Music Biz: Assembling an Entertainment Industry Team
Music Biz: Assembling an Entertainment Industry Team
(first published on May 03, 2007 in Multimedia and Entertainment Law Online News)
Rapid advances in technology now allow artists of all types to be relatively self-contained. The creative process has become streamlined and less expensive for many filmmakers and musicians, and the internet allows for direct access to the public. This is all pretty obvious at this point.
Nevertheless, for many artists, assembling a “team” is still a crucial step in building a long term career in the industry and successfully developing, marketing and exploiting the fruits of the creative process.
The following is an overview of the various members that may form the team.
The Personal Manager
I have often told my artist clients that entering into an agreement with a personal manager is a lot like getting married. It is a particularly intimate relationship with a long-term commitment. Furthermore, the artist-manager relationship tends to have ramifications after the contract has ended.
The personal manager is often the focal point between the other team members and the artist. Generally speaking, a manager's duties involve advising, counseling and guiding the artist towards the furtherance of his or her career.
Depending on the parties involved, the manager may be very hands-on (i.e., selecting wardrobe, publicity materials and advising on creative issues) or, at the other end of the spectrum, mainly involved in business transactions for the artist.
Most management agreements have a fixed term of 3 to 5 years, sometimes with options for additional time periods (or in the case of musicians, album cycles).
One way to reduce a lengthy term is to include a provision that permits the artist to terminate the agreement if he or she should fail to earn a minimum level of income during the first 2 years.
Yet another alternative would be to include a provision that provides for the termination of the agreement certain identified events do not occur. For example, if the artist is a musician, management agreement might state that the agreement may be terminated if a major label recording contact is not entered into within 18 months.
Management agreements typically seek to grant a manager a power-of-attorney provision which can be quite broad or narrow depending on the negotiating strengths of the parties.
A limited power of attorney permits the manager to carry on the day-to-day business affairs of the artists; i.e. endorse checks, sign performance agreements, deal with performing rights societies, etc.
A general power of attorney would, in addition to the above, also permit the manager to bind the artist to long term commitments and even commence litigation without the artist's knowledge. The artist should require that he or she has final approval over "creative matters" and the manager is not permitted to sign, on the artist's behalf, any recording, publishing, merchandising or similar long-term agreement.
Personal managers invariably provide their services in exchange for a percentage of the artist’s gross earnings. Generally, the percentage can be anywhere between 15% and 25% depending on the relative experience of the parties.
Often it is the case that certain expenses, costs, and disbursements incurred in connection with the artist's professional career are deducted prior to the calculating the personal managers percentage. These deductions should include most monies paid on the artist’s behalf to third parties.
The most highly-negotiated provision in any management agreement is post-term compensation.
While a manager will argue for a perpetual commission on income derived from any contracts that he negotiated during the term, the artist will understandably be concerned about paying double-commissions to the former manager and a new manager.
There are several compromises that can be reached on this issue, usually centering around what is known as a “sunset clause”. In this, the manager is granted a post-term commission that diminishes over time and also may be limited to certain specified revenue sources.
Because of the economic risk inherent in the management agreement, a new artist will find it very difficult to attract the attention of an experienced manager until the artist is generating income or at least creating some real “buzz”. Therefore, sometimes an inexperienced, but enthusiastic novice is called upon to be a manager in the early stages of the artist’s career.
The Talent Agent
The talent agent has one clearly defined function - getting the artist employment. Obviously this is a crucial function.
Talent agencies range from the giants such as CAA, ICM and William Morris to the smaller one person operations. While the large agencies cover the whole spectrum, the smaller agencies often specialize in different areas of the entertainment industry such as niteclubs, dance companies, film, corporate parties, etc.
The real trick, though, is finding an agent. Talent agents (also known as booking agents) not surprisingly tend to sign performers who have a demonstrated ability to fill a room with warm bodies. This means that many artists end up doing their own booking initially.
Most agents will represent artists only on an exclusive basis. This means that anyone who wants to engage the artist must negotiate with the agent. This also means that the agency may be entitled to a commission derived from virtually all of the artist's employment in the entertainment industry, even when the agent had little or nothing to do with procuring the employment.
Generally, talent agency agreements have an initial term of 1 to 3 years. Additional 1 year options are possible, sometimes based on certain specified levels of income having been achieved during the term.
Agents generally receive a commission which ranges between 10% and 20%. However, most performers' union agreements impose a 10% cap on agents' commissions.
The artist should always limit the commissionable income to live performance monies and exclude any recording and publishing income. Furthermore, unless the artist is signed to one of the big agencies which puts together package deals in a variety of media, the artist will not want the music agent to be commissioning income derived from acting gigs.
Except for the provisions relating to commissions, agency agreements (unlike management agreements) tend to be non-negotiable. One reason for this is that talent agencies who work with union-affiliated artists are obligated to use artist-friendly contract forms drafted by the unions.
