Negotiating A Management Deal In Music: Do’s And Don’ts

Negotiating A Management Deal In MusicIn 2015, I received my first offer for management. It was a very exciting development, and I was looking forward to exploring this new aspect of my career… then I saw the contract.

What was in there surprised me and at times – even horrified me. I’m an independent musician, and my entire salary comes from music. So someone wants to waltz in and take 20% of my hard-earned cash? And more, 20% of my earnings even after we’re done working together?

It seemed crazy to me at the time. But the more I talked to people in the industry (other bands, managers, etc.),  the more I realized the contract I was looking at was very standard stuff. Over the course of several conversations, I learned why many of the troublesome clauses exist.

Now with a bit of perspective behind me, I have different feeling about these contracts, and can approach a management offer with a better idea of what I’m getting into.

Let me make one thing clear: I am not a lawyer. I am a musician who has done this a couple of times. Please don’t negotiate on your own. Get a lawyer.

Let me make another thing clear: you can negotiate. It’s easy to get wrapped up in the excitement of having an offer on the table, but you want to make sure you’re on the right end of the deal. So if there are things you want changed – change them.

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Two Kinds Of Management Contracts

The first management contract I saw was definitely a pro-manager contract. When you’re negotiating, you want to make a pro-management contract into a pro-artist contract.

So what does this mean for you? Here are a few things to keep an eye out for:

The Term For Your Management Deal

Often phrased in difficult-to-understand legal jargon, the term is usually the first and most important part of a contract.

The contract I was looking at offered an initial term of one year, and gave the management the opportunity to, at any time, extend the term for an additional two years. The initial term is equal to one year, or a full album cycle.

This is standard stuff. But here’s the rub: you want to make sure your manager is actually making you more successful. So what can you do?

Consider stipulating that the manager only has the right to extend the term if certain goals are reached. If you want a record deal and gross income of $100,000/year, make that a requirement.

The caveat here is that you want to be reasonable with these goals. If they are phrased right, management will surely agree, because they want to make money too!

Negotiating A Management Deal In Music – Commission

Commission is actually one of the easier things to understand. For indie bands, it’s standard to pay 20%. As the band grows, you should negotiate down towards 10%.

One thing to note: commission should be taken on gross earning after certain expenses. For example, money given by a label to an artist for recording or marketing should not be 20% of gross. If you were given $50,000 to record an album and used $30,000, the manager should take 20% of the the $20,000 left over. This means you would end up with $16,000.

Otherwise, the manager takes 20% of $50,000, and you’re left with $40,000 to record with. After you’ve spent $30,000 on recording, you’re only left with $10,000! A big difference.

The same things applies to touring, video production, etc. All reasonable expenses need to be deducted from gross before paying the manager.

Sunset Clauses In Music Management Deals – Heads-Up!

Negotiating a deal for a music managerThis caught me off guard. Way off guard. Here’s what I’m talking about, from an actual contract I was offered (the emphasis is my own):

  1. If within six (6) months after this Agreement terminates Artist accepts any offer similar or reasonably comparable to an offer made during the Term hereof from the same offeror (or a person directly connected with such offeror), Manager will be entitled to Manager’s Commission therefrom, and monies derived therefrom shall be deemed Gross Income for all purposes hereunder.
  2. Notwithstanding anything to the contrary contained herein, the Commission after the Term shall continue to be payable to Manager solely in connection with the following:
    1. recordings featuring Artist initially recorded or released during the Term;
    2. musical compositions written, co-written, composed, or co-composed by Artist during the Term; and
    3. any sponsorship or endorsement contracts and agreements entered into or substantially negotiated by Manager on Artist's behalf during the term hereof, and upon any and all extensions, modifications, renewals and substitution thereof; and upon any such resumption of such contracts, and agreements which may have been discontinued during the term hereof and resumed within one (1) year thereafter.

Alright, there are a lot of words in there. Let me say it in simple English: the manager will continue to collect money from you if you accept any offer similar to an offer that you accepted while you were working with them. This means gigs, advances, sync licenses, whatever.

This seemed ridiculous to me, but there is a reason behind it. The manager is protecting him or herself from the possibility of putting in a bunch of work on say, a big licensing deal, and having the artist fire them right before the deal is closed. Sunset clauses reward the manager for their hard work during their term.

However, an “off-the-shelf” pro-management deal is not going to specify how long these commissions apply. The only way these are fair is if the commission dwindles to nothing over time.

Something that we found totally unacceptable was the fact that anything written, co-written, or composed by us during our term would be subject to the manager’s commission after the term.

In other words, if we were writing a new album and then ended the management agreement, he/she would collect commission on the new album. We were going to remove that entirely.

Expensive Expenses

Your manager doesn’t want to, and shouldn’t have to pay out-of-pocket for expenses directly relating to your band. The problem is you need to define what direct expenses are. You should also include a clause stating that the Manager has to consult the Artist before spending more than, say, $150.

You may have to pay for or help pay for certain applicable business trips, and directly related expenses such as drinks for a record label or tickets to your show. However, you should never have to pay for office costs, telephone, etc.

Performance Obligations

While you probably should make an effort to play the shows your manager tell you to, you also want to make sure that you have some freedom to play where you want, when you want.

The reason this was important to us, is we do a lot of concert series and other “rootsy” gigs geared towards an older market. While not necessarily career-building, they made us a good chunk of our money each year, so we didn’t want to give them up.

Thankfully, the manager understood this, and made this portion of the contract very agreeable.

A Note Of Caution

Management agreements should be very specific to your situation and your band. Make sure that the contract is ultimately agreeable for both parties and do not let anything get left unresolved.

Last but not least, hire a lawyer. Your interests are best protected by someone who knows what they’re doing.

P.S. Remember though, none of what you've learned will matter if you don't know how to get your music out there and earn from it. Want to learn how to do that? Then get our free ‘5 Steps To Profitable Youtube Music Career' ebook emailed directly to you!

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