comes into play with your negotiations on things counter to that, or an alternative to that would be what we call volume discounts. That's a timing thing. You can negotiate. Yeah. Take an advertising campaign I want to. To to buy ads in certain magazines or certain television programs or 

MRD - DGDesq

[01.07.18]

 whatever. I can do that. And you can buy it as a one off like you do with Super Bowl ads. Or you could buy a series of advertising placements. You get better individual unit spend by going into what they call the volume discount. Hey Mister magazine, I'm going to run an ad in your magazine every month. Full page for a year. Great. We'll give you a better price per ad. Yeah, you're paying more in the aggregate, but we'll give you a better price per ad placement than if you just wanted to buy one ad one time. So timing for those things considerations can come into play. Market conditions you know what's the stock market doing. What's the economy like. Is there is there geopolitical factors that come into play? Right. A few years ago, the touring market took a major hit, not even with Covid prior to Covid. Sheila, prior to you right after, but. Must have been right after because insurance rates went through the roof. Gas and fuel went through the roof, so that timing of what was happening there made all the touring that I mean multiples more expensive than the previous year or two. That creates some negotiating challenges on what you have to do. How much can the artists go out and tour for when his bus fuel costs have gone through the roof? We got to get that money back somewhere. So that affects how the negotiation goes for the booking agent and the promoter to make sure that the artist still can make decent money but cover his costs. Governmental relationships that come into play. Tax changes, for instance. You know, we came just through a few a couple years ago where the 

MRD - BNSesq 

[01.09.01]

 we thought the capital gains tax as it applied to catalog sales was going away. Fortunately it didn't, but everybody was rushing. This is like 1 or 2 years ago they were rushing to get catalog sales done. A 

MRD - DGDesq

[01.09.14]

 lot of people used it as a lever. Yeah, exactly. Yeah. Here's the lever. If we get it done now, guys, you're going to spend less in taxes. Okay, but fortunately that didn't happen. It still stayed down to about 20% 22. 

MRD - BNSesq 

[01.09.27]

 So we have those types of things. Stock market prices 

MRD - DGDesq

[01.09.30]

 obviously. One example I've had experience with is when you have, let's say you've got a recording artist who is in a seven period deal, right? He's got to produce seven albums and his royalty is in the lower range, let's say 12 to 14%. And he gets really successful album. Let's say it's his second album and it just blows the top out becomes platinum. Now he's got a timing lever because he can now go to them and say, wait a minute, I want to renegotiate my rate because I just made you a freaking lot of money. So the timing is perfect for that kind of thing. I think that's a, you know, some of these things that we're talking about, and that is a is a good example of how to use lever C. I would take the the flip side of that a little bit. So you're right. I mean, if I've got that much success happening, I've got leverage to to make some stuff happen. Yeah. But to your point, he's got seven albums he has to deliver. So on the one hand, the label doesn't have to do anything that would hurt the relationship potentially. Right. 

MRD - BNSesq 

[01.10.45]

 And that would get back into that whole discussion. So that is something. But I look at it from, from a timing of what are you doing seven periods to begin with. Let's do one with two 

MRD - DGDesq

[01.10.57]

 options. Well, and that's where you can use the lever to reduce the number of options. And you know, if they're coming to you saying, hey, let's get some more product out there. That's the timing aspect. And then and you can, you can actually call your shots. And I bring this up because there was one artist and I won't name any names at this point, but there's one artist who, who got a 50% partnership with the label after he had sold, you know, a lot of records and. Well, actually, there are several artists who have done that. And so that's another good example of, hey, I look what I've done for you to this point. You want to move forward with me. This is what you got to do. What? One example. I'm sorry you had what 

MRD - BNSesq 

[01.11.41]

 you're going to say. Again if you want. If both sides want to have a strong, meaningful relationship, you'll try to figure out how that how to make that work out for sure. Right. And and you're right. Second album goes gargantuan. It's suddenly, you know, 10 million sales. Album sales. We're looking at that. So we got a billion streams worldwide. The label better be paying attention now the the artists, because they have so many other records coming, aren't going to make bad records going forward because that would hurt their careers. So they're still going to deliver. But now you've planted the seed of I can't trust you. You're in it all for yourself. I'm counting down the days. Todd wark yeah. And that's. You do not want that. 

