The Artist-Management Agreement

“Just ’cause they’re your manager don’t mean they ain’t jacking your ass.”
-Bo$$, former Def Jam artist (quoted from the book, Def Jam, Inc.)

Okay, so maybe there is a love/hate relationship between artists and their managers. But, at the end of the day, a (good) music manager enables the artist to focus on the craft of making music. The manager frees up significant amounts of time otherwise dedicated to administrative tasks. Having a manager, however, is not a free pass to be ignorant to the role of business. After all, the music business is two words for a reason. Music is a business. And if you are an artist serious about carving out a career from your music, you also need to be serious about the business side. Artists have a responsibility to understand the deals that their managers and lawyers negotiate for them.

One of the first legal contracts that many artists sign is the management agreement. Any artist signing such an agreement is best advised to seek legal advice on the terms of the deal. Not every management contract is created equal. But equally surprising, many managers and management companies don’t have a written contract protecting there own interests – a huge mistake given all the effort (and oftentimes, money) spent in developing an artist’s career. While a handshake deal is admirable, it can’t possibly account for all the legal terms necessary to ensure a manager is compensated for the front-end investment made in representing an artist.

The management agreement is a crucial asset for every manager. Once you have one in place, you can use it as your template for negotiating with artists at every level. The length of the term or manager fee might vary, but the overall language will not. Provisions in a management agreement (or any contract, for that matter) are generally based on the relative bargaining powers of each party. The following are just some of the provisions contained in a management agreement:

  1. Length of the Term: While it is easy to specify that the term will last 1 year, 18 months, 3 years, etc… additional consideration is needed. Does the term automatically extend for an equal period of time? Is renewal of the term dependent on a revenue achievement (e.g. artist earns X dollars during the initial period) or entering into a particular deal (e.g. record label, tour, sponsorship)? From a manager’s POV (point of view), the term should be a reasonable amount of time to reflect the length of time it will take to develop the artist. It would be a shame to only have a one-year term with a new act (without built-in renewals), only to witness another manager swoop in and benefit from your hard work in that first year.
  2. Manager Fee: A manager fee typically varies between 10-20%. But, a percentage of what? Gross monies? Are there deductible expenses? Is it limited to specific revenues streams? Is the manager fee firm, or does it increase/decrease dependent on artist revenues – for example, the manager fee is 10%, but it increase .5% for revenues exceeding $50,000, another .5% for revenues exceeding $100,000. A manager that simply agrees to a straight percentage could be missing out on additional earnings.
  3. Sunset Clause: In the event an artist terminates the management agreement or both parties agree to sever ties, does the manager still earn the manager fee on the artist deals entered into during the term? At what base percentage? For how long? Collecting a manager fee after the term of the management agreement is known as a sunset clause. Though a manager should not collect a fee forever, a manager is justifiably entitled to a percentage of those earnings for a limited period of time after the end of the term. This is a crucial provision that should be in every management agreement – it might not stay, depending on the leverage of the artist; but a well-drafted sunset clause can be the difference of thousands of dollars.

If you are a manager that is serious about a long-term career in the music business, having a go-to management agreement is essential. Investing in one, and developing a relationship with a music lawyer that provides on-going legal advice as you negotiate specific terms of each artist deal, is a very important third step. First step, decide now that you want to be in the music business (and not just in music). Second step, find an artist you believe in. Then, hire a trusted legal advisor to draft the ever-important artist management agreement.

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