Artist Management Contracts Explained: Don't Sign Until You Read This
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Written by Ramsey Brown.
For an artist, getting a manager is a huge step in your professional music career. There are many advantages to securing a manager and signing a management contract, but if you don't know what to look out for in the agreement, the deal could cost you some serious drawbacks.
Being uninformed can lead to being taken advantage of, so it’s important to do some studying and research before jumping head first into a management deal. You’ll need to find out exactly what type of contract you are being offered and educate yourself on how it will ultimately affect your career in the long run.
In this post, we are going to explore what exactly artist management contracts are, the pros and cons of having one, what to look out for in the agreement, and overall inform you on how to get the best deal possible. If you are an artist who is looking for a manager or have recently been approached by a management company, this article will give you all the information and details on what to look out for before committing.
What is an Artist Management Contract?
An artist management contract (or AMC for short) is a formal agreement that allows the manager to assist in the professional development and career of the artist with certain detailed expectations of both parties specified in writing. A contract should include terms like what the manager will be responsible for, duration or length of the agreement, and the fees or payment the manager will be requiring for his or her services. On average, this is around 10-20% of an artist's total earnings.
Managers in a sense can be thought of as the head coach to your team and a partner in your company. They are hired upon the agreement to handle specific affairs and duties, continuously looking out for the artist’s best interest.
At each stage of your growing music career, there are different types of contracts in which you may be offered to sign. In this article, we are going to focus solely on artist management contracts because it is such a large and loaded topic to discuss.
Contracts are important because they lay out the terms of your business and personal arrangement with your manager. It sets clear expectations of what to expect and forms an agreement of responsibilities so there is no misunderstanding or confusion later down the road.
Though signing an AMC has its many benefits, it is essential to realize you will possibly lose some control of your business, career, freedom, and revenue stream with this agreement.
Pros of Having an AMC
If you're just starting out in the music industry, finding a manager to help guide you through the process can be extremely rewarding. Managers are usually experienced and knowledgeable about how to succeed in the music business. They'll help ease the transition from being a normal person into being a professional musician. They can help promote your work to their contacts of industry professionals, booking agents, venues, radio stations, advertising and marketing companies, plus more.
Managers can also be great at negotiating and can bring you opportunities, deals, and connections that might not have otherwise been available. Managers can be a great look on an artist’s behalf, showing you are professional and serious about your music career. They act as a liaison or third party between you and a company or entity you may be trying to get involved with. They represent you as a business instead of you handling all the back and forth communication yourself as an artist.
Additionally, managers give advice and serve as a safety net to make sure you stay on track and don't get distracted or waste time doing things that will not benefit or advance your career.
Cons of Having an AMC
The biggest and most obvious downfall to having a manager is that they are going to cost you money. Like we mentioned earlier, the average fee is normally around 10-20% of the artist's total earnings, depending on whatever the artist and management agrees upon.
Also, if your manager is not in it for the right reasons, or doesn’t believe in your career, it can be a huge waste of time and waste of money. This is why it's important to have a thorough manager selection process and ask plenty of questions before you start working together. It’s quite common for a manager to be someone who is close to the artist personally, perhaps a friend or family member who knew the artist before he or she embarked on their music career journey.
Artists may frequently disagree with their management team. Remember managers are people too, so you will not always see eye to eye on everything. However, if you find you are constantly in disagreement or being led to do things that aren’t in line with your brand, this can result in a big problem down the road.
Artists are often strapped for cash and can't afford to hire an attorney, so they're more likely to accept bad deals that artists with more resources would be able to reject. Sometimes artists don't know what they should be looking out for in a contract, so they let their managers take advantage of them instead. This is why it's important to educate yourself about artist management contracts so you know what rights and protections you should be getting before signing one.
Even the best managers will sometimes overstep their legal rights granted by an artist management contract. A good contract can be great for managing your career, but a bad one can be very damaging. Knowing that there are different types of contracts can help you close out a deal even if you're not a lawyer. You'll know what the best deal is for you according to your career needs, and how to negotiate or change the contract so that it works best for you in the long run.
Different Types of Artist Management Contracts
There are two main types of contracts for managing an artist's career: exclusive and non-exclusive. Both terms can be defined as follows:
An exclusive contract means that only one manager is allowed to sign artists for the company at a time. And the manager will be able to sign an unlimited number of artists as long as each artist is only signed to one manager.
A non-exclusive contract means that multiple people can manage your career on behalf of the company. However, artists may only belong to one manager at a time. The company decides how many managers they want to hire, and which ones they prefer over others.
The two types of agreements are mutually exclusive. If you want one manager to exclusively represent your career and manage all business decisions on your behalf, you'll want an exclusive management contract. If you want multiple managers to be able to sign off for you and make decisions on your behalf, then sign up for a non-exclusive contract. You don't have to choose between the two, but it's important to know the difference in order to understand your rights and the terms of a contract.
Exclusive contracts can be great for artists because they give you total control over how you negotiate terms and conditions, as long as you don't sign on with more than one manager at a time. It's also usually easier and cheaper to get signed by an exclusive management company that can only manage one artist at a time than it is by an agency that has lots of clients hoping to be managed right now.
