BUSINESS OF MUSIC
LECTURE – WEEK 7
Last Week
• We focussed on the marketing of music – a very broad and very
complex topic.
• It’s an area that confuses many people because, of course, there isn’t
a single common destination that all music marketers are seeking to
reach.
• The overwhelming outcome of that is that there is no “one-size-fits-all”
approach to music marketing.
• Artists, managers and record companies need to be aware of this
when designing an approach to marketing – because it is simply not
viable to utilise every type of artist marketing that is now available
This Week
• We move on to looking at the Law of Agency and in particular the
roles of agents and managers.
• The very nature of entertainment suggests that the
artists/performers/entertainers are generally skilled at creating the art
and providing the performance but the process of selling those
creative works and performances isn’t necessarily their strong area!
• But in many respects this doesn’t make the entertainment industry any
different to a lot of other businesses.
Law of Agency
• In fact when we discuss the law of agency we are talking about a
legal concept that applies across any situation where one person or
company has the authority to represent another person or company.
• For example – a real estate is simply a representative of a property
owner with respect to either selling or renting a property or a sales
agent is someone authorised to seel products or services on behalf of
the manufacturer of those products or provider of those services
• What tends to differentiate artist management from, say, a travel
agent, is that the artist is likely to be a person who has their own
creative, personal and professional agenda’s and ambitions and
hence is likely to be seeking services that cannot be determined by a
formula or a template approach.
Agents v Managers
• The law of agency doesn’t just cover agents as we know the term – it
also covers managers who are the artists representative.
• And like all situations under the law of agency the most important
thing is to establish the extent (and any limitations) to which the agent
can bind the principal.
• You will see, for example, that some managers only have
management rights for a limited scope of activity within their area of
expertise.
• Or there may be limitations to to the territory where the services may
be provided.
Legal duties of Agency
• Under the Law of Agency every agent is bound by the same
protocols regardless of the industry;
§ Duty to follow the principals instructions
§ Duty to act in person
§ Duty to act in good faith
§ Duty to make full disclosure of any personal interest
§ Duty not to make a secret profit
§ Duty to exercise reasonable care and skill
Legal duties of Agency
• “Don't be afraid to admit you don't know the answer and ask
the question. You have responsibilities to other people. That
was my mantra when I was starting out, that I was never
going to f*$# up because I’m too proud to ask a question. If
you f$%# up your own business, that’s fine, it’s yours. If you
f*$@ up your artist’s career, that’s a big problem to be
responsible for.”
• Rae Harvey – Former Manager – The Living End
Management as a Service
• Management is – like most other roles in the music business – a service
business.
• What differentiates management though is that the extent or the service and
what it entails seems to vary between manager and manager, client and
client.
• There is probably very few managers that are expert in every role that they
perform – they are not as good with law as a lawyer, they are not as good
with the media as a publicist, they are not as expert in touring as the agent.
• Yet in a contract the manager is almost always expected to do all of these
things.
• This can present an issue for both the manager and artist as the Artist’s career
evolves and it’s possible the manager’s skillset does not evolve as quickly
Management as a Service
• Essentially though the role of the manager is to be a coordinator for all the
other service providers in the artist’s career.
• There are a couple of analogies that can be used to describe the role of the
manager – one is that they are like ringmasters who keep the show running
but directing the spotlight on different aspects of the artists career when
needed.
• Another analogy is that of the plate spinner who tries to keep a number of
plates spinning at once and constantly has to keep going back and forth as
they start losing momentum.
AGENT
LABEL
PUBLISHER
PUBLICIST
DIGITAL MARKETER
MERCHANDISER
PROMOTER
CREW & TOUR
MANAGER
LAWYER &
ACCOUNTANT
CREATIVE SERVICES
JOHN WATSON’S HUB & WHEEL
ANALOGY
Artist
and
Manager
PUBLISHER
Management as a Service
• “In the past 10 years it has changed totally. When I started in
management in around 2006, it was at the end of the management
heyday. Label’s and publishers and everyone else were starting to
cotton on to the fact that management was actually quite a free
deal. Managers took their percentage of the artist’s income and their
job was really to be a conduit between all the different parties
involved in releasing an album and continue to build an artist’s career”
Cath Haridy - Artist Manager
Management as a Service
• “There really wasn’t a need for the manager to go in and get hands
on with the marketing plan or to physically go out to media with the
album or try and source deals or employ teams to co-ordinate a
complete strategy. Now that’s what a manager has to do. A manager
is everything to the artist and more, and the broader the skill base that
person has and the more life experience that person has the better
they will be. The 15 or 20 percent that you earn from an artist is
probably no longer accurately reflective of the work that a manager
will put into an artist of a three to five year period”
Cath Haridy – Artist Manager
Management Business Structure
• Before we look at the contract between the artist and the manager
we also need to consider the way the manager might structure their
business.
• Traditionally we have always thought of the manager as a lone wolf
who has a direct relationship with the artist.
• Increasingly though managers are operating within larger
organisations.
• This is perhaps indicative of an increasing move towards
corporatization or professionalism across the business of artist
management.
Management Business Structure
• There are examples of companies in the US like Red Light
Management where up to 70+ managers all operate under a
corporate banner providing each other with power, contacts and
infrastructure support in return for a slice of their commission.
• In Australian that is starting to happen with companies like Unfd and
Mushroom
• Artists need to consider whether that structure suits them because it
encourages managers to take on more artists.
