In this training I’m going to talk about how managers get paid, how much they get paid, how much their artists need to make in order for them to earn a living, what to be careful of, and how to manage the financial risk of being a manager on commission.
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Firstly, I just need to say that standards vary by country or state or province or relationship. What I’m going to share with you are all the insights I’ve received from dealing with management negotiations myself, as well as working with and interviewing other managers over the past 7 years. There are so many kinds of agreements out there, so the best thing to do is take what you learn in this video to a LOCAL entertainment attorney, or at least an attorney within your country, to help you before you sign any financial agreements.
How Do Managers Get Paid?
Managers get paid a percentage of what the artist makes, unless you’re an assistant manager at a management company, in which case you’d likely be on a salary. I think more and more commonly, we’re starting to see management consultants get paid on a flat fee basis to coordinate things or “project manage” as some call it, but not to manage deals or strategies or business development activities. This video is about the common commission structure of a management partnership so let’s get into that.
What Percentage Do They Make?
The most common, or easiest gauging point for management percentage, at least in North America, is 15 to 20% of gross artist revenue. I personally don’t know of anyone who charges 15% of gross but I have heard through the industry that some people do. I personally hear of 20% more often.
Alternatively, some managers will do a percentage of NET revenue. Meaning they’ll get their percent AFTER a certain set of expenses are taken off. The most common expenses taken off are in relation to live performance. For example: 20% after flights or transportation costs have been removed, or 20% after agent fees have been removed.
When negotiating a NET deal, though, the tough part is figuring out what expenses are being taken off. I spent 7 months negotiating this exact scenario last year and then we never came to a conclusion and ended our partnership. The bottom line is that there are SO many different possibilities when it comes to negotiating management commissions and how much a manager will make. And that’s all a part of negotiating a business partnership.
How Much Does The Artist Need To Make For The Manager To Earn A living?
Let’s say you want to replace your full- time income from your day job. Let’s say your day job is paying you $50,000, which is the average salary in North America. At 20% GROSS of everything an artist makes (which is the best case scenario), your artist needs to be earning $250,000 per year, every single year. Or you need 2 artists that are earning $125,000 each per year. Or 3 artists earning over $80,000 each per year. And so on. The thing is, if you’re managing 3 artists you’re likely at your max for work load. Most managers can only directly manage up to 3 artists unless they have a strong team behind them, who are doing most of the work.
So, $50,000 won’t be cutting it for 3 artists, as you’ll likely have tons of expenses yourself and will need to hire assistance. Plus, if your agreement is any less than 20%, and there’s a strong chance it might be in some areas, than your artist needs to be making significantly more than that, or you need to have other sources of income aside from management even after you quit your day job.
Word of Caution
So… managers, is the artist you’re considering working with, or already working with, making enough money for you to earn enough commission to live? Or are you willing to invest the time for a longer-term payoff? Either way, it will be a long-term investment. It can take years to earn an income for your efforts, if ever. And I say ‘if ever’, because there are many reasons why the project may not work out.
Just like any investment made in any business opportunity, there are risks. It’s up to you to establish how risky it is in the first place, and it’s up to you to decide if you’re going to take the risk. You may not work with the artist long enough to see a return on your investment or your artist may decide to quit pursuing music professionally one day. This happened to my friend a couple weeks ago. Her artist decided to give up being an artist. It happens all the time. Or, on the flip side, they may simply not be good enough to “make it”.
Managing the Financial Risk as an Artist Manager on Commission
So at the same time, don’t put all your eggs in one basket.
- Keep your day job (or find a job) and manage on the side
- Provide management consulting and admin services
- Pick up consulting contracts working on projects you’re good at and manage on the side
- Try to get a job at an established artist management company and eventually bring on your own roster
- Or, if you do become a full-time manager and are solely running a business off of management commission, ensure you’re managing multiple artists in case one artist decides to quit or their career flops
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