Managing Artists in Pop Music: What Every Artist and Manager Must Know to Succeed

Preface: The Buck Starts Here

A good manager's mantra: I don't know but I'll find out.

Attention: The Occupational Safety and Health Administration (OSHA) has determined that the maximum safe load on my butt is two persons at one time unless I install handrails or safety straps. As you have arrived sixth in line to ride my ass today, please take a number and wait your turn.

A good manager spends a ton of time on his and his client's finances and banking, paperwork, bill-paying, next-year's projections, fact-checking, resource-gathering, promotion materials, insurance, budget-cutting concepts—all the boring stuff of business. A good manager must also be prepared to deal with payola demands, homophobia in the radio business, sexism and racism (which are still alive and well in the music industry), massive numbers of charity requests, an airline industry determined to make the cost of touring impossible, paparazzi and demanding press people, and all those family members who think they know everything about the music biz.

That said, there is nothing more important than being an expert at communication with people, and I don't mean social-networking. I mean taking massive amounts of time to communicate every decision and logistical detail that might affect a staff person, artist, promoter, booking agent, accountant, lawyer, insurance broker, sound engineer, songwriter, or family member—everything they might need to know in order for them to excel in their individual work on behalf of your artist and yourself. It's a lot of time and work because it involves editing the information and repeating the information over and over again . . . tactfully!

Unfortunately most young managers and artists think a manager's primary job is to develop an artist's career and find work. If you didn't know it before, money talks when it comes to development. Lots and lots of money. So let's explore the myths and discuss reality in this new world of instant global notoriety courtesy of American Idol and X Factor.

The music industry is somewhere between chaos and flux. Technology and the Internet continue to affect every rule of artist development, music creation, promotion, sales and distribution, and the source of an artist's and manager's income. The public has new expectations and the industry is still struggling to catch up to its consumer base. The revised edition of this book combines the new digital age with the ageless principles that dictate success or failure in the music industry.

The new options and obstacles faced by managers and artists today are explored in detail from the manager's perspective. To the extent that every artist should learn to be his/her own manager, then this book is just as much for both the established and the hopeful artist as it is for the professional manager.

To make this book more accessible, we tell the story of one manager over a three-day period, providing important lessons in negotiating, artist handholding, and crisis resolution. Through a fictitious client list, we are able to describe in detail real things that have happened, based on firsthand and secondhand experiences known to the authors.

Along with this storyline, we offer cold facts through data boxes, on subjects ranging from choosing a pension plan, selecting a road manager, creating an effective press release, and analyzing a sample recording deal, paragraph by paragraph, in plain English.

The bottom line is to find success and happiness in what we do. Our business is to help singers, musicians, and songwriters do the same. In this regard, the buck starts here.

PART

1

Three Days in

the Life …

1

The Day Begins

Wanted: A job that will allow me to be creative, unrestricted, inspired, happy, productive … and FILTHY RICH!!

Happiness is not a state to arrive at, but rather a manner of traveling.

I'm an independent manager—no golden parachute plan in case of early termination by some ranting acid-rock diva and no large staff racing down the hall to copy contracts and get my lunch. I do have a wonderfully motivated intern, Robert O., who gives me twenty hours a week. The rest of the time I have my invaluable assistants, the computer and the cell phone.

Walking down the street on the way to my office … reflecting on the music groups and solo artists I have managed and the many others that remain out there to be tapped, it amazes me that some people still think that a recording contract will make them happy. Getting a recording deal rarely means that you'll be making money. People should be actively pursuing the things that will make them happy—and most people have never even thought in those terms. Not just music people, but people in general. Being a music performer is a job, like other jobs, but it's been glamorized and romanticized so much. And many performers, even famous ones, still believe the hype.

Today, I'll try to resolve a booking problem with BoyBand, a well-known pop rock group that continues to pack stadiums, but hasn't been able to get a new record deal after a decade in the business. When I walk in the door, I expect to find Max X., lead guitarist for the reggae-rock recording group RRU, who wants to speak with me confidentially about what he suspects is mismanagement from his group's current representation. I've agreed to talk to my friend's nephew John about his expected career in hip-hop. No doubt he has a clothing line ready to go. There will be calls to promoters, booking agents, attorneys, accountants, and other managers interrupting anything I may be doing. And an agent has asked me to accept a call from Jeremy R., a successful young Aussie horn player who recently immigrated to the U.S. I've got to make an appointment with the lead singer of Goodness, a Marvelettes-style four-girl oldies group, who is trying to revive her dormant career. And hopefully Pollyanne Heart, that Grammy-winning country singer, will call back. She wants me to translate her manager's explanation about why she has no money. I guess I should have her talk with other bankruptcy victims like Toni Braxton, Billy Joel, MC Hammer, TLC, and a whole slew of record labels.

