The costs of talent re-use payments and original music can have a significant impact on the total cost of TV and radio commercial production. Talent and Music Payment Services from Bird Bonette Stauderman can help our clients save money and time, and in some cases, actually realize income.

Smart advertisers can usually reduce talent costs by exercising all of the rights they are entitled to under the very complicated Industry/Screen Actors Guild contract. The talent payment experts at Bird Bonette Stauderman advise our clients on how to minimize talent re-use costs. Advertisers are often surprised to learn that they can actually RECOVER money on original music composed for their commercials through music licensing organizations such as the American Society of Composers, Authors, and Publishers (ASCAP) or Broadcast Music Incorporated (BMI). In many cases, Bird Bonette Stauderman can help its clients recover some of the costs of original music through licensing.


Talent & Music Licensing
Talent re-use payments have been with the television advertising business since 1954. They are payments made to every union member actor, announcer and musician who performs in a TV commercial. These so-called "residual" payments are based on the number and kinds of uses of each commercial. The exact amount of a performer's payment is determined by complex contracts between the industry (a joint committee of the American Association of Advertising Agencies and the Association of National Advertisers) and the unions (Screen Actors Guild or SAG, American Federation of Television and Radio Artists or AFTRA, for actors and singers; and the American Federation of Musicians or AFofM, for instrumentalists.)

Based on the most recent figures, the cost of re-use payments to advertisers is about $800 million per year....and continues to grow, as more and more sources of televising a commercial, including the Internet, come on line.

Some of the largest TV advertisers pay an amount equal to almost half of their TV commercial production budget, or around 2% of their total TV expenditures, including media, in talent re-use payments. The typical advertiser pays about $10,000 in talent for each million spent on media.

Who Is Responsible for Talent Payment Management?
In the past, the advertising agencies generally administered talent payments for their clients -- sometimes by hiring an outside talent payment service, but usually through their own in-house departments of supervisors and clerks who kept the records and saw that the payments were made. In the days before fee compensation became prevalent, agencies typically charged as much as 17.65% commission on the payroll amounts.

More recently, several very large advertisers have taken on the administration of talent re-use payments themselves. They employ staff persons to do the work, thus transferring the overhead cost to the company, but saving the agency costs.

Other advertisers have retained Bird Bonette Stauderman or a group like us to administer talent payments for them. BBS provides the services of experienced and skilled professionals at a nominal fee that's charged as a direct cost to the advertiser's business unit, and therefore does not add to corporate overhead costs or headcount.

Where Does Bird Bonette Stauderman Fit In?
As part of our advertising production consulting services, BBS administers talent payments for a growing number of clients, small and large. Importantly, BBS works directly for the advertiser to suggest ways to further reduce talent costs by better management. Surprising savings -- in some cases, hundreds of thousands of dollars -- have been achieved by adjustments in media plans, changes in commercial rotation, or changes in the way performers are hired in commercials.

Here's How We Work
BBS reviews each commercial prior to production to be sure all reasonable opportunities for cutting talent costs are explored. These might include more advantageous negotiations with talent, eliminating principals in casts, even modifying the planned on-air use of the commercial.

Once the commercial is on the air and re-use payments start, we work closely with the buying agency's media department or the advertiser's media buying service to be aware of every use of the spot. We then calculate the minimum applicable contract rate for these uses and authorize the payment of the talent by a payroll service (we use Talent Partners, the largest and best-known of these companies). When the invoice from the talent payment company is received, we check it for accuracy and authorize its payment by the client's advertising disbursement department.

ADDED SERVICES are provided, at no extra cost to our clients.

Overscale Talent Negotiation
BBS has negotiated contracts with literally hundreds of celebrity and overscale performers over the years. During this time, we believe we have established reputations for fairness, dependability and trustworthiness within the talent industry. We have at the same time saved our clients millions of dollars.

Management
Wherever our clients might benefit, we suggest adjustments in media plans and commercial flighting, revisions to commercial rotation plans, cancellation of commercials prior to incurring holding fees...in short, anything and everything legitimately possible to reduce talent re-use expenses. In addition, we negotiate with talent to reactivate retired commercials.
International use of U. S. commercials can be complicated because of technicalities in the SAG/AFTRA contracts. Our familiarity with these contracts often allows us to work within their provisions to obtain rights for overseas use, when needed. We also handle negotiations with talent to assure prolonged use for international airing, after the 21-month period of allowable use in the U. S. has expired. If overseas talent negotiations are required, we will do this directly, or call on our London or Sao Paulo office or affiliated organizations in Paris, Madrid or Mexico City for help.

Music
We negotiate for U. S. and international use of existing songs in advertising. We've successfully and economically done this for both agencies and advertisers, drawing upon some of the most extensive experience in the industry.

Cost of Our Services
Costs very from client to client based on an advertiser's volume and need. As a rule of thumb, BBS's annual fees will always be less than 7.5% of the talent cost, often dramatically so.

Managing Talent Payment at BBS
VP Business Affairs Corky Fairty, former manager of talent payments at Doyle Dane Bernbach; BBS Founder and retained consultant Ted Bird, a trustee of the SAG and AFTRA Pension and Health Plans and for 18 years a member of the industry talent contract negotiating team while serving as VP, Manager of Broadcast Operations at Mccann-Erickson and later as VP, Director of Broadcast Services at DDB; and BBS Chairman/ President Al Stauderman, negotiator of countless celebrity contracts at P&G and Richardson Vicks.

Commercial Music Licensing
This is a term that broadly covers the publishing and collection of royalties or use payments for original TV commercial music. As with talent re-use payments, the amount of money paid is tied to the number and kinds of use (network, cable, spot, syndication, etc.) of each commercial. Unlike talent re-use, where the advertiser pays someone else, music licensing represents actual income potential to the client. This is "found" money, shared with the composer of the music, which would not be available to the advertiser if he did not publish the music, then register it with ASCAP or BMI, the key performing rights societies, and then report the uses of the commercial to these societies so that royalties can be paid.

How Does BBS Work On Music Licensing?
BBS operates two music publishing companies, BBS Music Inc. for ASCAP composers and Birdsong Music Inc. for BMI composers. We handle all arrangements needed to publish the music composed for our client's TV commercials. But we always retain control over the use of the music on our client's behalf, so there is never a danger of unauthorized use of the music in anything other than the advertiser's commercials.

Then, using the same media information needed to calculate talent re-use payments, we provide ASCAP or BMI with the details they need to compute the royalties which are split between the publisher and the composer. As publisher, we distribute our share of the royalties between our clients and ourselves.

Needless to say, composers welcome our involvement and may even offer concessions in their fees. Only by having their music published can they, too, collect royalties.

The income from music royalties is modest -- usually only a few thousand dollars per commercial -- but it is obtained at absolutely no cost to the client.

In conclusion, talent re-use payments and music licensing represent opportunities for enlightened clients to save substantial money and to receive worthwhile income.

They can be administered separately, of course ... but the fact that both are pegged to TV media plans and expenditures make them ideal for centralization at one point, and for management by experienced specialists who will do all they can to maximize the client's benefit.