MRD - DGDesq

[01.12.32]

 You don't want that. When we're talking about timing, there's one other aspect that that I want to bring in here. Because you can use the lever of timing as well. And to introduce something that's going to be familiar with our faithful listeners. And that's the bot, not the best alternative to a To negotiate a deal. 

MRD - BNSesq 

[01.12.53]

 There comes a point in time. We've talked about this before on the show. When it's time to walk away. As Kenny Rogers says, know when to hold them. Know when to fold them. But a good example of this, you know, it's a very powerful time based leverage point. If I've got a bottom, then I can walk away. And we see this playing out in Frank Sinatra's life. When he went to Verve Records, the president of Verve, and he he was negotiating with him and they were going down the path of of him buying Verve Records because he wanted a record label. He wanted to be in control of his creativity. And so that's the path he chose, at least initially. But Frank had Albertina. He chose Verve because he liked the CEO or CEO, I guess is what we would call him now, the person who operated the label 

MRD - DGDesq

[01.13.46]

 and, you know, so he was negotiating with the owner. He really liked this guy because he was on the same vibe as him, I guess. And so when that negotiation fell through with the owner of Verve. He went out and hired the crew. His name was Moe. I don't remember his last name to Austin. Yeah, I think so. To to run his label, Reprise Records. And he just started his own. So perfect example of both a timing thing. He knew when to walk away from the Verve deal, and when he did, he knew what he wanted to do. He wanted to form his own and he wanted to get Moe Austin, and that's what he did. So perfect example there. 

MRD - BNSesq 

[01.14.32]

 Yeah, that goes back to opportunity. When you think about it. It does. 

MRD - DGDesq

[01.14.36]

 It involves that 

MRD - BNSesq 

[01.14.37]

 the opportunity a for Moe to break away from the other entity and go on to what he went on to. I mean, he's an icon in the music entertainment world. But Sinatra recognizing, hey, I like Moe. He's ready to move. Let's see how I can make a move to get him to come with me. And again, be aware, you know, be be. 

MRD - DGDesq

[01.15.06]

 Keep your eyes open. Yeah. You know, the way I like to look at it is embrace the chaos. Because life is chaos. It's full of chaos. And so you might as well go with the flow. And so see the opportunity that you can, you know, the phoenix that can arise from the ashes, as it were, as 

MRD - BNSesq 

[01.15.27]

 we've just admitted. You know, the Chinese axiom about chaos is, you know, opportunity and risk. 

MRD - DGDesq

[01.15.34]

 Exactly. Danger. But I think it is 

MRD - BNSesq 

[01.15.36]

 here. You're right. It is chaos. It is unformed in so many ways. Right now we're talking about the music and entertainment world. We've done this for a few years now as being the wild, wild West. What does the wild wild West really mean? Chaos. Yeah. You know, there were no rules there. Just go do your thing. But what's in that are real opportunities. No, there's real risk. Don't get me wrong. And I think we've talked about it before. The difference between risk and chance. I'm not really big on taking a chance. A chance means you've got your eyes closed and you're just, you know, jumping off the cliff. That's a chance. 

MRD - DGDesq

[01.16.10]

 Risk is different than risk is 

MRD - BNSesq 

[01.16.11]

 different. Risk is is educated. Thought through researched. You put your plans together, going through uncertainty. You don't know if it's going to really work. You have a confident expectation that it will when you start it. But you've got that married with. In this chaos, there is opportunity. Again, keep your eyes open, as you just said. Yeah, exactly. So, Dennis, the last lever that that you know, we talked about opportunity. We've we've talked about uncertainty and we've talked about timing. The last lever is either sanction or sometimes called coercion. But it is the old ultimatum. You know, it's kind of like the old parental admonition, you'd better do what I say, or else, you know, and then fill in the blank. And the problem with ultimatums is most people, when they're faced with an ultimatum, are going to choose to, you know, they're going to have the fight or flight response, and most of the time they're going to choose to fight. And if you're that parent saying you do that or else what's going to happen, the kid's going to do it. The best example and I always give this a in my class when I'm talking about negotiation and when I'm talking about the lever of sanction. When I first moved to Nashville, I worked with this older attorney, older gentleman who was more of the traditional negotiating style, the bulldog, us versus them. You know, I'm always right. You know. So. And we'll just call him. Shall we call him Mr. Jones, I guess. And I remember distinctly, I was a fairly young lawyer at that time, and we were going down town to one of the larger firms, and we were in one of these big conference rooms with, you know, 50 seats around the table. And, you know, there were 4 or 5 of them on the other side as me and and Mr. Jones, we'll call him on the other side. And he gets into it for about five minutes and he makes a demand, he makes an ultimatum and he says, if you don't do this, then, then this negotiations over. And of course, what happened? And so he stands up, he slams his book closed, and he waddles out of the room. And here I am. Have a nice day, guys. And I gather up all of our stuff and and trot off behind him. That's what happens with sanctions. Right now it is an effective tool. It can be, 

