Archive for Art & Artists

ASCAP, BMI, etc…

…just quickly, because I get asked a lot:

Nightclubs, Artists and Web Designers need to know how to appropriately license the music they plan to use.

Artists who want to know the finer points of whether they should associate with a performance rights organization can ask questions below, or contact me.  I will be eventually dedicating an entire portion of the forums to this topic.

BUYERS may have to deal with all of the organizations (or limit themselves to the “library” of one organization).
PUBLISHERS & WRITERS can only be represented by one organization.

www.ascap.org (ASCAP; American Society of Composers, Authors & Poets)
www.bmi.com (BMI; Broadcast Music, Inc., as an answer to ASCAP)
www.sesac.com (SESAC; fastest growing…because it is the newest)

If you’re using music in your media, presentations, nightclub, website, and/or business (even for automated phone attendants), you’re supposed to have a license for the content.  This is how songwriters and publisher get compensated for bringing music into the world.

We are happy to walk clients and artists through the process and equip them with what they need to know about licensing, for two reasons:

1. We’re a publisher and it is in our interest to keep things above board.
2. It is REALLY EASY to operate legally – and usually it inspires people with ways that THEY CAN PROFIT from the licensing dance.

As with all things – do it right the first time.  It takes us about 30seconds to answer a question (and it saves you the headache of hearing from somebody’s lawyer).

Example: In order to use the original recording of the Cheers Theme Song for a promotion (for THE Cheers! Restaurant in Boston), I had to license the song rights from the artist.  Licensing the actual recording used in the show came at a proposed cost of several thousand dollars (not attractive for a one-time promotion or simply for use on their website).  Think about it though - They haven’t been using the song for over 3 decades because, the second they executed that use, it represented a substantial amount of money.   Or DOES IT?
Solution: After 20 minutes in the studio (recording a new/similar piano& vocal track), I licensed the mechanical rights for the original and handed them a track they could use.  Their total cost ended up being $120…and they can do whatever they want with it now.
Seriously – One of the most recognizable brands in the country and they waited 30 years to add their most recognizable theme-song to a promotion.  Knowledge is power.  I’m happy to demystify this and many other topics for my clients (don’t wait 30yrs for a $120 solution).

Two things are owned when you hear a song on the radio:

1. Mechanical Rights (the words and music – as it would appear on a piece of sheet music) – extremely affordable
2. Master Recording (the owner of the actual audio recording that you hear) – not always affordable

- Mark

(reprinted from 1/13/2011)

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Career Clock (wage earners)

Understanding where you are in the arc of your career or project is important to determining your aptitude for risk or earnings (two different things):

1. Your value as an employee

2. Your preparedness for risk as a business owner

I developed this illustration as an answer to frequent clients that are starting their first business. 

I work with many career employees who are making their first risk in business (inventors, artists, startups, technology, etc…).  After years of working for someone else they are ready to strike out on their own.  Many, however, don’t truly appreciate how insulated their life has been as an employee.  Employee positions do not involve any personal risk (one is simply trading time, talent and responsibility for a given wage).   It may be worth discussion, but if you are considering self-employment or business ownership it is a good place to start. 

If you are already an owner (or self-employed…and there is a difference), this illustration may turn your wheels a little about where your value is in a business (and what other talent you may need to surround yourself with, in order to be most profitable).  This is titled “Wage Earner’s Career Clock” for a reason (owners don’t typically derive their income from a wage; earnings and wages being two distinct things).

In this illustration, MONEY exists outside the circle.  Getting to the money requires four things:

  • Time
  • Talent
  • Responsibility
  • Risk

MEINC_CareerClock1 (printable PDF)

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Valuing a “service”

One constantly shifting factor in a service business is finding that magic “happy medium” between the divergent concepts of “cost” and “worth” (what it costs your business to be useful to a client and what you think your clients are willing to pay for something useful).

In today’s economy, keeping a steady workload can sometimes force you to abandon both of those considerations in favor of approaching the problem from a more survivalist approach: “How cheaply can I afford to offer my services?”

Before you undervalue your services for survival (or undermine the market your competitors have established FOR YOU), let’s take a look at the cost of doing business.  In this example I’ll break down a Owner/Operator service business (Self-Employed “wage earner” as opposed to “business owner” who employs many).

