Music Management Agreements
Management Agreement w breakdown_US_v10
These drafts should not be approached as if it were set in stone. They have been designed as a “starter” to be tailor-made to suit particular parties’ needs. It should not be slavishly copied, but “moulded” and used as a template.
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Honorary Music Alliance member Juan David Lopez and Avenant Law, is a London England based legal consultancy advising bands, solo artists, composers, managers, promoters, distributors and producers with making informed decisions in the music industry. Over 1,000 music companies, including established labels, publishers, music colleges, recording studios and artists have used Avenant contracts since 2010. Their contribution to Music Alliance is one of the most complete and up to date collections of music and entertainment law templates on the internet.
10 Tips for a Music Management Agreement
By: Julia Bell –Edited by Juan David Lopez, Legal Consultant
The Manager/Artist relationship can be one of the closest and most important in the career of a musician. Managers are the ones who do the legwork, handling the day-to-day business side of an artist’s enterprise with A&R representatives, producers and agents amongst others, in order for the artist to focus on being creative. It is a business relationship, so all parties need to be sure that this arrangement is the best thing for everyone. You need to be sure of who you are choosing to enter this relationship with. They are going to be giving you advice, they will be your face and voice to much of the industry. You need to be able to trust them implicitly. Once you have decided on this course, here are some tips as to what to look out for in the management contract.
As a solo artist, the contract you sign will obviously only apply to you. As a member of a band though you will sign the agreement ‘jointly and severally’. A musician will have signed as an individual but also as a member of the band. This becomes important in two main respects. Firstly, they are bound to the manager as an individual artist as well as a part of the band. Therefore, if a member decides to leave the group, they are still bound by the contract for the remainder of the term. The second element of this requirement is about group culpability and responsibility. Any liability incurred to the manager will be the responsibility of the whole not a single individual from the band. If one member cannot pay, the other members will have to cover it.
Some of you talented musical folks may also have creative inclinations in other areas, such as sculpture or as an actor (I am thinking of Jared Leto here). Note which areas of your career the manager is to provide service for. In some instances, it may state the manager will deal with all aspects pertaining to the ‘entertainment industry’. You may wish to change this to ‘the music industry’ to allow for the possibility of obtaining management services for other endeavours in the entertainment industry without fear of breach of contract. Additionally, the artist will be bound exclusively to that manager for a specified territory, generally the entire world. You may wish to limit the exclusivity to a smaller territory in order to engage managers for specific regions of the world such as the USA or UK.
The term of the contract is traditionally between 3-5 years in duration, at which time the agreement can be terminated with sufficient notice. There are many variations to this set up and each artist will need to decide what they prefer. BE VERY CONSCIOUS OF THE TERM, 5 years is a long time to be with a bad manager or an unenthusiastic band. It has become a trend to draft the term as an Album Cycles condition, the period from commencing recording to the end of touring and promotional activities associated with that record. This avoids the potentially difficult problem of an agreement ending mid-cycle at which time parties may terminate, momentum stall and management failing to recoup from their efforts.
Providing advice, working alongside a booking agent to secure employment, obtaining that amazing record deal; these are just some of the things which fall under this heading. It is important to note the use of the phrases ‘best endeavours’ and ‘all reasonable endeavours’ regarding the provision of these duties. Their interpretation is an objective test, determined by what the wider world would consider reasonable and done with their best efforts by a manager performing their duties for an artist. Despite all efforts on the part of the manager, they cannot guarantee to get everything a musician wants, they are managers not magicians. What is important for the artist is if they feel that the manager is losing interest and is not doing the best they can for them, they need to take special note of everything the manager has initiated or proposed. If an artist is unhappy, they need to approach the manager about their lack of diligence with this evidence. Going to court to prove breach of contract should be considered a last resort as it can be a long and arduous ordeal.
A manager is paid on a commission rate of usually around 15-20 % of your gross income. This percentage rate can vary, the manager will argue the risk of taking on a new band which may have a limited following and the extra investment required for launching the act to increase the percentage stake. These are valid considerations but artists should be very cautious of anything over 25%.
It is important to note that this compensation rate for live booking and merchandise is often taken from the Net Income. This means after all the additional expenses are taken from the fee, the manager will receive their amount. An example is a fee of for an appearance and the band may have expenses for food and hotels of. Managers commission of 20% will be charged after the expenses (£200) are taken from gross income (£1000) giving the manager £160 and the band £640 to be divided between the members.
If an artist signs a separate deal with a company the management owns, such as a publishing or record contract, management will not be entitled to the commission on such deals as this would constitute ‘double-dipping’. For example, they cannot get the percentage of royalties from the recordings made with the management’s record company then get a commission from your share of the royalties from that record deal.
The arrangement can be modified for net income commission on certain things, such as touring, in order to get the manager to keep costs down. Additionally, an agreement could be modified to include capping, agreements as to no commission on failed tours etc.
The commissionable income is usually subject to a number of exclusions and deductions in order to make the arrangement fair and successful. Investment income and tour support funding are examples of money to be excluded from the commission. Paying record producers, legal fees, merchandise production are examples of money to be deducted from the commission. All these costs will require proof as will any expenses management will seek to obtain back from the bands income.
This clause put a final closing date on the arrangement between the Artist and Management if the contract is terminated through the usual requirements. It usually specifies a gradual phasing out of commissions and revenues. For example, 15% until the 3rd anniversary of the termination, 5% from the 3rd anniversary until the 5th anniversary of termination. These amounts will only be paid from contracts and arrangements substantially organised by the manager or entered into by the artist during the term of representation. Management are entitled to get this money due to the effort they put in to help the artist.
Artists need to be fully aware as to these dates to determine when they will have full access to their income streams, perhaps for new management. The main thing to be wary of is records and publishing deals. Be sure there is a final cut-off date, when the commission period ends completely.
In most instances, the contract will continue until notice in writing is given following the term as to terminate the relationship. If the manager is not properly fulfilling their duties, you should be able to terminate through failure to carry out required duties but this can be hard to prove. If a member of the band decides to leave, often the management team has the option to terminate the contract, with the sunset clause and other rights to be unaffected.
This is an important agreement not to be taken lightly, many careers have been made and lost under poor management and many court battles waged over such contracts. Remember, once you sign the agreement all parties need to abide by the terms and conditions. Good luck!
