Coffee, Conversation and Strict Liability of Dangerous Activity(s) In the Music Business

Today I had the opportunity to discuss legal liability issues with a friend, whom just so happens to be an entertainment attorney. Normally, when a person asks me “what are you doing, as a project manager, to avoid liability on tour?” I cringe and feel as if they’re trying to sell me something or get me to invest into a “new business idea”, but in this case I truly got to learn about how a group can be affected by both chance and tragedy.

Many people dream of becoming successful in the music and entertainment industries; either by managing a band, booking nightclub projects, touring with a group, or just simply being part of a well known theatre production. The majority of these individuals have very little formal training in business, entertainment business, or music composition; only the passion for helping artists realize their dreams through hard work and dedication. One of the most important parts of being successful in an industry based around aweing crowds, upstaging competition in the marketplace and constantly trying to innovate artistically without becoming unmarketable, is to understand which liability issues could directly affect their careers and witch aspect(s) of their groups’ performances could cause the beloved professionals to find themselves in a serious legal battle.

One significant liability for any type of public production, regardless of the size, is called Strict Liability of Abnormally Dangerous Activities. The basis for this liability is founded on creating an undue element of risk or harm to others in a community, regardless of how much care was exercised in the undertaking of that risk.

A specific example of such a risk is the case of nightclub owners Jeffery A. and Michael Derderian, as well as, road manager Daniel M. Biechele. This is a strict liability case where the tour manager of a group set off pyrotechnics during a performance, without proper licensing or permits, and a flammable material intended for insulating the walls and celling on and around the stage caught fire engulfing the entire venue in less than 5 minutes, injuring over two hundred people and killing one hundred individuals.

During the investigation, the two owners of the nightclub and the band’s tour manager were charged with two hundred counts of involuntary manslaughter and earning themselves prison-time, probation, and restitution fines for the victims’ families. Because of this type of liability, not only were the owners of the venue and group’s road manager held criminally responsible, there was a huge backlash of civil cases filed and nearly one-hundred-seventy-five million dollars has been offered to the families of the fire victims.

Lawsuits were filed against anyone and everyone thought to be responsible for any part of this tragic incident. Among the companies and state representatives that were included in the law suite are: JBL Speakers, Anheuser-Busch, Clear Channel Broadcasting, Home Depot, Polar Industries, Sealed Air Corporation, Great White Band and the American Foam Corporation.

Some of the insurance policies that are available for a nightclub and/or touring artist(s) are:

Band/ Touring Group

1) Touring Artist General Liability Insurance. This type of insurance is the industry standard for a touring group and is similar to the general liability insurance that a promoter or venue would have. 2) Workers’ Compensation Insurance. Many states require a company to carry this type of insurance, it provides for injury and death benefits to employees that are injured on the job. The band lost a member during the fire and this type of insurance would have helped his family with burial, lost wages, etc. 3) Musical Equipment Property Policy Insurance. This insurance covers certain types of damage to sound, lights, and related musical gear. There is an additional policy that can be included in this type of insurance that would have covered the pyrotechnical gear if it had proved that it malfunctioned. 4) Touring Artist Cancellation/ Non-Appearance Insurance. If the group would have had this type of insurance, even though they had to cancel the rest of that particular tour, their revenue stream would have continued for what would have been considered the remainder of that set of show dates.

Club/ Venue/ Promoter

1) Spectator/ Premises General Liability Insurance. This type of policy is very beneficial in releasing many of the liability issues of the promoter, club owner, or venue. If this particular policy had the option for a pyrotechnic policy it would have probably prevented the club from having any of the cover for the claim. 2) Workers’ Compensation Insurance. This policy is the same as the band’s policy but would have been beneficial to the employees’ families of the venue that had been injured or perished. 3) Property Policy Insurance. Depending on the terms of the lease with the owners of the building this insurance would have covered the liability issue pertaining to the building and the business’s equipment that was destroyed in the fire. 4) Business Interruption Insurance. This is a policy that provides loss of income coverage due to the destruction of the venue. Typically, this insurance will pay for the loss of income for up to twelve months.