MRD - DGDesq

[01.18.44]

 it can be, but it has to be used with a great deal of caution. It does. First of all, when you said me and Mr. Jones, of course, my head went back to that old 60s songs. You know me and Mr. Jones, actually, Mrs. Jones. The thing goes. Jones. Yeah. 

MRD - BNSesq 

[01.19.01]

 So you and Mr. Jones 

MRD - DGDesq

[01.19.02]

 had a thing going on? We had a thing going. It was a settlement agreement, but there 

MRD - BNSesq 

[01.19.06]

 you go. No, the you know, the challenge with coercion, depending on how it's used, can actually make the agreement void, 

MRD - DGDesq

[01.19.15]

 right? Well, this is true if you go to the extent of duress, but you know, so you got to be careful. Yeah. But the other part is ultimately I'm okay using ultimatums of coercion if you're really, truly going to do that. So as an example, and I had to use this with my kids and my wife as we were raising our kids when they were younger. Out of threats. Threat. Threat. Threat. And I thought I said, dear, we can't keep threatening if we're not going to back it up. So if we are going to give a threat, think it through, make sure that's what we really mean. And if they violate that or go the, you know, against what we're saying, then we have to act. But we can't give them another chance and another chance and we can't keep threatening. I think the same thing happens here. You know, we've talked about in one of the first episodes about being able to walk away. Kenny. Kenny Rogers gambler. Yeah. That's where if you say that's going to happen, 

MRD - BNSesq 

[01.20.16]

 then you better dang well do that, because then you do lose all your leverage for the next issue that comes up. Well, they're just all fluff. They they do all bark and no bite type of an idea. You don't want that either. You want to be respected so that when you say something, it has weight to it. And if you tell them even very nicely, this is it. Final offer. If you don't accept this, we're walking, then you better walk. That's all I say. 

MRD - DGDesq

[01.20.45]

 Yeah, I agree with that. I the the problem I have with ultimatums is that fight or flight instinct of most people. And when you're talking about a deal with somebody going back to the relationship where that you have a relationship with, or that you expect to continue a relationship with. It's difficult to put yourself in that coercive situation and enforce the ultimatum or enforce the sanction. I think in terms of people, you know, who quote unquote, have something on the other party and then try to use that to get a better deal. That's a bad use of sanctions. Your example of parental threat you called them, or better sanctions. You know, if you if you don't do this, then we're going to, you know, we have to follow through. That is a good example, right? And to some degree, my example of Mr. Jones, that's exactly what he was doing. He he threatened it and then he did it. Of course, in that case, we didn't get the deal, which is, I guess what I'm saying is, what's the probability of you continuing on in a relationship with someone when you've threatened a sanction and you've enforced it? 

MRD - BNSesq 

[01.21.56]

 Yeah. No, it's really low. Yeah, I was years it's been years ago now, but there was an artist. I was at one of the labels and he was mad about something. With distribution. He was actually on a division. That was not owned by the distribution company. That was just a distribution deal. And he confronted the head of the distribution company about whatever. I can't remember what the issue was and basically threw down the ultimatum. As soon as I can. I'm out of here. I'm killing my deal with this imprint, etc., etc. and just really ripped the distribution head a new hole. You know? Yeah. From that point on, it was never the same, right? And at the same time, he never left either. They didn't necessarily make any major adjustments over here with distribution, but the relationship was damaged in a significant way. So you got to be careful. I think you can use ultimatum 

MRD - DGDesq

[01.22.54]

 strategically. I think so, 

MRD - BNSesq 

[01.22.56]

 but boy, do not be cavalier and flippant with 

MRD - DGDesq

[01.23.00]

 them. No. And that's the thing you like. Like I started this out with you. You got to use it carefully. I mean, yes, it can be probably one of the most effective levers, but if you want a good working relationship in the deal, you want to use it judiciously, if at all. Yeah. So that's that's I guess, the best way to to summarize that one. So 

