CLASS 12 PERSONAL MANAGERS
Most artists seem to want a manager as soon as they can get one. They want someone to handle the many business details of their career and allow them to create MUSIC. Unfortunately, most new artists have a hard time attracting managers given the lack of income they earn early in their career. Usually there is not enough for the artist let alone the manager too. Of course successful managers typically have more than one client, with the more established clients helping to pay the bills while the newer clients are established.
What are the functions that Personal Managers typically perform?
1. Gatekeeper
The most important function is to serve as the main contact point for all parties who are trying to reach the artist for business reasons. The manager collects the various offers or inquiries, and together with the artist decides which are worth pursuing and which are not. Maintaining the artist’s privacy is often necessary to prevent unwanted strangers from getting direct access. In carrying out this role, the manager often becomes the artist’s defacto public spokesman.
2. Scheduling
The manager must keep abreast of the artist’s schedule at all times. It is critical for the manager to be aware of when the artist is committed and when they are free to tour, make promotional appearances, write, record, or have personal time. Avoiding schedule conflicts is necessary to preserve the artist’s professional reputation. Working with Talent Agents to book tours also requires keeping close tabs on the artist’s schedule to insure that key pre-existing commitments are honored.
3. Finding a Record Contract
Historically, the first job of a manger of an unsigned artist is to find a recording contract. Given the dramatic decline in the number of artists who are signed each year, this may not be a realistic goal for many artists. Where it is the primary goal, often a timetable is agreed upon for the contract to be obtained, i.e. 2 years, and if not, the artist can terminate the management agreement.
4. Independent Artist Management
Where the artist is independent and perhaps has their own label, the manager must work to oversee the artist’s operation on all levels to enhance its profitability. Traditionally, the manager worked with the marketing departments of major labels and key agents in talent agencies to get desired results for his client. With independent artists, recording, distribution, marketing, touring, merchandising, websites, and publicity are the artist’s responsibility. To have a financially viable artist, the manager must orchestrate these various components to the best of their ability. The fact that the artist is usually financing physical product (such as CD’s and Tour Merchandise) means managers usually refrain from commissioning gross income that includes the cost of sales, shifting to a commission on net income which is fairer to the artist.
5. Objectivity, Creative Input, and Ethics
The manager should be able to give the artist honest feedback about their performances and recordings. Often the manager is the only one who will level with the artist. Everyone else is too interested in being a fan and will not share negative opinions. Many managers get very involved with an artist’s musical direction while some take a more hands-off approach.
act in the artist’s best interests, and requires disclosure
of the existence of any conflict of interest. Managers have a duty of loyalty which requires that a fiduciary
under no circumstances self-deal, or put his or her personal interests before the artist’s
interests. This fiduciary duty can exist regardless of whether there is a formal
contract."("Building Your Artist's Brand as a Business: Edited by Dina La Polt, Esq; Authors: Christine Lepera and Christina Djordjevich 2012; Published by Association of International Entertainment Lawyers)
6. Team Leader
A successful artist is surrounded by a variety of professionals who all perform important roles. Lawyers, Accountants, Talent Agents, Record Company department heads, Road Managers, just to name a few. Selecting and coordinating the talents of these professionals to that they work as a team for the artists’ benefit is one of the manager’s duties.
7. Managing the Artist’s Internet Tools
Today, the internet is a major focus for an artist’s interaction with the public. There are likely several Artist websites and web pages to be maintained on social sites such as My Space, Face Book, Bandcamp, and others. The artist’s website needs to contain promotional content, links to other sites, tour information, videos and pictures, catalogue, email capture, and ecommerce components. Managers either must have effective internet skills themselves, or know others who can get the job done at a cost the artist can afford. The importance of this position of internet marketing, oversite, and innovation has given risen to the term "5th Beatle" to describe someone who performs this function so important as to be included as a member of the group.
8. Management Contracts:
(a) Verbal or Written Agreements:
If the manager will consider a verbal contract, that is the best arrangement for the artist because it can be terminated at any time by the artist. Practically all written agreements are for the protection of the Manager's right to his or her agreed compensation during and after the term of the agreement.
