When To Ask For A Down Payment In The Music Industry
One of the best parts of being an entrepreneur in the modern music industry is that you can be your own boss and choose which artistic projects you want to work on, surrounded by other bootstrapping creatives.
Unfortunately, there is not much oversight and paperwork found at the grassroots level. A lot of young engineers haven’t yet registered their home studios at businesses, a lot of artists don’t track their earnings until needing to declare it at tax season, and cash is often the most popular form of payment. This can lead to various people being ripped-off, underpaid, or in the case of one former studio manager I know: having to cancel Friday night plans to show up unannounced at the CD release party of a band who hadn’t paid their bill…
In most other aspects of consumer society, it is expected for big ticket purchases (such as a car, a house, expensive furniture) to allow financing options. It can be all yours today, but you must pay a smaller bill on the regular until the original full price (plus interest, usually) has been transferred over – or else we’ll come and take it away. There’s no question that independent artists have their fair share of big ticket purchases to make as well. However, very few companies that cater to our industry’s performers offer long timeline financing options (the only ones I’ve come across personally are national chain instrument stores with high interest rates).
My personal theories to why this is are as follows:
- Most businesses that cater to independent artists are quite small themselves, and don’t have the large cash reserves or huge client base necessary to wait around for someone to pay them over many months.
- Unlike a car, a house, or a sofa, big tickets items artists pay for are personalized and intangible (such as studio time and music video shoots), and if they need to be repossessed, have very little value to resell to anyone else.
- These days, few fans have the attention spans to wait for an unknown band to announce an LP every two years, leading to the trend of small acts releasing EPs, singles, remixes, etc. frequently in order to stay relevant. No band still wants to be paying back their engineer for a completed project already buried deep in their discography.
- The music industry, especially at the independent level, is fiercely artistic – let’s face it, dropping out of medical school to focus on your “sick sound” is not considered the respectable, safe career choice by most parents in this society. No one starts playing open mic nights because they plan to be rich. Companies catering to independent artists get a lot of business from word of mouth, and nothing kills their potential cool-with-the-band factor like sending bills every month, just like any other service that doesn’t care about creativity.
The safest popular option we have in the music industry is the down payment. Usually a 50/50 or 60/40 split. The talent gets paid upon reservation, and the rest upon completion of task. Here are three occasions where it should absolutely be used.
1. When you are creating something 100% customized from scratch.
If you are writing a bio for an artist, designing a logo, editing music video footage, putting together a personalized marketing plan, writing a song featuring a rhyme on someone’s name in the hook (or a corporate jingle), or building a band website, you should absolutely ask for a down payment.
These projects are ones that cannot simply be recycled for a future client if the current one decides to bail upon completion. You need to make sure you get paid for the time it took, as well as your expertise/talent demonstrated on the finished order.
2. When you are traveling an inconvenient distance for this opportunity.
If you are a band playing an out of town show, this one is very important to remember.
Wouldn’t it suck to drive four hours to play a bar gig, only to discover no one was expecting you? There aren’t too many prank promoters out there, but mistakes do happen – from the venue confusing the dates, accidentally booking two acts the same night, or simply not communicating changes of plans. The most common way to guarantee the event is with a tour rider, but smaller, less formal establishments may be able to ease your mind and commit by paying at least your gas money and meal in advance.
3. When you are renting out a scarce commodity for a specific block of time.
If you are an audio engineer (especially in the studio), photographer or videographer, this is for you.
When you’re main source of music industry income comes from owning specialty equipment and knowing how to use it, your time matters as much as the quality of the finished product. If you own a studio and a band rents it out for a week to record their album, you’ll have a week-long empty studio if they cancel last minute. Big projects with specialized equipment require a lot of advanced planning, and most artists don’t show up as walk-in clients. Another common practice is to not release the full commercial product until you get paid the full amount owed (leave a clear watermark to show the quality of the finished project, and remove it once everything is balanced).
If at any point during reading this article, you’ve kicked yourself for not adding a safety layer to getting paid, don’t worry. By being at the point, it likely means you’re getting paid in the music industry and you can protect yourself going forward! Good luck!