Sunday, August 24, 2014

Negotiation and Deal-Making: The Course in Review

In my original Mastery Journal Timeline post, I stated that my original goal for the Negotiation and Deal-Making course was: “To make sure that both artist and publisher are satisfied with the financial outcome of a contract. To avoid litigation from the onset.” To accomplish this, I would utilize the following tactics:

1.     Understand the Artist’s motivation: monetary or artistic?
2.     Protect those artists with extreme talent but minimal business experience.
3.     Continue to pursue a “deal” for my own company and learn from that experience.

The focus of the course is the concept of principled negotiation, developed by three professors at the Harvard Negotiation Project, and outlined in the book “Getting to Yes: Negotiating Agreement Without Giving In.” (Fisher, Ury, & Patton, 2011). To summarize, in a principled negotiation, a wise, efficient, amicable agreement is reached by focusing on the merits of a situation, rather than on positional bargaining or inflexible bottom-line stances.

The book gives a detailed list of steps for reaching that desired agreement. Related to my stated tactics for the course, here are a few of the most relevant:

1.     “Focus on interests, not positions.” If I am to understand a particular artist’s motivation, than I must understand his or her underlying interests. Why is the artist pursuing a publishing agreement? Our instructor cautioned us not to make assumptions about the answer like “because he wants to be rich,” or “because she wants to be famous.” It could very well be that the artist is pursuing a publishing deal because he or she wants to utilize music as a platform to raise awareness for a particular cause. As a negotiator, you would never know that unless you ask, and you might very well lose the deal if you do not appeal to that interest.
2.     “Insist on using objective criteria.” If my stated tactic is to protect talented artists with minimal business experience, the best way to do that is to use objective criteria – relevant data. Some artists might be so passionate about their underlying interests, or their cause, that they would throw caution to the wind in pursuit of a deal and accept a sub-par agreement. If you were the publisher, you might initially think that makes a better deal for you. However, in the end, you will probably be viewed as an unscrupulous negotiator that preys on the inexperienced. Your reputation will decline, and your business will suffer.
3.     “Separate the people from the problem.” My third stated tactic is an all-encompassing one, and is difficult to address as my business model evolves over the course of this MSEB program. Initially, I thought it would be rational to combine both my interests as an artist with my interests as a publisher / producer. However, a former client of mine said this to me recently: “You will not be a successful producer until you can separate yourself from your client’s music.” As much as I hate to admit it, he was right.

As a producer, I get aggravated when an artist who has “written” a song cannot play it from start to finish, or for that matter has not even completed the song before the recording process begins. That is simply laziness and lack of rehearsal, and as an artist, I would never put a producer in that position. In fact, I would be embarrassed if I did.  In “separating the people from the problem,” the negotiator has to include him or herself as one of those people. That leads me to my final point.

The second of the three texts included in this course, “Beyond Reason: Using Emotions as You Negotiate,” goes into detail about how to apply emotions during the negotiation process. (Fisher & Shapiro, 2005). The central theme is that every person that negotiates has five core concerns. To help me memorize them, I created the acronym AAASR, representing: appreciation, affiliation, autonomy, status, and role.

During the negotiation process, it is critical to understand the other party’s five core concerns and how you might address them in order to achieve mutual benefit. However, here is the kicker: you also have to understand yours.

The entire negotiation process can be boiled down to a quadrant: Do both parties understand what they need tangibly and emotionally to establish a mutually beneficial agreement?

Good Deal
Bad Deal
Bad Deal
Bad Deal


Fisher, R., Ury, W., & Patton, B. (2011). Getting To Yes: Negotiating Agreement Without Giving In. New York, NY: Penguin Books.

Fisher, R. & Shapiro, D.L. (2005). Beyond Reason: Using Emotions as You Negotiate. New York, NY: Penguin Books.

