Survey passman chap_3

1. The Personal Manager
The Most Important Person On the Team

2. Role of the Personal Manager
 Helping with major business decisions:
◦ What label to sign with
◦ Whether or not to take a publishing deal
◦ How much to ask for
◦ Corporate sponsorships

3. Role of the Personal Manager
 Helping with the creative process:
◦ Selecting a record producer
◦ Deciding what songs to record
◦ Hiring band members
◦ Selecting photographers
◦ Helping to shape the artists image

4. Role of the Personal Manager
 Promoting the Artist
◦ Hyping the artist everywhere
◦ Coordinating publicity campaigns
◦ Looking for opportunities to further and
expand the artist’s career

5. Role of the Personal Manager
 Assembling and Heading the Team
◦ Introducing the artist to attorneys,
business managers, and agents
◦ Overseeing and coordinating their work
◦ Making sure to be a point of
communication between the other
professionals on the team

6. Role of the Personal Manager
 Coordinating Concert Tours
◦ Working with agent to finalize concert dates
◦ Working with agent to make best deals with
promoters
◦ Routing the tour
◦ Working with business manager on budgets
◦ Supervising tour managers and road crew so that
everything runs smoothly

7. Role of the Personal Manager
 Working with the Record Label
◦ Aggressively pursuing the maximum advertising
and marketing budgets for the artist’s records
◦ Hounding label for promotion of artist’s radio
singles
◦ Coordinating concert appearances with record
promotion events
◦ Being the artist’s representative and advocate with
the label

8. Role of the Personal Manager
 Being the professional contact for
the artist
◦ Field requests for personal endorsements,
interviews, personal appearances, and charities
◦ Filtering legitimate and beneficial requests from
an overwhelming volume of illegitimate and
nonbeneficial ones
◦ Being the first point of contact for the artist
◦ Being a buffer between the artist and the
outside world

9. Review: Role of the Personal Manager
 Helping with major business decisions
 Helping with creative process
 Promoting the artist’s career
 Assembling and heading the professional
team
 Coordinating concert tours
 Working with the record label

10. What’s In It For the Personal Manager?
So…

11. Personal Managers Commission
 Personal Managers typically make a
commission of between 15% and 20%
of an artist’s earnings, with the majority
getting 15%.
 For a solo artist, it pretty much means
15% of all that the artist makes from all
sources: concerts, merchandise, royalties,
publishing, etc.
 Percentages are usually based on GROSS
income, not net.

12. Difference between Gross and Net
 Gross is income before expenses
 Net is what’s left after expenses
 There can be a huge difference between
the two, especially when it comes to
touring
 In touring, 15% of gross means more
than you think…

13. Example of Gross vs. Net
Artists are lucky to take home 40% to 50%
of gross income (trust me, I know!).
That means (for a very successful solo artist):
Artist’s gross: $100,000.00
Artist’s net: $40,000.00
PM’s 15% gross commission: $15,000.00
That’s almost 40% of the artist’s net earnings!

14. A band is even worse!
For a member of a six-piece band, 15% of
gross is almost as much as any of the
members make (100/6 = 16.66%)
BUT – Personal Managers’ commissions are
“off the top”- paid before any monies are
divided out. So, you get 1/6th of the 85%
left after paying the manager.
So, what does that look like…

15. Tale of the Tape…
Band’s Net : $40,000.00
Divided by 6 = $6, 666.66
Manager’s share of gross: $15,000
Manager’s share of gross over twice the
amount of a band member’s share of the
net!
Oh, yeah - then come taxes. More on that later.

16. Negotiating the Manager’s Deal
 Because artists have found it
“uncomfortable” to pay their managers
more than they make, the typical “15% of
Gross” deal has softened in the last few
years.
 A few ways to tweak the deal:

17. Negotiating the Manager’s Deal
 All deals are subject to the bargaining
power of the parties involved. An artist
grossing $10 million/yr will have
managers coming out of the woodwork
and willing to make a deal.
 A new artist will have a hard time paying
the manager they want what the artist
wants to pay.

18. Negotiating the Manager’s Deal
 Reducing the percentage
Try to limit to 15%, not 20%
 An escalating scale:
Manager takes 15% until artist makes
over a certain dollar amount, then
20% after that.
De-escalating scale:
Manager makes 20% up to a certain level
then 15% after that.
What would be the advantages of each?

19. Negotiating the Manager’s Deal
 Obviously, 15% is better than 20% for the
artist - always.
 An escalating scale is better for the artist at
the outset, but better for the manager if the
artist is successful. Of course if the artist is
successful, the manager is doing their job.
 A de-escalating scale is better for the
manager up front, and better for the
successful artist in the long term.
Which would you want as an artist? Manager?

20. Negotiating the Manager’s Deal
 Sometimes, a manager will take a deal on the
net. This is much better for the artist.
The manager isn’t paid if artist loses money.
However, managers will sometimes ask for limits
on expenses. Lear jets, parties, champagne and
limos add up. Managers don’t enjoy these things
quite as much.
The deal might be to pay the manager on net
tour proceeds but limit expenses to a certain
negotiated percentage of the gross.
Sometimes, manager’s commission limited to
50% of artist’s net. Still bad for bands, though.
All members split the 50% of net; manager
makes more than any member.