Many lessons can be learned from a management standpoint regarding this incident. Though many of the circumstances that led up to actual fire could have been avoided, what a perceptive road manager or business owner will take away from researching this case is the ability to hope for the best but plan for the worst. Having proper licenses to utilize pyrotechnics, proper planning for a mid-level tour should be considered rather than trying to bring such a large scale show to the small event, making sure all of the proper disclosures are signed with the venue before playing the event, working with local fire and ems services for any event that will draw a large crowd, having an emergency exit strategy in place if an issue were to occur, and making sure that all applicable policies have been purchased before the group embarks on the tour and/or the venue is open for business.

Applying these painful lessons to future business is quite simple, and following five simple rules can do this.

1) Make certain all policies are in full force. Policies include: general liability insurance, workers’ compensation insurance, automobile liability insurance, property insurance, and business interruption/ event cancellation insurance.

2) Check the limits. Know how much liability insurance is needed per venue, especially if the club doesn’t hold more than a few hundred people.

3) Make sure the policies cover the activities in the show and what is done onstage. If there is no pyrotechnic clause in the policy it is a great idea not to have pyrotechnics or explosions in the show.

4) Know and understand the financial strength of the insurance carriers. Make sure the insurance carrier is well known with a fair track record and does business honorably, a B rating or better.

5) Make sure the insurance broker knows the type of business the group is in. It makes a great deal of sense to have an agent that actually understands the project and its individual needs, especially if the show has any element of danger.

In conclusion, there are no foolproof ways to completely eliminate the potential for someone or something being injured at a live event. Regardless of the situation, a professional entity has a moral and ethical duty to its followers, patrons and/or fanatics to spend as much time as necessary planning for their safety and the safety of the overall company and/or event itself. Being aware of the changing laws and regulations, as well as being reasonable when pertaining to the design and parameters of what the performance has to offer any given venue. Paying attention to the mistakes of other companies and applying the best business practices available will help eliminate as much liability as possible and better provide for a successful, entertaining platform and medium for all to enjoy.

Conflict Resolution and How It Relates To The Music Business

Conflicts are a large part of any successful business. In the music industry, conflicts can make or break many different aspects of how and why a project can be, or is considered a success. Learning to manage these different types of less than favorable situations can greatly improve working relationships within the business as well as pre-negotiate many aspects of up and coming agreements.

Not long ago, the project with which I travel had a major conflict with the booking and management agent for the group. Frustrated over tour routing and percentages, the entire group was ready to walk if the conflict didn’t get resolved in a timely manner. Luckily, the performers and tour management were professional enough to have a very “Civil” meeting with the booking agent and owner of the project and calmly discussed each of the frustrations, in effort to resolve the situations.

Ultimately the group got a great education on what could be done, contractually, and then based on the issues, were included in the decision making processes, also creating a great means to permanent solution(s). The group still retains the same management and booking, however, the routing, percentages paid to the agent, and performer compensation has all been addressed to mutually benefit the entire project.

The booking agent, hindered the situation by trying to exude power and authority, but was then reminded he worked for the project, not the other way around. Internally, the situation was resolved two separate ways. 1) By granting power and also accommodating the project, and 2) by using the collaborative approach and including the entire group in the decision making process.

Similarities and differences in styles both help and hurt the negotiation process. The agent, in an effort to retain 100% of the exaggerated commissions that the group had originally agreed to, tried to display power over the finances of the group, but still not addressing the issue of not having a group to book and promote at all. This didn’t help the situation and also prompting the group to look elsewhere for booking and contract management.

On the internal side, the owner, being understanding and willing to put his own personal goals on hold, was able to manage the conflict very professionally, and still be able to retain the controlling power of the entire group and command over the booking agency.

Some of the greatest tools a group has to offer is its’ intelligence:

The overall positive outcomes of the conflict resolution approach, to the group frustration and management negotiations were handled through a series of A) Compromise, B) Integrative agreements, and C) Structural Improvements within the corporate structure.

