It’s not that you, the artist, can’t necessarily navigate your career by yourself, but there just aren’t enough hours in the day for you to get it all done.
There have been enough publicized horror stories of bands signing terrible contracts it’s a surprise bands sign any type of contract at all these days. However, while there is an argument to be had as to whether or not record labels are still necessary, it’s this writer’s opinion that artist managers will always be necessary. That’s not because you, the artist, can’t necessarily navigate your career by yourself, it’s because there just aren’t enough hours in the day for you to get it all done. Yes there are rare examples of independent musicians making a killing by spending 20 hours a day doing it all themselves, but they are the exception that proves the rule. If you ever plan on working with a personal manager (as opposed to a business or tour manager), it would behoove you to familiarize yourself with the basic artist management contract terms defined below!
Allen Klein Albert Grossman Peter Grant Brian Epstein
Rolling Stones Bob Dylan Led Zeppelin The Beatles
Management contracts almost always contain this clause. It designates that the manager can have more than one artist client, but the artist cannot have more than one (personal) manager. This is because otherwise there would be multiple managers fighting over the direction of your career. Also, unless you’re a bona fide superstar, the manager will need more than one client to make a decent living. Of course, it would be wrong to agree to have one manager and then have that sole manager be too busy to devote enough time to forwarding your career. Many artists who fear this might eventually be the case put something in their contract that asks a reasonable amount of time to be spent on them. This labeling is very grey, but at least gives you some leverage.
The excpetion to exclusivity is when Territories come into play. It is common that very big artists have different managers (though often subcontracted from your main manager) in different regions of the globe, i.e. the UK, South America, far east, etc.
Power of Attorney
This power allows managers to effectively sign your name on agreements. In the eyes of the law, it says that them signing for you is no different than you signing for yourself. This clause is usually made very specific as to what powers it grants the person with POA, but it can allow anything from hiring and firing, cashing checks, signing agreements, etc. Being the superstar that you are, of course, you may find yourself anywhere in the world at a given time, and if that’s the case this clause won’t prevent a deal from happening. Additionally, you probably don’t want to be bogged down signing so much everyday paperwork that is essential but time consuming.
Many artists will tell you, however, to be very careful with how this clause is worded in your contract. It’s a very risky move to allow your manager unrestricted power of attorney, especially if you aren’t busy enough to require that yet. A lot of musicians go with limited versions of this clause, i.e. POA only for a certain time (for instance, if the artist is away on tour), and only with certain powers, like signing concert agreements but not going so far as to open bank accounts, etc. Whatever you grant your manager with this contract, tread lightly!
Key Person Clause
It’s not rare that artists are managed by artist management firms, not individuals with their own business. Thus, even though you will be managed by one person at this management firm, there’s no guarantee that they’re not fired or replaced while you’re still under contract with the firm. Because these relationships take time to build, artists and managers both hate to see the relationships fly out the window for a reason like this. Enter the Key Person Clause. This allows artists to go with their managers if they leave the company, or prevent other managers from stepping in should the company try to do so.
Management contracts are usually written in terms of album cycles, not years. One album cycle usually includes the time from recording to promotion, and promotion usually includes a tour and promotion of all album singles. This is ideal because if the contract is measured in numerical years, there’s a chance that it might end during the middle of an album’s life cycle. Long terms are more favorable to the manager because they allow him or her more time to propel you and live up to his or her promises. Additionally, if you sign a short term contract, that means the manager could put in years of hard work only to see you walk away right as things are starting to pay off. However, short term is better for the artists because it means you can opt out sooner if things aren’t going how you intended them.
Options give artists and/or managers the right to renew a contract after its term is over, and are devices to guarantee performance by the other party. For example, if the manager wants to continue working with the artist after a term is over, they can exercise a one-year option, assuming that possibility was put in place by the original contract. It’s important to note how these options are worded in that contract, because sometimes they will say that options renew automatically if it is not otherwise stated in writing.
Termination must be done in writing. Some contracts stipulate that there must be notice of termination 30 days after a certain date or album cycle end, otherwise the option automatically renews. Keep this in mind!
Managers typically take 15-20% of Gross earnings. For example, say your concert grosses $50,000, and you, the artist, is allotted $20,000 of that. If your manager’s commission is 15%, he or she will bring in 15% of $50,000, not 15% of $20,000, meaning their total will be $7,500, not $3,000 (.15 x $20,000). Furthermore, 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 $20,000 from the previous example is divided amongst 4 band members, each will get $5k, and the manager will still be getting $7,500. This practice is often referred to as “off the top.”
Often times managers will ask for a heftier commission when taking on a young band, saying (and rightly so) that artists may never bring their manager any money, so this escalated commission is to pay for the increased risk. But what if the band that might not ever make any money becomes the next superstar? Many contracts have terms that say once a certain album sale benchmark or gross dollar amount is reached, the commission will sink back down to 15% from 20% or whatever the heightened commission was to begin with. It’s not uncommon for managers to take as little as 10% when their client’s income is in the millions.
The sunset clause outlines what will happen to a manager’s royalties once he or she is no longer working with an artist, even though the music produced during that manager’s tenure is still selling. Most managers seek language in contracts that state they will continue to earn royalties from transactions and occurrences made within the term, forever. 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 diminish for that manager over time, i.e. 10% from years 5-7 afterwards, 5% from years 7-10, etc. Artists try to make it so at some point, the manager stops receiving any type of compensation.
Artist beware – if you sign a 5 album deal with a label and your manager at the time leaves 6 months after, he is likely entitled to his commission on those 5 albums because they were entered into while he was still around. Make sure there is language in your contract that doesn’t let this happen.