I stop for coffee and my cell phone rings. It's Robert O.

Hey boss, George at CAA just called and needs a quick answer. Also, Max X., your 10:00 AM, has already been here fifteen minutes. It is 9:55 AM.

Let the day begin.

On the way to the elevator, I call George at CAA. He's the booking agent for BoyBand, responsible for bringing in concert dates and negotiating contract deals, based on my parameters. This is an exciting profession for some. For others it is a prison sentence. George sometimes talks like he's behind bars. I heard he used to perform with a group, and I suspect he's frustrated being behind a desk. I, on the other hand, get a kick out of the creative challenges of the profession.

It seems that the promoter for next week's BoyBand concert in Seattle is having trouble selling tickets and has asked if we would agree to reduce the band's guaranteed fee. Of course, the promoter is the one who takes all the risks, but has the greatest potential if the show is a sellout. I suggest that he call me with additional press interviews and that we wait a few more days before we consider cutting fees. I make sure that George knows that, to date, the promoter has not even called us for one blog interview—and this was after I spoke with his marketing director three times offering our help. This band also has a track record of high volume walk-up sales at its concerts. This is not a new situation for George either; less experienced promoters show their stripes at times like this. We agree to wait a few more days.

Upstairs, Max X. is smiling, impeccably dressed, tall, well-built, about thirty-five years old, and seems quite humble as we shake hands. RRU's funky reggae-rock recordings conjure a picture of a different Max, perhaps a Bob Marley-type. Nobody ever fits my preconceived images, and I now tend to suppress any mental pictures of musicians until I meet them.

First thing I need to know from anybody is what he wants. Of course, most artists don't know what they want beyond some vague notions of fame and fortune. If he says he wants a record deal, I'll need to keep a straight face. I also want to know as much as possible about RRU's current career and advisors.

Max is comfortable, he says. Like all the other members of his group, he's got a home, a car, a happy girlfriend, and an established career. He also eats and dresses well. So what seems to be his problem?

Our manager has much more than we do. And that doesn't seem right to me. We are his only clients. He may work hard, but he doesn't work harder than us.

How do the other guys feel?

They don't think there's a problem. That's why I'm talking with you alone. They haven't analyzed the books like I have. They don't want to rock the boat. Me, I hate being ripped off.

But your manager has done good things for you so far, right?

Yeah, but that ain't the point. It doesn't make sense that he makes more money than any of us. There are four of us and one of him. If he takes 20 percent, then we should each make 20 percent, too. But we don't. How does that happen if he ain't stealing?

Well, he may not be stealing, but he may be using some standard management tricks for his own benefit. I would have to see your management agreement to advise you further—unless you know the basics in that agreement. Do you know if he makes 20 percent, 15 percent or 10 percent? And does he take it from the gross or the net?

I think he makes 20 percent.

Of everything? Concerts, merchandise, recordings, publishing?

I know he takes 20 percent from concerts and merchandise, but I'm not sure of the rest.

That's your first problem.

What should the manager be making?

I tell him there are no rules in the music industry. Laws govern agents in New York and California, restricting commissions to 10 percent. But that could be 10 percent of the gross or the net—a difference that could translate into thousands of dollars.

GROSS VS. NET

As a manager, your clients pay you a percentage of their income. But unless you define what you mean by income, you can be cheating yourself or your client. Most artists would prefer to hear that you are taking only 10 percent of their money. But believe it or not, a manager making 20 percent of net income can earn less than a manager earning 10 percent of gross income.

Example: Assume the artist has just earned $10,000 for one concert.

Gross income is all money received from all sources without any deductions for commissions, taxes, union benefits, or expenses of any kind. A manager making 10 percent of gross will earn $1,000 (10 percent of $10,000).

Net income is the amount of money remaining after you deduct certain agreed-upon expenses such as hotel rooms, travel costs, taxes, the cost of personnel, equipment rentals, etc. If these deductions equal $6,000, then the net income in this example will equal $4,000. A manager making 20 percent of net will therefore earn $800 (20 percent of $4,000).