21. Negotiating the Manager’s Deal
 Exclusions
 Sometimes possible to exclude certain
types of earnings
 Ex: Songwriters hiring a manager to help
them become a recording artist might
give the manager 15% of all earnings as
an artist, but only 10% or 5% or 0% for
monies earned as a songwriter
 In general, manager takes less
commission from the area where the
talent is already established.

22. Negotiating the Manager’s Deal
 Deductions
◦ Recording costs
◦ Money paid to a producer
◦ Co-writers
◦ Costs of collection
 For money you have to sue to get, the costs of
suing them is deducted from the commissionable
amount.
◦ Tour support:
 Money paid by record label to offset losses from
touring.

23. Negotiating the Manager’s Deal
 Deductions
 Sound and Lights
◦ Money paid to the artist to “rent” their sound
and lights isn’t commissioned.
◦ Opening Acts
 Monies paid to an artist for the purposes of paying
an opening act are not commissioned

24. Manager’s Deal: Term
 Typical term for a management
contract is 3 to 5 years.
 With options to extend
◦ Typical is 3 years with two options
 Artist wants it shorter, Manager
wants it longer
 This is how it’s done almost
exclusively in Nashville between
managers and country artists

25. Manager’s Deal: Term
 Lately, in Pop and Rock, term has
been geared toward album cycles;
not number of years.
◦ An album cycle is the period from the
beginning of recording an album to the end of
the touring and promotional activities
surrounding it.

26. Manager’s Deal: Term
 Manager’s term might expire in the
middle of an album cycle and they lose
out on commissions after doing most of
the work.
 Compromises:
◦ If artists doesn’t earn a minimum dollar
amount, artist can terminate the deal early
◦ Ex: A 3-album cycle deal could be terminated if
the artist doesn’t earn $200,000 over the first
album cycle.
◦ Manager might insist that earnings must
include offers artist didn’t take.

27. Manager’s Deal: Term
 Artist should insist that offers must be
similar to offers previously accepted.
 Album Sales:
◦ Deal could be tied to album sales
◦ Ex. If artist fails to sell X number of albums by
the end of the second album cycle, deal ends
◦ Sales figures should include physical CDs and
digital downloads of the album.
◦ What about digital singles? Some deals equate
10 digital singles to an album.

28. Terminating the Deal
 Written notice – a letter given from artist
to manager (or vice versa) saying “you’re
fired.”
 A shorter management deal that gets
renewed automatically if the artist
achieves certain earnings.
Ex. Term might be limited to one album
cycle, but if the artist earns at least
$200,000 the manager continues for one
more cycle.

29. Earnings After the Term
 Virtually every manager gets paid on monies
earned after the term if they were generated
under contracts that were entered into or
substantially negotiated during the term.
 Manager gets paid on records sold after the
term that were recorded during the term,
AND
 Manager gets paid on records recorded after
the term but under a contract signed during
the term.
 Not uncommon for manager to get paid 7, 10
or more years after finishing rendering
services.

30. Sunset Clauses
 “End of the day” for commissions.
 For example – on records:
◦ Manager gets paid only on records recorded
and released during the term - OR
◦ Manager gets half commission on records
recorded during the term but released
afterward.

31. Sunset Clauses
 On Publishing:
◦ Same as albums: only on songs recorded and
released during the term - OR
◦ Half commission on songs recorded during and
released after the term - OR
◦ Half commission on songs written during the
term but recorded after.

32. Sunset Clauses
 Final Cutoff:
A date after which all commissions end.
 3 to 5 years after the term; should never
be more than seven.
 Remember – artist has to hire a new
manager after the term. Imagine 15% to
2 managers (30%!). Crucial to limit or
eliminate commissions after the term.

33. Key Man Clause
 Many management contracts have a Key Man (or
Key Person) clause.
 A “Key Man” is a person named in a contract
whose absence or exit can terminate the deal.
 EX - If your key person leaves the management
company, you can terminate the deal.
 *Trick – company might not “fire” your key man;
might just “reassign” them to another artist in
order not to trigger the clause. Counter? –
include language that specifies direct
involvement with artist.

34. Double Commissions
 Management contracts are set up to
commission at the corporate level.
 Unless language is included to exclude
“double dipping,” manager could
commission at the corporate level and the
smaller individual level.

35. Power of Attorney
 Be careful of power of attorney clause
which gives the manager the right to sign
your name on contracts, hire and fire
representatives, and write and cash
checks on your account.
 Need to limit power of attorney
 Only documents that you’ve verbally
agreed to and can’t physically sign, and
short-term personal appearance contracts
should be included.

36. More management costs
 Many management contracts allow the
manager to recoup from the artist certain
expenses incurred while acting as their
manager.
 Travel, hotels, cars, food, phone, even
office supplies.
 Try to limit these as a “cost of doing
business.”

37. Exclusivity
 Management contract will say that the
artist deems the manager as the
exclusive personal manager.
 What does that mean?
 Artist can have only one personal manager.
 Managers, however, can represent more
than one artist (and usually do).

38. Picking the Right Manager
 What are your choices?
 Major manager with young associate that
is enthusiastic about the artist.
 Midsize manager who is very enthusiastic
about the artist.
 Big Time manager taking artist as a favor
 Young, inexperienced manager willing to
kill for the artist (figuratively, of course…)

39.  Choosing a manager is extremely
important and the single biggest decision
of an artist's career.
 It will help or haunt you for the rest of
your career, if not your life.
 Here’s an example of what can happen if
you trust anyone and everyone. Enjoy.
Flo and Eddie of the Turtles

40. Questions?