Top Tips on Management Agreements for Musicians

20 August, 2015
Posted by Katie Besgrove

TOP TIPS ON MANAGEMENT AGREEMENTS FOR MUSICIANS

For those artists fortunate enough, there comes a time when faithful friends are replaced with strangers at gigs, those ‘likes’ start ticking over on Facebook to the thousands, and songs begin getting regular play on local or national radio.

At this point, managers may begin to make themselves known to you, or, you might think it is time to search out for someone to take over the more time-consuming and organisational side of your career – so you can focus on what you do best; write and play music.

Entering into a management relationship or a more formal management agreement is a serious step. Whilst you might be eager to get things happening, care should be taken to understand what’s involved and what all the fine print really means. Time and time again, we witness young artists who have signed contracts without reading or understanding their implications, either because they didn’t want to miss out on the opportunity, they didn’t have the time or the energy to bother understanding it, they didn’t have any money to take it to a lawyer or they thought they could trust the other party involved. Whatever the reason, we urge you to always educate yourselves about industry standards, things to look out for and how best to protect yourself moving forward.

First step – learn a bit about these agreements below!

Put something in writing

First and foremost, it is essential that you get something in writing, signed by yourself and the manager before starting to work together. Verbal agreements or what people like to call ‘gentleman’s agreements’ are extremely problematic. Whist they can be quick and easy at the time and seem like chilled way of doing business (especially if you are working with a friend) – should a dispute arise, it will become your word against theirs.

Define the scope of your relationship

What activities will the manager be managing? i.e. just music industry activities, or will it extend to other activities such as writing, acting, TV appearances, modelling? It is now often the case that managers wish to manage artists for the entertainment industry as a whole – so that they are also involved in endorsement, sponsorship, television, acting etc.

Should you want to pursue any other area of the entertainment industry (be it modeling for example) your manager would be entitled to receive a share of your income for these activities – regardless of whether they are qualified in this area. Should you not wish for them to manage you in a particular area, it is important from the outset to define the activities, which will be outside of the scope of your relationship.

It is also worth noting that you will most likely be signing the manager exclusively (i.e. you cannot have another person manage you), however they will often be allowed to manage other artists. Whilst this is industry standard, it is essential that the agreement requires them to devote sufficient time to managing you.

What territory will the manager’s services cover?

Generally a manager’s services will be worldwide, however it is not uncommon for managers to seek co-managers in territories outside Australia. Where the manager is permitted to do so under the agreement, often the commission payable will need to be increased to cover the co-manager’s services. It is important to expressly limit the total amount of commission payable to 25-30% at most for both managers and ensure you have the right to approve an overseas manager.

How long will the agreement last?

From the outset, it is important to define the initial length of your management relationship. For young bands/artists we would always recommend imposing a 6-month trial period – to allow you to test out the working relationship, and allow a way to terminate within the first 6 months if you don’t feel that it is working.

Generally managers will request anywhere between a 3 to 5 year management agreement so that they have sufficient time to build your reputation and in turn, generate some income. Particularly with young bands, 3 years would be seen as the minimum to allow them to build this reputation.

If presented with an agreement – be aware of ‘options’ that may be exercised exclusively by the manager. Such exclusive options allow the manager to extend the term (often for 2 to 4 years) at the end of the initial 3 year period should they wish to do so. Particularly when the manager and the artist are at an equal level in their careers, we would usually recommend taking any exclusive option out of an agreement – due to it unnecessarily favouring the Manager.

Functions of the manager

The basic duties of a manager are promotion, marketing and advertising, administration, bookkeeping and generally liaising with and negotiating with third parties (be it labels, publishers, bookers etc.) on your behalf. Their main job in essence, is to create and book you work. It is important to reflect these obligations/duties of the manager in the agreement so that you can hold them accountable should they not be pulling their weight.

Importantly, you should try to have the right to approve as much of what the manager does as possible. Managers may not like having to check with you before making every decision, but some major decisions like any creative decisions, interstate tours, and particularly deciding to work with a third party (label, publisher or booker) should require your written approval.

How much will the manager be paid?

Generally, the standard management commission is 20% of gross income from your activities within the entertainment industry subject to certain ‘deductions’ being applied first. From an artist’s perspective, you want to make sure as many deductions are applied to gross income before management commission is calculated. Also from an artist’s perspective, certain income received for the likes of tour support, music equipment and writing trips should also be non-commissionable.

In relation to commission on live performance income in particular, it is desirable that booking agent fees, direct venue fees, support band fees and other applicable expenses are deducted before a manager takes a commission. If these deductions aren’t made before calculating commission, you could be left in a position where your manager is generating income from a tour which you did not make profit on yourself. It is recommended that artists always seek advice when it comes to negotiating commission.

Further to a manger’s commission, you will generally be expected to pay for all of the manager’s reasonable expenses in providing their services (including long distance phone calls, accommodation and travel outside their city of residence). You should always have the right to approve certain manager expenses such as travel and accommodation.

Post – term commission

Given that the manager is likely to be credited for the successes achieved whilst working with you, management agreements almost always allow for commission to remain payable to the manager for a period of time after the end of the agreement. The rationale for post termination commission is that income derived from the manager’s efforts with an artist may not come to fruition until after the termination of a management agreement and it is only fair that the manager benefits from their efforts even though the agreement may officially be over.

Again, this area is a bit tricky to understand should you not have dealt with this beforeand it is always recommended that artists seek advice when it comes to defining what is subject to post term commission and what isn’t.

What happens if the manager is not performing their job?

Sometimes management relationships don’t work (a lot of the time really!) That is why it is important to have a well-drafted, favourable agreement. There should always be a termination clause, which will allow either party to terminate the agreement if the other party is not performing their duties. If this is not in the agreement, or only favours the manager, it is essential that you ask for it to be drafted in.

It is also important to note that most agreements provide for certain steps to be followed in order to terminate the agreement. Remember to follow these steps to the letter – as these procedures are built to allow for proper and lawful termination.

FINAL THOUGHTS

How well you get along with the manager on a personal level during early communications will give you an indication of how smooth the relationship will progress. Keep in mind that management agreements are often a minimum of 3-4 years, a long time to work with someone if you don’t get along!

It is also important that when engaging a manager, you still remain active and involved in your own career. It is easy to sit back and let someone else do all the work, but artists who have a active role in managing themselves and educating themselves along the way, are always the ones who sustain long and healthy careers in the industry, and avoid any of the traps which often occur. Always stay responsible for your own business – you won’t regret it.

Written by Katie Besgrove, Studio Legal (C) 2015.  

DISCLAIMER

The information in this article is of a general nature. It does not constitute formal legal advice, and should not be relied on as such. Please see the full disclaimer in our website terms. Please contact Studio Legal if you are seeking advice about a specific legal matter

For additional information or advice, assistance, or to get a quote – please contact hello@studiolegal.com.au or call us on 03 9521 2128.

Remember – whilst legal fees may seem expensive for an artists just beginning to forge their career, a legal professional that specialises in music industry related agreements will be able to review the agreement and help you avoid any major pitfalls and headaches in the future.