10 Tips for a Music Management Agreement Pt.2

The Manager/Artist relationship can be one of the closest and most important in the career of a musician. Managers are the ones who do the legwork, handling the day-to-day business side of an artist’s enterprise with A&R representatives, producers and agents amongst others, in order for the artist to focus on being creative.

It is a business relationship, so all parties need to be sure that this arrangement is the best thing for everyone. You need to be sure of who you are choosing to enter this relationship with. They are going to be giving you advice, they will be your face and voice to much of the industry. You need to be able to trust them implicitly. Once you have decided on this course, here are some tips as to what to look out for in the management contract.

5. Act on your behalf: The contract will empower the manager to act on your behalf in situations such as advertising and executing agreements. The manager will often consult the musicians about these agreements.

6. Artist’s duties: The artist too must perform their role reasonably and to their best potential. It is the manager’s reputation on the line here too, so if you cancel a gig suddenly for no good reason, perform badly because the group is drunk and continue to act without regard to the agreement, the manager could drop you. Managers will generally work very hard for an artist if they feel the artist is as committed to success as they are. A band cannot claim they are not receiving enough money if they turn down a lot of the ventures the manager brings to them. Sometimes, a contract will specify that the judgement of the performance of the manager must include the potential income from ventures and offers turned down by the band.

7. The Money: A manager is paid on a commission rate of usually around 15-20 % of your gross income. This percentage rate can vary, the manager will argue the risk of taking on a new band which may have a limited following and the extra investment required for launching the act to increase the percentage stake. These are valid considerations but artists should be very cautious of anything over 25%.

It is important to note that this compensation rate for live booking and merchandise is often taken from the Net Income. This means after all the additional expenses are taken from the fee, the manager will receive their amount. An example is a fee of for an appearance and the band may have expenses for food and hotels of. Managers commission of 20% will be charged after the expenses (£200) are taken from gross income (£1000) giving the manager £160 and the band £640 to be divided between the members.

If an artist signs a separate deal with a company the management owns, such as a publishing or record contract, management will not be entitled to the commission on such deals as this would constitute ‘double-dipping’. For example, they cannot get the percentage of royalties from the recordings made with the management’s record company then get a commission from your share of the royalties from that record deal.

8. Reductions, expenses and exclusions: The arrangement can be modified for net income commission on certain things, such as touring, in order to get the manager to keep costs down. Additionally, an agreement could be modified to include capping, agreements as to no commission on failed tours etc.

The commissionable income is usually subject to a number of exclusions and deductions in order to make the arrangement fair and successful. Investment income and tour support funding are examples of money to be excluded from the commission. Paying record producers, legal fees, merchandise production are examples of money to be deducted from the commission.  All these costs will require proof as will any expenses management will seek to obtain back from the bands income.

9. Sunset Clause: This clause put a final closing date on the arrangement between the Artist and Management if the contract is terminated through the usual requirements. It usually specifies a gradual phasing out of commissions and revenues. For example, 15% until the 3rd anniversary of the termination, 5% from the 3rd anniversary until the 5th anniversary of termination. These amounts will only be paid from contracts and arrangements substantially organised by the manager or entered into by the artist during the term of representation. Management are entitled to get this money due to the effort they put in to help the artist.

Artist need to be fully aware as to these dates to determine when they will have full access to their income streams, perhaps for new management. The main thing to be wary of is records and publishing deals. Be sure there is a final cut-off date, when the commission period ends completely.

10. Termination: In most instances, the contract will continue until notice in writing is given following the term as to terminate the relationship. If the manager is not properly fulfilling their duties, you should be able to terminate through failure to carry out required duties but this can be hard to prove. If a member of the band decides to leave, often the management team has the option to terminate the contract, with the sunset clause and other rights to be unaffected.

This is an important agreement not to be taken lightly, many careers have been made and lost under poor management and many court battles waged over such contracts. Remember, once you sign the agreement all parties need to abide by the terms and conditions. Good luck!

By: Julia Bell

Edited by Juan David Lopez, Legal Consultant

Image source: Yale Law Library

[notice_box]For a trusted Artist Management Contract template please visit The Music Law Contracts website.[/notice_box]