We've all heard the story: CD sales are dwindling but sponsorships and placement in movies and TV are going save us all. But here's the thing: it just isn't that simple. And that savior isn't coming. The music business has changed forever, but so has sponsorship. And even placement. There MAY HAVE BEEN a very, very short period where corporate sponsorships were easy money. Maybe. But if it did exist, it's gone now. There are several reasons for this: 1. In an economic downturn, the first budget big brands cut is marketing. And the first things they cut in that budget are things that are the least trackable, the longer-term "branding" projects and the least likely to drive short-term measurable and predictable sales. Sponsorships and endorsements are long-term brand plays. It's hard to connect them directly to moving the needle at retail. And the same "crazy sexy cool" factor that helped the marketing guy sell it to his boss is now seen as a yellow flag of "Hmmm... cut staff, keep John Mayer. That will NOT look good in the shareholders report."
2. Corporate marketers have been doing this for a while now. They're smarter, better armed and more confident about what they are bringing to the table. They now understand that their media spend and reach into retail is just as valuable to an artist as the artist's cool factor and music is to the brand. These days, a brand is much more likely to break a band that the other way around. Think about it. iTunes. Target. Am I right? So expect less cash and less desperation. More trade and more "I'm sorry's." Deals are tougher to find and a lot more balanced now.
3. The logistics don't work until you get to a certain scale. Generally speaking, for every $1 they give an artist, a company spends and additional $1-3 for activiation (signage, commercials, photoshoots, etc.). The smaller the deal, the higher that number is because there are no economies of scale or efficiencies. So if you are an indy band wanting $10,000, that deal will cost the sponsor AT LEAST $40,000 and that's before commissions or lawyers are paid or marketing staff or anything else. So it doesn't make sense for the person putting the deal together because they get 15% of that $10k. And that is for months and months of work. And even if it does go through, it won't even cover legal fees.
4. There is negligible impact below a certain level of artist. I wish it weren't true, but it is. Unless you are an artist with a certain media presence and fan following, then you don't have anything to trade with. Downloads are virtually worthless to advertisers now unless they are truly exclusive and from a major, major artist. Because people just don't care anymore. And salesmen and buyers at conferences get excited to see name bands, not good music. They want a story they can tell. And for a sales guy, even a crappy known band is better than the best act no one has heard of. Sadly, it's much easier to get a deal for REO Speedwagen than it is The Avett Brothers. How much does that suck?
5. Ultimately, it's people who make the decisions. The business card may say VP of Marketing, but if Mary Smith has loved R.E.M. since she was a 16, she's gonna be a lot more likely to find a way to make that happen with them than for some small band she barely knows. Never forget that EVERY SINGLE PERSON you're dealing with is a person and has feelings and memories and triggers that strongly influence those decisions.
So there you have it. A starter kit of the bad news about these deals. Next up, how you can get past these and create a partnership that works for everyone and - who knows - maybe even gets something signed.