Artist Management Final
Michael Jackson's Manager Situation
"I am not in the Music Business." •Last "Manager" - Tohme Tohme -- knew finances but did not know the Music Business OR Artist Management. •Did not appear to have a "real" personal connection with Michael Jackson -MJ was more concerned with getting out of debt and saving his Neverland ranch, than with being managed by someone who knew the music business. -Veteran music artist Michael Jackson overlooked the need for someone who also had the skills to lead and direct him, as a manager, on a personal level -AEG Live email on June 2, 2009 read: "Getting MJ to focus is not the easiest thing in the world and we still have no lawyer, no business manager, or even a real manager in place right now. It's a nightmare!"
If an artist's song appears on another artist's album that sells 20,000 units, and the compulsory rate of 9.1 cents is applied, how much money would the Publisher receive, before splitting share with the songwriter?
$1,365
If an Artist receives a $25,000 Advance and the Recording costs were $75,000, how much money in commissions would their Manager earn if they were a 20% manager?
$5,000
Role of the Producer
- Assembles all of the necessary elements to create the recording - All in deal - Producer gets 4-5% of the royalty rate an artist gets, which means the artist only gets 7%
Give examples of people who have the power of access.
- Booking agents - their relationships with prominent concert promoters and other talent buyers can give an artist access to some of the better performance opportunities at the better venues with the more successful promoters. - Radio programmers - they have the power to give an artist access to their audiences. It is their final decision whether an artist's single is played on their radio station and that gives them control and the accompanying power. - Publicists - use their power of access to help their businesses. Those with high-profile clients leverage their association to build on their own client base and to help record labels schedule their artists for appearances on television and cable programs.
Things to know about being an artist manager...
- time-consuming -slow to deliver but rewards after about 3-4 years; must be able to be independent and help support the artist the first couple of years -requires a continuous amount of education -must be creative, informed, and connected -do a lot of record label duties -a part of every facet of the artist's life
Proprietorship
-A form of business organization with one owner who takes all the risks and all the profits; you can get sued -no separation of you from your company
Contracting with a Minor
-American legal system says people under 18 years old cannot be held responsible or liable for contracts they sign. -the law requires the contract to be approved by a judge who will then regularly monitor the effects of the agreement on the career of the minor. -also requires that contracts created under this law include a provision that holds a minimum of 15% of the earnings of the minor in a trust account until that minor turns 18.
Commission Structure
-Biz. Manager- 5% -Tour manager- salary -Artist Manager- 10-20% -Booking Agent- 10%
Key Man Clause
-Contractual provision that if an artist's manager leaves a particular company, the artist may choose to follow that individual without legal or financial reprisals but they don't have to follow; must be in the front end if they want to use it in the deal; intended to protect the manager from managing ineffective groups -most management companies don't want to let a manager on that wants this clause because they want to keep that artist
Manager's Expenses
-Reimbursable Expenses = Out of pocket expenditures made by the manager specifically for the artist. These are basic "part of doing business" on behalf of the artist: •Travel •Meals •Lodging when on road with client •Entertainment expenses related to artist Reimbursable expenses does NOT include the manager's own costs of running their management company: •office rent •phone •business overhead, etc.