(b) Key Terms in Written Management Agreements
- TERM OF AGREEMENT
- The term is usually expressed in a set number of year(s) plus one year options to extend at manager's option only; for example 2 year intial period, plus 2 one year options; language can be added extending the term for the life of any recording agreement obtained by a manager
- SERVICES TO BE PROVIDED
- advice and counsel to the artist stated, but such terms are basically meaningless because they are too vague to define. Each manager has their own strengths, capabilities, and weaknesses and can be expected to focus on those areas where they are most effective regardless of what the contract states.
- if certain sources of the artist's earnings such as publishing income or acting income for example, are excluded from the manager's commissionable income base, the agreement should provide that the manager is not expected to provide services in those areas.
- if certain sources of the artist's earnings such as publishing income or acting income for example, are excluded from the manager's commissionable income base, the agreement should provide that the manager is not expected to provide services in those areas.
- AUTHORITY OF MANAGER TO SIGN CONTRACTS FOR ARTIST OR APPROVE HIRING FOR ARTIST NEEDS
- many management contracts seek to empower the manager to sign agreements for the artist in certain situations where the artist may not be available to sign for themselves. This power should be limited. Most companies want artist's signature on agreements in any event, not manager’s and with fax/scanning widely available, it is not really necessary for the manager to sign except in rare cases. Often management contract authorize the manager to sign concert appearance agreements for one or two nights only.
The artist should retain approval rights over any professional that is hired by the manager on their behalf
- COMMISSIONS
- 10% to 25% of gross compensation paid to the artist is the range, but most managers get either 15% or 20%. The commission is paid on anything of value received by the artist, including jewels, stock etc.
- fair management agreements should exclude from the commissionable base any monies paid to the artist which are destined for third parties and not intended to be retained by the artist for their benefit.
For example:
Tour support paid by a record company to the Artist to cover road expenses on a tour;
Recording Expenses which are included in an all-in recording fund.
Songwriter royalties paid to the Artist which are intended for the co-writer of the song
Video production budgets paid to the Artist
Manager commissions on income from live concerts can be adjusted in some circumstances;
For example, if the Artist pays the manager 20% on the gross earned from an engagement, it can be burdensome if expenses are high.
For example:
$10,000 Gross payable to Artist:
-$1,000 (10%) to booking agent
-$2,000 (20%) to personal manager
$ 7,000 Adjusted gross to Artist
$-3,500 Travel and accommodation expense
$-1,500 Musicians/Hype Men/Road Manager etc
$2,000 Net to Artist
Exclusions from Management Commissions
Some management agreements call for the manager to waive commissions on single dates which are less than a minimum threshold;
Some exclude income from certain areas of activity such as acting or songwriting if the artist feels they are well established in an area and do not need the manager to provide services
others reduce the manager’s commission to insure that the artist will never receive less than the manager.
Some exclude income from certain areas of activity such as acting or songwriting if the artist feels they are well established in an area and do not need the manager to provide services
others reduce the manager’s commission to insure that the artist will never receive less than the manager.
- RECEIPT OF MONIES
There are a variety of contractual arrangements concerning how monies earned by the Artist are handled and the Manager’s commissions paid. Some require the creation of a separate account, into which all earned funds are deposited, and withdrawals require both the Artist and the Manager’s signature. (This can be cumbersome if checks are needed quickly!) Others call for the Artist’s accountant or business manager to receive all monies and pay the manager’s commission. A minority call for the Artist to receive all monies and pay the Manager.
- POST TERM OR CONTINUING COMMISSIONS:
Managers want their full commissions on income from musical compositions and recordings created during the term of the manager’s contract to go on forever, even after deal is over.
Artists want their commissions to end as soon as the term is over.
The typical compromise is to reduce commission over period of years. This compromise is called a “sunset clause” and works something like this:
20% Original Manager Commission
20% First Year after the Term is over
15% Second Year after the Term
10% Third year after the Term
5% Fourth year after the Term
0% Fifth year after the Term
- LOANS AND ADVANCES
Agreements provide that Manager is not obligated to make any Loans to Artist, but if they do, it will be repaid from first monies received.
