Most musicians want nothing more than to spend time creating and performing. But being a professional artist also involves running a business – a responsibility that not all musicians can undertake. Hiring an effective manager is one way that artists can ensure they have plenty of time to hone their craft. In addition to handling the technical and logistic aspects of a budding artist’s career, good managers will free up an artist’s schedule so they can keep the creative juices flowing. So, what are some key terms to include in an artist management contract?
What are a Manager’s Responsibilities?
There is no industry standard or definition for a manager’s role. Therefore, the manager’s responsibilities should be spelled out in the contract. Managers typically take care of business decisions, social media, promotion, touring agreements and sponsorships. They are also often involved in hiring and being the principal contact for the rest of the artist’s professional team (including booking agents, producers, attorneys, accountants and more). Managers can also assist with the creative processes, such as arranging for collaborations with other artists, hiring backing musicians as well as a variety of other small tasks that could take time away from the artist’s creative endeavors. Ensuring the contract covers the scope of the manager’s responsibilities and the time it will commit to the artist can help define the roles and expectations for both the manager and artist.
How Much Do Managers Get Paid?
Managers typically receive 15% to 20% of the artist’s gross earnings (before any expenses are deducted), but this figure can vary from contract to contract. For example, a manager might start at 20% and decrease his or her cut to 15% after a period of time or once the artist achieves a certain level in their career. Alternatively, the artist and manager might negotiate a fixed percentage with some deductions (i.e., reducing or cancelling a manager’s take for a tour that loses money). Other common deductions from gross earnings can include:
- recording costs and payments to producers;
- payments to co-writers for their share of song earnings;
- money paid by a record company to offset losses from touring;
- costs for sound and lights during a performance;
- payments to opening acts;
- money paid for the manufacturing of merchandise; or
- income from non-entertainment-related sources.
The definition of an artist’s gross income, and any deductions to it, will vary from contract to contract. These deductions are often one of the critical points to be negotiated in the agreement. Most manager agreements will specify that all of an artist’s income is paid to the manager first, who will deduct his or her commission and then pay the balance to the artist. As a result, the manager will keep close tabs on an artist’s music royalties.
How Long Should My Management Contract Last?
In terms of management contract duration, artists will generally want the shortest term possible, both for maximum flexibility and to minimize any risk of becoming stuck with a sub-par manager. In contrast, managers prefer a longer term because they recognize that it takes a lot of time and effort to build a successful artist’s career and don’t want their artists leaving at the first glimpse of success.
Historically, many manager agreements tied the term to album cycles. An album cycle typically includes the length of time between writing, recording and releasing an album, along with the subsequent promotion and tour. With the advent of streaming, this practice has become much less popular. More recently, the duration of the agreement term is based upon minimum earnings: if an artist does not make a specific dollar amount or is not touring by a certain date (often between eighteen months to two years from signing), the artist can end the agreement.
Another approach is to tie the contract term to a milestone in the artist’s career. For example, if the artist is not signed to a record label or touring by a certain date, the artist could end the agreement. If the agreement term is tied to this sort of provision, another clause should require that the manager secure a second tour or deal if or when the current one ends.
What Happens When the Agreement Ends?
When the agreement ends, both the artist and manager will have to consider music publishing contracts, long term endorsement deals or other commitments that may run for several years after the agreement terminates. Most agreements will include a “sunset clause” which allows commissions to be paid to the manager for a specific period of time after the contract term ends. A sunset clause reduces the percentage commission the manager is entitled to down to zero, typically over a three-to-five-year period after the contract term ends. These clauses are typically limited to just the earnings from work in connection with the manager and the contract term.
What Other Provisions Should Be Included?
Additional provisions that should be considered include a key man provision, power of attorney, accounting and auditing rights, and how expenses will be reimbursed. A key man clause should be included if the manager works for a larger company or talent agency. Such a provision will ensure that the artist will be able to continue working with the same person. A power of attorney clause will allow a manager to make binding decisions on the artist’s behalf. Though convenient, artists may want to approach power of attorney with caution and limit the scope of the kinds of documents the manager may sign on the artist’s behalf if they want more control over their business dealings. The accounting and audit rights provision sets the terms for how the artist will provide the manager information regarding all commissionable income made within a period of time. This section lays out how the manager will submit this request to inspect the accounts and the time frame within which the artist must provide their records. The method for approving expenses and reimbursements should also be included in the contract terms to ensure transparency and that the manager will not incur expenses that exceed what the artist can afford.
What Should I Do if I Want a Written Agreement With My Manager or Artist?
Music management agreements can be as complicated or as basic as the artist and manager wants them to be, but they should be in writing to avoid misunderstandings and surprises. If you are an artist or a manager and are interested in having a written agreement, work with an experienced entertainment attorney. Contact a member of our team for next steps.
