Endorsement Deals: The Basics
You are a recording artist and starting to achieve success in the music industry. You’re starting to sell out your shows; you’ve experienced the amazing feeling of hearing your song on the radio and you’re even getting recognized on the street-nice! And, since you are now a savvy recording artist thanks to reading my newsletter (shameless plug ☺), you know that:
1.) becoming a successful recording artist is going to take some money because it generally takes a while before you can profit off your brand and
2.) as your popularity increases, so does your leverage.
This means that you can now seriously consider entering into deals that leverage your brand and growing fan base. So, one popular way for you to monetize your brand is to enter into an endorsement deal.
SO, WHAT IS AN ENDORSEMENT DEAL?
An endorsement deal is an agreement between you (or an athlete/celebrity) and a company that sells a product. You may agree to promote the company’s product for a fee or, if for example you’re working with a new company, they may offer you some of their products in exchange for an endorsement and it’s not a bad idea to endorse a product or brand that you actually like or use, since, in essence, you’re giving a “testimonial” about the product or brand.
The point of an endorsement deal is for the company to use your name and likeness to advertise their product to your fan base. Note that this is different from a company sponsoring you. With a sponsorship, a company provides funding for an event in exchange for publicity. For example, if a company sponsors you while you’re on tour, for example, they agree to give you money to offset your tour expenses in exchange for having their signage shown on the tour.
Generally an endorsement deal will require you to endorse the product in a number of ways. For example, a company may contractually require that you be photographed using the product. And, if the product is a type of energy drink or alcoholic beverage, you may be required to be photographed or videotaped drinking it at clubs, or at events where there will be media present.
You may also be required to name the product in the lyrics of one or some of your songs. Have you noticed lately that Jay-Z has been mentioning how awesome Bacardi’s new cognac, D’usse, is in his verses? Yep, he has an endorsement deal- and a lucrative one, at that.
Another more famous endorsement deal is the one between Diddy and Diageo PLC to endorse Diageo’s brand of vodka, Ciroc. Diddy currently has commercials and print ads promoting Ciroc. He has also been photographed numerous times at events either holding or drinking Ciroc. In fact, Diddy takes his Ciroc endorsement so seriously that a few years ago; Diddy apologized for verbally assaulting a club patron who drank another brand of vodka in his presence!
An endorsement deal can be beneficial for you in a number of ways. First, you get paid for your endorsement. Secondly, the company foots the bill for creating the marketing materials (i.e., the commercials/print ads, etc.) in which you appear thereby helping to also expand your brand.
However, before signing that endorsement contract and, with the help of your attorney, there are some clauses to be aware of. One such clause is the exclusivity clause. The exclusivity clause provides that you, as the endorser, will not enter into another endorsement deal with a company that has a product that is similar to or in direct competition to the product you are currently endorsing.
The point of the exclusivity clause is that you will exclusively work for the company as an endorser for a certain period of time (or Term) and that you will not be seen with or endorse another product from a competing company.
Last year, Alicia Keys was named creative director of Blackberry. However, she was subsequently caught tweeting from an iPhone which, as everyone knows, is a huge competitor of Blackberry. This would be an example of breaching the exclusivity clause and, partly as a result, Blackberry has since parted ways with her.
The second clause to consider in an endorsement deal is the so-called morality clause. Since you are publicly promoting the company’s product, you now, in a sense, represent them. Therefore, you’ll be expected to conduct yourself in a way that does not tarnish the company’s image or brand. For example, the endorsement agreement may have a clause stipulating that you will not willfully appear nude in any media or in public or commercially endorse tobacco products.
The point of this clause is to give the company an easy way to terminate the endorsement contract should you publicly conduct yourself in an “immoral” or unflattering way which would reflect on their brand. Some endorsement contracts are vague when it comes to this clause, while others will specifically list actions that would be in breach of the morality clause. Should you breach this clause, the company may not only treat the contract as breached and possibly terminate it, but you may be required to reimburse the company for any compensation already paid to you.
Finally, remember that an endorsement deal is mutually beneficial and involves the public image of BOTH parties. So while the company protects its image through the morality clause, it is important that you protect your image by requiring mutual approval of the marketing and promotional materials that will be used in the marketing campaign before the company distributes them to the public.
The last thing you want is to give the company total control over how to use your name and likeness to promote a product and you are stuck with a poster or ad that is not favorable to your brand or that you are morally opposed to.
HOW DO I GET AN ENDORSEMENT DEAL?
The simple answer to this question is to build up your fan base. The more fans you have on various social media platforms, the more attractive you will be to a company or brand. So, take a good look at what your brand is and what it represents to your fans.
For example, what type of music are you making? A country artist will have a different type of fan base from a hip hop artist and will attract companies or brands that want to reach that fan base. Also, what is your public image? This all comes into play because based on your image and your fan base it may make more sense to endorse certain products over others.
For example, it wouldn’t make sense for Taylor Swift, a country/pop artist with a good girl image (so far!), to endorse Ciroc vodka, an alcoholic beverage that is primarily marketed towards an urban demographic. Once you have a sense of what your brand is, the next step is to look for products that support music, and are a good fit for your brand.
You should also be aware of your leverage or what you’re bringing to the table (i.e., how large your fan base is, etc.). This is important for a number of reasons. The bigger your fan base, the more beneficial it will be for a company to work with you. Also, more leverage will mean a higher endorsement fee. Artists such as Justin Timberlake, Beyonce and Justin Bieber are easily able to negotiate multi- million dollar endorsement deals because of their huge fan base and influence, whereas, newer or lesser known artists may negotiate deals in the thousands or hundreds of thousands of dollars.
Finally, if you have a large fan base, there is a higher probability that a company will seek you out to work with them because companies and brands are constantly in search of the “next big thing” – which just might be you!
I enjoy the work that artists like Kenny G, The Police and Stuart Copeland have authenticated. Stuart Copeland once sat on a board of judges for a competition in the UK. His drumming is very good. Kenny G’s saxophone playing is a marvel.
The guitarist of The Police, Andy Summers, wrote some good riffs and has really shone. His recordings are like a virtual library of guitar for other guitar players. The band reformed in 2007 after some time. How fantastic are they? And the singer’s song about L.A. is also a marvel.
Endorsement deals are good for some and for others, they might not be appropriate. It depends on what the artist is doing. Personally I am concentrating on an actual record contract before I endorse anything. I should start at the beginning, before considering endorsing anything with another dimension to it.
Any music work at the moment would be better than bitter salad of course. What can music law firms do to help new artists speak with record companies? Are entertainment law firms involving themselves enough in trying to help new artists to speak with record labels? Perhaps law firms should try to get involved. The potential growth in this area for avoiding delays could hinge on insured law firms. It is worthwhile to sell music by new artists. Being retro and relying on the music of history is not always helping people.