• When this happens the artist can begin to feel like “a number:” – a
common problem with any service business that experiences growth.
Management Business Structure
• Other managers prefer to operate in pairs or as teams – the likes of
Winterman Goldstein in Sydney had three managers all of whom
manage all of their artists jointly.
• For artists one of the key things to realise is that any manager is only
useful to them if the manager is able to keep their doors open and
make a living.
• That often means that managers need to supplement their income
from other activities or other artists.
• Again – that creates a complication – a small manager may need to
maintain a ”day job” but obviously the artist would prefer to have a
full-time manager committed to propelling the artist’s career.
Management Business Structure
• The late Michael Gudinski commented about management:
• “Now you are managing a group of rights. Now you have a very
boutique type of manager or you can be owned by a corporation or
you have to manage a lot of acts. These days acts don’t play 50
weeks of the year like they used to, so for a lot of time the manager
doesn’t see any income, but the acts still expect a lot from their
manager”
Management Business Structure
• Managers essentially don’t own anything other than a relationship.
• If you operate a restaurant and building up a great relationship with your
diners, then its that “goodwill” that will help you sell the business when you
think its time to move on.
• That’s far more difficult to do with a management business – largely
because it’s a personal services business with the emphasis on “personal”
• As we will see later managers can often continue to receive income after
the term of their management has expired in certain limited circumstances
but other than that they usually don’t have any “ownership” of the artist
career.
• This has led many managers to form labels or publishing companies as they
realise that this is where the copyrights reside – it’s a strategy that doesn’t
always work.
Management Business Structure
• Managers also have to remember that in addition to managing their
artists business they are also required to operate another small business
– their own management enterprise.
• Often managers leave the management of their own business on the
back-burner as they concentrate on their artists careers.
• But a managers ability to serve the artist is only as good as their own
ability to maintain a well resourced business.
• So operating a budget and having a business plan for the
management operation is as important as having a business plan and
budget for the artists career.
Management Business Structure
• This situation sometimes encourages managers to take a position as an
equal member of the band – this can have positive and negative
effects.
• Mathematically it makes sense for a four piece band when the
manager as an equal partner is entitled to 20% of the profit but what
happens when there is eight members of the band…or if the artists is a
solo artist?
• This model is rarely effective - and it really doesn’t work in accordance
with the law of agency which requires “representation” more than
“partnership”
Management Business Structure
• There’s are the sorts of considerations both artists and managers must
have when considering the contract they have between them.
• It’s rarely as simple as the manager and artist agreeing to “a standard
form agreement”, although management contracts are usually seen
this way.
• There is also some semi-intangible but still very important
considerations.
• In reality an entry level artist is likely to only attract the attention of an
entry level manager.
• This is because of the commission basis upon which a manager
typically operates, means that a well established manager will be
reluctant to work with an entry level artist
• Entry level artists generally make no money and 20% of nothing is
nothing!
Management Contracts
• It is important to remember that the law of agency also exists between
the artist (principal) and the manager (agent) and as such the
manager operates essentially under the jurisdiction as agreed to by
the parties
• There are a number of types of manager – the dealmaker, the
strategist, the creative collaborator, the motivator, the facilitator.
• All have their purpose and all are justifiable types.
• Some of the Manager types include – the Dealmaker, the Facilitator,
the Cheerleader, the Organiser, the Creative Collaborator, The Hustler
and the Promoter
• In reality most managers need to be an amalgam of all these types.
• These are hard things to accurately capture in a contract!
Contractual Elements - Exclusivity
• The Artist will normally be exclusive to the Manager – meaning that the
artist will only have one manager at any given time.
• This makes logical sense, of course
• But normally the Manager will not be exclusive to the Artist – the
manager is free to provide management services to other artists.
• This is a product of the reality that 20% of a single artists income (unless
the Artist is very successful) is not likely to allow a Manager’s business
operation to be sustainable/
Contractual Elements - Territory
• Which territories will the manager have authority in?
• The manager will want the broadest possible territory – in order to
generate a return from their efforts.
• But an artist will obviously want to obtain the best representation
they can – and would that necessarily be provided by an
Australian manager in America, or an American manager in Asia?
• The manager may not have contacts, knowledge etc outside their
home territory.
• A Manager will counter this by suggesting that Australia is a small
market and the “real money” will only come from international
success but the hardest work with take place in the early days in
the domestic territory.
• This is sometimes dealt with by the artist and the manager pre-
emptively agreeing to appoint an international co-manager in the
event it becomes advisable.
Management Elements - Duration
• Inevitably the Manager will want to have the longest possible term of the
contract. They want the longest possible period in order to earn commission
from their early work.
• However the Artist will want the shortest possible term – if the Manager is
good it is easy to extend the agreement but if the Manager isn’t working well
the Artist will want to escape the contract.
• However this can be overcome with a trial period – after which a longer term
contract can be entered into.
• A good Manager may resent being asked to do a trial period – but on the
other hand a good Manager may have nothing to fear from a trail period!!
• There are numerous ways that a term of a management period can be
measured – its doesn’t need to be in calendar years – it could be for the
duration of a project.
Management Elements -
Payment
• Normally a Manager’s payment will be calculated as a percentage
based commission – and it’s said that management commissions are
normally between 15 and 20%
• But even this is just an indication and could be modified by
agreement.
• The commission could also be based on either a “net” or “gross”
calculation.
• Perhaps a retainer or fixed fee is possible depending on the nature of
services provided.