The Business of Commercials!! 221ished productions. In fact, some demos are not revised and are broadcast
as final tracks.
!!It is industry standard
that if a demo is rejected,
the music company retains
the rights to the music. To
be protected, make certain
that these rights are stated
in the contractual agree-
ment with the agency.Most music companies complain that
demo fees are meager considering the
work that has to be accomplished. Music
companies almost always lose money pro-
ducing demos. In essence, they pay to
compete for jobs. Most companies are
willing to accept the risk because the
financial rewards can be substantial if
they are awarded final projects.
There is almost always competition to
win national commercials. Some music houses develop close relationships
with creatives and agencies and are awarded jobs without competing.
They still have to satisfy the creatives and the clients with the quality of
their work, or additional companies will be hired to compete.
Creative Fee
A creative fee is a negotiable fee that is paid for an original composition.
Fees for successful composers are usually higher than fees for composers
with fewer successes. Most often, music companies do not charge exces-
sive fees because of the potential income from residuals. (Residuals apply
only to union jobs.)
Creative fees are often paid in increments. If there is a possibility that
a commercial will be played nationally or regionally, the agency may first
test it in one region. The first payment allows the agency to use the music
only in the test market. The remainder of the fee is paid when the commer-
cial is broadcast nationally or regionally. Additional fees are paid if com-
mercials are broadcast in foreign territories.
Arranging Fee
The agency might only require an arrangement(s) of existing music. Agen-
cies either own the music or negotiate licensing agreements with music
publishers; the license allows them to rearrange existing music (e.g., a
popular song). The music company charges an arranging fee (no creative
fee) but sometimes charges a production fee that equals about one-half of
the arranging fee. (Production fees are not considered standard and must
be negotiated.)
Union scale governs arrangement fees. The scale is based on the num-
ber of measures and the size of the orchestra or combo. Most competent
arrangers receive substantially more than union scale. The union requires
an arranger to receive scale only on the musicians’ contract. The remainder