The Management Contract That Every Artist, Songwriter, and Producer Should Have

contract

The following comes Steve Gordon, regarded as one of the top attorneys in the music industry.  Last week, he outlined 11 contracts that every artist, songwriter and producer should know.  So here’s the first one: management contracts.  

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In this installment, we will discuss management agreements.

As I wrote in “Now You Know Everything about Music Managers,” managers have never played a more important role in the music business than they do today.  If you have taken or are ready to take the next step in your music career, you probably need one.

A good manager advances the career of her client in a variety of ways.  Traditionally, a manager provided advice on all aspects on the artist’s professional life, used her relationships to generate opportunities, negotiated deals when the opportunity to do so arose, and helped the artist select other members of the “team,” such as accountants, lawyers, booking agents, and publicists.  A manager’s principal job was, however, searching for the “holy grail”—shopping the artist to record labels, particularly the majors, with the hope of signing a lucrative recording agreement.  Signing a record deal meant a payday for both the artist and the manager.  Managers work on commission, so the goal was to sign with a major label and negotiate the largest advance possible.  In the 90’s, when I was a lawyer for Sony Music, we paid advances to new artists ranging from $250,000 to upwards of $500,000.  If the artist caught fire, both the artist and the manager could become very wealthy from record sales alone. Those days are largely gone.

Starting in 1999, income from recorded music has declined more than 75%, accounting for inflation.  As a result, the major labels (Sony, Universal, and Warner, along with their affiliates) sign fewer artists and pay those new artists far more modest advances.  An artist may never get a deal, or may be dropped from the label’s roster much faster than in the past, when labels had spare cash to support a developing artist.  For instance, Bruce Springsteen did not catch fire until after Columbia (now a Sony affiliate) released two albums.  But, Columbia had faith and supported him through the early disappointments.

Today, with the major labels fighting just to survive, a story like that is far less likely to occur. Labels would rather put their resources behind already established acts, where a return on investment is more certain.

In these days of financial insecurity in the record business, the manager’s role is more important than ever.  In the past, once the artist was signed to the major label, the manager’s primary function became to serve as liaison between the record company and the artist.  The manager lobbied the label to do more, spend more, and focus more on the manager’s artist.  However, due to budget cuts and massive layoffs at the labels, today’s manager does a lot of the work that the label used to do.  For example, the manager may take over social networking, search for opportunities to get the artist’s music in movies or commercials, or find branding opportunities with sponsors.  And, if the artist can’t find an acceptable record deal, the manager may become the artist’s de facto label and take on the responsibility of securing funding from investors or crowd funding to produce records, arranging physical and digital distribution, and everything else the record companies traditionally do.

The Pro-Manager Agreement (With Pro-Artist Commentary).

In the following PDF, I critique a standard pro-management agreement and explain in the comments the changes an artist should negotiate.  There are a number of important terms where the interests of the manager are directly adverse to the interests of the artist.  For example, it is generally in the manager’s interest to have a long initial term and several options to extend the duration of the agreement.  The artist, conversely, will want to be able to get out of an agreement quickly if the manager is not meeting the artist’s goals.  This issue is addressed in the comments for the first paragraph of the pro-management agreement.

(if you’d like to download the PDF, it’s here)

Most management agreements base the manager’s commission on gross income that an artist earns from any activities in the entertainment business.  It’s crucial for the artist to 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.  For instance, if a record company gives an artist an advance of $100,000, and the artist spends $80,000 on recording costs, the manager should not calculate her commission on $100,000.  If the contract allowed her do so, she would be entitled to $20,000 and the artist would be left with nothing.  This issue is addressed in the comments for subparagraphs 11(b) and (d).

Another very important provision is whether the manager has the right to receive a commission from any contract negotiated during the term — even after the management contract terminates.  Pro-manager agreement will usually include such a provision.  The artist will want to terminate the manager’s right to commission his income when the contract ends.  However, the manager’s position is that if the manger lands a multi-album deal or long-term publishing agreement, the manager should continue to receive money because she helped create that source of income.  The compromise is called a “sunset clause.”  Under this clause, the Manager’s still receives income from contracts negotiated during the term of the agreement, but that amount of income declines over time and eventually ends within a reasonable time. A n example of a sunset provision is included in the comments for paragraph 13 in the pro-management agreement, and is also contained in the pro-artist agreement provided in this installment.

Other terms are mere “boilerplate”— standard legal phrases that are important to the agreement but equally protect the interests of both parties.  I will point out these terms and explain their significance as well.  One example is paragraph 29 which states that any amendment to the contract must be made in writing and signed by both parties.

The Pro-Artist Management Agreement.

The following PDF provides an example of a pro-artist management agreement.  The contract your new manager presents you with will often start out resembling the pro-manager agreement, and the closer you can negotiate it to the pro-artist agreement, the better.

(download the PDF here)

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Steve Gordon gratefully acknowledges the assistance of Ryanne Perio and Anjana Puri in the preparation of this material. Ryanne Perio is a graduate of Columbia Law School and a former legal intern at Atlantic Records and SAG-AFTRA. She is currently an associate at Wilmer, Cutler, Pickering, Hale & Dorr, where she focuses on intellectual property litigation. Anjana Puri is a lawyer pending admission to the New York bar. She currently works as an associate of Mr. Gordon. She received her JD from Benjamin N. Cardozo School of Law (2014) and received her B.A. in International Development Studies from UCLA.