Specific examples of these would be 1) The agent not booking shows if the routing doesn’t make sense; and working harder to find shows between cities when the drives are long. 2) Agreeing to add seats in the vehicle to make the performers more comfortable, in conjunction with a trailer to tow the performance gear. And 3) improving the group’s salaries, based on the growth schedule of the project and performance compensations, while lowering the agent’s commissions overall and penalizing him, financially, for bad booking decisions.

The solutions are short-term, with long-term affects; meaning, the group is comfortable for the upcoming bad routing, but, understanding in the fact that overall the entire situation will improve and be better for years to come.

Stories such as this one, can offer a conflict, negotiation and resolution strategy without having to be in the middle of a disagreement. Studying different cases and historical events will also give the researching group or manager the ability to learn and understand how to better approach and (or) resolve serious situations before they become very serious.

Entrepreneurial Management & Its Followers. (A Doc McGhee Profile)

Management within the music industry is constantly changing; however, there is much that can be learned from the profiles of groundbreakers that have truly paved the way for an entrepreneurial-style of management. This particular blog posting will be based around one of those individuals and the quality business he’s built over the past thirty-plus years.

McGhee entertainment is one of the mega-management companies that have helped shape, what the world has come to know as, “Rock History”. Managing groups and artists, such as: Kiss, Motley Crue, Skid Row, Bon Jovi, Guns N’ Roses, and Ted Nugent, Doc McGhee has become one of the most successful managers in the history of the music business.

Organizing one of the most memorable music festivals in history, “The Moscow Music Peace Festival” on August 12-13 1989; the festival drew an audience of 120,000 attendees and was broadcast on television to 51 different countries. The show itself took two years to set up and arrange and employed many of the top artists of the day, still being listed as one of the most memorable concerts of all time. (Celeb. Access, 2009)

To date, McGhee Entertainment still represents some of the most successful bands in the world; one of the most recognizable is the rock band “Kiss”, whom has been touring for well over thirty years and generating hundreds of millions of dollars in revenue throughout the world. Kiss can be recognized as one of the biggest bands of all time, with the likes of “The Rolling Stones”, “The Beatles” and “Led Zeppelin” forever helping to shape the influence of music, history and culture.

Thirty-five years ago, twenty four year old Doc McGhee set out on a journey, one that would land him a life-style similar to that of the Rock and Roll legends that he has managed over the years. Starting in a band called “Rising four”, the band covered “Yard Birds” songs and then later signed to “Mercury Records” for a short period of four years. (Leblanc, 2009)

Searching for employment in the mid 1970’s McGhee found himself with no major prospects for jobs, but a handful of knowledge about the music business and the need for others to be heard by a number of the contacts he had acquired over his shot stent on Mercury Records. As a 26 year old, Doc had an opportunity to work with Pat Travers and then Moved to Florida, where his management career started to grow, also lucking into an opportunity to work with the late, great, James Brown, where McGhee claims that he didn’t know if he managed Brown, or if Brown managed him.

In 1982 Doc McGhee signed “Motley Crue” and “Bon Jovi”, then in 1989 produced and promoted one of the largest concert promotions in music history, “The Moscow Music Peace Festival”, and by 1996 had signed a deal with one of the great bands of all time “Kiss”. Where McGhee Entertainment was able to help facilitate the biggest tour of that year, being the Kiss Alive World Tour, generating $43.6 Million dollars in revenue over an eleven-month period; further solidifying the abilities and mega-success potential for McGhee, McGhee Entertainment and the artists represented by the company. (Leblanc, 2009)

True to the evolution of the entertainment business, McGhee was able to successfully spawn a Reality Television Show called “Super Group” with the likes of members from bands such as: Skid Row, Ted Nugent, Anthrax, Bonham, etc. and also opening McGhee Entertainment, Nashville for modern country acts, Darius Rucker, Chris Cagle, Drew Davis, and many more.

As of today’s date, McGhee Entertainment has, and is still working with some of the biggest names in the music business; they’ve managed and/or launched the careers of more household names that any other independent management firm and have carved out their own special niche in history.

