Artist Manager Agreements
Commission Rate: 15% or 20% of Commission Base
Commission Base: Artists will want to make the “Commission Base” as close to a net number as possible, the managers will want to have it be some form of modified gross. For tour income, the typical deductions would be for the cost of sound and lights, opening acts or musicians, some tour personnel, promoter commissions, sometimes booking agency commissions. On merchandise created by the artist to be sold at shows, the artist would get to deduct the cost of merchandise, credit card fulfillment fees, hall fees. On recording funds, the artist could deduct recording costs, producer fees and royalties, mixing costs, musicians, vocalists, arrangers, engineers, vocal coaches, outboard gear, instrument rental. On songs, commission should be excluded on co-writers and any publishing that has to be given up to a third party, such as on a soundtrack where the studio takes part of the publishing.
Term: Most managers do not like to have less than a five year term, but younger managers should expect to see that period broken down into a couple of options, usually performance based options.
Post Term Commissions or “Sunset Clause”: There will be a post-term commission schedule that should apply to specific records that were created and released during the term of the management agreement and the songs in those records, any tours booked but not performed during the term, other elements that you argue about. The manager will expect to take a reduced commission for a period of time. The artist is incented to make that term as short as possible, and these are usually expressed as a percentage of the otherwise applicable commission base. For example, a reasonable post term deal would be 50%, 25%, 12.5% for 3 years post termination (meaning that a 15% commission would be 7.5% during post term year 1, 3.75% in year 2, 1.875% in year 3, and 0 thereafter. The commission base would be limited to product created during the term). If the band gets new management during the sunset clause for old management, make sure that the new management either doesn’t commission what the old management is commissioning during the sunset or they agree to back out the sunset commissions.
Expenses: Avoid surprises on management expenses by limiting actual costs actually spent on your band, no overhead charges, no management travel expenses without prior approval.
Audit: It is always important to be able to audit the manager once a year.
Payments/Power of Attorney: Make sure that the manager cannot cash checks. Good managers do not want to touch the money. Also make sure that the manager does not steer you to a business manager they essentially control. The manager does not need to sign anything on your behalf other than so-called “one nighter” agreements in a form approved by the AFM, or approval of publicity shots if you are not available personally.
New artists often think that the first person they need on their team is a “manager”. They’ve all heard the stories of the “big” managers who can snap their fingers and make something happen for their clients.
The reality is that when an artist is just starting out, those first 1,000 to 10,000 units are just as hard to sell for the new artist using Internet based tools as it is for the big manager with the major label backing. When I say “sell”, I mean that literally—get someone who you don’t know to pay money for your record. I don’t mean some promotional gimmick or getting a retailer to take some units they can later return for full refund. That’s not a “sale.” Real sales have always been hard, and they are just as hard in the current environment as ever, and actually given the levels of theft, much harder.
So getting a manager may not be your first move in assembling your team. Let’s talk about what a manager does and what a manager does not do.
Not a Personal Assistant: A manager does not walk your dog, pick up your laundry, pay your bills or tie your shoes. A manager also does not remind you to do any of the foregoing, nag you to wash your dishes, or loan you money. This person is usually called a personal assistant, kind of a cross between a gofer and a parent. Good managers will not do any of that stuff.
Not a Booking Agent: Strictly speaking, a manager does not get you work (a/k/a “procure employment”), particularly not in California. However, most new bands have the expectation that if they do not have a booking agent, a manager will get them shows. This is a problem for the manager, because anyone other than a licensed booking agent (which usually means licensed by the State where they reside) is not supposed to book shows. There are a lot of reasons for this, but think “casting couch” and some will become clear. It is also true that a booking agent is a specialized employment agency, and employment agencies are highly regulated. Even so, it is not unusual to hear that managers are booking “pump priming” shows, usually at clubs or festivals for low or no performance fees, in order to showcase their band for agents. This can go on for a while, including after the band is signed to a major label.
Another reason a manager is not a booking agent is that most booking agents are “franchised”, meaning that they have signed an agreement with the American Federation of Musicians or possibly other unions. That franchise status is very important because without it, the agent will not be able to book union members—which is essentially all touring artists. The franchise agreement has limitations on how much commission the agent can charge, usually 10%. Managers charge more.
Not a tour manager or roadie: Most managers will do not go on tour with their bands, at least not for all of the shows. They do not hump gear, they do not settle or argue about the value of towels (usually), they do not drive the truck, van or bus. They may have done all those things in other lives, but they do not do those things now.
Career Advice
Personal managers typically will say that they give career advice. Of course, they do much more than that, but given the things they don’t do, you can see that if you think of “career advice” in the very broad sense and then you add in shopping a record deal, booking agent, publishing deal, setting up co-writes, finding a producer and negotiating the deals for all of these people in concert with your booking agent or lawyer, you begin to get the idea.
The personal manager often—and usually—comes up with most of the marketing plan for your band, then runs interference to make sure that all the people involved can actually execute that plan on time and in concert as a team. You could call this an “uber product manager”—a manager of managers. The better the artist’s personal manager is at that, the better off the artist should be.