| Once
an artist has decided to work with a manager in which there
is mutual trust and belief, it is advisable to memorialize
a management agreement ("Agreement") in writing.
Such an Agreement has certain elements an artist should be
familiar with. This article will discuss the most important
components.
The Agreement will contain a description of
what the manager will do for the artist. The standard terminology
is that a manager will "advise and consent" the
artist in all aspects of the artist's career.
Although this is vague, the manager will be
performing creative functions, such as formulating an image,
selecting material, and finding ways to promote the artist.
Further, the manager will act as the artist's liaison with
record companies, publishing companies, attorneys, agents,
the press, etc.
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The Agreement will also set forth that the
manager is "not a talent agent". This means that
the manager is not agreeing to find live gigs for the artist.
There is a law in California which requires a talent agency
license in order to procure live engagements for an artist.
A talent agent must abide by strict standards
which most managers do not want to be shackled by (i.e., posting
a bond, limited commission percentage, cannot work out of
home). If a manager violates this law, the artist can terminate
the Agreement and require the manager to pay back all commissions
collected from the act in the past.
Additionally, the manager is usually granted
a "power of attorney" to act on behalf of the artist
on business matters. This allows the manager to approve such
things as ads and publicity. However, it also allows for abuses
because this power lets the manager sign documents on behalf
of the artist.
Thus, it is best to limit the signing authority
only to live appearance documents, and only then once the
artist has consented to the terms.
Further, the Agreement will have a time limit,
or "term". The average term is three years. Normally,
there is an initial number of years and then "options"
for additional years, with the manager generally having the
option power. The artist can limit the term by requiring "performance
standards" whereby, for example, if the artist does not
obtain a recording agreement or does not make a certain amount
of money in the initial period, then the manager cannot pick
up an option for more years.
Moreover, the Agreement will set forth the
manager's fee, which on average is fifteen percent "of
gross earnings" (i.e., before deductions) from all aspects
of the artist's career. Yet, the artist can exclude certain
monies from the manager's commission.
If the artist, for example, is already a successful
songwriter or actor, the manager should not be able to commission
those earnings. Further, there are other monies which only
"pass through" the artist's hands and which the
artist never really earns. These, too, should be excluded
and consist of: recording costs, tour support, independent
promotion money, producer fees, and live gigs where the "net"
is minimal.
Finally, with respect to commissions, the
Agreement should have what is known as a "sunset clause"
on activities which occur after the termination of the Agreement.
Although a manager normally wants to be paid
perpetually on sales of records released during the term,
the band can negotiate that the percentage is reduced over
a span of a certain number of years until the manager is no
longer entitled to any commission.
Music
agent or composer agent | The
Personal Manager | Music
Attorney | Business
Manager |
Negotiating
Contracts with Your Music Agents | Why
use a music entertainment agency ? |
Business
Formation | Management
Agreement |
