We finished the last installment of this article looking at the artist-manager relationship on the more inexperienced end of the spectrum.
Now let’s take the other extreme and assume that both you and your manager are established veterans of the music business. Under these facts, it may be more practical to enter into a long-term contract, since you will each presumably have some track record of success. In this situation, the risks involved are not as great as they are when you?re both newcomers to the business. Perhaps you and your manager will fall somewhere between these two extremes. What happens if you can?t agree to a fixed amount of time?
Well, to satisfy both parties, the attorneys can always try to hammer out a compromise: a short-term contract with the potential of being converted into a long-term contract. For example, the parties could agree to a one-year contract. Part of the agreement, however, would be that the manager must meet certain conditions during this one-year period ? such as getting you a record deal, a publishing deal or even guaranteeing that you earn a minimum amount of income. If the manager fails to meet the conditions, then the contract ends when the year is up. If, however, the manager is successful in meeting the conditions, then he has the right to automatically extend the contract for an additional period of time, say for another year. Under this kind of an arrangement, the best interests of both you and your manager are met.
Guess what the next subject of negotiation will be? That?s right. Money. The custom is for the manager to work on a commission. In other words, the manager gets compensated for his efforts by taking a percentage of whatever income you earn as an artist. Obviously, your attorney is going to try to negotiate for as small a percentage as possible. Your position will be that ultimately it?s your guitar virtuosity that will make you a success. You?ll argue that the manager simply manages, and without your talent, there is nothing to sell to the labels or to the publishers. Therefore, you?ll confidently conclude, the manager?s commission should be negotiated toward the low side since you are entitled to keep as much of the money your talents have earned as possible.

But, as you should soon be appreciating, there are two sides to every coin. The manager?s attorney is going to negotiate for as high a commission as possible. Their position will be that there is a lot of talent out there ? especially in the major music centers like California and New York ? and that the difference between those who make it and those who don?t is the quality of their management. Without the manager, your career development may slow down to a crawl. Why? Because instead of honing your talents, you?ll be too busy running around doing all the things that a manager is supposed to be doing. Talent is important, but without a manager exposing you to the people who can make a difference, you?re just another unknown basement band.

Money:

The custom is for the manager to work on a commission. In other words, the manager gets compensated for his efforts by taking a percentage of whatever income you earn as an artist. Obviously, your attorney is going to try to negotiate for as small a percentage as possible. Your position will be that ultimately it?s your musical virtuosity that will make you a success. You?ll argue that the manager simply manages, and without your talent, there is nothing to sell to the labels or to the publishers. Therefore, you?ll confidently conclude, the manager?s commission should be negotiated toward the low side since you are entitled to keep as much of the money your talents have earned as possible.

But, as you should soon be appreciating, there are two sides to every coin. The manager?s attorney is going to negotiate for as high a commission as possible. Their position will be that there is a lot of talent out there ? especially in the major music centers like New York, Los Angeles, Nashville and London ? and that the difference between those who make it and those who don?t is the quality of their management.

They will also point out that without the manager, your career will slow down to a crawl. Why? Because instead of honing your performance, songwriting and recording skills, you?ll be too busy running around doing all the things that a manager is supposed to be doing. Talent is important, but without a manager exposing you to the people who can make a difference, you?re just another unknown artist. So what?s the range of the amount of the commission? It can generally be anywhere from 10% to 25% of your gross income. But as I have stressed before, the amount that is settled on may very well depend on the circumstances. Again, the art of compromise may bring new life to a negotiation that is at a deadlock on the issue of the commission amount.

Money - Negotiation Ideas:

The amount of the commission can be anywhere from 10% to 25% of your gross income. But as I have stressed before, the amount that is settled on may very well depend on the circumstances. Again, the art of compromise may bring new life to a negotiation that is at a deadlock on the issue of the commission amount. The attorneys can suggest that the commission percentage be staggered. In other words, your attorney can suggest, for example, that the first $25,000.00 of gross income will be commissioned at 10% and the next $25,000.00 of gross income will be commissioned at 15%. The manager?s attorney may rearrange these numbers and offer a counterproposal. Some further give and take may be necessary before something is finally agreed upon.

Regardless of the particulars, the concept here is that the lower percentage rate should be satisfactory to you, while the manager is also given an incentive to make a bigger percentage if he can get you to earn in excess of a certain amount of gross income. And, of course, getting you over that amount, whether it?s $25,000.00 or whatever, will be to your benefit as well. As you can see, the concept of staggered commissions is an alternative compensation plan that can be suggested during negotiation, but, even so, the actual percentage rates and the income levels when these rates kick in must still be negotiated. Another factor in this negotiation is determining which of your income-earning activities will be subject to the commission.
The manager will try to have his commission apply to every conceivable entertainment-related activity from which you could possibly earn an income. Examples of such money-making activities would be live performances, record sales and the sale of promotional merchandise such as T-shirts, posters, buttons, programs and pictures. So if you feel that the commission rate the manager is asking for is too high, you can try to compromise by proposing that you?ll accept the commission rate, but only if certain activities are excluded from the commission.
Your attorney may want to suggest, for example, that the commission not apply to any publishing income you earn from your songwriting activities. If you are multi-talented and occasionally earn extra money as a model or actor, your attorney may argue that these activities be excluded from the manager?s commission as well. However, if the manager insists that all your activities be commissionable, then you may want to agree, but only if the commission rate is lowered.

This ends part 2 of the article. The other two sections are available in the main articles section of the site.

This entry was posted by Will Dayble on Monday, August 28th, 2006 at 10:08 pm and is filed under Articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.