MRD - BNSesq 

[01.23.25]

 but it does create. Ultimatums are great leverage. They also can sometimes create a good opportunity. True. And again, I'm just such a big believer in know why you're doing something. Reason it out. Look at the contingencies. Look at the unintended consequences potentially that could come from those things. But the moment you lose any control, if your ultimatum is from a an emotional state and controlled state, it's never, ever, ever good. Yeah. If it's from a reason strategic perspective, it can be it can be good. So I guess for the audience to summarize kind of the four levers, we've got opportunity, we've got uncertainty, we've got timing and we've got an ultimatum. So with that, let's um, after we come back from the break, Dennis and I are going to give you some walkaway points for this session. So please remember to hit subscribe and get us up over that 200 mark, that very mission earlier. Wherever you'd like to listen to podcasts, just go there, click like and subscribe. Thanks again to Ryan Smith over at Shaw, and for providing these great microphones that hopefully are doing justice to my dulcet 

MRD - DGDesq

[01.25.00]

 tones. I think they are. And yes, I second that and I had a shout out to him earlier. So thank you again. So some walkaway points. Dennis, we got a lot to unpack here. I mean, we've got so much. I mean, I think obviously the first walk away should be make sure you know what your levers are, you know, understand your leverage, figure out what their leverage is. And and as you said, reason it out. Make sure you understand when to use the levers that you have. 

MRD - BNSesq 

[01.25.30]

 You know, it's so funny, just as you're saying that I grew up in a construction household. My father was a superintendent for a bridge contractor, and I was always fascinated by the crane operators. Back in the old days in particular, it literally was like 4 or 5 levers in front of them in a couple of foot pedals. Yeah. And. If you didn't know what the lever was supposed to do, you killed people. Literally. You could kill people. 

MRD - DGDesq

[01.25.53]

 That's a great analogy. Know which lever to pull? No one's lever to pull. And that just now hit me like, this is really like operating a crane. You have to know which lever and even combinations of levers correct to pull and at what time. So it kind of fits in with our whole talk today. I don't 

MRD - BNSesq 

[01.26.10]

 know why. I just thought it couldn't have summarized that better myself. One of the other things I think that we we, we see in a lot of these deals is, you know, when you're negotiating, try to get something for something else. Understand what the other side wants. Through all of this analysis we've talked about and leverage that to get something you want. And that's where that analysis of what I desire, what's acceptable to me, you know, and what I can live with. If you analyze the deal from those three perspectives and put the deal points in that order, 

MRD - DGDesq

[01.26.53]

 you'll have a better sense for when to pull the levers. 

MRD - BNSesq 

[01.26.55]

 Oh, agreed. It's the whole concept of give to get. Yeah, right. And and 

MRD - DGDesq

[01.27.01]

 quid pro quo. Exactly. And every good negotiator understands that. So you got to come to the table with. Here are the arrows in my quiver that I can I can shoot. They're going to have arrows in their quiver. I'm okay giving them a couple of my arrows if I need to. Yeah. If I'm going to get something from them that I really, really desire in one out of the deal. So you've got to be willing to give, to get. You can't again, you can't squeeze turnips until there's nothing left in them and hope that it's going to be a good relationship. You know, just maybe last week. Talking with one of our clients about a I think it was a record deal, if I'm remembering correctly now. But he kept saying I want certain things and he I listed them out and I said, I 

MRD - BNSesq 

[01.27.48]

 said, well, you do understand. The other side gets gets to speak into it gets 

MRD - DGDesq

[01.27.52]

 really messed up as well. 

MRD - BNSesq 

[01.27.53]

 You know, you can tell me you're demanding that, but we gotta talk through what if, what if they won't give it to you? Or what if they just simply can't give it to you for whatever reason? Right. What are you going to do? You know what? Then what? And so we had to talk through some of that stuff to what you're saying. And I was dealing on a management dissolution just yesterday, and I told our client, who's the artist? I said, here's what we need to do to get out of this deal. And I said, are you okay with me presenting such and such? And here's why I think it makes sense. I walk through all the options. I said, now remember, they don't have to accept any of this. They could come back with something else. So I went to their attorney. He came back later with something else and I said, went back to the client and said, okay, we're almost got you everything you wanted. I said, but they've had this one little twist to it. I don't know if we want to do that. Well, hang on, let's talk about this. What are you why why would you not want to do that? We'll start there. And they didn't have a really good reason. So we were able to talk it through. And I think we're going to get to a settlement here pretty quickly on it. And it wasn't necessarily big money, but it's a young band that has no real money. Yeah. And so I said again, we're going to give up this little piece to get you this bigger piece, this bigger piece. Includes peace of mind. Includes. You're not having to deal with this jerk of a manager anymore. That allows you to move forward with things and find other opportunities to make you successful. Or you can say no to it. Yep, he's going to file a lawsuit and we're going to have to fight that. Oh, 

