Understanding Managerial Charges in the Music Industry

First of all, it depends on what you agree on regarding the asset.

Managerial Fees

But normally, British managers charge 20% of the net.

• What "net" means is that if an artist gets, for example, that mythical £50,000, they will have certain direct costs.
• Legal costs will come off the £50,000.
• If there are any other direct costs (for example, if we were involved in any of the financial negotiations), our costs would also be deducted.

Example:

• Let's say after all deductions there's £40,000 left.
• The manager is entitled to 20% of that £40,000.
• So, that would be £8,000, plus VAT.

Advances and Touring

So that's where we are on any advances, whether it's publishing or recording royalty advances, or touring.

• Again, initially, an artist very rarely makes money touring.
• A manager is working for the artist, knowing very well that they are building up someone's career so that they can benefit from it later down the line.

Commission on Touring

Primarily on touring, commission is chargeable on the net, referring to net profit.

• This is after all ticket sales and costs in relation to the production are deducted.
• If there's a profit, we prepare the tour accounts and report to the artist and manager.

Example:

• We might say, "Right, you made £10,000 profit on this particular leg of the tour; please let us have your invoice for £2,000."

Additional Income Sources

There are other subsidiary income sources like PRS, PPL, and Levy rights.

• When those statements come in every three or four months, we look at them and send copies to management if they haven't already been sent.
• We request the manager to send us their invoice based on the actual income coming in.

Important Notes

• You can't charge a fee for doing something and then charge a commission on the same income.
• It can't happen contractually as well; it won't be in the agreement.

Advice: If an artist has that arrangement, then my suggestion is they're with the wrong type of manager. That manager isn't going to progress their career, so they need to get out.