Sunday, August 10, 2014

Negotiations Interview with Josh Mahan, Owner of Mahan Music Productions

 What a pleasure it was to meet and interview Josh Mahan (J. Mahan, personal communication, August 10, 2014). As I struggled to decide on whom to interview for this assignment, a simple need for a specialized cable in my studio lead me to this entrepreneur and business owner. He has an incredibly positive attitude about the outlook of the music production industry, which is very refreshing. It reminded me that I got into this business to help people express themselves through music, and he reminded me several times during the interview to “stick with the people.” He also reminded me to “value your skills”. Most of us at Full Sail have been through the initial stage of fighting off the naysayers: “Get a real job.” “That’s a pipe dream.” In our finance class last month, Robert Kiyosaki reminded us “a job is a temporary solution to a long-term problem.” (Kiyosaki, 2012).
I asked permission to record the phone interview, and Josh agreed. Then, I asked the standard questions from the course instructions, but what I received were eye-opening results.  Here are some important excerpts from the interview:

1. How do you separate the people from the problem when negotiating? What tips do you have for new negotiators that are trying to do this?

“I just stick with the people. The problems will drift away, and there won’t be problems anymore, as long as you stick to people.” That statement reminds me of Chapter 7 in Maxwell’s book, Developing The Leader Within You: “Developing Your Most Appreciable Asset: People.” (Maxwell, 1993).

2.  How do you handle positional bargaining tactics?

“Usually, I know it’s going to happen.  I know there is going to be a war about this, because most artists don’t understand the process. They don’t understand what it takes to get [an initial product] to a finished product. And that’s okay. The biggest thing is establishing guidelines right off of the bat.”

3. Can you give me an example of how you worked toward mutual benefit when you were negotiating a deal?

Josh gave two examples, one bad and one good:

(a) “There was an expected finalization of a project… but when it came down to press record, the musicians were not ready.” In the short of it, the musicians had high expectations but low preparedness.  That statement reminded me of an old Marine Corps phrase: “Lack of preparation on your part does not constitute an emergency on mine.”
(b) “In this new project that I did, I went straightforward and wrote out exactly what I wanted to do, and so far everything is going great.” That is the nutshell (or more than a nutshell, in Josh’s words) of this week’s class. Be clear, be concise, let no one be confused about the terms, and things will be fine.

Ambiguity leads to descent. Be brief, be brilliant, and be gone. Negotiate on the facts of the situation, not your underlying emotions. If you do, all parties involved will prosper.

Josh and I met this week. There is no prior affiliation.

For your music production needs, you can reach Josh Mahan at:

Mahan Music Productions
Phone: (615) 440-6273


Kiyosaki, Robert (2012). Rich Dad, Poor Dad. Scottsdale, AZ. Plata Publishing.

Maxwell, John C. (1993). Developing the Leader Within You.  Nashville, TN: Thomas Nelson, Inc.

Thursday, August 7, 2014

Entertainment Business Finance - Full Sail University: The Course In Review

I must admit that going into this course I was a bit of a skeptic. What in the world was this “university of artists” going to teach me about finance that I didn’t already know? I am a degreed accountant with fourteen years of experience in corporate financial reporting and business intelligence. What did they possibly know that I had not already learned? The answer is: “plenty.”

As an example, my most recent former boss taught me that my home was my greatest asset and my cheapest liability. From an accounting standpoint, that is true. He has a Master of Accountancy and is a CPA. He told me to pay down all of my other debts first, because they are at a higher interest rate than my mortgage. “Your mortgage is the cheapest debt you will ever own,” he said.

That made perfect sense to me at the time, because I don’t like to pay for the use of someone else’s money. But this course taught me to rethink my strategy, and ask a couple of simple questions:

1.     Would you rather have your credit card company or your mortgage bank upset with you? Let’s hope that neither is the case, but assume you had to choose. Your credit card company cannot make you homeless; your mortgagor can. And your credit card company does not generate gains for you. Your home usually does. So whom do you want to keep happy?
2.     Why is any asset other than my noggin considered to be my greatest asset? Getting back to the example of my incredibly smart former boss, why does he not consider his knowledge to be his greatest asset? It is, after all, his smarts that made him what he is – not his home, his stocks, or bonds, or mutual funds. It is his financial intelligence that will carry him through, even if all of those other assets are gone (Kiyosaki, 2012).

This was a fantastic course in so many ways. But my greatest take-away is this: teach your children about financial intelligence, because they are not likely to get that education in public schools or universities (ironic, huh?).

Kiyosaki, Robert (2012). Rich Dad, Poor Dad. Scottsdale, AZ. Plata Publishing.