The earliest phase of the artist-manager relationship is one of development. This period includes the development of talent, development of communication patterns, development of business systems, and—most of all—the development of a solid overall artist-manager relationship. Usually, the artist and manager are getting to know one another, what each other’s strengths and weaknesses are, and how they work together.

Our industry has changed dramatically in the last decade due to a number of factors that have converged at the time of this book, resulting in an even greater need for a management team that can work closely with an artist to develop and implement a solid career plan. The first of these factors is the availability of technology that allows the production of high-quality recordings of music at a relatively low cost. In addition, technology has been developed that allows these music recordings and the artist’s image to be distributed worldwide to the public immediately.

At the same time, what we used to refer to as “the record business” has evolved (and continues to evolve) into a much broader multimedia entertainment business in which the role of the major, well-funded record labels is primarily to distribute and market talent that has already been “pre-developed.” The combination is a double-edged sword because, on one hand, an artist can naturally and organically develop into the musician of his or her choice. On the other hand, the experience and guidance of the development process that used to be one of the most important and creative roles of major record labels is almost extinct. The days of A&R executives and talent scouts discovering and signing large numbers of unknown artists, songwriters, and garage bands in the infancy of their careers on a hunch that they have pure talent, and then nurturing those artists into fruition, are just about gone.

Most young artists are inexperienced at developing their talent, so often they lack the luxury to step back and be objective about the time it takes and the incremental benchmarks to look for as they hone their skills. In addition, while an artist nurtures their talent, they need to develop a relationship with the industry as well as find an audience. It has been my observation that these duties and responsibilities fall squarely on the shoulders of the personal manager much more now than ever before.

During this critical phase, the manager’s primary role is to identify the artist’s talents, objectively evaluate them, and then assist in the artist’s development of those talents in a logical order and pace. This also works on the other side of the relationship, as well. An artist should use this time to pay particular attention to the strengths and weaknesses of the manager. Is the manager good with people or abrasive? Do they have good organization skills? Are you motivated to work, and will others be motivated to work for you because of this manager? Is this manager honest? Do they share responsibilities with you or do they try to control you?

At this early stage, some managers will demand the execution of an exclusive contract prior to taking any actions at all on behalf of an artist. In my experience, there is no particular profile of a manager who will ask for the signature on the dotted line this early in the relationship. I’ve seen managers with no experience at all want to secure their arrangement for fear of being left out of a deal, as well as big-time experienced managers who want the deal closed early in the relationship because they believe that the artist needs their experience and phone book of connections. The timing of when to sign an exclusive management contract will be discussed later in this chapter, but be aware that you may be faced with making the decision pretty early on. I usually advise artist clients to err on the side of caution and put off the “early decision” until the relationship seasons to a point of comfort on both sides. In most cases, if you, as an artist, continue to develop and grow, the manager will not abandon the relationship.

The way the development stage unfolds largely depends on the level of your talent and career at the time you meet the manager. For example, a 30-year-old musician with a catalog of published songs, seasoned by years of gigs and studio session work, requires a lot less hand-holding than a very talented 14-year-old novice musician with little or no experience who needs to grow up as a teenager/young adult as well as an artist. Sometimes managers are very actively involved in the development process, suggesting schooling and coaches, assembling musicians, producers, and co-writers for you to work with, and overseeing the creation, development, and coordination of every facet and person involved with your entire act. This “dream team” approach proved extremely effective with the development of the classic Motown artists in the 1960s and has been replicated on reality television shows that depict a “boot camp” approach to artist development.

Other managers take a more hands-off approach to artist development, allowing you to develop at your own pace. For example, The Beatles did a great deal of their growing up, both artistically and personally, in a crucial development year prior to meeting their legendary manager, Brian Epstein. During this time, the group traveled between England and Germany, playing several sets a night several nights a week at clubs. The group really didn’t need to have a manager watching them develop from day to day as they grew into the people, performers, and songwriters that the world eventually came to know. It is my opinion that the fact that they didn’t have someone to chaperone them as young men looking for adventure and keep them out of trouble is probably a major reason that they developed as quickly as they did as artists and as people.

You need to decide what works best for you when it comes to development. If it is important for you to work with someone who has the professional objectivity to provide you with feedback, motivation, direction, and organization, let the manager know that you want and need their input. If you are independent, self-motivated, have good practice habits, and can objectively evaluate yourself, then let the manager know that a hands-off approach is best, and that they need only check in with you periodically. What is crucially important during this phase is for the artist and manager to agree upon a relatively objective level of competency for the artist to reach before the artist is to be introduced to the rest of the industry.

