What does artist management have to do with independent producers? Most people think managers are only for musicians or a group of recording (and performing) artists working together as a band. Nonetheless, some of the more successful independent producers do have managers. Indeed, a successful producer is considered an artist in his own right, and the general principals of artist management are similarly applicable in these circumstances. In this article we will discuss some of the more basic concepts contained in most management agreements.
There are basically two types of managers, business managers and personal managers. The personal manager is customarily a person whose expertise and contacts are utilized to provide career advice and counsel to an artist. Business managers quite often arrive after an artist has achieved some level of financial success, or income flow, from his entertainment business career.
The personal manager should be available on a regular basis to handle the day to day aspects of an artist’s career. His or her responsibility is to oversee, advise, consult, promote, follow up leads as well as available career opportunities that may be developed in addition to negotiating those that are presented to the artist.
Selection of a manager is not an easy task. A personal manager has the capability of advancing an artist’s career or hindering their development for a significant period of time. An up and coming artist’s dilemma is that successful managers usually do not have the time or inclination to invest the attention, and necessary money, in an unproven act, whereas a young or relatively inexperienced manager may not have the necessary background to handle an artist properly, or may not have the clout to have a positive effect on the artist’s career.
Personal managers are generally compensated by receiving a percentage of the artist’s gross income. What specifically does the personal manager do in order to earn his compensation? Generally, all the personal manager is obligated to do is use his or her “best” efforts to advise and counsel the artist. Although an artist will look to a manager to find work, it is a licensed booking agent that obtains “gigs” for the performing artist and not the manager. In most states, a party who receives a commission to find work for others is considered an employment agent and must be licensed as such. Although, in some states such as New York, a manager may obtain limited (or incidental) bookings for the artist/performer without being licensed. With regard to producers’ managers, the line is less clear and less regulated. We would guess that most producers’ managers are not licensed employment agents.
The manager’s compensation may range from as low as ten percent to over thirty percent. The average seems to be in the 15% to 25% range, but there are always exceptions. In the negotiations between producer and manager, a producer’s attorney will generally seek to exclude from the definition of gross income, all actual production costs and certain other expenses. The rationale being that the producer has not received these funds as their own, but instead they are the costs of making the product. This is especially significant if the producer’s payment from the commissioning party (or Record Label) is based upon an “all-in” budget, which includes all costs and expenses as well as the producer’s fee. Similarly, as between manager and musician, an artist’s representative will seek to exclude actual recording costs, third party payments made to others such as the producer and sidemen, as well as tour support, from the definition of commissionable artist’s gross income.
In general, managers seek to share in income even after the agreement has expired. This would include extensions or modifications of contracts entered into during the manager’s term. Artists perceive this to be unfair because the agreement is over. Nonetheless, managers insist that if not for their efforts during the duration of the agreement, the artist would not be earning such income after expiration of the agreement. Many negotiators offer clauses that provide for the manager to receive a reduced or declining percentage of the gross income for several years after the agreement expired (until finally the manager receives nothing).
Quite often the producer will be a writer or co-writer of a the compositions recorded. This could represent significant additional income to the producer. The relative bargaining positions of the manager and producer at the time of the initial negotiation may determine whether the manager will receive compensation from publishing income as well as future income. The more successful the artist or producer is, the less likely publishing royalties will be included in the definition of gross income.
The second type of manager is the business manager. In essence, the business manager is the artist’s accountant and financial advisor (and sometimes bookkeeper as well). Many business managers are certified public accountants (C.P.A.). The business manager may administer all of the artist’s financial matters, including the paying of bills, preparation of tax filings, handling the royalty or publishing income, as well as frequently advising them on potential investments or significant financial decisions. As with personal managers, there are the good ones and the dangerous ones. The horror stories abound. Choosing a business manager should not be an impulsive decision. Ask around and investigate. Check references and background. Having an idea of what you or your client is looking for is essential. It is easier to lose money than to make it.
As you may imagine, business managers are normally for people or companies that have already achieved some sort of financial success or flow of income. Business managers may charge on an hourly basis, or on a set monthly minimum fee. There are other variations as well, including a percentage of gross earnings, similar to personal managers. There could be a wide range of percentages from the artist’s gross.
Remember, there is no such thing as a “standard” management agreement. Although the types of provisions in these agreements seem to be standard; each and every clause of the contract is subject to negotiation. The bargaining positions of the parties and the skill of the negotiator will determine how the final agreement will look. Since these agreements generally last for well over a year, the significance and importance of negotiating these deals should never be minimized. It is essential that a professional representative, or entertainment attorney of your choice be consulted prior to signing any document which obligates you to others, or which may grant another party rights to a share of your income.
By: Bruce E. Colfin and Jeffrey E. Jacobson
© 2006 Jacobson & Colfin, PC