An artist manager’s job is varied and has a wide scope. Their primary duty is to create opportunities and to facilitate the artist to excel artistically.They connect the artist to the right people. To maintain a state of order that facilitates productive creative work. To bring the right people on to the artist’s team, for the right reasons, at the right time. To make the decisions that the artist doesn’t want to make. To be his right hand, and a trustful advisor. A good manager has a plan for an artist and will do everything in his power to make that a reality.
The artist manager is compensated well that allows them to act in the best interest of the artist. Receiving 15% of everything the artist makes before all expenses, the artist manager has one of the most daunting and grueling jobs of all: not only they advance shows, they make introductions, form strategic alliances, and doing everything in their power to help the artist succeed and become sustainable. The artist manager should not be tasked with managing the interests of the business manager, who is compensated by receiving 5% of gross, which is the total income of the artist before any expenses.
Economists might say that the music industry has fallen prey to the principal-agent problem. Our principal, the artist, cannot ensure that his agents are acting directly in his best interest without a certain degree of supervision. This is especially true when the artist is interested in remaining sustainable so that he or she can continue to pursue their craft. In the existing structure of how the agents are paid, the main concern is raising the bottom line (profit), which requires increasing revenues and decreasing expenses.
Below is a pie chart, demonstrating the amount of money an artist takes home. For example, if you are a touring DJ/Producer, making 10,000/- a month, after you pay for management and taxes, you are left with 4,500/-. This amount does not include all expenses such as travel to and from any of your shows, meals while on the road, studio time, equipment, rent, etc.
It is in the best interest of the artist to have someone pay very close attention to these expenses while also providing concierge service and helping the artist plan for the future.
The structure of the game has to change. The way business managers are compensated must be altered so that they can police themselves, allowing both artist manager and artist to spend more time at what they do best: revenue generating activities. Business managers should be able to provide their clients with transparent, high quality services at a fixed price. The relationship component between the artist and their business manager should not be perfunctory, but rather a partnership where the artist is taken care of and feels in control of and supported in the management of their finances. With a tiered payment schedule, artists would know what to
expect for the level of service that they want, and allow business managers to act with the best interest of their client in mind.
With this proposed new structure, despite the fact that the business manager now works for flat fees, there still is major incentive to provide high quality service. Top line numbers do not reflect the true growth or stability. By working hard to raise the bottom line by cutting costs and increasing efficiency, the business manager is helping the artist to become more sustainable in the long run.
As the comprehensive financial health of the artist increases, the business manager can expect incentives in the form of more services. They can collect more fees, as the artist needs more services to support their growth.
If we change the structure of the game, the artists we respect become sustainable (and some of them become very wealthy), while their management stays fairly compensated for their labor. In a world where artists can earn nearly $50 million for work that involves an incredible level of touring, along with other streams of revenue, an artist should reconsider the payment method that is used to compensate their business manager.
Find an artist manager or artist consultant that can support your artistry and believes in your vision. Find someone you can trust. The next step is putting together a binding agreement for everyone to have clarity as to goals and objectives. These are often called personal management contracts or management agreements.
There may be a verbal or written agreement between the artist and manager. The two may have decided verbally that the manager will help the artist and in return get 10%.
The challenges with this arrangement include that “helping the artist” isn’t clear, and likely means something different to each. The 10% is 10% of what — money from opportunities the manager obtains directly, or 10% of music sales and tours? What about royalties?
Point being, having a verbal agreement to help an artist in return for 10% can lead to arguments, an expedited end to the relationship, and/or fear that the other person will take legal action at some point if there’s a lot of money involved.
A written agreement between the artist and manager should outline the details of the relationship to ensure that the artist and manager are on the same page, which helps to avoid conflict in the future.
A management agreement doesn’t guarantee there won’t be conflict, but it does make the parties talk about the tough questions early on. It’s easier to have a conversation about how to divide up money before there’s money to divide.
There are some clauses (sections) of the management agreement that can either be drafted (written) to be advantageous for the artist, or advantageous for the manager. Ideally, both the artist and manager fully understand how each element of the agreement could be structured, in order that the agreement is reasonable.
One of the purposes of this article is to go through some of the essential clauses that would generally appear in a music management agreement.
1. Exclusivity
The manager is more likely than not, the artist’s only manager, but the artist may not be the manager’s only artist. If the artist isn’t the manager’s only client, it may be helpful for the artist to get a minimum commitment of time that the manager commits to provide.
2. Time
The amount of time that the agreement covers is referred to as the term. The term may be for a specific number of years. Also, it may have extensions which could happen automatically unless one of the parties informs the other by a certain time that the term shouldn’t extend, or perhaps based on certain thresholds. A threshold may be obtaining a certain level of income. For example, a term might be one year, and extend to a second year if the artist has obtained a certain level of income in the first year.
3. Manager’s Management Services
It’s important to be on the same page about what the manager is required to do, and what authority the manager has regarding the artist’s career.
4. Decision-Making
A key element of this is decision making. Does the artist need to pre-approve anything or everything that the manager does? Can the manager sign on behalf of the artist (power of attorney), either with or with the artist’s approval each time?
5. Commission
Regarding compensation, one way for the artist to pay the manager is to the provide the manager a commission equal to a certain percentage of funds earned from certain revenue sources. The percentage may be a set number regardless, or might increase based on the funds the artist earns. As alluded to above, it’s very important to define from the outset what is commissionable and what is not. There may be specific revenue generators that the parties may agree are not commissionable, for example the artist’s job outside of the music industry (until the artist can ideally focus 100% on the music career) to money generated from grants for music videos.
6. Expenses
Who’s responsible for paying for expenses? One scenario is that manager can pay for expenses and get reimbursed from the artist, either whenever the managers asks to be repaid, or only once enough money is generated by the artist.
If the manager is given the right to make purchases which will eventually be covered by the artist’s revenues, are there any limitations on what decisions the manager makes regarding expenses? Perhaps the manager has the right, but not the obligation, to pay for expenses up to a certain monetary threshold, but otherwise needs the artist’s permission.
7. Cash Flow
Other related questions include whether artist-generated funds are paid directly to the artist or manager, what the manager is entitled to, if anything, after the agreement ends, and the details surrounding the manager’s obligations to report the numbers (revenues and expenses) to the artist and to pay the artist.
Other elements of a management agreement include the artist confirming she has the authority to enter into the agreement, the rights of each party if the other party breaches (breaks) the agreement, the extent to which the manager can assign (give) any of the manager’s rights under the agreement to someone else, and the details surrounding how the agreement can terminate (end) earlier than planned.
At the end of the day, the most important words on the agreement are the names of the people who are signing. As an artist, you want a manager that you can trust, and who’s a good fit with your work habits, style, communication and ambitions. The same goes for the manager. There needs to be a good fit. Having an open conversation about the topics raised in this article, among others, can help the artist and manager to figure out if the other person is the right partner.
A formal written agreement can’t make an artist and manager a better fit with each other. However, the process of discussing a music management agreement can help an artist and manager think about certain issues that they may not have just yet. Also, the agreement will help reduce the likelihood of future conflict, which in turn is one of the endless number of ingredients in the recipe for success in the music industry.
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