The subjective nature of the development phase of the artist-manager relationship makes the legal issues involved difficult to reduce to an objective form. While it is possible to find the right words to draft a contract, the interpretation of those words can be wide open. After all, how much coaching and encouragement are too little or too much? Can an artist nullify a contract because the manager didn’t supervise rehearsals? Can a manager claim a breach of contract because the artist isn’t practicing according to a given schedule? As you can see, the relationship and communication between the parties are going to be key in interpreting how the parties’ agreements with each other are interpreted.

How and how much to pay an artist manager are two of the greatest questions in the music industry. News stories of unsavory managers making off with millions of dollars from successful artists often make inexperienced artists extremely wary of would-be managers asking for a piece of the pie. Fortunately, compensation to managers is also completely negotiable, so with some creativity and business acumen, the parties involved can hopefully come up with a fair and realistic result.

One form of payment to a manager can be to pay them to provide management duties on an hourly basis. Artist and manager just need to negotiate a fair hourly fee, how often the billing will occur, and to clearly define what duties and activities can be billed to the artist. A variation on this compensation would be to hire the manager on a retainer basis. In this scenario, the manager is hired for a set fee (usually weekly or monthly) with minimum expectations for what the manager is supposed to accomplish within a particular time frame.

Most often, managers are paid from the artist’s entertainment business earnings. The percentage that the manager is paid is referred to as a manager’s commission. This is a very fair and logical payment arrangement when you think about it. The artist wants to create and/or increase income from the entertainment industry, and the manager’s job is to guide the artist in how to earn that income. If they both do their jobs correctly, the manager is paid from the earnings that they and the artist generated from their work together. Three major points are to be discussed when paying a manager on a percentage basis: How much should the percentage be? How do the parties define the artist’s income on which the percentage will be based? How long does the manager get to collect this commission?

The amount of the management commission varies widely. Some managers donate their time and efforts with no expectation of return simply because they want artist to succeed; others have earned up to a reported 50 percent of the artist’s gross income. The common figures I’ve seen in the industry are from 10 to 20 percent of the gross income of the artist. When arriving at a figure, consider the number of people involved in the act (an eight-person group paying a manager 20 percent of its gross ends up rewarding the manager more than any single person in the group earns); whether the act is already earning money in the business (why should a manager be rewarded by commissioning the first $100,000 of your income if you already have been earning that amount without the manager?); and whether the manager is devoting all of their time to your act.

Determining the basis of the management commission can also be tricky. Most managers want to base their commission on gross receipts, meaning every dollar earned by an act is subject to the management commission. On one hand, basing the commission on the gross makes the calculations easier and can serve to prevent “creative accounting” on the artist’s side to deny the manager hard-earned money. On the other hand, artists sometimes have high overhead such as touring expenses, recording expenses, and similar costs, so why should the manager be paid based on money that the artist wouldn’t receive anyway? One way to address this issue is to pay the manager on a net basis. Calculating a “net commission base” is accomplished by reducing the gross receipts by certain agreed costs (for example, touring costs or record production costs) that the artist incurs in the course of doing business. For the parties to calculate a fair net basis for commissions, they both have to be familiar with the reasonable business costs of the artist. A record producer has very different costs than a performing artist, and they both have very different costs than a session singer or player. Once again, good communication and a certain level of industry knowledge on both sides will assist in coming to a fair commission base.

The last component of the management commission is how long the commission will be paid. On the management side, the logic is that participation should last forever for any products created or deals structured during the time that the manager worked for the artist. Many managers feel this is fair because the hard work and connections that created the opportunity for those products and deals are valuable enough to be rewarded perpetually. Under such a commission structure, if the artist writes or records any songs during the term of the artist-management relationship, the manager participates in the exploitation of those works well beyond the term of the relationship. Artists and their representatives often argue that managers should participate only for the period of time that they are directly involved with the artist; thus, when the relationship ends, the right to commissions ends, as well. A sunset clause is a contractual concept often employed as a compromise to these two very different payment structures. This type of arrangement provides for a diminishing commission to the manager after the contract term ends (for example, from 15 percent to 10 percent to 5 percent in consecutive years).

As you can see, valuation of the combination of a manager’s skill, contacts, commitment, and overall importance to a musician’s career is not an easy calculation. However, by working together to develop a well-thought-out and realistic plan using real numbers to project an artist’s potential earnings, the basic terms for a fair financial reward can be crafted for a manager who can effectively deliver what the artist needs to make a successful career.

