Music management contracts under the magnifying glas

Yes, horror stories about unfortunate artists being ripped off by their malicious manager exist. And no, not all of them are made up. But not every management contract is a deal with the devil. Like in every good partnership, everything depends on a good foundation. Make sure you start off with a clear, transparent agreement, covering the upcoming bumps in the road.

What, when, where, who?

First things first. As evident as it may be, it’s important to start off with the right title, for example “Artist management contract”. Make sure the date and the territory are clearly mentioned, as the names and addresses of every party involved. Who exactly is managing? Is it a management firm or an individual with his own business? In the first case it’s a good idea to add a “key person clause”. This guarantees that if the management company fires or replaces the manager they appointed to you, you’re allowed to go with him and leave the company.

 

management2Manager’s responsibilities

Once the basics are sorted out, it’s time for the real deal. What do you expect from your manager, what will be his responsibilities? The Music Manager’s Forum advises the following:

  • to use best endeavors to advance and promote the artist's career and to ensure the artist gets paid.
  • to consult regularly with the artist and keep the artist informed of all substantial activity undertaken.
  • to maintain records of all transactions affecting the artist's career and to send the artist a statement at the end of each calendar quarter disclosing all income, sources of income, expenses, commission and other debts and liabilities arising during the preceding three months.
  • to obtain the artist's approval for any expenditure higher than (((amount))) over a period of one month.

 

Artist’s responsibilities

 Obviously, you as an artist will also have to fulfill certain duties. Again the Music Manager’s Forum has a list of suggestions:

  • to carry out to the best of his ability and in a punctual and sober fashion all reasonable agreements, engagements, performances and promotional activities obtained or approved by the manager.
  • to attend promptly all appointments and to keep the manager reasonably informed of the artist's whereabouts and availability at all times.
  • to reveal to the manager any income paid directly to the artist.
  • to accept that this is a job and that it involves hard work and a professional approach
  • not to engage any other person to act as the artist's manager or representative in connection with any aspects of the artist's career
  • to use all reasonable diligence and make all reasonable efforts to assist Artist in obtaining employment
  • and to consult with, counsel, advise and assist Artist in all matters relating to his professional interests.

Exclusivity

In most of the cases, the manager will make sure he maintains the right to represent other artists. This is only reasonable since the manager will need more than one client to make a decent living, unless you’re a genuine superstar. On the other hand, the artist generally appoints the manager as his exclusive representative and advisor, preventing the scenario of multiple managers fighting over the direction of his career.

Manager’s commission

Managers classically take 15 to 20% of your gross earnings. Let’s say your concert makes 5000 rand and you, the artist, are entitled to 2000 rand of that. If your manager’s commission is 15%, he will bring in 15% of 5000 rand, not 15% of 2000, meaning his total will be 750, not 300. Besides that, if there is more than one person in your group, chances are likely that the manager may bring in more than each individual group member. If that 2000 rand from the previous example is divided amongst 4 band members, each will get 500 rand, and the manager will still be getting 750. This practice is often referred to as “off the top”.

Post-termination commission

Be aware! The manager will take his percentage not only during the term of the management agreement but also after expiration, for as long as your income results from agreements made during the term of the management contract.

So, the manager you had when you made your first album will always get his cut of that album’s sales, even after you two are no longer working together. One way to compromise here is to have a commission reduction over time. You could agree that your ex-manager receives 15% for the first year after termination, 10% for the next year, 5 % for the year after and 0% for the fourth year after termination. This is called a “sunset clause”.

Expenses

Artists are usually responsible for the payment of all the expenses done by the manager in their behalf. Again the general rule applies: the more specific you are in the contract, the less chance there is there on arguments later in time. Make a list of predictable expenses that will be covered by you. For example:

  • Cost/wages payable to accountants, booking agencies, tour managers or other professionals involved in artist’s behalf
  • Artwork and promotional costs
  • 50% of management hotel, phone and hotel room charges
  • Travel expenses

Arrangements for banking and accounting

 Make an arrangement on banking and accounting matters. Will the manager receive all the earnings so he can withhold his commission and expenses? Or do you want an independent third party to do manage your income?  

 Who keeps the books? Your manager or an outside book-keeper? Make sure the contract mentions your right to inspect the books during regular business hours by a certified public accountant upon reasonable notice.

Term and termination

Management agreements have an initial period from 1 up to 4 years, sometimes preceded by a probation period. After the initial term artist and/or manager have the option to renew the contract, sometimes the renewal even occurs automatically (unless one of the parties states otherwise in writing). Some contracts require that there must be notice of termination a certain period before the end date, otherwise the option automatically renews. Keep this in mind!

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Note : These are general guidelines. For your specific case, you’re advised to consult an entertainment law specialist.

 

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