Managing_Creativity

Introduction to Artist Development - Coursework One To ensure a solid foundation on which to develop a strong and positive working relationship, it is important to have an agreement between the manager and the artist. This may be in the form of a verbal agreement, or set out in a formal management contract. Both these forms of agreement are in use in today’s music industry and both have their own individual merits and drawbacks. Managers must convince the artist that they can provide the best possible management of their career. The relationship between a manager and an artist is personal and built on trust. A manager who is willing to work without a formal contract is showing confidence in their own ability to provide the best service; this is a good way of cementing a long term relationship. A verbal agreement is often more acceptable to an artist as it allows them to see proof of the managers acumen and the advantages they would gain by having that manager representing them. If an unknown manager is approaching an artist, it is unlikely that they will want to sign an exclusive contract, in which case a verbal agreement is one way of keeping interest, allowing for later negotiations when confidence in the manager has been established. It is likely that a manager will be required to work for a long time without an income for their efforts. A verbal agreement can be successful, as in the case of Peter Grant and Led Zeppelin, but it is more usual to formalise the relationship in to a management contract. The first step to formalising an agreement with an artist is the approach. The Music Managers Forum (2003, p.64) suggests that: ‘’Many agreements have failed due to the manager being too demanding in the initial stages by perhaps insisting that a full long-form management agreement is signed before they will do any work.’’ When presenting the artist with a contract it is vital that they receive expert independent advice from their own solicitor (MMF, 2003). If any dispute were to arise during the term of the contract and it was found that the artist did not receive any independent legal advice then it can be construed that the manager exercised undue influence and the contract will be void. The manager has a fiduciary duty to the artist to always act in their best interest (Harrison, 2008). Specialist legal advice can be expensive, both parties may be reluctant to incur legal fees if there is no income being generated by the project (MMF, 2003). It is acceptable as a manager to contribute towards the cost of independent legal advice. An agreement can be made whereby these contributions are recovered from the artist’s first earnings (Harrison, 2008). An intermediate step between a verbal agreement and a formal contract is a short-term trial period letter of engagement which, as outlined in the Music Managers Forum (2003, p. 65/66); “...sets out the very basic arrangements under which the manager will manage the artist in the short term until both sides feel comfortable to move ahead with negotiations of a long form agreement...’’ This is documentary evidence of the verbal agreement preventing details from being forgotten or misremembered; a key disadvantage of verbal agreements over formal contracts. Once an artist has agreed to commit to a formal management contract it is advisable that both parties attempt to agree the basic principles (subject to legal advice) before consulting lawyers in order to keep legal costs down (MMF, 2003). The duration of the contract is important to the manager as it represents the period during which the manager is exclusively entitled to represent the artist (MMF, 2003). It can be agreed that the manager will have a limit to the number of other acts they can manage. In the case of management companies, a key-man clause can be written in to the contract, stipulating that the person named in the clause must be made available to the artist. Most management contracts provide for a minimum fixed period, usually between three and five years (MMF, 2003) and there is an unwritten rule that management contracts should not continue for longer than this (Lee and Thompson, 2010). The artist may challenge the validity of a longer agreement on the grounds that it represents an unreasonable restraint on trade (MMF, 2003). Contracts may specify the duration in terms of “album cycles’’ rather than years, a cycle being defined for this purpose as the period involved in writing and recording an album and any promotional or touring activity in relation to that album (Lee and Thompson, 2010). Some contracts may not run for a fixed term, in which case they are deemed terminable upon notice, meaning that the contract continues indefinitely unless and until either party serves a given period of notice (MMF, 2003). The period of notice could be three or six months, or it may be stipulated that the agreement may only be brought to an end once an album cycle has concluded. With most management agreements, three to five years is standard, often arranged with options so that the manager can extend the agreement after the initial period of one year, but only to a maximum of the agreed term (Lee and Thompson, 2010). An artist may put a control on the options by making them available only when certain targets such as chart position or a minimum level of earnings have been achieved. A short-term trial period may be written in to the formal contract from the outset. A