Always ask for the definition being used in your contract. It may be different in every contract.

THE MANAGER'S COMMISSION

Here is a good example of how Gross vs. Net directly affects the artist's income. In this example, the artist receives a flat guaranteed fee.

1. Some promoters will pay the artist a fee in addition to providing airfare and hotel rooms. The face (front page) of the contract will state that compensation is $8,000 plus air and hotel. In this case, a manager taking 15 percent of gross income earns $1,200 (15 percent of $8,000). If band salaries and other concert expenses equal $5,000, then the artist is left with $1,800 ($8,000 gross less $1,200 manager's commission, less $5,000 expenses = $1,800).

2. Another promoter may want nothing to do with the artist's travel arrangements and pays a fee of $10,000 from which the artist must provide her own air travel and rooms. In this second case, where air and hotel costs the artist $2,500, the same manager, again taking 15 percent of gross income, earns $1,500 (15 percent of $10,000). Assuming the same band salaries and concert expenses of $5,000, the artist is left with $1,000 ($10,000 gross less $2,500 travel expenses, less $1,500 manager's commission, less $5,000 expenses = $1,000). Obviously, if the manager is concerned about the artist's income, the actual cost of travel and hotel should have been checked before agreeing to this all-inclusive fee.

3. In the examples above, if the manager's commission had been on net income (defined as income after deducting travel and expenses), then the two cases end up as follows:

Regardless of the percentage a manager receives, it is infinitely more fair to base a commission on some form of net income.

BOX OFFICE RECEIPTS

Sometimes the artist receives a percentage of ticket sales. It then becomes essential to define any deductions that the box office may take before calculating the artist's share. It may make sense to deduct a special entertainment tax imposed by the local government (such as a sales tax). Obviously, neither the promoter nor the concert hall will be enriched by this money that must be immediately forwarded to the government, so why should the artist take a percentage? Sometimes group sales agents send large groups to the concert and are entitled to a commission. Some box offices will deduct the group sales commissions before calculating the artist's share. Credit card (CC) companies charge up to 5 percent of each sale for administrative costs and for their own corporate profits. Again, this is the cost of doing business and is not considered income because it is immediately paid out to the CC companies. The list may be long or short, but the manager should know what is a permissible deduction.

Here's an example of how the fee based on box office receipts might be calculated.

1. A stadium concert sells $250,000 in tickets. The artist is entitled to 15 percent of net. If net income is defined as after credit cards and 6 percent local tax, then the artist's share is calculated on $225,000 ($250,000 less 4 percent MasterCard/Visa/AmEx and 6 percent tax). The artist earns $33,750.

2. If you add $15,000 in group sales commissions to the above deductions, then the artist's share will be calculated on $210,000 ($250,000 less 4 percent CC, 6 percent tax, and $15,000 commissions). The artist earns $31,500.

This simple difference reduced your artist's income by $2,250 ($33,750 – $31,500). It matters how you negotiate the details of net income.

CREDIT CARDS

A special trick used by concert halls and venues everywhere is generic credit card deduction. When defining deductions from box office income, a contract may read that the box office may deduct 5 percent for the cost of credit cards. In actuality some credit cards charge 2.75 percent, some 3.2 percent, some 4.75 percent, etc. If you insist on deducting the actual credit card deduction, they are required to pass along only the actual monies paid to the credit card companies. In some cases, the difference can be tens of thousands of dollars. Always insist on the actual credit card cost.

Once again I ask: How can I help you?

I need to know whether we're being ripped off and, if so, whether we can get out of our agreement with our manager. If he did anything illegal, I want to sue the bum. Either way, we may need new management.

But the rest of the group doesn't agree with you, do they?

Not yet.

So at this point, you need a consultant to help you analyze your situation.

That sounds right.

Max needs to come back with his management agreement. I also ask for copies of concert gig contracts, their published songs, and other paperwork pertinent to RRU's income. I need to know who produced their merchandise and if the cost of production was subtracted before profits were divvied up.

Hey, what's all this going to cost me?

I don't hesitate a second. Nothing for now. Let's see how involved this gets. I don't like managers who take advantage of their artists. If you didn't know what you were signing, you need to be educated—assuming you want to learn.

Absolutely.

