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ecords. Some of the deductions are: recording costs of the records,
packaging, returns and reserves, discounted military sales, video costs, tour
support, promotional records and free goods. Please note: records on which
royalties are paid are quite different from deductions from gross royalties.
Joyce Sydnee Dollinger is an attorney admitted in New York and Florida.
She is also the Vice President of 2 Generations SPA Music Management,
Inc., and involved with 2generations.com and SPA R e c o rds, Inc. Contact:
w w w. s p a re c o rd s . c o m .
A R T I S T-MANAGEMENT CONTRACTS
by Richard P. Dieguez, Entertainment Lawyer
© 2009 All Rights Reserved. Used By Permission.
♦
Next to a record label deal, the artist management contract is the most
exciting agreement an artist will sign. As with any legal document, a
contract shouldn’t be signed without the advice of a music attorney. Let
your lawyer take the blame for “asking too much” or for being such a
“tough negotiator” that is what they are being paid to do. Here are the fine
points to negotiate:
• How long will the agreement be in eff e c t ?
• How much will the manager get paid during the agreement?
• How much will the manager get paid after the agreement has ended?
The art of negotiation
1. It is likely you and your manager are each likely to have a legitimate
d i fference of opinion as to the amount of time for which the contract
will be binding. Whatever the reason, you don’t want to get locked in
with a loser for the next seven years. On the flipside nothing can be
more frustrating for a manager than to have her budding artists go to
another manager, where they then make it to the big time.
2. Depending on the particular circumstances of the parties, the
negotiation will center on a contract term ranging from as short as six
months to as long as several years. What length of time is fair really
depends on what you and your manager are each bringing to the
relationship you wish to form. For example, let’s say that neither of
you has too much experience in the music business. In this situation,
you’re both probably better off with a short-term contract, (6-
12months) so that you can check each other out without getting
locked in. You can always enter into another agreement if it turns out,
at the end of the contract, that you have a future together.
The time and money equation
What happens if you can’t agree to a fixed amount of time? Well, to satisfy
both parties, the attorneys can always try to hammer out a compromise: a
short-term contract with the potential of being converted into a long-term
contract. For example, the parties could agree to a one-year contract. Part
of the agreement, however, would be that the manager must meet certain
conditions during this one-year period — such as getting you a record deal,
a publishing deal or even guaranteeing that you earn a minimum amount of
income. If the manager fails to meet the conditions, then the contract ends
when the year is up. If, however, the manager is successful in meeting the
conditions, then he has the right to automatically extend the contract for an
additional period of time, say for another year.
C o m m i s s i o n
The custom is for the manager to work on a commission. In other words,
the manager gets compensated for his efforts by taking a percentage of
whatever income you earn as an artist. Obviously, your attorney is going to
try to negotiate for as small a percentage as possible. You’ll argue that the
manager simply manages, and without your talent, there is nothing to sell
to the labels or to the publishers. The manager’s attorney is going to
negotiate for as high a commission as possible. Their position will be that
there is a lot of talent out there — especially in the major music centers
like California and New Yo r k .
Money talks
So what’s the range of the amount of the commission? It can generally be
anywhere from 10% to 25% of your gross income. The amount that is
settled on may very well depend on the circumstances. Again, the art of
compromise may bring new life to a negotiation that is at a deadlock on the
issue of the commission amount. Regardless of the particulars, the concept
here is that the lower percentage rate should be satisfactory to you, while
the manager is also given an incentive to make a bigger percentage if he
can get you to earn in excess of a certain amount of gross income. And, of
course, getting you over that amount, whether it’s $25,000.00 or whatever,
will be to your benefit as well.
The manager
Your manager will likely try to apply their commission to every
conceivable entertainment-related activity from which you could possibly
earn an income. Examples of such money-making activities would be live
performances, record sales and the sale of promotional merchandise such
as t-shirts, posters, buttons, programs and pictures. If you feel that the
commission rate the manager is asking for is too high, you can try to
compromise by proposing that you’ll accept the commission rate, but only
if certain activities are excluded from the commission.
After the contract ends
Another touchy subject is whether the commission on gross income earned
by the artist continues after the contract has ended. Your response will
probably be “of course not!” After all, once the contract is over, neither
party has any further obligation to the other. Once the contract is over,
there should be a clean break, but it is not always so clear- c u t
You may be fortunate enough to have signed some money-making
deals. As agreed, the manager gets his percentage and you keep the rest.
But it may be that your money-making contracts will still be in effect for
quite some time after your management contract has ended. Since you will
continue to profit from a deal he helped you obtain, the manager may feel
that he should also continue to profit even after the artist-manager
relationship legally ends.
When you get a new manager
If you enter into a contract with a new manager, that new manager will
probably be no different from your former manager on the question of
compensation. The new manager’s attorney will probably demand that the
commission apply to every conceivable entertainment- related activity from
which you could possibly earn an income. And this would include the
money pouring in from deals your former manager obtained! You wouldn’t
want to be stuck paying two commissions on the same money.
C o n c l u s i o n
There are many aspects of the artist management contract that will be
subject to negotiation. An issue may be made of as to who collects the
income: the manager, you or maybe a third party like a business manager
or accountant. Another traditional sticky point is the extent of the
m a n a g e r’s authority to sign contracts on your behalf. There may even be
some negotiating points that to you and the manager don’t seem crucial,
but to the attorneys seem to mean everything. The personal circumstances
surrounding any given artist management contract can be so unique, that
the art of compromise expands the parameters of the so-called “standard”
c o n t r a c t .
An NYU Law graduate, Richard P. Dieguez has over 16 years experience
in entertainment law. He has re p resented hundreds of clients across the
U.S. and several nations in music, film, television, publishing etc., Mr.
Dieguez is also the founder of The Circle, a monthly music industry
seminar held in New York City. Contact: www. R P D i e g u e z . c o m
The Indie Bible – 10 th Edition www.indiebible.com