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- Negotiating The Manager's Deal - James H. Stewart
Negotiating The Manager's Deal - James H. Stewart
- By Andy J
- Published 08/10/2007
- Business Articles
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Andy J
Andy J - Music Business
Andy Gathers Industry related information and passes it on to you. If you have any questions related to the business of music, please send questions to Andy's Article or email andy@crunkbox.com profile.
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Negotiating The Manager’s Deal
Compensation –
The Manager’s Percentage:
You should try to limit the percentage to 15%, although some managers argue that the risk of taking on a new artist is worth 20%. They say it will be years before they will actually get paid for a lot of the work that they will do. A compromise is to say the manager gets 15%, which escalates to 20% when you earn a certain dollar amount (such as 15% of the first 2 million and 20% of the excess).
Sometimes managers share in the net of an artist’s earnings rather than the gross. This is much better for the artist – for starters the manager wont get paid if the artist loses money, which is not the case in gross deals.
When a manager has a deal on the net amount, they will sometimes ask for limits on the expenses. For example, artists who decide to go on the road and charter jets, throw parties in every city, put inflatable pools in their suites etc. can easily eat up the net while having a great time. Managers don’t usually enjoy these parties as much as the artist. Thus the manager’s agreement might be that the manager is paid on the net touring proceeds, but that the expenses of the tour cant exceed a negotiated percentage of the gross.
Another variation is that the manager gets a percentage of the gross, but it is capped out at 50% of the net. In other words, the manager will never make more than the artist actually puts in their pocket. For Example, if you gross $1,000 and have $800 in expenses, your net is $200. If the manager got 15% of the gross, they would earn $150. Under this agreement, the maximum would be 50% of the net (50% of $200, or $100), so the manager gets $100 and the artist gets $100. However if you are in a group, you all have to share the artist’s 50% of the net, which means the manager makes more than any band member.
Deductions:
Certain monies are deducted before computing the manager’s percentage, even when a manager is paid on the gross. Most managers don’t take commissions on these but it is a good idea to spell things out to avoid any misunderstandings.
1) Recording Cost – If the record company pays you monies and you spend them on recording costs, you should not pay a commission. This is because the funds only pass through your hands and thus aren’t really earnings.
2) Monies paid to producer – The reasoning is the same as recording costs.
3) Tour support – this is money paid by a record company to offset your losses from touring.
4) Costs of collection – If you have to sue someone in order to get paid, the costs of suing them should be deducted before applying the manager’s percentage. For example, if a promoter stiffs you for $5,000 and it costs you $1,000 in legal fees and court cost to collect. The manager’s commission should be calculated on $4,000.
5) Sound and lights – It is common in personal appearance contracts for the artist to supply his or her own sound system and stage lighting. The promoter then rents the sound and lights from the artist for a specified dollar amount. Customarily, the rent money is considered and expense reimbursement opposed to a fee paid to the artist.
6) Opening acts – Your deal for a personal appearance may also include monies that you pay to an opening act. Again as this money only passes through your hands, it shouldn’t be commissionable.
Compensation –
The Manager’s Percentage:
You should try to limit the percentage to 15%, although some managers argue that the risk of taking on a new artist is worth 20%. They say it will be years before they will actually get paid for a lot of the work that they will do. A compromise is to say the manager gets 15%, which escalates to 20% when you earn a certain dollar amount (such as 15% of the first 2 million and 20% of the excess).
Sometimes managers share in the net of an artist’s earnings rather than the gross. This is much better for the artist – for starters the manager wont get paid if the artist loses money, which is not the case in gross deals.
When a manager has a deal on the net amount, they will sometimes ask for limits on the expenses. For example, artists who decide to go on the road and charter jets, throw parties in every city, put inflatable pools in their suites etc. can easily eat up the net while having a great time. Managers don’t usually enjoy these parties as much as the artist. Thus the manager’s agreement might be that the manager is paid on the net touring proceeds, but that the expenses of the tour cant exceed a negotiated percentage of the gross.
Another variation is that the manager gets a percentage of the gross, but it is capped out at 50% of the net. In other words, the manager will never make more than the artist actually puts in their pocket. For Example, if you gross $1,000 and have $800 in expenses, your net is $200. If the manager got 15% of the gross, they would earn $150. Under this agreement, the maximum would be 50% of the net (50% of $200, or $100), so the manager gets $100 and the artist gets $100. However if you are in a group, you all have to share the artist’s 50% of the net, which means the manager makes more than any band member.
Deductions:
Certain monies are deducted before computing the manager’s percentage, even when a manager is paid on the gross. Most managers don’t take commissions on these but it is a good idea to spell things out to avoid any misunderstandings.
1) Recording Cost – If the record company pays you monies and you spend them on recording costs, you should not pay a commission. This is because the funds only pass through your hands and thus aren’t really earnings.
2) Monies paid to producer – The reasoning is the same as recording costs.
3) Tour support – this is money paid by a record company to offset your losses from touring.
4) Costs of collection – If you have to sue someone in order to get paid, the costs of suing them should be deducted before applying the manager’s percentage. For example, if a promoter stiffs you for $5,000 and it costs you $1,000 in legal fees and court cost to collect. The manager’s commission should be calculated on $4,000.
5) Sound and lights – It is common in personal appearance contracts for the artist to supply his or her own sound system and stage lighting. The promoter then rents the sound and lights from the artist for a specified dollar amount. Customarily, the rent money is considered and expense reimbursement opposed to a fee paid to the artist.
6) Opening acts – Your deal for a personal appearance may also include monies that you pay to an opening act. Again as this money only passes through your hands, it shouldn’t be commissionable.
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Comment #1 (Posted by Nick)
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what is it a manager does to earn that healthy slice of profits?
