As a manager, you represent and advocate for your clients in the entertainment industry. From negotiating contracts to overseeing career development, your role is crucial in helping your clients succeed. But how do band managers get paid?
Band managers are typically paid by commission, incentivizing them to work harder. This way, the more the band makes, the more the manager makes. The desire for your pay feeds itself.
Check out our article to learn more about how entertainment managers are paid.
Seven ways a band manager can get paid
One of the most common ways artists pay managers is through commission-based pay. This means you receive a percentage of your clients’ earnings as your fee.
The percentage can vary, but it is typically around 15-20% of your client’s gross income. This includes things like album sales, tour income, and merchandise sales.
In some cases, managers may also charge upfront fees for their services. This could be a flat fee or a percentage of the client’s earnings.
Artists typically pay upfront fees in advance, and managers can use them to cover the client’s costs, such as legal fees or travel expenses. This is less common because managers aren’t incentivized by performance.
Another way that managers may get paid is through performance bonuses. These bonuses are typically based on the client’s success and are paid out in addition to the commission or upfront fee.
For example, a manager may receive a bonus if their client’s album goes gold or if they sell out a tour. These bonuses are often seen in addition to commission pay.
Some managers may also charge retainer fees, which are paid regularly (such as monthly or quarterly) to cover the costs of managing the client. These fees may be based on the level of work involved or the client’s earnings.
Much like with upfront fees, retainer fees don’t push the manager. So they should be considered in addition to commission pay in most cases.
In some cases, managers may also receive equity ownership in their clients’ careers. This could include ownership in a record label or a percentage of the client’s publishing rights.
Equity ownership can be a good way for managers to benefit from the long-term success of their clients. This pay structure encourages band managers to consider a band’s long-term success.
If a manager is also a producer on a project, they may receive a producer’s fee in addition to their commission or upfront fee. A producer’s fee is typically a flat fee that covers the costs of producing the project, such as studio time and engineer fees.
These fees might be separate or included with other kinds of earnings. Because they are two different jobs, they might be paid differently.
Managers may also receive points on their client’s projects. Points are typically a percentage of the gross income generated by the project and are paid out in addition to the commission or upfront fee.
For example, a manager may receive 1 point on a client’s album, equaling 1% of the album’s gross income. Point structures are similar to performance fees in that they come in addition to commission.
Other factors to consider when paying managers
The entertainment industry can be highly competitive, making it difficult for managers to find and retain clients. As such, it’s vital for managers to have a strong understanding of their value and to negotiate fair and reasonable terms for their compensation. This may involve working with an attorney or entertainment lawyer to draft contracts and agreements that clearly outline the terms of the manager’s compensation.
Another critical aspect of handling manager finances is to stay organized and keep track of your income and expenses. This may involve using software or tools to manage your accounts and track your financial performance. It’s also a good idea to work with a financial planner or accountant to help you develop a financial plan and ensure that you make the most of your income.
In addition to the methods of compensation outlined above, it’s also crucial for managers to consider the tax implications of their income. Managers are often responsible for paying self-employment taxes on their income, which includes paying both the employee and employer portions of Social Security and Medicare taxes. It’s a good idea to consult with a tax professional to understand your tax obligations and ensure that you correctly report and pay your taxes.
It’s also essential for managers to consider their long-term career goals. While it can be tempting to focus solely on the financial aspects of your job, it’s also important to consider your personal and professional development. This may involve setting career goals and working towards them, seeking new opportunities for growth and learning, and building relationships in the industry. This can help you to stay competitive and to serve your clients better.
Where managers should get paid
Band managers should only be paid for the work they contribute to. For example, if the manager doesn’t support your booking schedule, they shouldn’t get a percentage of that income. Managers want to dip into multiple income streams to maximize profit.
You’ll also want to be sure they don’t take a portion of income owed elsewhere. For example, if record labels help you produce and create a record, they might want a separate 20%. Contracts let you consider who gets paid first, helping you establish a fair payout for everyone.
What percentage of income do band managers make?
In North America, a common management percentage is 15-20% of gross artist revenue. Some managers may charge 15%, but it is more common for them to set a rate of 20%.
Alternatively, some managers may charge a percentage of net revenue, meaning they will receive their share after subtracting certain expenses. These expenses usually relate to live performances and include flights, transportation, and agent fees.
One of the challenges of negotiating a net deal is determining which expenses will be subtracted. There are many potential variables to consider when negotiating management commissions and the amount a manager will make, which is a normal part of negotiating a business partnership. In some cases, negotiations may not conclude, and the association may be terminated.
How much does the artist need to make for the manager to make a living?
To replace the income from a full-time job paying $50,000 per year, the average salary in North America, an artist would need to earn $250,000 per year at a management percentage of 20% gross.
Alternatively, a manager could have two artists earning $125,000 each per year or three artists earning over $80,000 each per year. However, managing three artists may be the maximum workload for most managers unless they have a strong team supporting them.
If a manager earns $50,000 per year and has three artists, they will likely have many expenses and may need assistance. In addition, if the management percentage is less than 20%, the artist would need to earn significantly more, or the manager would need other sources of income besides management to sustain themselves after quitting their day job.
Managing the financial risk as an artist manager on commission
It is essential to diversify your sources of income and not rely solely on one stream. Some ways to do this include:
- Keeping your current job or finding a new one and managing artists on the side
- Offering management consulting and administrative services
- Taking on consulting contracts for projects you are skilled in.
- Seeking a job at an established artist management company and eventually building a band roster
- Managing multiple artists in case one artist decides to leave or experiences career setbacks.
Do music managers get royalties?
Music managers are responsible for managing the daily aspects of a musician’s career, including booking gigs, handling publicity, negotiating record deals, and managing finances. The owners of copyrights receive royalties, which are uncommon for music managers to receive. In most cases, the songwriter or composer owns the copyright to a song, not the manager.
Typically, managers receive a portion of the profits from record sales or gig fees, but they usually do not receive royalties, which are payments copyrights owners receive
The copyright owner, typically the songwriter or composer, receives royalties rather than the manager. This is the reason why music managers do not usually receive royalties.
It is always important to carefully read and understand any contracts before signing them, as there may be exceptions to the general rule that music managers do not receive royalties. However, in general, the owners of copyrights accept these payments, which music managers do not.
In conclusion, there are several ways managers can receive payments for their services in the entertainment industry. These methods include commission-based pay, upfront fees, performance bonuses, retainer fees, equity ownership, producers’ fees, and points.
It’s vital for managers to negotiate fair and reasonable terms for their compensation and to consider the tax implications of their income. Continuing to develop your skills and stay up-to-date on industry trends can also help you remain competitive and serve your clients better.