by J. Scott “Skip” Rudsenske, Attorney, MusicContracts.com
One of the most important contracts an artist will sign is an artist management contract. Entering into a written management agreement will make it clear the services a professional artist manager will or will not provide to an artist and make it clear how the manager will get paid. Some of the most important terms of an artist manager's agreement is set forth and explained below:
Exclusivity:
The manager will be exclusive to the artist. What this means is that the artist may not hire anyone else to act with the same capacity or with the same authority or to provide the same services as the manager. The artist will have the right to hire an attorney for legal advice, a booking agent for employment or booking opportunities, an business manager to handle the artist's money, etc. And in fact the manager will work with all of these people. While some manager's contracts will not make this clear, other than to state that the manager is exclusive, an artist should try to make it clear in the contract and a manager should be flexible and realistic enough to understand that the artist will need others to assist in the artist's career.
Term:
The term sets forth how long the contractual relationship will last. Sometimes this just states how many years the agreement will be. Or the terms might be expressed with an initial term with options. For example the contract may be for 1 year with 6 additional 1 year options. This means that after the first year, the manager has the option or choice to extend the agreement for another year. Usually these options are exercised automatically which means the contract continues for the next year unless the manager notifies the artist in writing that the contract is over.
The total number of years or options that the manager and artist agree upon will be affected by the manager's experience and artist's prior success. Therefore, a manager will need a longer time to work with an artist that is only starting out and developing in the business. In these circumstances that manager does not want to spend years of time and money developing an artist, only to have the artist leave the relationship after the hard work has been done. The manager wants to be able to be compensated once the artist has become successful and to continue the work the manager has started. The length of the term is also dictated by industry standard and state laws. The industry standard for the maximum term just happens to be influenced by the laws of the state of California limiting personal services contracts to 7 years. Therefore, most management agreements will be between 3 and 7 years.
Services:
The expression of services will range from a simple statement that "the manager will advise the artist in all aspects of his or her career and be available at reasonable times" to a specific list of duties and responsibilities. Because management is an inexact science, manager's are hesitant to list specific duties in their contracts because an artist might point to several of the specified duties and claim a breach of contract. But on the other hand, if a manager can list some of the duties he or she will perform in the contract, it can help an artist understand the services that will be provided. Some of those services that can be listed as follows: (i) assist in decisions concerning the artist's professional activities and career; (ii) assist in the general practices in the music industry and with decisions respect to compensation and terms of contracts; (iii) assist with respect to he selection, supervision and coordination of third parties that will work with artist such as business managers, attorneys, publicists, booking agents, etc., and; (iv) assist with matters pertaining to publicity, promotion, public relations and advertising
Expenses:
Money is one of the most disputed and argued issues in all relationships and it is no surprise that it affects the artist and manager relationship too. Therefore, a written agreement addressing this issue can help to get both parties on the same page at the beginning so as to reduce problems later on when an artist's career is going well. An artist should understand that just because the manager is assisting in your career, it does not mean they are paying for it too. Whether an artist has a manager, if an artist without a record deal is going to go into the studio to record music to upload to their website or a social network page, the manager is not responsible for paying for these recordings. The same is true for basic expenses such as the creation of promotional material, payment to a publicist, advertising, postage, etc. The point, is the artist would have to pay for these things if there was no manager. Consequently, an artist should also have some level of control or decision making over these expenditures and not leave them to the manager to make these decisions and then send the bill to the artist. Therefore, there must be a balance and a working relationship so that this process is understood by both parties so that the outcome is reasonable. An experienced manager will talk to the artist about a plan and the expenditures necessary and will consult with the artist on how the things will be paid for. If the manager wants to spend their own money to help do these things-then this just needs to be understood and agreed to in a written document or even in an email later. Also, the contract can limit the manager from spending more than a certain amount of money on a single item or in a single month without the artist's approval. Therefore, if the artist is making money and can afford $500 to be spend on all expenses including publicity and promotional materials or services of $500 a month then this can be put in the contract. The manager can also be limited to spending more than $100 on one single item. For any amounts after these limits, the manager can be required to seek approval in writing from the artist (like an email), to go beyond these amounts.
Compensation:
Because an artist's success cannot be determined and its usually not feasible for an artist to pay a manager a salary, the manager is paid based on the monetary success of the artist. The best way to calculate this is based on a percentage of the money the artist makes in his or her career. The industry standard percentage ranges from 15% to 25% depending on the manager's reputation and prior success managing artists. There are many of creative ways to have this percentage range go up or down based on the artist's success. But for this article I will limit the discussion to the basic range. Therefore, once a percentage is agreed to, then it's important that the artist understand that this percentage is usually on everything the artist does in the music industry. Some management agreements just state the commission is on all income the artist makes in the entertainment, music, film, literary, merchandise and television industries.While many music industry artists may cross over into the other industries, the manager may or may not be instrumental in those areas. Therefore, the artist may try to negotiate that the manager's commission are limited to the income the artist makes form their music career. But even so, the manager can help reduce disputes in the future by listing the income sources specifically. For an music industry artist it might be helpful to list income from the following: (i) sale and exploitations of recordings; (ii) live performances; (iii) music publishing; (iv) merchandise, and; (v) name or likeness product or service endorsements.
Authority:
Another important and highly negotiated set of terms in the contract relate to the authority the manager will have to do things on behalf of the artist. The manager usually wants authority to: (i) negotiate contracts on behalf of the artist; (ii) be the sole representative to third parties; (iii) accept payment and deposit the payment into a bank account; (iv) pay third parties for services, and; (v) make publicity decisions and authorize the use of the artist's likeness and name in publicity matters.
There is a balance between what the manager can do without the artist's approval and not slowing the manager's efforts down to obtain the artist's approval on all things. Again, if the manager has a good reputation and represents many successful artists, the artist usually will have less need for oversight in these areas than if an the manager is just starting out. An artist should insist on being apprised of a manager's actions on the artist's behalf, especially matters dealing with money. But the artist should try to avoid micro managing his or her career, after all this is why the manager was hired.
MusicContracts.com has versions of different manager agreements on the website at the following link: Artist Management Contract