The Artist Management Agreement

You’ve been steadily building your online buzz and creating a name for yourself by performing regularly in your city.  While checking your FaceBook account, you get a message from “Mark Manager.”  He’s been checking you out for a while now and feels he can take you to the next level.  After a few phone conversations and a meeting, you feel he might be the guy you’ve been waiting to meet because you know you won’t be able to become that superstar you know you are without a great artist manager!  He’s ready to go and presents you with an artist management contract.  Since you’re not a moron, you tell him that you’ll be having your New York entertainment lawyer (shameless plug!!) review the artist management contract and get back to him.

So before we actually look at the key terms of an artist management contract, it’s important to get a clear understanding of what it is.

An artist management contract is an agreement between you and an artist manager in which the artist manager agrees to “advise and counsel” you in all areas of your career in the Entertainment Industry.  An artist manager will also negotiate the best deal possible (in conjunction with your entertainment attorney) with third-parties that wish to utilize and commercially exploit your talents whether for a live performance, endorsements, recording, acting, etc.  Keep in mind that Mark would be your “exclusive” representative which means you can’t bring in another artist manager unless he agrees to it.

Mark also has a “fiduciary obligation” to you which is a legal term that means he has to look out, at all times, for your (not his) best interests and evaluate any future opportunities or deals for you from that perspective.  Lastly, remember that a management relationship is not a dictatorship and Mark can’t tell you what to do.  All he can do is strongly advise and counsel you and the ultimate decision maker is you!  However, if your respect and trust Mark, it’s to your advantage to seriously consider any advice or opinion he gives you.

• Term: This is how long or the length of time you and Mark will be bound by the terms of the artist management contract and will be working together.  Typically, the term of an artist management agreement is 3 – 5 years.  This, of course, is negotiable, but I would recommend that you put Mark on a “probationary” or “trial” period where he can show you what he can do and that both of your working styles are compatible.  One of the ways to accomplish this is by negotiating a performance benchmark, in the artist management contract, that if achieved will give Mark the option to extend the term of the artist management contract.

For example, in order to become that “superstar” you’ll ultimately need to be signed to a major record label.  So I would suggest adding language to the artist management contract that if within 18 – 24 months from the date the artist management contract is signed, you have not entered into an artist recording agreement with a major record label, you will have the right to terminate the term of said artist management contract.  This incentivizes Mark to do all he can to help you get that record deal because if he does, he can then extend the term for another 2 – 4 years (“Additional Period”).  This type of performance benchmark is usually the most commonly negotiated point because you don’t want to be signed potentially for up to 5 years if your career is not progressing or Mark is not helping you to get to the next level!

Another type of performance benchmark that could also be negotiated into the artist management contract is a “minimum income” provision.  In other words, Mark has to assist you in earning a specific amount of income (which also benefits him because, as we’ll discuss, he gets a percentage of that income) within the 18 – 24 month trial period, and if you don’t earn that minimum income, you will have the right to terminate the artist management contract.  For example, if during the 18 – 24 month probationary period, Mark agrees to assist you in earning $75,000 and you earn that amount, he has the right to exercise his option to extend the term for the Additional Period.  If you don’t earn that $75,000 by the end of the probationary period, you will have the right to terminate the artist management contract and look for another artist manager.

• Management Commission: Remember, we live in America and no one works for free and neither does an artist manager!  Artist managers get paid a percentage (i.e., a “Management Commission”) of an artist’s gross income earned during the term.  The amount is negotiable and typically ranges from 10% – 20%.  Since Mark has managed successful recording artists in the past, he will probably demand 20%.  Although he is looking to be paid on your gross income, I would insist that certain costs that you will have to incur be first deducted from your gross income before he gets paid the Management Commission.  Typically those costs would be monies paid to you by a record label for “tour support” or monies you spend on “sound and lights” for your live performances.

Also, I would make sure that the Management Commission decreases or is reduced after the term of the artist management contract ends on any deals that you enter into during the term.  Customarily called a “sunset clause,” Mark’s Management Commission of 20% would be reduced to 0% usually during a 3 – 5 year “post-term period.”

And finally, I would not allow Mark to be able to receive all the gross income earned by you during the term or to collect and endorse any checks payable to you.  That’s a major no-no!  Instead, all gross monies payable to you must first be paid to a mutually agreed business manager/accountant that is experienced in the Entertainment Industry.  The business manager/accountant will, in turn, calculate the Management Commission (and any approved expenses Mark incurred on your behalf) and pay him accordingly.

There are other issues to be aware of before deciding to sign an artist management contract, but these are some main points for you to be aware of.  For more information, holla at me!