The art of artist management contracts
“Chains are cool to cop but more important is lawyer fees.”
— Jay Z, “Never Change”
The end to a chaotic 2020 is ushering in a flood of music industry headlines: from Bob Dylan, Stevie Nicks, and David Crosby selling their songwriting catalogs to the ongoing theatrics surrounding Taylor Swift’s album re-recordings, discussions about music royalty transactions in mainstream press have been ubiquitous. The one we found of most interest, however, relates to a different aspect of the business: artist management contracts.
On November 30th, the Grammy-winning hip-hop artist Chance the Rapper was sued by his long-time manager Pat Corcoran for breach of contract, alleging millions in owed commissions and expenses. The wrinkle? The contract was verbal and the details critical to establishing who’s right or wrong were ever memorialized.
While the nuances of this particular feud are certainly specific to the two gentlemen’s disagreements, the case is one of the most high profile examples of an unfortunate reality of the business of managing artists: regardless of levels of fame, fortune, and infrastructure surrounding the talent, a significant amount of commercial relationships are done via handshake agreements. Contrast this with the business of distributing artists’ recordings (i.e. a record label): 30-page contracts, deal terms that stretch from 5 years to perpetuity, armies of lawyers pouring over every word.
This is, in some respects, ironic given the role of a manager in the modern music industry landscape can be significantly more important and even more lucrative than that of a record label. While record labels get paid from effectively one main source of monetization, managers participate in 10–15% of everything an artist does, from music streaming to live shows and brand sponsorships.
However, the frequent lack of written contracts makes it materially more difficult to finance or invest in artist management companies vs. record labels or publishing companies. In our ‘travels’, we frequently advise successful artist managers to push to secure proper contracts with their clients in order to make their businesses more attractive to capital providers such as ourselves. While historically, this has been met with resistance, perhaps the high-profile nature of the Chance the Rapper case, despite its unpleasantness in the moment, will be a helpful catalyst for the industry in the future.
