These days, artists must wear many hats. Along with making the music, up-and-coming artists are often their own publicists, labels, graphic designers, and more. However, at a certain point, this all becomes too much, so the artist is forced to delegate some of these responsibilities, usually first to a manager.
Music managers come from all different backgrounds, and they typically assist artists by providing them with, for example, money, experience, industry contacts, and maybe just simply enthusiasm and support. A manager may already work in the music industry, may be friends with an artist from his or her early days, or may simply believe that the artist has the potential to “make it.” However, managers are one of the few artist representatives who are unlicensed, unregulated and need no experience (unlike, attorneys, agents and business managers). In fact, anyone can call him or herself a music manager. It seems like all one has to do to start a management company is create a Facebook company page.
Before you get an attorney to draft a management contract, both the artist and the manager should take stock as to what each of them is expecting to gain from entering into this relationship, and what they are each expecting to have to give up. Some important elements of the relationship that need to be decided and questions that need to be answered before you draft an agreement include:
· What does the manager bring to the table that is of value to the artist? E.g. Money, contacts
· What does the manager expect out of the relationship with your artist? What if the artist decides that music is not for him or her and quits?
· What should an artist expect out of their relationship with you? Is the manager devoting his attention to other artists?
· What are your responsibilities to your artist?
· What should your artist’s responsibilities be to you?
Lastly, attached is a sample management agreement, along with an analysis of the some of the most important potential issues. Given the stakes of this relationship (It is the artist’s career after all!), it is crucial that the business arrangement between a manager and artist is put into writing. Written contracts are viewed as necessities in all other areas of business, yet countless artist/manager relationships are based on a handshake agreement. There is no reason that they should not be viewed the same in the music industry.
[pdf-embedder url=”https://acfreedmanlaw.com/wp-content/uploads/2017/07/Sample-Mgmt-Contract.pdf” title=”Sample Mgmt Contract”]
ANALYSIS OF SAMPLE MANAGEMENT CONTRACT
1. THE TERM.
Most management agreements range from two to three years, with options to extend, usually belonging to the manager. It is in the artist’s interest to obtain a shorter term, while the manager’s interest is to lock in the artist for as long as possible. Variations might concern whether the contract terminates automatically or only on timely notice from the artist. The Term of the example contract is laid out in Section 1(a), and Section 1(b) provides that the Term will automatically renew, unless one party opts out at least 30 days before the end of the Term.
2. MANAGER’S DUTIES.
Most management contracts simply state that a manager is obligated to “advise, guide and direct an artist’s career during the Term.” To describe how hard the manager has to work, the contract may include language such as “best efforts” or “reasonable efforts.” These vague terms are used because, despite all efforts on the part of the manager, they cannot guarantee that they will be able to get everything the musician wants, and artists want to protect against getting stuck with a manager who has lost interest. The Manager’s duties are outlined in Section 4 of the sample contract, and they are relatively standard, but artists should keep an eye out for potential issues, such as providing the manager with his or her power of attorney (as further explained in Section 6 below).
Most agreements will require that the manager be exclusive to artist, meaning that the artist may not hire anyone else to provide the same services as the manager. This language is contained in Section 4(a) of the sample contract.
4. SET PERFORMANCE CONDITIONS & BENCHMARKS.
However, a common compromise when deciding the length of the Term is for the agreement to expire if a specified performance level is not achieved within a set period. For example, an agreement can state that if the artist doesn’t earn $100,000 in the first two years, the contract may be terminated. The sample contract does not contain such benchmarks, but Artists may want to include them as another way to assure performance by the Manager.
Most management agreements pay the manager a percentage of gross income that an artist earns from any activities in the entertainment business. It’s crucial for the artist to specifically define what is and what isn’t included as part of gross income, as well as insist that monies paid to the artist, or on the artist’s behalf, for recording costs, touring expenses and other business expenses are not included in gross income. Language explaining how commission is calculated is contained in Section 7 of the sample contract.
6. SUNSET CLAUSE.
The Sunset Clause entitles the manager to receive a commission from any contract negotiated during the Term, even after the management contract terminates, and is one of the most important provisions for the manager in the agreement. The artist will want to terminate the manager’s right to commissions as soon as the contract ends. However, the manager’s position will be that if he or she lands a record deal or long-term publishing deal that extends beyond the term, he or she should continue to receive the commissions based on that deal, because without the manager, that source of income would never even have existed. This clause is dubbed a “sunset clause” because while the manager is still entitled to receive income, the amount declines over time and eventually ends within a reasonable time. Section 7(b) of the sample contract provides that the Manager shall receive commissions, even after the expiration of the term, for all contracts the Manager worked on.
7. POWER OF ATTORNEY.
Whether the manager merely offers advice to the artist, or makes decisions on his or behalf, depends on the manager’s authority. Management contracts sometimes include a Power of Attorney that gives the manager a variety of powers, including signing contracts on behalf of the artist. However, with instant communication so widely available, there is rarely a need for an artist to grant his or manager power of attorney. Some may consider a manager’s insistence on the power of attorney a red flag. A limited power of attorney is provided for in Section 4(c) of the sample contract, which artists may want to consider limiting further, or even removing completely.
8. TALENT AGENCY LAWS.
Many states have enacted statutes regulating agents and managers. For example, New York, California, Florida, and many others require anyone who procures employment for an entertainer to obtain a license from that state. Florida does not require a license for agents who represent themselves or no more than one (1) artist. Nevertheless, this licensing requirement may become problematic for up-and-coming managers, many of whom reach out to industry contacts in hopes of procuring additional opportunities. Any opportunities procured by the manager, without a talent agent license, may be illegal and thereby voided. The Manager agreeing to abide by such talent agency laws is provided for in Section 5 of the sample contract.
DISCLAIMER: This article is intended for informational purposes only, and is not intended to, nor does it create any attorney-client relationship. To be clear, this is ATTORNEY ADVERTISEMENT, and THE CHOICE OF A LAWYER IS AN IMPORTANT DECISION AND SHOULD NOT BE BASED SOLELY UPON ADVERTISEMENTS.