Management competition in the music industry can be quite fierce, one of the newer companies that have clearly made their presence know is “Wind-up Entertainment” now, a division of “Wind-up Records”. Clearly showing influence from Doc’s Successes and teachings, Wind-up has been able to secure a large amount of Venture Financing and sign acts like “Creed”, “Evanescence” and “Seether”, three of the more successful acts in today’s modern rock.

Another very well established competitor is Bill McGathy and Tony Couch at “McGhathy Promotions” and “McGathy/Indegoot Recordings”, signing artists like “Shinedown”, “Saliva”, “Three Doors Down”, and “Tantric”, McGathy has a huge portion of the Modern Rock market on their current roster.

One thing both companies have in common is their business model, find talent, manage the talent and then either market and promote the talent, or use a record company to exploit the talents of their artists and roster. Ironically similar to what McGhee Entertainment has been speaking about for over 35 years.

One of the luxuries of being a independently owned is that a company doesn’t have to publish their financial reports to the public; however, with artists like Kiss selling Hundreds of millions of dollars in recordings, merchandising and marketing materials, it is obvious that McGhee Entertainment is at the top of the current food chain.

Second in the market place would be Wind-Up, with some of their bigger artists, mainly Creed and Evanescence selling upwards of 30 Million CD worldwide for each of their releases and generating millions of dollars in revenue as well. (Wind-Up Records, 2011)

Third position in the market-place would be McGathy/Indegoot; though Bill McGathy does own a Record Label, his major artists like “Saliva” and “Shinedown” are signed to major labels such as: “Atlantic Records” and “Capitol Records”, relieving some of the financial burden, but also reducing the amount of total revenue as well.

Many companies in the music industry have a sharp strategy, pertaining to the development of new talent; McGhee entertainment’s philosophy is based around an aggressive need to get the artists heard and among the public eye. “Sell by any means necessary” (McGhee, 2011) is the guerilla-marketing tactic used my Doc McGhee and his staff. Finding what makes the artist special and then marketing that aspect of the project with what is currently popular in the market is how MGE innovates and incorporates their new artists into the already existing plateau of their target market and fan-base.

Other companies take a similar approach, targeting a multi-market segment, but have a more tactical plan of action scheduled because of the lack of already established talent. McGhee Entertainment can command higher prices and lower percentages for their artists based on guaranteed success; whereas, another company that has less experience will have to charge more and take less, in an effort to build artist confidence and industry connection.

As the company has seen change in the market-place and trend flux in the music industry it made sense for McGhee Entertainment to change along with it, launching reality shows, promoting concert DVDs incorporating new technology and music genres in their marketing mix.

McGhee has the opportunity to continue growing and developing new talent by expanding their operations and hiring new and hungry agents to seek and manage upcoming talent, whereas other companies are still trying to catch up to the success and history, Doc will be setting another bar in the entertainment business.

Connecting emotionally to the audience can be reflected in Doc’s ability to understand what is physically happening in the market and then embrace that, in a way as to get the public involved in promoting and supporting the promotion. Reality TV shows, Performance DVDs and Online, On-Demand interviews for his artists are a way for the company to help reach an emotional connection with both artist and fan.

Being an inspiration to many other companies, McGhee Entertainment is also connected to the music business by way of reputation and ongoing respect. This is one of the largest factors for the company’s 35-year success and relationship to their represented talent.

Several facts can be concluded about McGee Entertainment, the company, though agents are aging, is still in high demand; offering a lifetime of knowledge and inspiration to other companies aspiring to work in the management field and experience that few other companies have the ability to match. McGhee Entertainment, though not acquiring talent very often, spends the same amount of time on the new acts as they do their existing ones, also keeping the company sharp and in the public eye.

The only negative side to any management company participating in the entertainment industry is being able to stay current and modern with the music topping the charts or already established as successful with the current marketable demographic; McGhee is no exception to this rule, the company has the potential to slow, just as many others have in the past, however, at this time, they’re showing no signs of aging or slowing down in the near future. Already planning to open more branches and feature a new genre of emerging talent.