Artist management agreements series; (part 8) Production and publishing agreements as alternatives to management agreements

This is where things can get sticky, and generally do. With the advent of the 360 deal, the lines between management and label, and between management and publisher, often get blurred. Picture the scene: young up-and-coming artist cannot afford to share his performance income with manager, so manager, believing in artist’s future success, proposes a different structure: he will act as manager for free now, provided he is given a cut of future recording and publishing income. Although this type of arrangement is becoming quite common, I generally do not recommend it.

There are two ways in which a manager can become a licensee or co-owner of the copyright or related rights created by the artist: Production agreements, where the manager (hopefully) pays for and licenses or co-owns the artist’s recordings (preferably for a limited time); and publishing agreements, where the manager acts as publisher and licenses or co-owns the copyright in the artist’s songwriting/compositions (again hopefully for a limited period only).

The manager may agree with the artist to fill both of these above roles and will enter into two separate agreements as a production company and as a publisher. But there are several problems with this model. Firstly, production and publishing are, more than likely, not the manager’s areas of expertise (he is a manager after all). Secondly, many artists entering into these types of deals end up signing their copyrights away in perpetuity – a death-knell if the material is successful. Finally, it is vital that the manager, if he wishes to become the production company and/or publisher, does not see this as an opportunity to “double dip”, i.e. take commission as well as recording and/or publishing income. This happens all too often, and effectively creates a 360 scenario, and the now-familiar conflicts of interest.

If you are intent on following this model, I would suggest that you at least couch it in a more protectable framework, such as forming a company, with shareholding favourable to the artist (although the manager, of course, is likely to be appointed managing director). Another possibility is for the manager and the artist to form a partnership, although this framework is more loosely controlled by law, therefore needs a very comprehensive agreement to be drawn up.

In the production agreement management business model, the recording costs for the album are likely to be recouped from any incoming advances together with any other allowable expenses and thereafter, dividends or profits split between the production company and the artist according to the agreed split. (Does this sound familiar?) If you are hell-bent on doing this type of deal you should at least have a reversion of copyright clause and ensure that the recording is owned by the production company for a far shorter period than would be the case with a proper label.

In the publishing agreement management model, it would be vital to provide for the term of the publishing agreement to be no longer than the period of the management agreement. If the publishing splits were, say, 75/25 at source in the country of residence and 80/20 on receipts outside the country of residence, with no management commission payable, this could work out to be favourable for the artist, because he is now not paying for management services.

If the manager sets up a publishing company then the net pay-through to the artist would need to be higher than 60% at source for the artist to do better than 20% of income that he would be paying on a standard management deal. It’s all about making the numbers extract greater service value for you. Another advantage to the artist of this arrangement is that composer royalties are likely to be paid through more quickly than would be the case with an outside publisher.

In either case, it is vitally important for the artist/composer to retain ultimate ownership of his/her copyrights and related rights.

Conclusion

It is hoped that this series has given you a good introduction to the more important aspects of the artist management agreement.

The manager is the single most important person in any artist’s professional life. A good manager can rocket the artist’s career into its maximum potential, just as a bad one can implode it into nothingness. Many bright young talents have been lost to obscurity due to poor management, and many (quite frankly) undeserving performers have shot to stardom because of excellent management.

It is absolutely vital to choose the right manager, and to negotiate his contract very carefully.