On the other hand, exclusive contracts can be complicated and expensive to maintain for a musician who wants his or her career to grow. Multiple managers can become expensive if the artist wants to sign different types of acts or have more demanding career goals. Plus, you may find that management works differently in different countries, and signing with multiple companies can lead to problems when you're traveling across the globe.
The majority of contracts signed by artists are non-exclusive, which means that the artist is free to sign with other managers and record companies as they please. Many artists choose not to sign exclusive contracts because they're afraid that their manager will try to control their life if there are too many people signed on as managers for the company. According to artists who have chosen either of these options, it's difficult but not impossible to conduct business with multiple managers at once.
Why are Contracts Needed?
Many artists choose to sign with managers or management agencies in order to generate more income from their music. The artist is still the one calling the main shots but the manager(s) have a big say so in the decision making process and typically advise the artist on the best choice to make.
It is not uncommon for individual managers to charge up to 20% commissions, although some perform their work at a lower or higher rate depending on their experience. This number can always be negotiated down the road, if it is laid out within the contract to be able to do so.
When initially approached by entertainment and management companies, artists will be asked to sign agreements stating that they are committed to working with the company in select areas of the music business. This agreement allows both the artist and company to work together and reap benefits from their collaboration without being overly restrictive.
Contracts are written legal documents that outline what is expected out of each party, this helps eliminate any misunderstandings or confusion down the road if one party feels the other is not holding up their end of the bargain.
Main Deal Points in an Artist Management Contract
Each contract will be unique and individualized to the artist but a contract will always serve to outline the responsibilities and expectations of both parties, and how they will work together to help build the artist's career. The contract will detail that the manager has the obligation to work with the artist, and help them reach certain goals.
There are specific rules, regulations and terms that the contract will enforce. This helps maintain the professional working relationship and protects the interests of everyone involved. Below are the 10 very basic and most important areas you will find in a contract, and what you need to fully understand and discuss with your manager before signing.
1) Term of the Contract
If you're new to working as an artist, it's important to understand what will happen if you and your manager decide that the relationship is no longer sustainable. Some companies will allow the artist to come back for renewed terms, while other companies are known to fire artists after a certain period of time without providing any reason as to why or giving them any chance to prove themselves again.
It's important to know how long you'll be able to work with your manager, as this can sometimes be one of the biggest determining factors when choosing a manager. The longer you're able to work with a manager, the more likely it is that they will be able to help you achieve your career goals. Most management agreements range from two to three years with options to extend longer or terminate the length sooner.
2) Expectations & Responsibilities
Job expectations and responsibilities will always vary from artist to artist and will largely depend on where the artist is at in his or her career. Most contracts are notoriously vague in this area, majority of them simply state that the manager is obligated to advise and guide the artist and push their career forward with any means possible.
If you are a newer artist or band, the manager should be promoting you to labels, trying to get you gigs, and generally trying to get your career off the ground. For artists who are further along, managers may be responsible for day to day affairs like booking hotels during tour stops, advising on music, or acting as the liaison between recording labels, press, or booking agents.
It’s always important to have a specific outline of detail of performance expectations and also a standard or benchmark for results. A manager's responsibilities could be anything to help benefit the artists and is not limited to anything, as long as it is agreed upon and written in the contract.
3) Management Fee
Managers and management companies typically charge 15-20% in commissions for each of their clients. Depending on the manager’s level of clout, they may require a higher percentage. It's important for artists to pay attention to commission rates and what your manager will actually be taking a cut from. A manager could take a cut from album sales, tours, appearances, recording deals, or anything else an artist would make money from.
There are also managers looking for an overall percentage of the top or the artist's gross income. There should be an agreement that this number or percentage can be changed or negotiated throughout the term of the contract, depending on certain criteria.
4) Manager Expenses
Managers will be expected to do certain things that will require them to come out of their own pockets. A key point of an agreement should detail how the artist will reimburse the manager for these expenses. It is practical for an artist to pay managers on a weekly or monthly basis for the overhead spent. Managers should also always provide receipts for any expenses they expect the artist to pay back.
Another common rule of thumb is to set a certain amount or cap that your manager can not spend without it being approved by you first. This helps expenses not get out of hand and that there is no dispute down the road if you feel your manager is spending too much money.
5) Contract Renewal
It's common for artists to want their contracts to be renewed so they can continue working with their current manager. This can often provide artists with the security of knowing that their career is protected by an experienced professional who has proven themselves time and time again. It can also help them build strong relationships with professional managers who might have connections in high places within the music industry.
However, it's important for artists to keep in mind that not everyone is able to work well with managers and record companies. This doesn't mean that they're not successful artists, it just means that they may not be happy with the agreements that they've made with management companies. It's also important for artists to understand what will happen if they decide to terminate their contractual relationship between them and a company or manager.
6) Signing Bonus
Many professional managers will ask their artists to sign incentives that will allow them to receive rewards if the artist is able to meet certain goals or milestones.
