The management agreement is between the artist and the person or company who agree to develop and guide their career. The management of their affairs includes the negotiation of all other music contracts and the engagement of other professionals to assist the artist, such as agents, promoters, tour managers. In return for managing the artist's affairs, the Manager will expect to be paid a commission based upon their earnings.
Gross Earnings
The Manager will usually require a commission of about 20% of the artists 'gross earnings'. (These are the artist's total earnings)
Gross earnings would not normally include income from live performance: The Manager may receive a higher commission, say 50% but based on net receipts (i.e. the money left after all of the costs of touring have been met). If the Manager was to take 20% gross, this may leave the band in debt should the tour run at a loss. Therefore splitting the profits, if there are any, is a much fairer option.
Also there should be no management commission payable upon record royalties earned by the artists but which are retained by the record company in recoupment of any recording costs, the same would apply in connection with costs paid by the artist towards videos or tour support, all of which would be recoupable expenses.
From an artists point of view, the key things to look at when considering a management deal are: -
Commitment
The length of the contract is referred to as the 'Term'. The artist needs to make sure that they are happy with the length of the deal and what provisions are in the contract to allow them to get out of it. As a general rule, , it is best to try and limit the contract to a few years. For example, a one-year term with an option to extend it for future years. A key point here is that if the management failed to achieve anything, the artist must be able to get out of the deal and go elsewhere.
Exclusivity
It is important to understand that when an artist signs an exclusive management deal with a Manager or management company they are making a legal commitment that allows those Managers to represent them exclusively for a stated period of time. Whilst it may be possible to get out of the contract at a later date, this is not always easy and can often involve a great deal of expense. This is why it is best to have a short Management Agreement, which can be renewed so that both parties can see how it goes and get out if they are not happy.
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