Disclaimer: The information in this series has been prepared for informational purposes only and does not constitute legal advice. This series should be used as a guide to understanding the law, not as a substitute for the advice of qualified counsel. You should consult an attorney before making any significant legal decisions.

19 Responses

  1. Anonymous

    Yeah, in this day and age not likely to see the Elvis and the Colonel type deals and I doubt yuoull ever see an Arnold Palmer and McCormick handshake deal ever again… Its no wonder limited liability corps are the almighty and every last person is all for themselves and only care about what’s in it for them… No more honor, no more valor, no more trust, no word is thy bond, shame….

    Good stuff tho Steve, not often in the music badness or show budness thou get many honest people publicly, real shady industries unless accepted by the family and in tight and protected.

    Reply
  2. Anonymous

    “Labels would rather put their resources behind already established acts”

    Indeed. This is the direct result of piracy — and it goes for books and movies, too:

    Fifty shades of Spiderman and Katy Perry all over the place.

    Thank you so much Napster and Pirate Bay…

    Reply
  3. Shlomo

    Good stuff Steve. Best free advice you could give to either side. I’m an experienced music manager and have signed several of my clients to major labels and I belive my management contracts are fair. Not completely you pro artist agreement and not completely pro manager. A nice hybrid. A few things I want to address:

    Funding: as you’ll hopefully agree it’s not the managers job to fund an artists career. However, I have funded the start of my clients career and I’m Sure other manager have as well. So I would argue that a manager should received 20 percent of gross for an advance on a recording deal. Otherwise the artist can easily blow their entire budget leaving no money for either side. It’s not fair to the manager whose devoted years and money to get their client a deal, only for the client to have the power to blow everything under the guise of creativity. It should be up to the manager to make a rational decision on the comissoom of s recording advance. I have waived 20 percent gross for some and for others I’ve enforced it based on a bunch of factors. As you know all labels don’t provide the entire advance upfront usually 15 percent or so and then draw down to produce the album. Is said label has creative control they and or artist can conceivably pay said producer the entire budget leaving no remaining funds to commission. Or even worse label can over pay producer and get a nice little kick back on the backend. Yes kickbacks definitely happen and the only real way a manager can be secure is to commission gross and then navigate the bulkshit later on.

    Just a shlomos thoughts.

    Reply
    • Shauna McAllister

      I really like your comments!
      Very kind of you to help your artists and I hear often of the artist not paying back their “Sponsors” and that is too bad. Keep doing good and helping the good music get out there!

      Reply
    • Zo

      You sound like the manager to have. I agree you should make decisions as such based on an artist’s responsibility. As a rap artist myself I have found that many fellow artists are very “funny with money.”

      Reply
    • Cory Vore

      This was highly insightful. Thank you for your additional comment.

      Reply
  4. jr

    The problem with management contracts is that managers are under fire in California and elsewhere against agents. The idea that a manager cannot enter into any form of job procurement or else forfeit ALL incomes derived from ALL activities from the first day of operation is a problem.
    In this climate where the instant stars make money, they can not only cut managers out for doing their job lest they lose all past commissions but sue them into paying back all commissions is a serious problem, one that is harming most in the acting and has harmed a lot of folks in music as well.
    SAG has sided with the big agencies despite the majority of their membership not having agents and their management peace offering is to grant them SAG approved status but that comes with so many strings as to be unconscionable.
    Managers are the first people in the talent development line and have been for over a decade under attack and now that the money is greatly reduced (especially in music), some sort of compromise must be found that allows talent to assemble a team and pay them correctly. It is no longer an US vs Them scenario.
    These issues impact all managers and all talent. The agencies have spent money to ensure their % at the expense of future talent, remind you of the major labels no?

    Reply
  5. steph pappas experience

    Record labels typically wanted an established act even back when. Noth’in has changed, really.

    Reply
  6. SHAKA BANTON

    Great info real talk you hit the nail on the head for sure,iam a indie artist on my own label my own publishing house just need to jump a little higher,check me i f you get the chance shakabanton.com.SB

    Reply
  7. Agatha

    I have plan to contract singer/actor outside my country. Yes, they are overseas guy.Their manager is their mother but I’m requesting to the their first manager(thier mother) to contract them.I will be their manager for Asia religion.
    My question is how to make Exclusive Management Agreement for it? Is it same like in this article even Artist is overseas person?
    Thank you

    Reply
  8. Angela

    I want to ask about it. I want to contract an artist,They are different nationality(overseas guy).I ask for their mom,their manager too.I asked for their manager to be their manager in Asian Region. I want to ask, how to make artist management contract? Is it same like in the article even They are overseas guy?

    Thank you,
    Angela

    Reply
  9. PASCAL G MAN

    hello:: i am a talented artist from cameroon:: i have been working on my own now for a long time and i got good tracks now that the world can enjoy;i am a singet and also a rapper got 2 videos for now and looking for sponsoship and manager::visit my youtube chanel ;;;mohlah empire;;https://www.youtube.com/watch?v=BwIEZBcQnH0
    even this::::https://www.youtube.com/watch?v=Ik6T_y4lV40
    :::i have many tracks now::you can also listern the audios on mynotjustok.com ::jst search for mohlah empire or meet me on facebook::: pascal g man::: onder my facebook timeline::: you will find the linkks to my tracks or search mohlah empire on google there you also find them:::here is my email!!::: [email protected];;: waiting to read your reply ;;thanks

    Reply

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