In my head, I'm thinking, yeah, right. Most artists are quick to agree and submit to anything that sounds good without a true knowledge of what they're agreeing to. As far as the money goes, I have found that I get more substantial income from worthwhile artists by being up front and affordable (free) than by worrying about consultancy fees. I'm not a fool. But I'm not going to make a living off of helping artists already in trouble. Management, as I see it, serves a purpose by keeping artists out of trouble before they get into it.

That means we must be educated. Most music managers I've met have little or no training. There are no standards for managers in the popular music industry, and they often make it up as they go along. While much of management is really crisis control—preventing and putting out fires—longevity in this business (the carrot on the stick) requires that the manager, the artist, or both have knowledge of more than twenty topics. They include:

• Medical plans

• Pension plans

• Insurance (life, travel, disability, liability, loss)

• Money management and investment strategies

• Taxes

• Contract law

• Publishing

• Recording contract pitfalls

• Royalties

• Translating legalese into English

• Basic accounting

• Copyrights

• Trademarks

• Booking agreements

• Recording studios

• Musical personnel

• Merchandising

• Publicity, marketing, press, and promotion

• The Internet

• Staffing (accountants, lawyers, engineers, road managers, etc.)

• Music and songwriting

• Image (costumes, makeup, and hair)

• Playing instruments (especially keyboards, because they're not just pianos anymore—a synthesizer or computer keyboard allows you to play almost every instrument)

• Stage presence and performing talent

Do you, the manager or the artist, know anything about these items? Together, artist and manager should complement each other and know something about all of them.

THE WHOLE CIRCLE: HOW AN ARTIST SHOULD CHOOSE A MANAGER

No one knows everything about everything. The best that artists can hope for is to find a manager that complements their talents and experiential education, filling the voids in their knowledge and having the abilities that they lack.

When asked, artists say they want someone personable but aggressive, honest but with great selling abilities. What they ought to be looking for is a manager who is well trained and knowledgeable in business, finances, and artistic arenas (see above list).

Everyone in life is going to be ripped off sometime. Having a knowledgeable partner on your side will help decrease the number and severity of the ripoffs. If both manager and artist are strong in one area, it reinforces that particular area against rip-offs. If either one is weak in an area where the other is strong, then the one should be able to compensate for and strengthen the other's area of weakness. If you're both weak in an area, read a book, seek out an advisor, enroll in a class, ask somebody who might know. Ignorance is expensive. Then find someone you will listen to, at least in those areas that you are not strong. Be willing to accept the blame if things go wrong and you didn't listen. The manager must be willing to listen to you too. No manager is as wise as he wants to believe he is.

It's not absolutely necessary, but there are definitely advantages to finding the manager who likes your music. His passion for your talents can work wonders.

A note to artists just starting out: Your nephew who loves your band may want to help you carry your luggage and get you water, but he's essentially worthless when it comes to tasks beyond a gofer (go for this, go for that). Your uncle may have run his own business for twenty years and be a hard negotiator on the phone, but he'll let you down when a club owner is robbing you blind and the press is misspelling your name. Let your friends and relatives be helpful and love them dearly, but don't sign with them as your manager. When it comes time to replace them, they will be insulted and they will hate you and spread nasty gossip around the neighborhood, or around the world via YouTube, Twitter, Facebook, Tagged, LinkedIn, and whatever else pops up.

The most successful marriage of artist and manager occurs when they each add pieces to the career pie and together complete the circle. It appears that Beyoncé Knowles's parents were special and helped shape the career of their talented child. Perhaps this family together covered the whole pie. But this is definitely a rare exception.

Max stays another fifteen minutes telling me about the band members’ various personalities. No druggies (thank God) but RRU's version of the Dwarfs: Lazy, Wimpy, and Crazy (as in certifiably schizophrenic). It's a pleasant hour, but a full hour nonetheless. This has been either charity or a great intro into a new managerial relationship.

Max X. from the reggae band RRU

2

Six Rules of Management

Keep all the tools in mind. Sooner or later you'll need every one.

The courage to speak must be matched by the wisdom to listen.

Robert O. witnesses my meeting with Max, as he does most of my business dealings, because as an intern he is here to learn. I found him five months ago through a university. He is a graduate student in entertainment management. He started out eager to donate his services in exchange for hands-on experience, but things have worked out so well that he has been lightly salaried for the past two months. Graduation is four months away and he is not interested in staying on with me (he needs to make a real living). We discussed it. I think it is an excellent practice to apprentice under managers with varying styles. I've introduced him to some possibilities and he has made many good contacts on his own.

