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May/June 2018

by Dan Chisholm

Legal Bandwidth: Adding Up A Manager

by Dan Chisholm

Legal Bandwidth: Adding Up A Manager

Successful music artists will tell you that the management team you choose will make or break you in this business. Your manager is the strategic and business brains of your outfit. They work as an organiser, influencer and negotiator, connecting you and your music with the right people and projects to make your band’s goals a reality.

Whether you’re chasing a Top 40 radio hit or a spot on the line up at Rhythm & Vines, the right manager will have the industry sway and the powers of planning, coordination and know-how to make it happen.

Yep, for artists, choosing the right manager is mission-critical. But equally, a great management team is no good if they’re engaged under the wrong terms. Think you’ve found your dream team? Before accidentally signing your career away, here are a few initial questions to start you thinking about how to protect yourself and get the right outcomes from this new artist/manager relationship.

What services will the manager provide?

As a starting point, a good music manager should have proven business skills as well as music industry connections. It’s important you assess this carefully as managers usually insist on being the ‘exclusive’ manager of the artist within the territory of the contract. This means that you can’t appoint anyone else to co-manage your band’s business. In contrast, the manager usually acts on behalf of several other artists working the same space.

If you believe they do have the right skills for the job you then need to find out whether they’ll dedicate a sufficient amount of time to managing your act’s affairs. Sometimes an artist signs with a management company only to find that out they’re primarily managed by less experienced support staff, while the main managers dedicate their time to their other star artists. If you have a solid management contract in place, a ‘key man provision’ can be inserted by the artist’s lawyer to protect the artist from this situation.

Under the terms of their engagement, the manager should be obliged to provide certain services to the artist so the relationship is clear from the start. Typically, music manager services will include:
Representing the artist in negotiations regarding the terms of all personal appearance contracts and other contracts for personal services.

Promoting and publicising the artist in all relevant media.

Engaging, discharging and directing all relevant booking agencies, promoters or employment agencies.
Negotiating and liaising with record companies, publishers, distributors, sponsors, merchandisers or other similar entities.

Consulting with the artist and formulating plans and directions for development of the artist’s career.

What’s the length of the agreement and what territories are covered?

As a guide, a music manager will typically want to sign up an artist for between three to five years. This is reasonable because there’s usually an initial period where the manager is helping the artist make their way up the ladder to greater success. If the term of the agreement is too short the manager risks going to considerable effort to help the artist succeed, only for the artist to change managers as soon as they become a more profitable client. Managers, therefore, seek reasonable time to allow for them to see a return on their investment.

If the management relationship is new I recommend including a clause in your agreement for a trial period of around six months. This allows both parties to test the waters and decide if it’s a match before committing to the full term.

The other query you’ll need to discuss is what territories the manager has exclusive rights over under the agreement. Is it just NZ? Australasia? The world? Managers will always want the largest territory possible, but may not have useful contacts outside of their home country. For this simple reason, artists may wish to restrict the territory to where the manager has the most experience and influence, and look for other representation elsewhere.

What should the manager get paid?

Managers ordinarily receive a commission of 20% of gross receipts from income received by the artist. Less experienced ones may take 15%.

Artists can be tempted to trust their managers with all their financial affairs, but word of warning – there’s no substitute for having clear, written terms for the financial arrangements signed by both parties. There are countless well-publicised examples of managers who have taken financial advantage of their artists. Ask Alanis Morissette – her ex-manager has recently been sentenced to six years in prison for fleecing her of $5 million!

Negotiating the terms of your manager’s commission structure can be complex, there are plenty of fishhooks artists can get caught by if they don’t get appropriate legal advice from someone who knows this area of law well.

A few example exclusions to think about under the terms of your agreement:

Because of the expenses to the artist, managers shouldn’t get their commission on live performances without certain expenses being deducted first. For example booking agent fees, venue costs, session musician hire and sound engineer costs can all be deducted before the commission is calculated. This same principle can be applied to other activities. For example, it’s only fair that if an artist has incurred expenses on producing an album independently, or creating and manufacturing merchandise, such costs are taken off before the management calculates its commission.

The manager shouldn’t be able to commission ALL income received by the artist. An example of this would be where an artist receives a payment or advance from their record label to produce an album. In this scenario, it would be unreasonable that the manager gets a cut of that income as it may potentially leave the artist without enough funding to complete the album.

A similar example exclusion would be advances intended to go towards tour expenses. The agreement you both sign will need to clearly define what artist income will be exempt from the manager’s commission, and for artists, it’s well worth getting specialist legal advice on this.

What is the manager authorised to do on the artist’s behalf?

Among other things, artists should be extremely careful not to give their manager the capacity to sign contracts on their behalf. If they do so the artist risks getting locked into a deal they never intended to be in. An artist should always make important decisions along with band members and with advice from an experienced music lawyer.

To protect your band’s integrity and public ‘brand’ it’s also a good idea to include terms restricting what the manager can and cannot do to generate income for the band. An example of when this has gone wrong for the artist would be when Jessica and Ashley Simpson’s manager (their dad) sold embarrassing photos of his daughters to make a bit of extra cash.

How do you get out of the contract if the management doesn’t do its job?

Finally, for various reasons sometimes the management relationship just doesn’t work out. A worst-case scenario for an artist would be getting stuck for years with a manager who isn’t doing what you pay them for. Every contract needs a watertight termination clause enabling the artist to exit the agreement if the manager breaches a material term of the agreement.

Remember – you are the talent, this is your future! Find the right team, get the basics right and you’ll be well on track to success.

Dan Chisholm is a Senior Solicitor specialising in Music & Entertainment, Commercial and Property Law at Duncan Cotterill. Dan’s love of music law sparked over 10 years working as a professional drummer for Aussie indie band Bonjah. dan.chisholm@duncancotterill.com