After development, the artist’s initial demo is one of the manager’s most important tools to introduce the artist to the industry and the public. The manager’s primary role during this phase of an artist’s career is to help the artist identify which business opportunities should be pursued and then tailor the artist’s package accordingly. Traditionally, on the music side of the entertainment business, an artist who was seeking a record contract in the past would put together a package most commonly consisting of a three- to four-song demonstration in the form of a non-commercial recording in the current industry standard medium (known as the “artist demo”), a photo that presents an idea of the artist’s image, and biographical material. Because of industry access to artists via the Internet—particularly through entertainment sites that include self-made videos and social networking sites—a video presentation, now known as an Electronic Press Kit (EPK), is an essential part of the manager’s promotions arsenal.

Many artists prefer to release a Master Recording for sale to the public to use as a demonstration. This is a major decision that the artist and manager need to discuss in detail from many points of view—including whether or not the artist or the manager is ready to physically, artistically, financially, or emotionally devote the time and effort to run an independent label when all they really want to do is have a demonstration package to show to people. A more complete discussion of what to consider when making an independent label release can be found in Chapter 10.

If an artist is pursuing multiple career ventures such as a combination of singing, acting, and songwriting, the manager needs to monitor the development of all of these talents objectively and decide with the artist how to present these talents. This may require going back to the previous stage of development. As an example, if an artist is highly developed as a performing artist but doesn’t have a lot of recording experience, the demo may highlight a DVD or videotape and concert reviews along with the audio CD in order to show off the artist’s immediate strengths. If highlighting your skills as a songwriter is a major consideration in the kind of deal you and your manager are seeking, it would be a good idea to have more originals than cover songs on the demo.

In my experience, the expense of creating the package sometimes becomes a major strain in the artist-manager relationship. I’ve seen a wide range of opinions on this touchy subject. On one hand, a number of artists and managers feel that it is part of the manager’s responsibility to bankroll the demo package. On the other hand, some feel that the financial responsibility rests solely on the artist. Whatever the result may be to the issue of who pays for the demo package, it is the manager’s responsibility to take the resources available to the artist—including such things as available cash, credit, studio, photographer, and musician relationships—and assist the artist in making the right relationships and deals that result in a package that can get an artist’s point across effectively. This may require negotiating deferred payments or speculation deals, pulling in favors, and emotionally supporting the artist to take more time or curtail his other spending in order to invest in his own project. Any agreements made in connection with the development of demos should include who is responsible for any payment, what the amounts of any payment may be, when the payments are due (including very specific “triggering events” for speculation agreements, what credits are to be included on any demos, and what the limits of the performances or services on the demos may be used for. In addition, if the manager loans the artist money toward developing the package or invests any money into the artist’s package and expects to get the investment back above and beyond the eventual commissions, the parties must map out a clear agreement of their understanding.

Demo package in hand, the manager moves on to their next responsibility: selling, or shopping, you to the industry and finding the opportunity that hopefully results in your break into the entertainment industry. To help in the shopping process, the manager may enlist the aid of other industry professionals, including entertainment lawyers, agents, and industry executives, who can assist in keeping the momentum of this shopping period going and, with any luck, getting a quick result. These third parties usually work for a fee, which can either be a flat “finder’s fee” if and when a contact should pan out or a percentage of artist advances or royalties. It is the duty of the manager together with the artist and the artist’s lawyer to negotiate these fees, which is a huge responsibility for an inexperienced manager. On one hand, the manager has a vested interest in retaining as much income as possible for the artist in the form of advances and future artist royalties, which also results in a higher management commission. On the other hand, to get the desired deal for the artist, the manager may find it necessary to share the wealth with others. It is crucial that both artist and manager are very clear and candid about how the eventual pie is split up when making deals at this juncture.

During the shopping period, the artist should support the manager’s efforts as much as possible. This means continuing talent development, gigging, organizing showcases at a moment’s notice, making themselves available for networking events and meetings, and generally giving the manager something to talk to the industry about. The initial promotion phase should come to an end when the manager and artist close a deal that results in the artist’s first major opportunity. This deal can take a variety of forms, including an exclusive record contract, a publishing agreement, a part in a major theatrical production, recording session opportunities, or an extended road gig.

