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by Kenny Kerner
Since I've spent a good portion of my 32-year music business
career in management, I thought I'd devote this TIPS column
to answering some of the most frequently asked questions dealing
with artists and personal managers.
How much do I pay a personal manager?
Personal managers receive payment in the form of a commission
of the gross income of the artists that they manage. They
usually get 15%-20%. Managers handling superstar acts will
sometimes get 10% because the artist's gross is in the millions.
Are there any things a manager should not commission?
Yes. Keeping in mind that a manager must only commission
income, money received by an artist to pay for the recording
of their CD is not income and not subject to commission. Nor
is money received to pay for a producer or a video or for
tour support. If the artist is putting that money into his
own pocket, it's income. If he's using it to pay for something
else, it's not. Monetary advances to bands are commissionable
even if the band decides to use the money to purchase equipment.
How do I limit how much money my manager gets when his
contract expires and he no longer represents me?
The time to take care of this problem is when you are first
negotiating your management contract and not after it's signed.
Hewre's a very common artist-manager scenario:
You sign a five year management contract and, after four
years, your manager is successful in getting you signed to
a record deal. Label negotiations take two months, rehearsals
and pre-production take two months, recording, mixing and
mastering take three months, and there's a two-month wait
for the album to be scheduled for release.
During this time, your manager's contract expires and you
sign on with a giant management firm. The record comes out
and, within six months, explodes to the tune of five million
sold! Your original manager, the man who hasn't worked for
you in almost a year, is legally entitled to his full 20%
management commission. And so is your new manager! This means
that you could now be paying 40% of your gross income to managers.
To avoid this, discuss the possibility of putting a "Sunset
Clause" into your management contract. This clause limits
the manager's income after his contract expires. For example,
you might mutually agree to pay your manager for five years
after the expiration of his contract, but the pay decreases
so that after the fifth year, he is no longer getting any
income.
You may decide to pay him his full 20% during the first year,
15% during years two and three, 10% during year four, 5% during
the fifth year and after that, nothing.
The Sunset Clause is fair to the manager because it continues
to pay him a commission during the years he is no longer involved.
It is also fair to the artist because that commission decreases
and eventually disappears. Keep two important things in mind:
Many managers will not allow a Sunset Clause in their contracts
and, the time to discuss this is during negotiations and not
after signing.
I've heard that an artist should always keep his publishing
and songwriter royalties and nobody can commission them. Is
that true?
No. A manager is entitled to commission every single area
of income—and that includes publishing, songwriting, merchandising,
record sales, live performances, paid endorsements and any
other income imaginable. Remember—that's the only way they
get paid!
Excerpted from the best-selling book "Going
Pro" written by Kenny Kerner and published by Hal Leonard.
You can order this book by calling 800-637-2852.
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