The management agreement may be the most important agreement you enter into during your career (whether you’re an artist/band OR a manager). Consequently, it is vital that both parties take the time to clearly frame their contractual relationship at the outset to avoid a potentially costly dispute down the road. Here are some important contract terms that managers and their artists/bands should consider and flesh out BEFORE entering into an agreement:
1) Term of the agreement – for what period of time will the manager act as the artist’s exclusive representative (the “Term”)? Is the Term based on a number of years, so-called “album cycles,” or some other benchmark? Can the Term be extended, and if so, can the decision to extend be made unilaterally?
2) Manager’s commission (i.e. payment) – what percentage of the artist’s income is the manager entitled to receive? Is the manager collecting his/her commission on the artist’s “gross” income (i.e. artist revenue before deducting expenses) or on the artist’s “net” income (i.e. artist revenue after deduction of approved expenses)? If a “net” calculation, which expenses may the artist deduct from gross income before calculating the manager’s commission? Are any artist revenue streams (e.g. acting or modeling revenue) excluded from the management agreement?
3) Manager’s powers – can the manager enter into any or all agreements on the artist’s behalf? Will the artist retain the power to approve certain types of agreements (e.g. synchronization licenses; lengthy tours)?
4) “Sunset” provision/post-Term income – will the manager be entitled to collect a commission on artist’s income earned after the Term ends? If so: a) on which artist revenue streams will the commission apply (e.g. only revenue generated by certain recordings and/or compositions); b) for how long after the end of the Term will the manager earn a commission?; and c) what is manager’s post-Term commission percentage and does it decrease over time?
If you are a manager or an artist/band and you require assistance in drafting and/or negotiating a management agreement, let’s chat. Email us at info@hendersonandco.ca and we’ll provide you with a flat fee quote.