I should note here that industry promotion is distinct from promotion of the artist to the public. The manager should develop and implement a plan for promotion to the public in tandem with their promotion of the artist to the industry. The manager’s role is important in public promotion both before and after the “big break” comes. These days, grassroots opinions weigh heavily on whether or not the industry will be interested in making a long-term investment in an artist. Of course, once the artist is in the limelight (for example, when his records begin selling), a completely new and important phase of promotion kicks in: the selling of the artist’s image and products to an even wider public. The manager needs to be very involved in this process and work closely with other professionals such as record label promotions people and publicists to market the artist effectively.

The initial promotion phase of the artist-manager relationship is often the key “deal point” in an artist-manager contract because the first major industry opportunity is an objective, identifiable, and crucial result that both parties want and need in order for them to move forward together. When drafting contracts, the parties may consider basing future options on having a third-party deal in place. In other words, if the manager can’t deliver a record deal, publishing deal, or other major opportunity to the artist, then the parties no longer have any obligations to each other. To protect the interest of the manager, the parties should consider how to compensate the manager and how to give them the opportunity to stay involved in your career if they do all of the work leading up to a third-party deal but simply runs out of time before finalizing it. Here is a scenario that can tragically affect both artist and manager: Suppose that the manager has a mandatory “sign or leave” clause deadline in his contract with an artist. If that deadline is looming, the manager might advise the artist to take just any deal that comes along—no matter how bad the terms may be—simply to meet that signing deadline and preserve the management contract. Flexibility, communication, and fairness are key in determining how to handle this type of situation.

When this initial opportunity comes to fruition, is the manager’s work over? Absolutely not. It’s just beginning. After the initial opportunity comes, it is usually the duty of the manager to add the shared accomplishment to the artist’s resume and start all over again, trying to create and shop for the next opportunity. If done correctly and according to a well-conceived plan, the long range planning, industry promotions, and implementation of a series of these opportunities add up to a successful career in the industry for both the artist and manager.

Once an artist’s anchor opportunity is established, the manager really must go to work at expanding the artist’s earning power even further. I like to think of this expansion as taking place both vertically and horizontally.

By vertical expansion, I mean taking the anchor opportunity and maximizing the productivity for the artist. For example, if the artist is with a record label, the manager has to do the things necessary to make the artist a priority at the label. These could include working with the label promotions team, finding a booking agent and setting up tours, or getting press coverage above and beyond what the label’s publicity team gets. This is a crucial period, for the more work the manager does for the label, the more the label will do for the artist.

Simultaneously, the manager should help the artist expand horizontally, developing other talents and thus opening up other career opportunities. Many recording or performing artists have moved horizontally to song-writing for other artists, producing, acting, writing books, starting independent record labels, or pursuing management opportunities in the industry. A variety of new options open up once the artist’s foot is in the door. As with any other business, carefully planned diversification is a must when it comes to sustaining the artist’s career.

During this phase of expansion of an artist’s career, the manager—with the consent of the artist—usually assembles the rest of the management team. The team could include a lawyer, a publicist to handle press duties, an accountant, an agent, and other professionals. This is an important phase of the artist’s growth and the manager needs to be able to shift into this delegation phase while coordinating the team and keeping the artist’s career moving forward.

This last phase is one that, sadly, most artists and inexperienced managers forget to address. The ride ends. Time and time again, we see for ourselves or hear about an act well beyond its prime doing gigs or making one more try at a comeback, or living some obscure and financially strapped life, as the public asks, “Whatever happened to …?” These days, a recording artist’s career is considered a success on a major label if they release five albums during their tenure with the label, along with accompanying concert tours.

For a manager and artist, that means a 7- to 10-year period of making money in the industry to balance the early, lean years of development, and being in the limelight needs to segue into a combination of financial and personal stability in order for the artist to exit the industry with some semblance of dignity and emotional stability. It means that once the flow of money begins, it is wise to consult a good accountant and financial advisor to plan for the future. If the artist sustains popularity and financial success well beyond the norm, then great, but the public is fickle and demands new stars on a regular basis, so an exit/retirement plan is very important for a manager and artist to develop.

With the foregoing overview of the artist-management relationship and its life span as a backdrop, let’s take a look at some of the major points of discussion that are usually included in the negotiation of an artist management agreement. Of course, every individual and every relationship is different, so whether you are an artist considering a manager or visa versa, be sure to take the time to carefully review the Companion Questions at the end of the chapter to really get a clear picture of what you are willing to put into this relationship and what you expect to get out of this relationship. Both artist and manager are putting a great deal of trust in each other to move forward together in a highly speculative business; the decisions made for each and all of these individual components can be positively or negatively long-lasting for both parties.