Today is part four and will discuss a bit about money, commission costs and negotiating with the manager's deal. For the manager they typically get anywhere from 15% to 20% of the bands gross earnings. A majority of the music managers get 15 % as these percentages are applied to the gross earnings, before deducting any
expenses. So, this is what this means:
1. If your a solo artist/act, the fee is pretty much what is sounds like for publishing , songwriting, records, etc. There are some finer points that I will mention in a later post. In a nutshell the manager makes 15% of everything that your band brings in right down to the penny. When you are touring, a manager can make a good chunk out of your net. An example here: If the band earns $100,000 and you net say $40,000, your manager's 15% gross at $15,000 which is almost 40% of your $40,000 net income from your tour.
2. So if you are a group and you have more than five members, 15% of gross equals almost the same, or more than. any one of you earns if money is divided equally. Let say you have seven band members everybody gets one-seventh, that's 14.28%, which is actually less per band member than the manager's 15%. Keep in mind that the manager's cut comes "off the top" before you divide up monies.
Very important when hiring a manager is only offer 15% and not a penny more. Despite the powerful impact that a manager should and will have, it is possible to negotiate with your manager. Some managers will try to negotiate 20% stating that if you are a new band it is a risk for the time invested. The 15% to your manager is not going to stay this way for ever. Once your act reaches a certain dollar amount, let's say one million dollars. Anything after the negotiating certain dollar amount usually the percentage for the manager then goes to 20%.
So i need to mentioned what we call deductions that pertain to the business. Certain monies are customarily deducted before computing the manager's percent, even when he/she is paid on gross. Most manager don't take a commission on these deductions. Here is a list that don't involve payment to your manager.
1. Recording Costs.
If your label pays you monies specifically for recording a single release or album release you should not have to pay a commission. This is because the funds only pass through your hands and is not income.
2. Monies paid to a producer
This is the same as recording costs. This does also include advances to the producer, and also royalties.
When a song or songs are written with another party, the manager shouldn't get paid on the other person's share of the song's earnings.
4. Tour support
This is money paid by the record company to offset your losses from touring.
5. Cost of collection
Let say that you have to sue someone to get paid, the cost of suing them to collect your earnings should be deducted before applying the manager's percentage. Let's say that a promoter takes you for $50,000, and it costs the band $10,000 in legal fees, collection and court costs the manager should only commission on $40,000.
6. Sound and lighting
It is very common in personal appearances contracts for the band or artist to supply there own sound and lighting. The promoter then rents the sound and lights from their artist or band for a specific dollar amount. This rent money is considered an expense reimbursement. The manager is not paid on the amount allocated to sound and lights.
7. Opening acts
When you blow up and become superstar status, your deal for a personal appearance may also include monies paid to an opening act. Once again this is money that passes through your hands and shouldn't be commissionable.
This is all for today. I will post tomorrow and continue more on what to expect in the music industry. To make your own music click here.