MRD - DGDesq

[01.29.31]

 by the way, go through two years of litigation and a couple of thousand 

MRD - BNSesq 

[01.29.35]

 offers. And you don't have money for the lawsuit. Yeah. So what are you going to do? So it's a gift to get idea for 

MRD - DGDesq

[01.29.40]

 sure. Well, that's another lesson in negotiating that you should always be prepared for a curveball. So the way to avoid any of those kind of things is to do your homework. You know, know what each side wants from the deal. As you said. You know, he's got his list, too. You need to we need to talk about your list versus his list and figure that out. What is your need? What is his need? And then in the end, sometimes you got to be prepared for that fight. One of the examples of Frank that I gave in the history section was that, um, Frank was with Capitol Records, right, for seven years before he decided he wanted to get out on his own and exercise more creative control. Big deal. But when he, of course, for that seven years, he recorded a lot of product for Capitol Records. So when he went out and he started reprise and he started selling records, Capitol Records flooded the market with his old material, and he had to go in and reduce the price of his records in order to sell product. And that's really what started him down that road of the trough and made him go to Warner and get that marketing and distribution deal. So you got to be prepared for that kind of thing when you're talking about deals of any kind. Be prepared for that curveball. You 

MRD - BNSesq 

[01.31.04]

 know, I don't know how much of a curveball it might have been. But think about to Taylor's versions of her songs. So she had a rerecord restriction in her original deal. Yep. She had a falling out with not with the really with her first label. They weren't on great terms, but the label sold her masters to somebody that she vehemently disliked, right? And she claimed that she was not made aware of things. She was not given the opportunity to buy them herself. She couldn't. ET cetera. Etc.. And then as soon as she passed the rerecord date for no rerecord, data should say she started working on her. Taylor's versions that went just blew up huge as well. How much of that was unintended consequence by the catalog sale to begin with? Could they have thought it through and said, wait a minute, would it be better for us long term to work with Taylor so that we have these albums? We can do these things with them, and she's not going to go off and do what she did. And I don't know the answer to that because I'm not I don't represent anybody in that in that camp. But that type of unintended consequence, which it may have been, but be prepared for that particular fight, because I'm sure it had a major impact on her original recordings, at least in terms of streaming, because her mega fans are going to the Taylor's versions more than than the original studio version, so I'm sure it had a major impact. I don't know if they thought it through or how well they thought it through. Yeah, 

MRD - DGDesq

[01.32.38]

 well, I think our final point is it kind of seems always to come around back to botnet, doesn't it? I think to remember your botnet, but in this context, remember to use it with in conjunction with the lever, the lever of timing and exercise it at the right time. Don't use it as an ultimatum, but use it to walk away from the deal when you know you're not going to achieve your desirable outcomes. 

MRD - BNSesq 

[01.33.05]

 So to tie it back to at the top of our this program, we talked about military. Yeah approach to things. Yeah. The botnet to me is like creating strategic depth. It is the only thing about some of the military approaches to things. It happened a lot in the Afghan war, in the Iraq war, but they were in Turkey basing. But the reason they were there, there were some fight over issues, but it gave them the ability to stage behind them. They had enough room that they could bring what they needed or even retreat if they had felt they needed to some strategic death, i.e. contingency plans. So that's what I created. So that's what I bought. And it really brings to the table is here are some contingency plans. 

MRD - DGDesq

[01.33.47]

 And that's exactly what it brings to the table. And you know, that goes back to doing your homework and understanding what's involved in the deal. So with that, I thank you listeners for for listening in. And we hope you have a great two weeks and we'll see you then. Music Row Dealmakers is a 

MRD - BNSesq 

[01.34.13]

 production of Shrum, Disney and Associates, recorded on location on Music 

MRD - DGDesq

[01.34.17]

 Row, the Heart of Music City Nashville. Subscribe to future episodes wherever you 

MRD - BNSesq 

[01.34.22]

 enjoy your podcasts.