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The manager's commission rate
By Thaddaeus Thompson
Commission rates have crept up over the years, and there are sound reasons for this. Historically, the manager was nicknamed "Mr 10%." By the 1970's the usual rate of commission was 15%. Nowadays managers invariably charge 20%, and sometimes a manager will charge 25%, although this is rarely thought to be justifiable. An inflated rate of this kind might arguably be reasonable in the case of a powerful and successful manager putting together a "manufactured" band or if the manager is prepared to work exclusively for the artist involved.
The principal reason for this increase in rates is that, when a lesser rate of perhaps 10% or 15% might have applied, the remaining term of the typical management contract would have been more demanding from the artist's perspective. For example, the manager might have expected to receive his commission on the gross income arising from any contracts entered into during the currency of the management contract.
The management contract might have run for five years, but if towards the end of the five years the artist were to enter into a long-term recording agreement, for example, the manager would nevertheless expect his commission on all earning under that agreement, even though a large part of those earnings may have been attributed to recordings made after the expiration of the management contract.
Today a manager would not usually expect to receive commission on recordings made or songs written after the expiration of the management contract, even though the manager may have negotiated the terms of the recording and publishing deals governing those subsequent recordings and songs. Moreover, most managers now accept that the commission will be calculated on the gross income only after deduction of certain expenses.
Not only that, but the manager will often have to accept that, following the end of the management contract, there will at some point be a reduction or even a cutoff in his commission entitlement. For these reasons, the rate of commission has increased to its usual rate of 20%. The rate of commission may be affected by what is agreed as to the extent of the manager's involvement. A manager may wish to limit his involvement to the business side of things - he may not wish to be available day and night to deal with creative issues and personal crisis.
If the manager is prepared to accept that he is offering something less than a full management service he may be prepared to accept a less substantial rate of commission. A manager of a producer, for example, may accept less than 20%, even perhaps 10% or 15%, considering that his role is restricted largely to seeking out work for the producer.
Related topics:
- Variable rates
- Commissionable income
- Calculation of commission
- and many more important topics are part of T&T Music's Artist Training and Mentoring Program.
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