Do you know the essential clauses in an artist management agreement? Here you go.
Influencers, musicians, and artists, especially those new to the creative world, need the guidance of a manager. The manager is the one who has a broader knowledge about how things run in the industry, which makes the new artists somehow dependent on them. In exchange, managers get something from the artists, typically cash, which is a portion of the artists’ sales. But what if both parties come into falling-outs? Then a written agreement can be the answer.
Although the written agreement is not a guarantee that there will be no conflict, it allows both parties to have a formal conversation on how to divide the money they will acquire in the future. Contracts for musicians also state all details of their relationship. In case of any disharmony in the future, the terms written in it will quickly sort things out democratically and professionally.
An essential part of a talent management contract is the clauses. These clauses can be beneficial to the artists, manager, or both. All parties must agree with it before submitting their signatures to finalize the deal. Read on to learn about the 5 essential clauses in an artist management agreement.
When it comes to compensation, a means for an artist to pay the manager is to provide them with a commission. Typically, this commission is equal to a particular percentage of funds they earned from revenue sources. For instance, such a percentage can be a set number regardless or increase depending on the artist’s funds.
For this element, it’s a must to define from the outset what is commissionable and what is otherwise. The reason for doing so is that there are specific revenue generators that parties may agree on that cannot get commissioned.
Time is one of the most essential clauses in an artist management agreement. Time refers to the period the agreement covers, which can be for a specified timeframe, such as a specific number of years. It may have extensions that can happen automatically or not, depending on the contract.
However, an extension cannot occur if one of the parties informs the other that the term should not extend by a particular time. In addition, there can be no extensions based on certain thresholds, which may be acquiring a specific income level. For instance, a term can be a year, extending to a second year if the artist has reached a certain income level in their first year.
Another significant element in an artist management deal is decision-making. For this clause, you might be wondering if you as an artist need to pre-approve anything or everything your manager does. Or you can also distinguish whether your manager can sign on your behalf, by a power of attorney, or if it requires your approval every time.
- Gross v. Net Receipts
All income generated or credited to the artist through any activity about entertainment – movies, film, television, music, shows, appearances, and even ads – are often referred to as gross receipts. ‘Net Receipts’ pertains to the artist’s “earnings” – essentially, ‘Gross Receipts’ less related expenses. Understand what each category entails and how they differ from one another.
Such terms must be defined in a well-written contract. A manager will demand to be paid based on ‘Gross Receipts’ (because they want their percent to come from a bigger pie). The manager’s commission should be based on Net Receipts, according to the artist.
- Sunset clauses
The “sunset” provision gets its name because it stipulates that the management will keep earning a commission from the artist’s earnings after the period has ended. Management wants this clause because they want to see a return on investment in the artist’s career – it can take years for an artist to “break,” but they “break” because of the manager’s hard work in the early years (or so the argument goes). Generally, during the sunset period, the area of commissionable activities will be more limited than during the Term. The commission rate will be noticeably lower and steadily fall as the years’ pass.
Engaging in an artist-manager relationship is not easy because disagreements are uncertain. There can be times that both parties will question one another’s actions and motives. Fortunately, there are lawyers for artists who can guarantee to make things easy for both parties.
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