Partnership
-a business owned by two or more people -you both own it so you can sign and make decisions without the other one
Corporation
-a business that is owned by many investors. -a formal business form that requires filing a charter with a state's secretary of state
Recoupable Elements
-advance (artist must pay back) -recording costs (artist must pay back) -video costs 50/50 -marketing
Power of Attorney
-allows managers to sign on the artist's behalf -signs contracts for performances, appearances on TV, music, and advertisements -endorse checks, deposit money, and pay employees -hire and fire artist team members -approve use of artist's likeness, voice for advertisements, merchandise, ringtones -utilize a Business Manager for some elements such as handling money
Exclusivity
-artist is exclusive to manager -manager is non-exclusive to artist so they can make money from other artist
Education
-broad education of a Bachelor's or Masters degree not "necessarily needed" -key is to get some education about the music business! -education teaches you the workings of the industry, but teaches the language of the business -attend industry related conferences, seminars, and workshops -IEBA Workshops, GMA's IMMERSE conference, GRAMMYU Camp, etc. -Listen to speakers in class/on campus
Promoter
-buyer is purchasing -all promoters ARE buyers -but not all buyers are promoters -promoter pays all of the costs associated with the show including... -marketing-promoting and advertising costs -rider requirements -pays all of the costs associated with paying the artist's fees (per the fee structured discussed)-regardless of ticket sales outcome -creates a show budget: pays rent to venue, contracts with performers, hire local labor, hires caterers, leases production equipment -must know local laws -gets required permits -makes sure PROs get paid (technically paid for by venue) -supervises all aspects of the event
Experience
-coupled with education, can move an artist manager though the early years of the entrepreneurial experience quicker and with greater prospects of success -internships, volunteering, join industry organizations and/or clubs, class assignments, projects, etc. -find a mentor-someone you can have continuing conversations about the business (SOLID) -learn from other people's experiences-what to do and what NOT to do
Vision
-decide what kind of artist management company you want to run -the vision for your business will help you set its values and goals, and direct the work of the company -Mission Statement: defines what a company is today -an entrepreneur's vision statement is an expression of where your business could be in some defined future... and then developing a strategy to make it happen! Focused Entrepreneurial Vision: -it identifies direction & purpose -it sets standards of excellence -it inspires enthusiasm -it encourages commitment -it is easy to understand -vision needs to be realistic -if not, go back and modify -if it's realistic, make a business plan -the plan let's you know whether the company can thrive in today's business -it's very important you develop your own, detailed business plan, specific to your vision, and the path to the company's growth and development
SoundExchange
-functions like a PRO -owner of Sound Recording -secures payment on behalf of recording artists and master rights owners including the record label -independent non-profit organization -collects and distributes digital performance royalties on behalf of the owners of copyrights of the sound recordings used on satellite radio or the internet
CONTROLLED COMPOSITIONS
-if the artist is the writer of the songs that appear on their own album =6.825 cents per song, instead of 9.1 cents -only for first 10 songs recorded -only applies when the artist is the songwriter for their OWN songs
Role of PRO in Publishing Stream
-license the use of copyrighted music compositions (songs) for public performance, and then collect royalties for the use on behalf of publishers and songwriters -do NOT license for dramatic productions (movies, tv, commercials) *public performance of the song, not the sound recording* -award shows are "somewhat" an exception (the show must get a license for the performance of the artists at the show; however, because it's also televised, they have to get the other appropriate license)
Behavioristic Segmentation
-looks at the WHY consumers engage with a product -HOW they use a product -WHAT creates their loyalty to the product
Sunset Clause
-manager gets commission after contract is over on the works that they worked on old & new -creates a time after the contract ends during which the manager will continue to earn a commission for work already planned and is under contract -time period and commission amounts agreed to in advance -Typically structured to "step-down" in percentages; 20% client may continue to pay... 15% for certain period, then 10% for certain period, then 5% for certain period -Protects Manager who's working on a deal that doesn't see fruition for another year later. -Protects Manager in event of artist's death. -Applies to royalties generated from Songwriting and from Record sales. •Also to Television, Film, Books, etc. •Tour sponsorships •May apply to branded merchandise (artist launches their own line of fashion or wine)
Publishing Revenue
-manager makes 10-20% commission from the 50% portion of their client -industry standard split=50/50 -if the artist does a co-write, cut is 50/50 split of the 50% cut with publisher -manager's commissions only come from their artist's cut
Breakeven
-payment received (artist's fees)=expenses associated with doing the show; with no profit or loss to the artist -money artist receives has to cover what the artist is spending to pay their band, road crew, commissions, etc.
