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From ArtistsHouseMusic.com: http://www.artistshousemusic.org/
How managers get paid
First, you need to understand a bit about how managers make their money. Typically a manager will receive a commission—usually 15 to 20 percent—of all of the income that you generate (the gross). This includes money from gigs, money paid to you from a record label as a personal advance against royalties (typically, not from money advanced by a label for you to record your record), money from merchandise, income from your music being used in movies or commercials, and any other source of income you generate as an artist
The problem is that young or unestablished artists typically take quite a while to generate any revenue. Also, these artists typically don’t have any money of their own, so the management is left to spend their own money in order to develop the band before any money comes in. Managers … often defer their commission while spending their own money. They have no guarantee that they will ever recover their investment.
Good managers understand that new and developing artists are much like startup businesses. The first couple of years (or records) typically are money losers. The hope is that after the painful initial period has ended, there will be a financial reward that will recoup all the early losses and then some. This is why managers will fund an artist’s career at the early stages—and, in fact, sometimes well into an artist’s career.
It’s Money that Matters: Money is a significant factor in creating effective artist/manager relationships. The manager is spending money, hoping for a return on investment. Managers who have no money have a hard time being effective. There are always expenses involved in getting a band signed: recording costs, gas for the van, fan mailings, travel, guitar strings, and so on. It all adds up. Of course, management doesn’t have to pay for any or all of these things. But remember, they can’t make any money unless the band is making money, so they usually opt to pay for these things and others so that the band has a better chance of getting signed.
Even after you get signed, management is often the fountain of money. For instance, an artist and manager may determine that they need an independent publicist because they feel the label’s publicist (if it has one) can’t do an effective job due to workload, the label’s priority scheme, or whatever. The label is not obligated to pay for this (though often they do), and so the band and management are left to decide whether or not the potential added exposure they would get from a publicist is worth the out-of-pocket expense. Many times, in a situation such as this one, the band itself is not generating enough income to pay for something like this, so the management foots the bill. Theoretically, management will be reimbursed for these costs once the band does start generating some money. If neither the band nor the management can afford to pay, it really is the band that suffers.
In my opinion, it is better to have a manager who is passionate—and not a bozo—than one who is connected or financed but lacks passion, vision, or understanding of what your goals are as an artist. You will be working very closely with this person, and you need to be able to communicate easily and effectively together. Additionally, you need to trust that they will represent your artistic vision in a way that you are comfortable with. They will be your mouthpiece in many situations. Good managers aren’t easy to find…
Like everything else in the music business, the role of the artist manager is changing. In the good old days (you know, a year or so ago), artist managers largely concerned themselves with helping the artists with whom they worked get record deals, and then – post deal – acting as a liaison between the label and the band. This is, of course, a radical oversimplification, and certainly neither getting an artist a deal or working with a label is an easy job. However, this was, for at least the majority of artist managers, their role.
Today, for the vast majority of managers, their principal role is different. No longer should they be concerning themselves with getting their artists signed. Rather, they should concern themselves with developing and unlocking value for their bands; i.e. business development.
If, as I think you should, you view your band as something for which you must develop brand equity, it’s no longer about leveraging that brand equity into a record deal. Rather, it’s about leveraging the brand equity to create direct revenue streams, as well as strategic partnerships where you, again, create visibility (thus increasing brand equity) and revenue.
All those hours spent mailing things out to A&R people at labels, taking meetings with A&R people at labels, and, generally, thinking about A&R people at labels, and all those hours fighting with those at the label over marketing budgets, and everything else, now must be hours spent doing – for lack of a better phrase – “business development.”
This, again, brings us to the problem that has plagued the industry for far too long: most managers are completely unprepared to do business development. Most have no proper business training, and, through no fault of their own, will flail around in a market that punishes those without the requisite skills. Thus, most will fail. Some, on the other hand, will take the time to learn business fundamentals, and will change the paradigm.
Certainly, as stated above, there are a lot of generalities in this here post; many great artist managers have long thought of their role in terms of business development (I’m thinking specifically of people like REM’s Bertis Downs, Kristin Hersh’s Billy O’Connell, Phish’s John Paluska, Dirty Dozen’s Marc Allan, Whitesmith’s Emily White, and Dead Confederate’s Dawson Morris – certainly, there are many others; leave me a list in the comments). I do think, though, that most haven’t thought in these terms, and I fear that too many are still thinking in terms that revolve around getting their band signed – sort of the anti business development.
So…go on get educated, innovate, and start building something.
From Houston Chronicle: http://work.chron.com/percentage-band-manager-would-make-5710.html
There is no standard job description for a typical band manager, nor does the position exist in a corporate sense. Entrepreneurial in nature, self-employed in practice, a band manager is usually a business-savvy jack-of-all-trades. Depending on the profile of the band, the manager may be the leader of a support team, or he may be the entire team himself
Managers receive commissions of between 15 and 25 percent of the artist’s gross earnings, plus reimbursement for travel and other out-of-pocket expenses. According to M. William Krasilovsky et al. in “This Business of Music,” a respected textbook covering business aspects of the music industry, new bands often enlist a business-minded friend to book shows, negotiate with club owners, collect fees and arrange publicity, merchandise, travel arrangements, and other tasks to allow them to concentrate on the creative part of their careers. An independent manager dealing with all these duties for one band will usually receive 20 or 25 percent of the band’s gross.