Robert O. is ambitious, able, and personable, and he completes every task on or before schedule. In a word, he's overqualified. When I interview assistants, I always look for the overqualified because 1) they often don't get hired (they intimidate their potential bosses); 2) they do good work; 3) they think on their feet. Robert O. is everything my last intern Ned was not. The best assistant I ever had was Gloria. But she was paid. And after three years, I discovered that I couldn't afford the salary she deserved. In this business, change is good and necessary for growth, experience, and sanity. Even the big agencies are often fluid in their employment practices.

I usually learn something from each person I work with. Gloria taught me to hire the overqualified. She asked all the right questions and made no assumptions, even though she was very bright. She laughed and complained, but she cared about all the little important things—spelling, deadlines, phone etiquette, organization, filing, scheduling, keeping cool in crises, money, and the clients. I don't keep secrets from my assistants. I expect complete discretion, and make them sign a statement to that effect for my protection and, more importantly, the protection of my clients.

Many managers don't operate that way, thinking that holding on to knowledge is power. I believe that your staff will do a better job if they know what the hellest goest on. It shows you trust them and they usually return it tenfold.

Robert has taken five phone messages during my session with Max X. As a rule, I return all phone calls within seventy-two hours. I consider it rude not to return even the most unwanted call or email, although Robert is certainly capable of relaying answers on my behalf. In business, there are many rude people who must be contacted multiple times before you'll get a response. I teach my assistants good business manners.

When I was apprenticing under General Manager Robert Kamlot for the country's largest nonprofit theatrical producing organization (at that time), every assistant was made to memorize his Six Rules of Management. To this day, I pass them on to young manager-types whenever I can.

KAMLOT'S SIX RULES OF MANAGEMENT

1. Never assume anything.

2. Never give out gratuitous information.

3. When in doubt, do nothing. Sometimes no action is an action.

4. Never play around in your own backyard.

5. Never speak to the press.

6. Diplomacy is at least as important as being right.

I'd come in to the office and at arbitrary points during the day, the general manager would conduct a call and response, similar to religious services. He'd call out Rule #4! and expect us to respond with the appropriate rule. It was an effective education, and has turned out to be applicable to almost every crisis I've encountered.

Let's talk about Ned, who didn't understand a single rule. Ned was enthusiastic, very smart, and very spoiled. His parents made sure he didn't want for anything, so the unpaid internship was a breeze for him. I liked him right off the bat—a real charmer. But crises and deadlines were not in his vocabulary, even though he insisted that they were. Asked to finish filing some new contracts, he spent an entire day rearranging my personal files instead, thinking that I would appreciate his initiative. He assumed wrong (Rule #1). All he had to do was ask me. During contract negotiations, making this kind of an assumption can be deadly.

Ned would ask many questions about contracts. However, I caught him one day on the phone, telling his mother about the size of the fee that one of my clients was making on a show. Sharing this information did nothing to help the client, me, or Ned's mom. And it can destroy trust in a second. Rule #2 broken.

One day while I was at the gym, Ned received a crisis call from a promoter saying he had to book the artist's plane flight within one hour or the reservation would be lost. Ned couldn't reach me on my cell phone, so he authorized the flight. He didn't know that the artist had just called me directly to say he was leaving out of a different state. Rule #3 broken. This is why I prefer refundable tickets for all my clients.

Ned dated one of my clients, unbeknownst to me. But it didn't last. Ned didn't take rejection well. My client, subsequently, felt uncomfortable calling or coming to see me, because Ned would be there. The client didn't show up to a press interview because I had assigned Ned to accompany her. Rule #4, the most dangerous one, broken. And this was only dating. Screwing can get you and your business screwed. All that results from an affair is potential distrust and massive complications. Getting married doesn't make it better. Either manage the artist or marry him/her, never both. There are no doubt exceptions to this rule, but my observations tell me that it's not worth the risk. You can be your spouse's best friend and provide career advice without being the hired manager. You should define your relationship clearly as personal or business. Never both. There are no ifs, ands, or buts. Sorry.

To add insult to injury, when the client didn't show up for the interview, Ned felt free to step in and protect the client by inventing an illness. He assumed he was being helpful. He gave out gratuitous information and he took an unwarranted action. The next day, a column item appeared on