Publishing Income Streams
-performance royalties-when a song is performed live, or in a dance club, or restaurant, or on the radio -mechanical royalties- songwriter owns earns income each time the song is sold as one of the songs included on a recording -print royalties- printing and publishing of sheet music, music book ex.) church hymnals, etc. -synchronization royalties-from licensing of the song for advertising, video games, tv, movies, commercials
Booking Agent
-person or agency responsible for booking live shows -choosing the "right" place to do shows, in keeping with the artist's images -standard=10% pay -smaller agencies that specialize in smaller venue bookings can commission at 15-20% -responsible for finding opportunities for paid live performances -looks for "Employment Opportunities" ex.) concerts, tours, festivals and "Promotional Opportunities" like a personal appearance on the Macy's Day Parade
Business Manager
-person who handles income and expenses of an artist -pays commissionable entities, payroll, taxes, etc. -makes sure that what remains after artist's bills are paid are deposited or invested -5% pay
Publicist
-responsible for handling all of the public relations and publicity for the artist -the one connecting the artist to the media (news, stories, appearances, interviews) -building and protecting artist's image in print, video, online, etc.
Artist Recording Income
-royalty rates for new artist 13%-16% -royalty rates for established artist up to 20% -royalty rates for major recording artists might exceed 20%
Artist Development Deal
-runs for 1 year at a time -manager develops artist until they have all the guidance, coaching, and connections they need -paid a set fee/monthly for "consulting" -artist retains 100% of their earnings
Attorney
-takes care of all of the legal matters involving contracts-management, booking, publishing, etc. -helps negotiate the record deal -sets up artist's form of business (LLC.,INC.,Partnership,etc.) -may advise artist not to sign with a particular manager due to image and experience
Promoter/Buyer
-talks to the booking agent -agent and promoter negotiate the financial deal on behalf of the artist -agrees to pay artist
Harry Fox Agency (HFA)
-the company that licenses songs on behalf of many publishing companies in the U.S., and then collects the royalties for their use to be paid to the publisher -strength is in it's ability to periodically audit record companies to be sure they have paid their publishing clients royalties that are owed -means that small publishers do NOT need to deal with licensing issues
Digital Media Manager
-the person handling the artist's digital media formats -actively oversee the interaction of artists with their fans through their websites and various social media -oversee content distribution for their artist -track how users find and interact with the artists, etc.
Tactic
-the things the artist and manager do every day to implement the strategies in order to achieve goals -it's the specific details to make it happen
Buyer
-typically has budget given from whoever hired them -they buy for a particular entity (i.e. their own venue, state or city fair, performing arts center, etc.) ex.) the remain, tpac, mtsu, etc.
Career Manager
-typically looking at the big picture; future growth and branding of the artist -handles negotiations for products, sponsorships, etc..
California Talent Agency Act
-withholding requirement is 25% of gross earnings -booking agent is only allowed to book employment in CA -must be licensed -prevents managers from being paid double commission (conflict of interest)
What are the four powers?
1. The Power of Your Latest Success 2. The Power of Money 3. The Power of Your Body of Work 4. The Power of Access
royalty rates for an artist can range from...
13-16%
Tennessee & New York trust fund
15% of gross earning
artist first royalty check comes in...
2-3 years
royalty rates for established artist...
20%
Standard length of contract and renewal options
3-5 years (sometimes plus 2 year renewal, which must be mutually agreed on)
Publisher makes...
50%
If an artist is paid a 10% royalty for each album sold through iTunes, and the wholesale price is $7.00, then the artist earns how much in royalties each time an album is sold?
70 cents
Trademark
A brand that has exclusive legal protection for both its brand name and its design
The Power of Your Latest Success
An example of this power is that an artist can have success with a tour followed by the release of another successful tour or album. Most of the success involved here is by means of money.
Live Performance Money
Basic Booking Fee Structures: -Flat Guarantee: artist gets paid an agreed upon amount; typically done on soft ticket shows; has no tie-in with ticket sales -Straight Percentage: artist gets paid an agreed upon percentage of the ticket sales; doesn't matter if low or high ticket sales; percentage is the same; venue isn't putting money on the line -Guarantee v. Percentage: artist gets paid a guaranteed amount OR artist gets an agreed upon percentage... whichever one is GREATER at the end of the show -Guaranteed Plus Percentage: artist gets paid a guaranteed amount plus agreed upon percentage of ticket sales -Bonus: gets extra money based on attendance *Artist Manager gets paid their commissions from what the Artist actually makes.*
LLC (Limited Liability Company)
Corporation with the benefits of a sole proprietorship, and not many disadvantages.
