This Article Originally Published December 2001
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How do I limit how much money my manager gets when his contract expires and he no longer represents me?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!