The Business of Commercials!! 219times, agencies have a predetermined music budget and ask music
companies to itemize their proposed budgets. When music houses submit
budgets, there is generally a minimal negotiation until a mutually accept-
able budget is agreed on. The agency proceeds by writing a detailed agree-
ment outlining the exact terms of the assignment. The music company
must sign the agreement before work can begin. The agreement is impera-
tive for both sides because if a dispute arises, the terms are documented.
Negotiate the best possible budget. If the budget is too low to accom-
plish the creative objectives of the agency, tell the negotiators. Once a bud-
get has been approved, it is very difficult to obtain additional funding.
Inform the creatives that for, say, budget A, the track will not contain
certain elements (e.g., real strings as opposed to synthesized strings) but
that for budget B the track will be produced in the manner in which the
job has been creatively conceived.
A satisfactory compromise is generally agreed on. Always assure the
agency that the final track will sound acceptable even if the requested bud-
get is not approved. Inform the agency that some adjustments will be
required, such as fewer musicians and singers, less mixing time, and so
on.
Sometimes music companies negotiate a total price for an assignment.
If an ‘‘all-in’’ budget is accepted by the agency, the music company is not
usually required to submit a detailed budget because there will be no
residual payments. If it is necessary for the agency (client) to pay residual
payments (residuals), the agency must approve the number of musicians
and singers in order to calculate the cost.
Budget
The budget is based on regions of the country where membership in
unions is mandatory in order to work. These payments are included in the
agency’s overall budget that has to be approved by the client.
Traditionally, advertising agencies add a commission to the produc-
tion costs (an average of 10 to 15 percent). Another business paradigm is
also implemented. Agencies receive fees in place of percentages. Agencies’
compensations are negotiable.
Some clients require that at least three qualified companies bid on each
line item of a production budget. This includes the music, the director, the
editor, and so on. If the suppliers are of equal creative ability, the lowest
bid usually wins the assignment.
Right-to-Work States
Some states do not require union membership to work in certain indus-
tries. If nonunion musicians or singers work on union recording sessions,
the law requires that their wages be the same as the union members. In