So how is a personal manager paid?
Usually a personal manager receives a commission or a percentage of the
artist's earnings.
Usually that amount is between 10% and 20%.
And the amount they get will depend on a lot of factors.
It could depend on the leverage of the manager, the
experience of the manager.
Most experienced managers that have leverage with record companies,
publishing companies, might charge a commission of 20%.
Whereas, you might have a new manager that's coming in, one of the friends
of the band, that says they're really going to work hard.
And they're going to charge less than that experienced manager if the band
gives them a chance.
They might charge 10%.
So you have a sliding scale, so to speak, as far as determining how much
a personal manager is going to get paid in commissions.
Some managers have made as high of a commission as 50%.
Now, that's very rare.
And I'm speaking of Colonel Parker with Elvis way back in the '50s.
Those days have kind of gone.
Usually in the music industry, personal managers commissions won't
exceed 20%.
So you might ask 20%, 20% of what?
20% of the gross income of the artist.
The gross income is all of the income that comes into the artist.
As I mentioned regarding the recording contracts, the artist might have a
recording fund, but there's a number of costs and expenses that are taken
out of that fund so that artists is left with very little.
That can be a big issue in determining how the commissions are applied.
Many experienced managers with great track records of success will insist
upon 20% of the gross.
However, if the artist has any kind of leverage at all, they might be able to
work out the commission being paid on the net amount of income
rather than the gross.
What do I mean by that?
Well, let's say that the artist makes a fee of $5,000 a night for a live
performance.
Now, in most situations, out of that $5,000 the artist has to pay all of
the cost of getting to the gig, any costs associated with the gig as far
as production goals, of course, they have to pay their road crew.
They have to pay their booking agent or talent agent.
And we're going to talk about that, usually 10% of that income.
If the manager is receiving 20% of the gross of that date then a manager is
going to get a fee of $1,000.
The booking agent, of course, gets 10% of the gross as well,
that's another $500.
So there's only $3,500 left.
The artist has to pay the cost of transportation and lodging, which
could be very substantial.
Let's say that that's another $2,500 out of the $3,500.
Let's say that this is a band of four members.
That's kind of tough thing for an artist to swallow that their manager
has made so much money while individually the amount of money that
they take home is much less.
And that leads to the argument of whether or not the personal manager
should be paid on the gross as opposed to the net.
Let's say that the manager is paid on the net rather than the gross.
Let's go through those figures.
The fee for the date is $5,000.
Of course, the talent agent's commission of 10% comes off the top,
that's $500, which leaves $4,500.
$2,000 is being used for travel and lodging for the artist,
which leaves $2,500.
That is the net.
If the manager is paid on the net, the 20% is going to be taken on $2,500
instead of $5,000.
And that 20% is going to be $500, which is going to leave the act with
$2,000 to be split between all of the members of the artist leaving them
with $500 each as well.
So in this example, you can see when the commission is paid on the net,
both the manager and the artist make the same amount.
Whereas when the manager's commission is based on the gross, the manager is
making much more money than each individual band member is taking home.
And that could cause some bad feelings and usually does in the artist manager
relationship.
Now, when I say that sometimes artists can negotiate net deals as opposed to
gross, don't think that that is really an every day occurrence.
Usually only artists that have a significant amount of leverage and
success are in a position to negotiate net deals on
various types of earnings.
So this is one of the most important aspects of an artist having a proper
perspective.
And sometimes it takes the personal manager to make it clear to the artist
that there are a number of expenses, including their commissions, that have
to be born before the artist is in a position to have a net amount to split
among the band members.
Once again, you're talking a personal manager's commission of maybe 20%, a
talent agent's commission of 10%.
We're going to talk about other types of managers and other team members
that might also be on a percentage basis with the artist.
And the artist needs to be aware that, particularly in live engagements, when
you have to take all of the commissions off the top as well as all
of the expenses to actually get to the live performance and perform.
It could be substantial.
Some artists may only net 30% to 35% of the gross amount which has to be
split among all of the band members.
And that's before taxes on their share.
Earlier in this course, we talked about how dynamic the industry is and
how changes have been occurring and are currently occurring
in the digital age.
Well, the idea of personal managers and personal managers' commissions
isn't immune from change.
As a matter of fact, I went to a conference a few years ago.
And one of the panelists said, you know, if I had my band now, if I had a
four person band, I would make sure that I would hire a fifth person that
didn't play an instrument at all.
They were just an expert in social media.
And they would become a member of the band.
In other words, they would receive an equal share.
Well, I gave you the example of Ethan Schiff.
I think he's a new jack swing type of manager.
And by that I mean, he is really coming in and incorporating new
elements of the digital age and really helping and assist his client.
This idea of a manager being like a member of the band isn't new.
It really goes back to the '70s and '80s.
As a matter of fact, the Commodores, which was a great band that included
the great Lionel Richie, had a manager Benjamin Ashburn who was like the
seventh Commodores.
There were six members of the band and this person was treated as the seventh
member of the band.
In other words, his commission was an equal share with the band members of
the net amount.
That way he never made more than the band members.
And he was even more inspired to try to make better things
happen for the band.
Because he knew when they made more, he made more.
It'll be interesting to find out if this is a new trend when you have
people like Ethan Schiff and other young managers who are working hand in
hand navigating this new digital age for their artist and creating a kind
of success that the artists hoped to achieve.