Taylor Swift got rid of her first manager because...
Dymtrow did not get their contract approved by a judge
Recording Contract
Exchange of Promises: -artist promises to create sound recordings exclusively for the record label -record label promises to commercially exploit those recordings -has immediate benefits to artist of being a signed recording artist -can quickly increase their public profile and build a larger fan base ...specifies how the artist will earn income -record label provides all financing necessary to create the sound recording (like studio time, payments to singers, producers, engineers, etc.) but artist MUST PAY BACK recording costs and advances to the label (recoup) -LOANS=ADVANCE -advances help the artist pay off existing debt and it helps the manager make a budget for the artist -pay back w/ royalties -labels withhold all royalties until there is enough to pay off what they loaned you -Artist's Expenses will only have to be paid back if the recording earns adequate income from the project to pay them
Tour Support
Financial resources, such as those provided contractually by a record label, that help underwrite the costs associated with touring a given act; not commissionable
Gatekeepers
Gatekeepers: Receptionist at a record label, record label, songplugger, publisher How to Get Past Them: 1. Find out what the gatekeeper needs and use it as a way to gain access 2. Use the four powers: a) Money b) Access c) Body of Work d) Latest Success
Exit Strategy
Managers use this when the business relationship with the artist will come to an end because the business simply isn't there anymore
Tour Sponsorship
Person or organization that assumes financial responsibility for a tour in return for the right to advertise themselves at the events; commissionable; not recoupable
The Power of Money
Power in the music industry comes from having money, the ability to earn money, and money to influence decisions. A larger label will likely be more successful than a smaller indie label because of their establishment and financial benefits. Money shows its power in the music business in the ability of major labels to influence who is nominated, who wins, and who performs on some music award shows. The power of money at larger labels will continue to help define who the major recording artists are.
SWOT of the artist
S/W- Artist is in control and manager exploits the strengths and improves the weaknesses O/T- External things that could potentially affect artist/is out of their control
SWOT of the manager
S/W- With passage of time, strengths will improve and weaknesses diminish . - Weaknesses expose areas that need improvement O/T- Keeping upon the current trends will allow a manager to be aware of the O/T
Royalties
STAT. RATE= 9.1 cents for the sale of each copy of the recorded song
Manager's Payment for Services
Standard Manager Payment: -typical commissions from the artist's gross earnings is 15-20% for new and established artists -can be as low as 10% for very established "A" level artists -some managers agree to commission on "adjusted gross" earnings -after specific expenses (i.e. artist's travel expenses, publicity, legal fees, etc.) are deducted. -agreed to in advance
The Power of Your Body of Work
This power builds a reputation and that translates into power. These people have consistent success in the industry. They're often asked to help out others in the industry to share their "secrets" to doing well in the industry. These people have built long-standing careers in the industry; they possess power simply because they continue to succeed.
The Power of Access
This power is an important resource for people who have it. Those who can reach key decision makers--or more importantly, influence those individuals--who have power that many do not. This power comes from business relationships and sometimes from associations with others.
Strategy
a plan of action; comes after the goal
Logo
a symbol or design that serves to identify an organization or institution
As a manager you can get commission from the...
advance, not recording costs
Demographics
age, sex, race, religion, etc...
which one of the following is NOT one of ASCAP's top five abilities that increase someone's potential to become a it songwriter?
amount of commissions
Organizing
assembling the necessary resources to carry out a plan and to put those resources into a logical order
Conflict of Interest
business interest that benefits the manager but not the artist
Geographic Segmentation
dividing markets up by countries, regions, states, cities/towns
Traditional terrestrial radio in the U.S. has been...