In the vast majority of cases, the manager will be paid by way of commission. This recognises that the music business is a volatile one and that success is by no means guaranteed. The manager runs the risk of working hard but failing to achieve success with the artist, in which event the manager earns little or nothing. Conversely, if success is achieved the manager may be rewarded handsomely. The obvious benefit from the artist’s point of view is that the manager will not have to be paid unless there is some money to pay with.
Commission rates have crept up over the years. There are sound reasons for this. Historically, the manager was nicknamed “Mr 10%”. By the 1970′s the most usual rate of commission was 15%. Nowadays, managers invariably charge 20%. Sometimes a manager will charge 25% although this is rarely thought to be justifiable. …For these reasons, the rate of commission has increased to what is now generally 20%.
Generally, the manager will be entitled to his commission calculated at the agreed percentage rate upon all of the artist’s earnings from those activities which fall within the scope of the agreement to the extent that those activities are undertaken during the term of the management contract.
Because the success of the artist usually is measured in dollar amounts, the manager will take a percentage of what the artist makes. Without the manager, the band would not have as much income to distribute. It is typical for a manager to receive 10 to 20 percent of the artist’s gross income from all sources (e.g., recording, performing, songwriting, merchandise, etc.). The manager is helping to develop and exploit the artist’s talents in these categories and should be compensated for that work
From RapCoaltion.com: http://www.rapcoalition.org/what_is_a_manager.htm
A manager is someone who takes an interest in an artist’s career and invests his or her time and energy in helping the artist succeed. The duties of managers are rather ambiguous. They include counseling the artist as to all aspects of the entertainment industry including record companies, advertizing and merchandising. Overall, a manger is your link to the entertainment industry. He will advise you as to standard practices, reputations, etc.. Therefore, it is of the utmost importance to get a manager who knows what he is doing. Since the manager will be getting a percentage of your income, be sure you get what you pay for. Some managers will sign you up for a percentage of income and sit back and do very little and wait for the band to hit it on their own.
Most professional managers will present you with a contract to sign. Like any music contract, have someone who knows the industry look it over for you. There are generally accepted terms in manager’s contracts and there are people who try to take advantage of a band’s naivete. The best managers, i.e. professional, will hand you a fair contract. A fair contract is for a term of 3 years with an option period and 15-20% of the artists’ total income. A fair contract will also have escape clauses for the artist such as, “if manager fails to secure a record contract within one year, contract is void,” or “if artists’ gross income fails to reach $X in the second year, artist may terminate this contract.” A professional manager will agree to these type of provisions. An unscrupulous manager will take a large percentage, do little work, and not allow the artist to get out of the contract.
From HipHopPush.com: http://hiphoppush.com/the-role-of-an-artist-manager/
An Artist Manager’s Compensation
A manger usually takes 15-20% of the performance and commercial incomes. Again, this number can vary depending on how valuable you are as an artist and also the connections, resources, and networks of the manager. If you are an artist that has a little experience and is not fully developed as an artist yet the manager will want to charge you more of a percentage for his duties.
From IndieHipHop.net: http://www.indiehiphop.net/artist-management-when-do-you-need-it/
Many artists look for managers before developing anything to manage. The more developed you are as an artist, the better your chances are of attracting a good manager’s interest. There are however, some of the major misconceptions about artist managers and what they do. Here are a few
Mangers should (NOT) invest lots of money into the artist. It’s not a managers job to pay the costs for your recording projects, travel, or promotional material. While it’s not uncommon to find a manager thats willing to pay for the needs of an artist, they are not obligated to. Some managers feel that dropping cash to help their artists become successful is a worthy investment. Because this is not the manager’s role, he or she will usually make an agreement with the artist that this investment be repaid once the artist starts making money. This is outside of 15 to 20 percent commission managers already receive from the artist’s earnings.
Another misconception is that managers should have lots of experience in the music business. While this is definitely an asset, it’s much more important that you have a manager that’s willing to hustle hard for you and be ambitious about learning the parts of the business that he or she doesn’t know. Your manager should be someone you have a tremendous amount of trust in because they will play some part in every facet of your music career.
Managers are not publicists. Publicists handle your PR (public relations), expand you visibility and help develop a marketing strategy for you. Good managers will do some of this for you until you’re signed or able to afford a professional publicist. It a nutshell, good managers want to minimize the chaos that can surround an artist so they can concentrate as much as possible on their music.
From AvenantLaw.com: http://www.avenantlaw.com/10-tips-management2/
Artist’s duties: The artist too must perform their role reasonably and to their best potential. It is the manager’s reputation on the line here too, so if you cancel a gig suddenly for no good reason, perform badly because the group is drunk and continue to act without regard to the agreement, the manager could drop you. Managers will generally work very hard for an artist if they feel the artist is as committed to success as they are. A band cannot claim they are not receiving enough money if they turn down a lot of the ventures the manager brings to them. Sometimes, a contract will specify that the judgement of the performance of the manager must include the potential income from ventures and offers turned down by the band.
The Money: A manager is paid on a commission rate of usually around 15-20 % of your gross income. This percentage rate can vary, the manager will argue the risk of taking on a new band which may have a limited following and the extra investment required for launching the act to increase the percentage stake. These are valid considerations but artists should be very cautious of anything over 25%.