There is a dramatic difference between earning a wage and owning a business – I’ll discuss that in another article.

In either case “time is money” as they say – so I’ll start with wages (and some assumptions):

  • Assumption 1: Let’s say you’re a billable independent service provider w/$15k in supporting equipment and/or software (musician, photographer, videographer, graphic designer, web designer, writer, analyst, etc…).
  • Assumption 2: You don’t have any employees and your business operates with the least amount of overhead possible.  Whenever something gets out of your area of expertise you hire other subcontractors to help you pick up the slack.

TIME: For this example I’ll use a $50,000/year salary as a baseline (rough national average).

For a W2 employee earning $50k/year it would cost the employer about $65,000 per year (taxes, benefits, insurance, etc…).  Sole Proprietors are not W2 employees but they do still have liabilities on their earnings and a responsibility to their retirement planning, all of which will likely make their costs about the same.  That means if you want to earn $50k/year you have to bill $65k/year (that is the base pay multiplied x 1.3).  Want $100k a year? Use $130k for the math.

MATH:

  • $65k/52weeks = $1250/week
  • $1250/36hours = $35/hour

Why 36 hours?  Even if you work a 50 or 60hour work-week it isn’t all billable to a client – you own your business and you don’t charge your customers by the hour to do your own books, deal with your accountant, plan your marketing and advertising, pay your bills and bid jobs, etc…  It is reasonable to assume you will burn at least 10hours a week that you aren’t paid for.

Using the above math we have established that your survival as a “wage earner” (not a business owner) requires you to bill for your time at a minimum of $35/hour and for a minimum of 36hours/week (assuming all client expenses are reimbursed at exactly what it costs you).  That’s the cheapest you can work (before factoring in anything like additional equipment, job materials, insurance liability on subcontractors, etc…).   It doesn’t matter if you work in your business (or on your business) for 60 hours each week – you still have to bill at least $35/hour for 36 hours (or $1250/week).

OVERHEAD / SUBCONTRACTORS:

To determine whether you are charging the appropriate markup on subcontractors/vendors, you simply need to determine three things:

  1. Does the difference between what you pay your vendor and what you bill your client equal your minimum rate after factoring in the amount of time it takes to manage/communicate with that vendor? ($200 in markup in a situation that takes you 10 hours to coordinate the work of your vendor only equals $20/hour).
  2. Can your subcontractors/vendors provide services at lower rates than you presently charge your client? (if there isn’t any built-in margin you will want to either raise your rates to create a natural margin or value a quote using #1 to calculate the margin)
  3. Is the perceived value of what you can provide by using a vendor or subcontractor worth the “perception” it has on your rates? (if you charge a customer $35/hour but your graphic person is charging $100/hour what is the perception of your talents to your client?  This is how you determine whether you quote a “project” or an “hourly rate” because the perceived value of a project may be completely different than the perceived value of your time).

ASK YOURSELF (do these assumptions match your business):

  1. Can I bill 36hours/week in my field? (If not, you need to divide your weekly target by however many hours you can actually bill to a client).
  2. Can the clients that I have access to afford my rates?
  3. Can I deliver my service reliably at this rate? (and have client successes result in more work)
  4. Is my rate too affordable (this is a perception…and is mostly based on the market you work in – sometimes pricing yourself too low can actually hurt your ability to be taken seriously)
  5. Am I valuing the cost of my education?
  6. Do I have more than $15k in equipment?
  7. Are you above or below “average”?

In Short (this example):  The least you can charge is $35/hour.  The most you can bill is 36 hours.  Is that a value for a useful service?  Is that enough to survive in your world?

PERSONAL TAKE:

At Mahar Enterprises, Inc. our base rate is $65/hour (which is based on my personal baseline for all consultants).
The only time we charge more is when we can’t handle a scope of work with our existing pool of talent (or when travel is required).  Travel changes everything – if only because most of the expense of my business is the equipment, software and technology which all live in my office (it isn’t as mobile as I am personally; I still need it outside of my office; and it has to be “duplicated” at a cost that is always applied to client’s project).  We have established a few services which are budgeted lower because we have made them more efficient.

In some cases they have been eliminated as a client expense because it replaces “advertising”  – a cost we would otherwise incur, so we can afford to apply the savings to that service.

