Negotiating & Contracting
the Acquisition of Privately Held Intellectual Properties

Part Four
By Harlington L. Hanna Jr.

Management and Agency Rights

An important object in the acquisition of entertainment properties and income revolves around the acquisition of management and other agency rights which the wise entrepreneur may acquire from the holders of talent, or the talent themselves. Perhaps the most important aspect for gaining success for the talented artist, author or producer is access to competent management or agents which may be essential for the success of most artists. Competent management is not easy, nor is it ubiquitous in the marketplace. However it is something almost every artist, including those who already are business wise and savvy, can benefit from.

The right to manage and or provide other agency type functions is a potentially valuable right and certainly an important responsibility which the entertainment entrepreneur can acquire. Managers sit at the table where decisions are made and exercise a significant amount of control and direction to entertainment talent. Mangers and agents should and do see the deals and opportunities available to the talent before any one else. If they are good and perform their function well they deserve every penny they make and sometimes more. A good manager or agent becomes the brain of the business and as such can be an indispensable partner in the process.

Good managers may make up to twenty five percent or more of the applicable income of the artist. While the higher percentages may seem high, a good manager is usually worth his weight in gold.

Even in acquisitions where the actual management or agency rights are not the primary property being acquired, it is extremely important to determine whether the artists involved in acquired entertainment property have adequate management. This is may be the critical factor in the success of any project dependent on artist performances. The acquirer of the entertainment property may desire to require or provide for such management if it is not present. If the acquirer attempts to undertake management himself he must be aware of some of the potential conflicts of interest issues which may arise in such a situation. Additional care must be taken in such cases to provide for adequate disclosure provisions in the contracts and in the actual practices performed under the contracts.

Artist Attitude & Disposition

An important word about properties where artists performances are being acquired or where artists themselves are the prime subject of the acquisition. Obviously the attitude, mental disposition, character, physical and habitual attributes of the artist(s) must be highly considered. Provisions providing indemnity for losses incurred due artist behavior or lack of performance must be negotiated into the contract. If there is any doubt as to the cooperative disposition of the artist the acquirer should seriously consider moving on to the next opportunity. Uncooperative artists can be the worse situation an entrepreneur can encounter despite the quality of the talent. It must be remember that legally the artist can not be made to personally perform, and so contractual measures such as indemnity clauses, anti competitive clauses, attachment of income, constructive trust arrangements, and rights to the artists income emanating from the investment forwarded, must be provided for in the contract.

Promotion & Marketing

All of the money in entertainment is tied to the quality and amount of promotion and marketing. In other words it's mostly tied to hype. Certainly quality productions and good material is always helpful, but more important is publicity, or creating attention and excitement in the marketplace surrounding the production. As the world gets more sophisticated, market boundaries become more blurred and competition becomes more prevalent, promotion and marketing becomes more important. Today producers who expect to make significant money from their production efforts must be prepared to put at least as much or more effort and resources into promoting and marketing the product. In effect the promoter and marketing process will usually control the outcome and in many cases even the production process. The product produced must be marketable and so before it is produced the promotional and marketing potential and value must be considered. Unfortunately most productions are undertaken in just the opposite manner. Producers tend to produce what they like or want and then try to find a market for it. A wise producer looking to make money should do just the opposite.

The I.P. acquirer is usually also the ultimate I.P. exploiter. He is the party who is taking the risk of ensuring that the property will be marketed and bring profits. With this in mind he must enter the acquisition negotiations process with some idea of how he is going to make money from this acquisition. This plan should actually be in place before he acquires the I.P. he must understand that the resources need to profitably exploit his acquisition may require two or three times the acquisition amount for effective promotional and marketing activities after the acquisition. His acquisition efforts must therefore allow for this and particularly where there may be multiple parties involved account for such factors.

 

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For Further details of the Hannaian Business network and its associated business opportunities visit the Business Opportunities Section of the Hannaian Publishing Website at
http://www.hannaian.com/distribr.htm