Management Agreements: Getting the Artist-Manager Relationship Right
An artist's career is rarely built alone, and the manager who helps shape it usually does so under a management agreement. This is the written or verbal contract that records what each side can expect from the other – from the manager's authority and remuneration through to how, and when, the relationship can come to an end.
There is no dedicated piece of legislation governing artist management, so these agreements sit within ordinary contract law. One principle the courts do apply closely, however, is the doctrine of restraint of trade. New and emerging artists often have far less bargaining power than the managers they sign with. Difficulties can arise where an agreement is heavily one-sided for example, where it contains an excessive commission rate, an open-ended term, or commission that runs on indefinitely after the relationship ends, such terms are not favourable or fair for the artist. This can lead to disputes between the manager and the artist down the line that may need to be settled through litigation, which is a very costly and time-consuming process. Taking independent legal advice before signing, and making sure the terms are reasonable on both sides, goes a long way towards avoiding that outcome.
Where nothing is agreed in writing, i.e. a contract created verbally or by a handshake (which is still a potentially legally binding contract), misunderstandings creep in easily: over what a manager is entitled to charge for, whether they can commit the artist to third-party deals, or what happens to ongoing income once the relationship breaks down. These issues are rarely simple to untangle after the fact, and can be just as damaging to a manager's business as to an artist's career.
A management agreement will typically need to address the following:
1. Length of Appointment and Exclusivity
Most agreements begin with a fixed initial term, sometimes extended if the manager hits a specific milestone such as securing a record or publishing deal, before settling into an ongoing arrangement that either side can end on notice. Most artists and managers prefer to start off with a trial period of 3-6 months, a time in which they can learn more about one another and determine if the working relationship truly has legs. The formal written agreement should also confirm whether the appointment is exclusive, and over what territory – usually worldwide, given how international the industry has become.
2. How Commission Is Calculated
Commission is usually the part of the formal written agreement that gets the most attention, and rightly so. Beyond the headline percentage, which is usually 20% in the UK, such agreement should set out exactly what income it applies to and what falls outside it – recording and video costs, tour support, VAT, and sums paid to independent promoters are common exclusions. Live performance income is also often commissioned net rather than gross, once direct costs have been deducted.
3. Commission After the Relationship Ends
Some managers will seek the right to keep earning commission for a period after the term of the formal written agreement finishes, reflecting deals put in place while they were still acting for the artist, often referred to as the “sunset period”. These arrangements usually step down gradually – a higher rate for the first few years, tapering to nothing after a set point (typically 5 years at full rate and another 5 years at half rate) – giving the manager a fair return on work already done, while giving the artist a clear date after which their earnings are entirely their own.
4. Expenses, Income and Accounting
The written agreement should explain how a manager's expenses are handled, including any threshold above which the artist's approval is needed, and how the artist's income is collected and recorded. Many artists appoint a specialist accountant (i.e. with experience of the music industry), once their earnings justify it, and managers will usually request an audit right to inspect the accounts and records related to the artist’s books to confirm the correct commission has been paid.
5. Bringing the Agreement to an End
Both sides should know exactly when they can walk away – whether that arises because they are no longer on the same page, or if it is for unremedied breach, insolvency, or serious misconduct – and what notice, if any, applies. Given the restraint of trade principles mentioned above, it is sensible practice to record that the artist took independent legal advice before signing. An agreement that has been properly explained and negotiated is far less likely to unravel, or be challenged, later on.
Put together well, a written management agreement does far more than fix a commission rate. It gives an artist confidence that their career, income and reputation are being looked after on agreed terms, and gives a manager the security to invest their time, contacts and expertise without worrying the arrangement could unravel. Getting it right at the outset benefits both sides for as long as the relationship lasts.
This article is intended as general guidance only and does not constitute legal advice. We would encourage you to contact us to discuss the options available to you.