- EXCLUSIVE AGREEMENT FOR THE ARTIST;
- NON-EXCLUSIVE FOR THE MANAGER
The Manager can have other clients but the Artist cannot have other managers unless the Manager consents
- MANAGER IS NOT A LICENSED TALENT AGENT
Manager Agreements will often state that the Manager is not a Licensed Talent Agent and has no obligation to book shows for the Artist. This clause is designed to offer the Manager some protection from a subsequent claim by the Artist that in fact the unlicensed Manager did find employment for the Artist in violation of the California Talent Agency Act. In fact, it offers no protection since the test as to whether the Act was violated will depend on what acts the manager actually performed, and not what was stated in the agreement.
Some Managers prefer to become a Licensed Talent Agent and simply provide only Personal Manager services, but have the License as insurance against a later claim that they performed some act for the Artists as Manager that required the License.
- ASSIGNMENT OF CONTRACT
These contracts never give the Artist the right to assign the contract to another artist, which is logical. However the artist should also resist giving the manager the
right to assign contract to anyone else or to a company that is not owned by the Manager
- KEY MAN CLAUSES AND PARTNERSHIPS
If the Manager is part of a company, and not
an individual, the Artist should consider requesting a “Key Man” clause if the individual manager is the main reason they are coming to the company for management services. The Key Man clause provides that if the Manager leaves the company, the Artist can terminate the contract. If the Manager is in a partnership, it is also a good idea from the Artist’s perspective, to have a clause that allows the Artist to terminate if their partnership dissolves. This gives the Artist the power to decide which partner he or she wants to select, if any, going forward.
9. What are some of the qualities that make up a good manger?
-trustworthy and honest
-someone with whom you have a good rapport ( 'chemistry')
-good communication skills - in person, phone and email
-intelligence
-good reputation
-knowledgeable about the music business
-knowledgeable/passionate about the Artist’s type of music
-good common sense
-good public relations and promotional skills
-good contacts in the entertainment industry
-creative ideas
-good administrative skills
-good negotiating skills
-not easily intimidated by others
-internet skills
No one is going to possess all of those qualities. Have to determine which ones are most critical. Trust is indispensable. Experience can be gained; Intelligence and common sense are either there or not.
10. What Backgrounds do Managers come from?
There are no licenses required to be a manager, so no particular background is required. However, some generalizations can be made.
Family Members:
Friends:
Industry Insiders: arists, producers, promoters, record company staff, radio, TV, etc
Attorneys:
Accountants:
Non-industry
Business People:
11. Legal Constraints on Personal Managers
Aside from claims that they performed services as an unlicensed talent agent, the next most common complaint filed against a personal manager is breach of their fiduciary obligation. All managers, as the agent for the artist, have a high duty to hold the artist’s interests ahead of their own. If the manager uses their position to advance their own interests at the expense of the artist, they are vulnerable to a civil claim for damages. Fraud is another common claim. Fraud can be either the basis for a criminal or a civil complaint. Fraud is the misrepresentation (or omission, if the party has a fiduciary duty to disclose it) of a material fact that the Artist relies upon to their detriment
6. What a manager is not:
-A manager is normally not a talent agent and should not be expected to find engagements. Doing so could jeopardize his manager's contract. In order to book shows legally, they must be licensed as a Talent Agent under California law with the Labor Commissioner's office. Unfortunately, new artists can rarely attract a licensed Talent Agent, which puts the manager in the position of having to do the booking by default.
-A manager is not in charge of every aspect of an artist's personal life (although sometimes they end up doing so regardless).
-A manager is not responsible for filing an artist's tax returns or managing an artist's money. An artist should get competent referrals of people who perform such professional services such as accounting and legal services.
-A manager’s job is not to provide a source of loans or financial support for the Artist. Some managers do provide financial support, but that is not a requirement of the management relationship.
7. Main reasons why the management relationship ends:
- changes in personality
- marriage to someone who hates the manager
- disputes over money
- failure to meet artist's expectations
What does the Artist Do?
Try to reach amicable settlement. Often there is a "buyout” based on the remaining length of the manager’s contract.
The entertainment business is so small that you might need each other again down the road and you don't want to make enemies. See also dispute resolution section below.
The entertainment business is so small that you might need each other again down the road and you don't want to make enemies. See also dispute resolution section below.
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