Management commission, explained

The short answer: music managers are paid a percentage of the artist’s income, usually between 15 and 20 per cent in the UK. The headline rate matters less than three details: whether it is taken from gross or net income, which income is excluded, and how long the manager keeps earning after the agreement ends.

Commission is the part of a management agreement most artists look at first and understand least. Two contracts with the same percentage can cost an artist very different amounts. Here is how to read one.

The rate

Most UK managers charge between 15 and 20 per cent. The higher end is common where the manager is taking a risk on an artist who is still building and there is little income to commission. Some managers with established artists charge less, or tier the rate so it falls as income rises. Occasionally a manager asks for more than 20 per cent. That is worth questioning hard.

We charge 20 per cent and publish it, along with the rest of our terms, on How we work. Our view is that an artist should know how their manager is paid before the first meeting, not after the third.

What it is taken from

Commission on gross income is taken from the full amount received before costs. Commission on net income is taken after certain costs have been deducted. For most income, such as a sync fee or a publishing advance, the difference is small. For live work it can be the whole question.

Touring

A tour can take in a large fee and still lose money once crew, travel, accommodation, production and the agent are paid. If the manager commissions the gross, they are paid on a tour that left the artist out of pocket. That is why many agreements, ours included, commission touring on the net: the manager’s percentage comes from what the tour actually made after it paid for itself.

Check exactly which costs are deducted before the percentage is applied, and whether the manager’s own commission is itself treated as a cost. The wording matters.

What should never be commissioned

Some money passes through an artist’s hands without being income at all. A fair agreement excludes it. Look for these:

• Recording and video budgets. Money advanced to make a record or a video is spent on the record or the video. It should not carry commission.
• Tour support. Money from a label to cover a touring shortfall is not profit.
• Payments to other people. Fees the artist passes on to band members, producers or co-writers.
• Session fees for playing on other artists’ records, where the manager played no part in securing them.
• Anything agreed before the manager started, unless the agreement says otherwise and the artist has agreed to it knowingly.

After it ends: the sunset clause

Most management agreements let the manager keep earning commission after the term ends on work they helped create during it. That is fair: a record made in year two may pay out in year five. The question is how long, and on what.

A sunset clause answers it. Ours tapers over three years, 20 per cent then 10 per cent then 5 per cent, and applies only to work contracted while we were managing. After that it stops. Some agreements ask for commission in perpetuity on anything recorded during the term, which can mean a former manager earns from an artist’s catalogue for decades. Read this clause twice.

Questions to ask any manager

1. What is the rate, and is it the same for every income stream?
2. Is touring commissioned on gross or net, and which costs are deducted first?
3. Which income is excluded entirely?
4. How long does commission continue after the agreement ends, and does it taper?
5. Who holds the money, and when do I see statements?
6. What expenses will you charge me, and which need my approval first?

Nothing here is legal advice. Before signing any management agreement, including ours, have it reviewed by an independent music lawyer. Our checklist of twelve things to check before you sign goes through the rest of the contract.