exempt from paying artists and labels for the use of their sound recording -publisher/songwriter get paid for the use of song, but artist/label does NOT get paid for the use of the sound recording
Being a manager is immensely time-consuming, but the financial rewards come quickly with record royalty payments typically within the first year of album release
false
The main focus for the record label is the exploitation of the artist's song
false
a manager is typically entitled to commissions of the NET income that an artist makes from touring
false
advance is not considered recoupable
false
artist contract with a label is non-exclusive
false
artist manager can charge back to the artist their business expenses for running their company
false
mechanical royalty is the money earned each time a song is performed
false
the option to renew at the end of a term is the artist's
false
Target Market
fans who have the willingness and means to buy music, tickets, merchandise, and related products of the artist
360 Deal
in recording contract, label gets a piece of all income streams -% of live income, publishing, & merchandise sales, other
Psychographics Segmentation
lifestyle characteristics of the buyers of music and tickets
name of royalties earned by the writer each time the song is sold as one of the songs included on a recording
mechanical royalty
Four Functions of Management
planning, organizing, leading/directing, controlling
in the business framework for the artist, which one of the following would likely be chosen by a band who pool their talents an professional resources to become an artist
proprietorship
Record labels are based on...
records -record company decides what an album is, how many songs, what songs, & when it gets released (A&R Function)
All-In
royalty you earn, you're responsible for paying producer
Keith Urban and his team weren't able to secure the internet domain name because...
someone already had that name; they ended up with www.keithurban.net
Goal
something you want to accomplish
which one of the following would a manager go to if they want to know how recordings for a similar artist have been selling?
soundscan
SWOT analysis
strengths, weaknesses, opportunities, threats Strengths- use them to your advantage Weaknesses- what the artist isn't good at; play down weaknesses Opportunities-external things that happen or are available to the artist; positive impact on the artist's career Threats-external things out of the artist's control; negative impact on artist's career
Leading
taking the resources needed to reach goals and use them efficiently to achieve success
Bette Midler won her lawsuit with the advertising company for their automobile commercial because...
the advertising agency used a sound a like artist in their commercial
Brand
the artist's name and everything associated with it ex.) the name of the artist
Ethics
the principles of right and wrong that guide an individual in making decisions; MORAL COMPASS
Market Segmentation
the process of dividing a large market into smaller segments of consumers that are similar in characteristics, behavior, wants, or needs
Payola
the unethical (but not always illegal) practice of record promoters paying deejays or radio programmers to favor particular songs over others; LEGAL ISSUES -isn't the same as following the "law" -don't pertain to regulations -you can be following the law and regulations, and still lack an ethical standard of business
Image
the way people feel about the artist including their emotional attachment ex.) fan engagement, appearance, fashion *should be a reflection of artist's own personal values, as well as a reflection of the values of those in their target market (music & ticket buyers)
What is key to successfully representing an artist in business?
time management
"superstar" status can be as low as 10%
true
The controlling function of management is monitoring how effectively the plan is being carried and making any necessary adjustments to advance the plan
true
a "draw" is considered an advance payment against future royalties and is recoupable under most circumstances
true
artist manager CANNOT commission tour support
true
artist manager CANNOT recoup recording cost
true
artist manager can charge out of pocket expenses on behalf of doing artist business
true
artist pays producer through royalty earnings
true
example of subordinate goal: artist wants to learn how to play an instrument and the goal that supports it is a artist playing the instrument during their stage performance
true
if an artist decides to make a music video, it comes out of their advance
true
in artist development deal, manager is paid retainer
true
management contract should contain language to end the relationship and cancel their contract
true
manager is allowed to take commission from advance
true
manager isn't obligated to seek employment for artist
true
royalties paid to the artist from the sale of their single or album, are a percentage of the wholesale price of their recording
true
service mark gives the sources of the services an artist provides
true
subordinate goals support a large outcome
true
the budget the manager prepares in order to support the artist's career plan should be for a three-year time period
true
the main focus of the music publisher is the exploitation of the musical composition
true
Timeline
when you want to accomplish the goal
Pollstar
where managers should do their research, utilizing trade publications and services to gather the information they need
Music Publishing is based on...
years