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Sunday, July 18, 2010

An Overview of Music Business Management

by David Rose

I’m a firm believer that the longer an artist can manage themselves the better off they will be in the long run. I wrote a blog post last year titled “Build It and The Music Biz Will Come ” I encourage artists to read before rushing out to find a music management “team” early in their career. Once an artist has done all the hard work required to build a dedicated fan base they may want to consider hiring management to help grow and manage their business. Below is an overview of some of the traditional management roles in the music business.

 Manager

Traditionally, managers have spent much of their time getting their clients signed to a record label deal then working with their client’s record labels to coordinate publicity, radio promotions and retail marketing budgets and programs. Today, the desirable skills for a manager in the music industry have changed fairly significantly. Managers need to be specialist in direct to fan relationships, social media, online marketing, licensing and sponsorships. They should be generally knowledgeable in ways artists can be successful with and without a record label.

 Managers should handle all the artist’s personnel issues with the band and crew members and work with the rest of their management team including the attorney, booking agent, business manager and tour manager as needed.

Managers are typically paid 15% to 20% of the artist’s gross earnings. That means they get paid their percentage on all the artist’s earnings including, royalties, publishing, touring, merchandise, or sponsorships before the artist gets paid. Some managers have multi-year contracts (that can be quite complicated) with the artists they represent and some just work on a handshake.

Attorney

Given the uniqueness and complexities of recording contracts, management agreements, publishing deals, sponsorship or licensing agreements and the various other music business related agreements attorneys can play a critical role in protecting the interests of the artists they represent. The most important thing to look for in an attorney is experience in the music business. Just because someone has a law degree (even from a top school) does not qualify them to adequately represent artists in the music business.

A good attorney with experience in the music business can keep you from making contractual mistakes they have seen that have happen to other artists. Attorneys usually charge by the hour or by retainer (a set monthly fee) and in the music business it’s fairly common for them to charge well established artists a percentage of gross earnings, 5% is typical. 

Business Manager

A business manager is the person or firm that collects monies owned to the artist from royalties, publishing, touring and merchandise sales, pays the bills, band and crew, invests the profits and files the tax returns. They handle the artist’s general accounting related needs, royalty collection & auditing and tour budgeting & reporting. Many good business managers are either CPA’s or employ CPA’s on their staff due to the complexities of the music business accounting and the challenges of dealing with multiple state and international tax jurisdictions that come into play when an artist is on tour. They also handle all financial aspects of the artist’s personal life including insurance, loans, mortgages, investments and estate planning.

 Business managers typically charge 5% of the artists gross earnings in the music business but some an hourly rate or flat monthly fee. 

 Booking Agent

Booking Agents play an important role in the success of the artists they represent by planning and booking their tours with promoters and venues. They will make sure you are playing in venues that are known for your genre of music or booked as an opening act for bigger band. Booking agents negotiate the fee structure (guarantee,  % of the door, meals, etc.), determine ticket prices and ticket availability in the market. Thoughtful route planning is critical to the financial success of a tour and a good booking agent should make sure you are not playing in Atlanta one night, Chicago the following night and Jacksonville the next.  Route planning can be a challenge for even a seasoned booking agent due to the large number of competing tours and the limited availability of quality venues in highly desirable markets.

Booking agents typically collect a 50% deposit on the show guarantee from the promoter once the show is booked. They usually charge 10% of the money the band gets paid for the show for their services. For example if the booking agent negotiates a $2000 guarantee for a show, they would collect a $1000 deposit, keep $200 (10% of $2000) then send the band $800. The band or their manager / road manager would collect the balance ($1000 in this example) from the promoter or venue after the show. 

Tour Manager

The Tour Manager handles all the details of life on the road for the artist during a tour. They will arrange transportation, hotels and meals for each stop, make sure the equipment is accounted for and maintained plus manage the crew. The tour manager makes sure the venue has the stage, sound and lighting set up as requested and that the band is paid per the terms arranged with the booking agent. They manage and safeguard the cash collected while on the road. The Tour Manager will work with the tour publicist to make sure the artist shows up on time for scheduled interviews, appearances and promotions in each market. It’s the tour manager who puts out all the inevitable fires that come up at each stop during the tour.

The tour manager is also responsible for maintaining the tour plan and budget set up by the manager, business manager and booking agent. They are typically paid a salary, per diem or a set amount per tour.


 

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