Is This A Business Or A Game?

by Allen Johnston, Karl, the owner of Show Off Records, has made a lot of money. He has worked long and hard to obtain and maintain his money, family, lifestyle and power. Now he believes in the American dream and feels that his "crew" is beyond a doubt the most talented group of producers and rappers in the game. He forms Show Off Records and is determined to make his label the greatest Rap label in history.

He calculates and determines that the yearly SOURCE Awards in Miami is the place to launch his label, so he makes sure that he

 is prepared.

He first buys a full-page ad in the Special Awards issue of the SOURCE magazine and two Platinum tickets each for himself, his partner and three artists. Now he is guaranteed a chance to walk the red carpet and sit near the front of the auditorium.

He buys two used motor coaches to transport his 60-member crew in, rents a mansion on "Millionaires Row" for three days to house part of his crew and to have a place to hold an exclusive private party. Knowing that the real ballers need to be seen, he rents five rooms at the Loews hotel for three days just for himself and four trusted lieutenants. His three acts must look good, so he gives each act a clothing allowance budget and sends them out to shop. Having seen how the greatest rap artists party, he rents the VIP room at the hottest clubs in town for three nights and makes sure that he has plenty bottles of Moet, Grey Goose and Dom available for his guests. He has setup performances by each of his acts every night, and partnered with the club owner to have a major recording artist "after party" in the club while he hosts their VIP area.

Within his crew are his Street Team members, who will drive two wrapped vans around the event and make sure the city is saturated with flyers, posters and mix CDs. His lieutenants have visited the main strip clubs in Miami, and now he knows that he will have beautiful people at his private party. His party plans are a huge success, and he now knows that his label will be the talk of the weekend.

Let's look at his total expenses:

Transportation:

Motor Coaches: $100,000
Drivers: $1,600 (per diem, driving charge)
Gasoline float: $500
Additional cars: $10,000 (2 used Wrapped Vans)
Gasoline: $250
Parking : $150

Housing
Mansion: $15,000
Hotel: $4,500
Club Rental:$15,000 (3 nights $5,000 each)

Food
Mansion: $2,000 (2 cooks in crew)
Hotel: $1,250 (room service charge)
Club: $1,500 (VIP snacks)

Liquor
Mansion: $2,000
Night Club: $6,000 ($2,000 per night)

Promotion
Street Team: $1,500 (hotel, food, misc.)
Flyers: $3,000
Posters: $1,200
Mix CDs: ($10,000)
Source Ad: $10,000 (full page color ad)
Radio Advertising: $5,000 (3 days on 2 stations)
Artist Clothes: $9,000 ($3,000 each)

Entertainment
Platinum Tickets: $30,000 (10 x $3,000)
Limo: $1,000

Shopping
Clothes: $6,000
Jewelry : $12,000

TOTAL: $245,950

This does not take into consideration studio costs, producer fees and individual artist costs.

What has Karl received for his money outside of a wonderful, fun-filled weekend in Miami?

* Show Off Records' name has been blasted over the radio every night, but none of the Show Off Records music has been played.

* Hip Hop Industry attendees and some Miami fun seekers now have copies of the Show Off Records mix cd, which they may or may not listen to.

* Some industry notables now understand that Show Off Records throws a mean VIP room party, and a few may have even seen there acts perform in the club.

* Karl has personally met a few major recording artists, but doesn't know their management team, booking agent or record label executives.

* The majority of his promotional materials have found their way to Miami Beach & Miami Dade County Sanitation Bureau because his material was just one of several hundred labels' material that was promoted during this weekend.

* The organizational structure of Show Off Records has not been created; there are no products ready for sale and no plan to create either.

If Karl has an accident or for some unforeseen reason cannot function as the head of the label, who will take over and save his investment?

* The creation of a written document outlining the agreement among partners should have been one of the first things he did.

* Next, the organization of his office environment should have been instituted where all mailings, billings, invoices and correspondence can be collected, sorted, acted upon and filed.

* A central phone number and a computer-based office system should have been formed.

How will he keep in contact with the many different individuals and companies he and his crew have come in contact with?

* Incorporation of the business will give Show Off Records the tools needed to create a corporate bank account, savings certificates and a corporate credit card. Additionally, it will also give him the basis for paying his taxes and the ability to keep open and honest legal documents.

* The entertainment industry is based on communication, so a strong, ever-increasing database of radio, retail, publicity and industry executives should be started.

* Every good song needs distribution, and in order to obtain a decent distributor, Show Off Records should have an established marketing and promotional plan available with some type of radio or club play prior to acquiring distribution.

Most important of all is the staff that Show Off Records must utilize to accomplish the type of marketing and promotion they will need to place product into the mainstream.

* Staffing should consist of a primary industry professional (consultant), an office manager, and at least three office workers, all who should be computer literate.

* Duties will include: communication between retail, radio, pools, clubs, publicity and industry contacts on a weekly basis; the ability to get promotional product out and to follow up on the product sent; the ability to get information on upcoming shows, festivals, events, parties and station promotions, disseminate it to the staff; and keep the lines of communication open between record label and ALL others.

Unfortunately, what I am finding more and more of this the young entrepreneur who really only desires the fame and popularity associated with the entertainment industry, and not the basic business acumen needed to initiate and maintain a viable entertainment business.

"BALLIN" has become a game of one-upmanship to see who has the brightest "iced out jewelry," the biggest most expensive cars, and the latest fashions, who can market themselves into a major deal, yet not have any professional team available to maintain a deal.

Recently, I spoke at a conference and during a private networking session, I was asked how to just "jump over" all that old fashioned business and go directly to having a major record deal. My response was that it would be really easy to do if you have met someone in the position of power at the major labels that wanted to immediately sign you and spend their money on making your career. The only issue I can see would be how you would keep a deal of this magnitude without chosen individuals around you that know the business, have connections, and will work on your behalf to ensure your continued success and well being.

In other words, where is your trusted team?

Why not develop the business structure you will need now, acquire your trusted team, develop your database of industry connections, and prepare yourself for success?

Here is a basic Record Label startup expense sheet based for a six (6) month plan. The difference between the two expense sheets is phenomenal.

Office
Rent: $9,500
Lights: $1,200
Multi phone line with paging/intercom/hold system:$3,000
5 lines with account codes: $1,500
DSL: $600

Hardware
Microwave oven: $200
Coffee Pot: $50
Stereo system: $1,000
DVD system with monitor: $1,000
Copy machine: $250

Computer 5 each, $5,000
Pentium 3 or better
40 gig hard drive
17" monitor
Laser printer
Multi function printer/flat bed scanner/fax
3D accelerator
Sound cards with speakers
Microphone Video camera
DVD/CD player
DVD/CD burner
Server system for marketing, promotion teams

Software
Microsoft Office XP Professional: $800
Right Track royalty/accounting: $3,000

Salaries
Professional Consultant: $50,000
Office Manager: $19,500
Office Workers (3): $39,000

TOTAL: $142,600

This does not take into consideration studio costs, producer fees and individual artist costs, but now you still have money to create product, test it, sell it, market and promote.

So my question becomes, IS THIS A BUSINESS OR A GAME? Why venture into the entertainment industry if what you really want is your personal 15 minutes of fame? The duties of a record label are to produce, manufacture, market, promote, sell and collect monies on the music that is created by the company. Anything less is not a record company!

Provided by the MusicDish Network. Copyright © MusicDish LLC 2006 - Republished with Permission