Music Funding 101
Term
Since a sponsorship is a category of advertising, it is always contracted to be for a particular length of time, which is called the "term." ("Term" should not be confused with the "terms" of an agreement, however.) During this time called the term, the band is required to expose the sponsor's name to the public, and the sponsor may be required not to engage in other activities, depending upon the agreed-upon contract.
26 weeks (six months) is the minimum term that is recommended by TalentFunding.com for bands and sponsors doing their very first sponsorship. It simply takes this long for the sponsor to get measurable results when doing the lower-level marketing efforts that most new sponsors will engage in. And if it were a larger regional or national effort, 52 weeks (one year) would be the recommended minimum, due in part to the sheer amount of time it takes the band to tour.
Nevertheless, it is understood that sometimes the band can only negotiate 8, 13 or 16 weeks, since this requires less upfront money from the sponsor. If this is the case, it is recommended that it still be contracted as a 26 week sponsorship, paid in installments every 8, 13 or 16 weeks (i.e., half now, half later). At the end of the 26 weeks, re-negotiation occurs: 1) Both parties renegotiate from scratch; 2) The sponsor gets the right of first refusal of continuation, or 3) The band gets the right of first refusal of continuation.
Of concern with the term is the "implied endorsement" that the sponsor gets from the band. This "endorsement" effect is a positive thing, and it works best when the public starts to associate the band with the sponsor. This takes repeated exposures; doing it for just a few weeks won't work. The band can only do shows every so often in the same club, so it takes many weeks before the fans in a particular club are exposed to a sponsor more than just once.
Also during the term, and depending on the contract, the band will either be able to (or not be able to) sign other sponsors. This is assuming, of course, that the first sponsor's agreement is not exclusive. However the "pursuit" of other sponsors (meaning the talking and negotiating with) should always be allowed during the term; this way the band will be prepared if the first sponsor does not continue.
Likewise, during the term, and depending on the contract, the sponsor will be able to (or not be able to) sponsor other bands. This is assuming, of course, that the first band's agreement is not exclusive. However, the "pursuit" of other bands (meaning the talking and negotiating with) should always be allowed during the term; this way the sponsor will be prepared if the first band does not continue.
Term also applies to markets (cities). For the length of the term, the band must abide by the contract as it applies to which markets the band can expose the sponsor in, and which markets it cannot. It should also be stipulated if members of the band are allowed to perform with other bands in these markets.
As sponsorship levels (money) increase, so will the need for a lengthier term. The primary drivers of this are the amount of time needed to tour, the buildup of the endorsement effect, the inclusion of the sponsorship costs into the pre-planned marketing budgets (which are generally annual) of larger sponsor companies, and the inclusion of CD sales into the desired effects of the sponsorship package. (CD sales are a very long-term endeavor and cannot be considered in short six-month time cycles.)
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