Our competitors charge $250/hour for some of the services we provide.  We have chosen to undercut the market so aggressively because the concern of “perceived worth” is less important to me personally.  I prefer to focus on actually “delivering something that any client can afford” (and doing it better than someone who charges much more).

Because our core services are either “Delivery” or “Management”, we can remain focused on the simple cost of “our time in delivering the service” (and not worry about the perceived value of what we are delivering).  Vendors worry about that, not us.

Each business is different.  I value services based on my ideology of “removing handcuffs” from business owners.  Everything has a cost.  We operate on the most basic “Cost +” mentality rather than the value method our competitors and clients use (their method being more of a salespitch or rationalization which says, “this saves you $X so it is worth $X”).

Let’s be honest: If it doesn’t save you money or make you money it’s not worth doing.  The perceived value and the cost are two different things.  I couldn’t care less what someone says a service is “worth”…all I care about is that my clients can afford the “cost” (and that the cost is worth incurring).  In answer to that question we’re always the most affordable and creative solution so I don’t have to defend the perception of “value”.

TO BE CLEAR: We don’t always recommend the “Cost +” approach for our clients in THEIR BUSINESS because the reality is that successful business revenue models rely on exploiting “perceived value” (in my business, however, I’ve reserved perceived valuations for PRODUCTS…not SERVICES).  For the purposes of Mahar Enterprises, Inc. we’ve simply shaped our perceived value as “the most affordable solution for a truly necessary service” (rather than demonstrating “return on investment” in order to emotionally provoke clients to choose us over our competition).  I personally find it easier to clearly say to business owners “once you decide something is necessary to your business, we are without question the most affordable place to get it done properly”.   That approach may or may not work in your business but it works for mine (but I am also a business “owner” instead of just a “wage earner” – as mentioned, I’ll discuss the distinction in another article).

Feel free contact me to schedule a valuation study of YOUR RATES.  We can do it under an hour, in real time and it costs $65.  We conduct our services with complete confidentiality.

Regarding MY VALUE: I look at it this way - if a client doesn’t feel it is worth $65 to formally dissect their rates/business and gain access to some really candid/helpful advice, they might as well stop shopping consulting services in general because my competitors start at $150/hour….and I already delivered free advice (above).

Doing business is easy…but only once you’re valuable and useful…as an enterprise.  That starts with “rates”.

- Mark

UPDATE: 9/24/11

After 11 years of operating with minimal overhead and providing all services exclusively with in-house talent, our workload has required that we add production personnel and programmers (all of whom are $100/hour or more).  As a result, we’ve been forced to modify our rates.

Beginning October 1, 2011 our 2012 rates will go into effect at $130/hour (which is a 30% margin on contractors, and includes use of all production facilities at our disposal [no room rental fees for any production, taping, broadcast or commercial media]).

1 Day Film School

(utilizing licensing for retail products)

Prolific Film Industry Professional, Bobby Logan, teamed up with Image Icon Entertainment (with the support of Mahar Enterprises, Inc.) to create a valuable resource for emerging film-makers.

“Bobby Logan’s 1Day Film School” on 2 DVD’s is available at an amazingly low $99 [Buy It Now]

Bobby Logan's 1Day Film SchoolHere’s a small sample of the subjects covered in Bobby Logans’ 1 Day Film School DVD set:

Part 1 – “Creative Elements”

  • Coming up with a clever, commercial idea
  • The script – length, 3-act structure, re-writes
  • What does the audience want? And how to give it to them
  • What do distributors want? What elements are important?
  • The genres that are always in demand
  • How to direct/handle actors

Part 2 – “Technical Requirements”

  • Crew positions
  • Hiring the right crew – and at the right price
  • Getting your film equipent – for little or no money
  • How is it, you dom’thave to know a thing about technology

Part 3 – “Business”

  • Shopping your completed film
  • Dealing with distributors
  • The politics of film festivals
  • The business of casting – you need names to sell the film
  • Producing a high-quality film on a shoestring budget

Educational DVD Credits:

Licensing - Mahar Enterprises, Inc. / Mark Mahar
Production, Editing, Artwork & Packaging - Image Icon Entertainment / James Benti / Jim Smith
Educational Content – Bobby Logan