Furthermore, it is important to note that some states, such as California, require talent agencies to be licensed by the State Labor Commission. As a result, in the State of California, no person, including a manager, may procure employment for an artist without first obtaining a license from the labor commissioner. An exception to this law permits a non-licensed individual to procure a recording contract for an artist.
As with finding a manager, or an attorney, the best method for finding a talent agency is by word of mouth from other artists in your field. In addition, there are reference books and websites which list talent agencies.
As with any member you are considering for your team, it is important to select an agent who is familiar with the venues which are appropriate for your particular genre and is enthusiastic about working with you. For this reason, for the artist who is starting out, it is sometimes more effective to work with an energetic, but less experienced agent rather than attempting to sign with one of the giants and getting lost in the shuffle.
The Entertainment Attorney
Negotiation skills and general legal advice are only a portion of what attorneys bring to the table in the entertainment industry.
Many attorneys are de facto business advisors and professional matchmakers, bringing parties together for new projects. Some attorneys administer copyrights and collect and receive funds on behalf of their clients. And, of course, when deals go sour, an attorney coordinates the litigation process to resolve the claim.
Finding an attorney requires some research and the best place to start is word of mouth. Ask other artists and industry professionals for recommendations. The entertainment industry is a relatively small network of professionals who tend to interface on a regular basis.
One of these places is entertainment industry conferences. Attorneys often participate at these events as panelists and their bios are published in the conference materials. In addition, it is easy to strike up a conversation at one of the many cocktail parties that occur during a typical conference.
For the less socially inclined there are a variety of lawyer referral services, some of which specialize in arts or entertainment related law. Many of these organizations also provide regular workshops and clinics which are informative and provide yet another method of networking with attorneys.
In addition, your local public library or county law library may have a directory called Martindale-Hubbel which lists lawyers ranging from personal injury to bankruptcy to probate - but this is probably more information than you would want to sort through initially.
Of course, an artist can also use the internet to locate an attorney. Many of the top-notch entertainment law firms maintain websites with information about the firm, articles and links to other entertainment resources.
It is important to ascertain whether the attorney will be charging you for the initial consultation. Beyond that, fee structures can vary widely, but there are several primary methods in the industry.
Firstly, there is the hourly rate. Hourly rates can vary quite a bit based on geography and experience, but as a ballpark range you can expect $250.00 to $450.00.
Secondly, many entertainment lawyer charge a percentage (usually 5%). While this may provide the client with an advantage in some cases, the client should also consider that the other members of his or her team (i.e., agent, manager, business manager) also take a percentage, thus making what's left of the pie that much smaller.
Finally, flat-fee billing is utilized by some attorneys for specific projects such as incorporating or registering a trademark.
In all cases, the client should expect a written legal services agreement, as well as the requirement to pay an upfront retainer deposit, which is typically held in trust and applied against fees and costs as they accrue. Costs, by the way, are usually billable and can include messengers, fax, overnight mail, long distance phone calls, and possibly photocopies.
I mentioned already that the entertainment industry comprises a relatively small network of companies and individuals. The problem that arises for the client is the potential for conflicts of interest.
Attorneys are ethically required to disclose conflicts of interest. Many conflicts can be dealt with by disclosure and informed consent of the parties. However, some require that the attorney step aside and that the parties retain separate counsel.
That being said, conflicts are not limited to attorneys - it is also common to managers, agents and other professionals in the industry. The bottom line is that the client needs to be informed and then needs to feel comfortable based on the facts and circumstances as presented.
Simply put, a publicist's job is to develop public awareness for an artist. Without that awareness, even the most talented artist will have a hard time becoming successful.
The publicist presents carefully crafted information about the artist to the media, and the media takes the information and, hopefully, presents it to the public in a manner that will generate interest and economic benefit.
People often think that artists end up on magazine covers or television because the publication, television station or radio station sought them out. Rarely is this the case.
Most of the time a publicist is hired to create a stir about an artist, or an event. A good publicist accomplishes this by building trust over a period of time with the writers they solicit. Writers come to depend on publicists to bring them good stories and new players in the scene.
Publicists may charge an hourly rate, a project fee, or a monthly fee, depending on the scope of the job. For example, a four-month media campaign might range in cost from $6,000 to $20,000 plus expenses.
The Business Manager
Assuming the artist has a solid income stream, a business manager (usually an accountant) is an essential member of team.
Business managers, as opposed to personal mangers, focus solely on the artist’s finances. However, good business managers are more than just “bean counters”.
Whereas accountants generally do one or two things for their clients: taxes and/or bookkeeping, a business manager can pay the artist’s bills, help the artist collect income, do payroll, budgets, tax planning, shop for the best insurance (life and health), do investment analysis, and track and audit royalty accounts.
Business managers are compensated on an hourly basis, monthly retainer, percentage, or some combination of these.