Recently, I had the pleasure of talking to Mr. Rich Denhardt
about negotiations and how he has dealt with them over his extensive career.
Mr. Denhardt has been in the music business since moving to Nashville in 1970.
He worked for EMI from 1995 to 2006 where he honed his negotiation skills to
their fullest. He has negotiated hundreds of deals from new signing new bands
to extensions for artists already under the EMI label. Currently, he is one of
the lead instructors for the Entertainment and Media Business bachelor program
at Madison Media Institute as well as running his own consulting firm. I talked
with him the other day and received some very insightful knowledge.
Ryan Howard (RH): How did you deal with artists who believed
they were owed the world when they came to you to sign a deal?
Rich Denhardt (RD): When a band came in thinking that they
were above others and thought they were owed some great deal, I just informed
them that even though they were well liked by their audience, they were still
new to the industry. They had no past performance with working with a label or
in any sort of professional capacity so there was still risk in signing them. I
informed them that we have no problem with getting them what they deserved when
they proved themselves to us. They needed to understand that because they were
getting a record deal that they needed to work even harder to prove
themselves. I had to get through to them
that they were now professionals and getting to work with a company that wants
to see them succeed but that this is also a business and that they need to make
sure that the company doesn’t get in too over their heads. They needed to know
that they had to earn the respect they believed they were due. If they failed
to realize that, then I would have no recourse but to walk away from the table,
even if I really wanted to sign their band.
RH: How did you see bands and artists using their BATNA if
they had one?
RD: Artists and bands were all over the place with their
BATNAs. Some would bring it up right at the beginning without any provocation.
Others would plug it somewhere in the middle and then there were the ones that
would hold on to it until the end, after we had already given them our offer.
There were even times when we would find out on our own before the negotiations
even began. This wasn’t intentional but the music business really is a small,
tightknit group so it wasn’t uncommon to know what others were up to.
RH: Did you aim for mutual benefit?
RD: Yes, always. It wasn’t in the best interest of the
company to try and undercut a band or artist. Reputation is everything in this
business and if word starts getting around that you are offering lopsided
deals, you won’t be signing many bands. Plus, we always had attorneys present
for all involved to make sure that all parties were being fair. By having
lawyers present, the autonomy for everyone was kept intact and made for a
smooth deal. Our goal was to work as partners because it makes it much easier
to work with partners rather than adversaries.
RH: How did you handle in dealing with dirty tricks or
tricky tactics?
RD: I was always willing to walk away from a deal. Even if I
wanted an artist or band badly, I had to have the strength of mind to just walk
away from it if it required me to. If they insisted on trying to play hardball,
I would do my best to defuse the situation but if it persisted, I would just
tell them, “This doesn’t look like it will work,” and would get up and leave
the room. I guess that was my version of hardball but that was the extent.
RH: Lastly, what advice would you give to an individual who
is new to negotiating?
RD: I would advise that you should never negotiate with
yourself. When you make an offer and the other party just answers that it isn’t
enough, don’t make a higher offer. Ask them what it will take to be a fair
offer and go from there. The moment you start negotiating with yourself, you
give the other party all the power and control. Also, always have a lawyer
present at the negotiation table or at least kept up to date with how the deal
is going. Lawyers are a great way to make sure all parties are getting a fair
deal and that there are no lopsided offers. They will also make sure that
everything is legal and on the up and up.