trial period would typically extend to six months with an option for the artist or manager to terminate the contract at any point during a predetermined period following the trial period (Harrison, 2008). A more manager-friendly approach would be to include a provision to the effect that the artist can terminate the contract if designated targets are not met within a given period. The territory of the deal is concerned with the geographical scope of the contract. Managers will aim to represent an artist globally in order to keep control of the game plan (Harrison, 2008). Artists may be reluctant to this and will often press for a separate manager or co-manager to cover North America, the latter allowing the manager to maintain more control over the artists global activities (Harrison, 2008). The manager may wish to represent the artist for non-music activities; in this case a manager may agree to the appointment of specialist managers but will expect all income from non-music activities to be commissionable if related to the artist’s musical career (Harrison, 2008). The manner in which a manager will account to the artist is set out in the areas of responsibility section of the contract. This section outlines the duties of both parties, such as the manager regularly consulting with the artist, keeping them informed of major activities, keeping detailed records and accounts and gaining the artists approval for expenditure over an agreed figure (Lee and Thompson, 2010). The artist will have clauses in their contract stipulating that they are to act in a professional manner, attend in a punctual and sober fashion all reasonable agreements, engagements, performances and promotional activities obtained or approved by the manager (MMF, 2003), to disclose any income from external sources such as PPL or PRS to the manager and not to engage anyone else to manage them. Commission rates are generally 20% of gross income after deduction of certain expenses however there may be a negotiation as to whether a different rate is received for income generated by publishing deals and live performances where it has become common practice to take 20% from net earnings or 10% from gross, whichever is greater (MMF, 2003). A manager will expect to receive commission on any income received during the term of the agreement; meaning that if the artist has already released an album prior to engaging in the management contract, the manager will still receive commission on the income generated. A manager may not receive commission on the income of any activities that take place after the contract has expired unless the artist agrees to pay post term commission, usually a reduced rate for an agreed period, often reducing gradually to zero (MMF, 2003). All income on activities undertaken during the term of the contract is fully commissionable, regardless of when that income arrives. Without a formal contract, the manager is still entitled to commission. If the artist refuses and it goes to court, the manager will likely be paid what is considered to be a fair price for their services, if this cannot be amicably agreed upon, a judge will call upon expert evidence of what is usual in the music business and will decide how much the manager is paid. Without a written contract however, the manager will not be entitled to any ongoing royalties or post-term commission (Harrison, 2008). All expenses incurred by the manager on behalf of the artist should be reimbursed; this does not include the manager’s overheads. “Most managers accept (partly out of practical necessity) that expenses are recoverable only from commissionable income. Others take the view that since the expenses have been incurred specifically on the artist’s behalf those expenses should in effect be treated as loans and should be repayable on demand. “ Lee and Thompson (2010) A contract will never stipulate that a manager must incur expenses and they do so at their own risk, and at the risk of the relationship should disputes arise. Traditionally 100% of the artist’s income would be received by the manager and they would account to the artist for 80%, modern contracts may insist that it works the opposite way, with the artist accounting to the manager for 20%. A manager may insist that in this case the artist hire a reputable chartered accountant, to be paid for by the artist (MMF, 2003). Both parties have a right to terminate the contract in certain circumstances such as bankruptcy, criminal conviction involving dishonesty or incapacitation causing noncompliance with contractual obligations (MMF, 2003). An artist may wish to terminate a contract early, in which case they must show the manager to have breached the material terms of the contract. One thing to consider is that the contract is unenforceable. If both parties adhere to the terms it is valid, but the court cannot force either party to do so. The security provided by a management contract detailing the duties both parties must fulfil is invaluable; there can be no dispute over issues that may arise when fame and fortune take their toll on the personal relationship between manager and artist. If there is a breakdown in the relationship, the contract dictates how it will be resolved and makes sure that neither party can be exploited unfairly by the other. Without a manager an artist is unlikely to achieve success, and the manager deserves the peace of mind offered by a formal artist management contract.