This can be a good idea, but it's also important for artists to protect themselves from any confusion or disagreements surrounding bonuses by finding out:
How long an artist has to wait before he is able to claim his bonus payments.
What the expected percentage of fees will be if an artist is able to sign a contract.
Possible restrictions or conditions for when and how the manager will be able to use commissions earned on behalf of an artist. For example, the manager may need to use these funds within a certain amount of time, or may not allow the artist to withdraw their money at all.
7) Contract Termination
As mentioned above, it's important for artists to understand what happens if they decide that they no longer want to work with a manager or company. The biggest question that artists need to ask themselves is whether they are able to terminate their relationship with a manager or company easily and without any complications.
It's natural for artists to want to work with managers who they trust and who will be able to help them meet their goals. However, if an artist doesn't feel like he or she is getting the help they need, it's important that they can easily end their working relationship so that they're able to find a new manager within a reasonable amount of time.
This agreement should be clearly outlined in the contract before signing. If either party should feel that for any reason they want to terminate the agreement, they are able to do so without any complications to follow.
8) Commission Payments
Many artists are under the impression that their recording companies will pay commissions on behalf of an artist's earnings in the music industry. However, this is not the case. Artists are often required to pay their manager or management company a commission payment on top of any royalties earned from the song.
This is called a 'commission fee' and can amount to 10% or more of any earnings made by an artist on a single song. When artists are offered contracts with managers, they should ensure that they're aware of how much money that they'll have to pay the manager in commission fees from their royalties, as well as if there are any restrictions or conditions placed upon these fees.
It's possible to ask for an increase in the amount of commission that is paid each time a new song or album is released. It's important for artists to understand what commissions are and how they will be used on their behalf.
9) Powers Granted
When signing a manager, artists are agreeing to let the manager take care of certain responsibilities and take actions on the artists behalf. This could include signing paperwork, booking appearances, making press statements, and more. Artists should specify and look out for anything specific they do or do not want the manager doing on their behalf.
For example, Power of Attorney would give your manager the right to sign documents or paperwork and give them the ability to make executive decisions when you are unavailable. This can either be a good thing or a bad thing for the artists, and is something that you would need to set restrictions on.
You may look out for or want to mention that the manager or management team does not have the power to do things such as force change on your physical appearance or sound of your music. Any power given to the manager is something built and agreed upon trust.
10) Sunset Clause or Commissions
A sunset clause states that there is a certain amount of time after a contract end date where the manager must be paid a commission. A sunset clause gives the manager the right to collect commission from any other contracts they secured for the artist during the initial contract term.
Sunset clauses are not necessarily unfair as they typically have the reputation of being. If a manager worked on a project or deal for the artist, it’s reasonable for the manager to earn profit from it even if the manager and artist decide to go separate ways.
However, like anything else in a contract, there should always be limitations and restrictions on the details of the sunset clause. A sunset clause begins as soon as the management agreement ends. There should be a set amount of time and percentages that the old manager will make. Typically you’ll find the sunset commission percentage will decrease over the years it is in place for, hints the name sunset clause.
Ideally an artist would not want a sunset clause included in their contract, but this is sometimes a non-negotiable aspect for managers. If your management team does have a sunset clause in place, artists should always negotiate for the least amount of time possible.
When to Hire a Manager?
Many artists choose to wait until they have a record deal or have released an album before they decide to hire a professional manager. However, it's important for artists to understand that while it can be tempting to wait to hire a manager until they have solid opportunities in place, it's often better to hire a professional early and develop their career from the ground up rather than waiting until later on.
If you are asking yourself if you should hire a manager or not, then the answer is probably yes. If you are concerned about the money, just remember that managers don’t make money unless you do. It is their job to put you into positions to make a profit and build up your career in the process.
More often than not, a manager will seek you out or be someone close to you who truly believes in you and your music. However, if you decide to seek out a manager yourself, you should choose someone who has a proven track record of helping multiple artists with their careers. This will make it easier for an artist to feel confident that he or she is able to work with someone who has the connections in the music industry and the experience needed to help them reach their goals.
Before bringing someone on board to your team, ask yourself what exactly you are looking to achieve by hiring them and question them about how exactly they plan to get you there.
Wrapping Up
The success of an artist depends largely upon the way in which they handle their voice and are represented in this business. A great manager who understands how to navigate this industry can do wonders for your career and put you in positions you couldn’t have gotten on your own.
Although, there are certain management agreements that could be detrimental to your future instead of beneficial. Even if you sign with a proven great manager, if the contract is set up poorly in your favor, it could cost you down the road.
If you are serious about signing with a management team, this article should give you insight on what to look out for in the contract and how to deal with the negotiation process. Even so, it is always a good idea to hire a lawyer before signing any agreements or documents related to your music career. It may cost you some money up front, but having a professional set of eyes to look over the fine print and advise you on details will be totally worth it in the long run.
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1 Response to "Artist Management Contracts Explained: Don’t Sign Until You Read This"
In my contract to from a AMC it’s a $100 registration fee why is that