Important facts in management, agent and label contracts

1.Management contracts:
Responsibilities are: represent the artist, deal with agents, keep business partners updated, make decisions on behalf of the artist. The role of management is split in personal management / artist management and tour / road management.

The most important cornerstones in a contract are:
- percentage


- termination
- exclusivity
- territory



2. Agent contracts:
Responsibilities: Connect artist or management with venue representatives on a certain territory, where the agent operates. Agents are responsible for touring. They need exclusivity to ensure that their show price is fixed. If more than one agent operates on a territory at the same time, it can happen that two competing agencies undercut a price for a show until one of them gets the deal. Venue representatives are angry if they hear from somebody else about a different pricing for a show they just bought. The agents business advantage is to know venue representatives in person, so the artist belongs to a catalogue of other artists who all stand for certain quality standards. Management can't deal with venues, directly. Management always deals with agents and tour management is not agent work.

Again, these are important facts to negotiate in a contract:


- percentage


- termination
- exclusivity


- territory

3. Major Distribution combined with secured marketing investments and a strong image are the key for success on the market. Labels try to sign as many artists as possible to have an option on them, in case they develop and generate a request. Major labels typically use their names to sign artists exclusively. The artist gets a (huge) advance. For instance 20.000USD. The management sometimes gives advice to sign the contract because of their percentage of the advance and the dreams, the major A&Rs promise.

IMPORTANT FACTS IN CONTACT: 


1. Exclusivity and image control -> No other releases than the ones, approved by the label


2. Push back option -> The label can push back the album release as many times as they want. Exclusivity applies and artist can't release official songs.
3. No marketing investments -> The label makes the advance recouple from artist royalties and minimize the risk of failure by leaving the marketing budget out of the contract.


4. Major label often put other clauses in the contract and then name the contract „Standard recording contract“ to give the artist and its management the impression these are market standards.  Other things that benefit labels in their contracts are i.e: "pro rata royalty rates" or "controlled composition clauses"

360-degree model - Artist Management and labels

Today, consumers attach no direct value to music anymore, because the way how they get new music changed through technology. In the past, music labels generated most of their income by selling records. An artist released a record and went on tour to stimulate sales. Today, consumers listen to new music on YouTube, Facebook or via subscription services. Many young people share their favorite music online or copy gigabytes of music to hard drives. Music lost its value and labels have to find new ways to earn money with their artists. Nowadays, most labels sign artists "360-degree". Besides the right to use the recordings of the artist, the record label participate in other income streams, including publishing, live performance, merchandising, sponsorship and endorsement deals. For this reason the model is also known as an "all rights" deal. If the publishing rights are excluded, it is called a "270-degree" deal. It is often necessary to sign such a deal because marketing investments are high and a label only invests, if investments can be recouped. Another way is, to produce music on an independent label and license it to a major label. In this case, it is possible to sign a package & distribution (P&D) or master licensing deal without giving the label a piece of everything, the artist earns. A typical breakdown of the 360-Degree record deal for new bands can look like this:
"Label gets approx. 90-95% of record sales. / Label gets approx. 10% of touring income. Label gets approx. 10% of merchandise income. / Label gets 9c publishing cut per song (or more, depending on media distribution)" Unknown, U. (2008).
Established artists often sign 360-degree deals and receive huge advances. Madonna received a 80 million advance from Live Nation in 2007 for giving them 360degree rights. When independent labels sign 360-degree, they need to have a good business plan and success in their past business operations to convince an artist about the benefits of their label. Its a huge commitment for artists to sign 360 degree.

References:

Phillips, C., & Shepherd, M. (2010). The 360-degree Deal and other Music Business Models. Retrieved October 1, 2011, from: http://www.boltburdon.co.uk/en/Business%20Clients%20Bolt%20Burdon%20Solicitors%20London/Media%20and%20Entertainment%20Bolt%20Burdon%20Solicitors%20London/The%20360%20degree%20deal%20and%20other%20business%20models.aspx

Unknown, U. (2008). 360 Degree Music. Retrieved October 1, 2011, from: http://brettgoldberg.wordpress.com/2008/01/11/360-degree-music/

Meyerowitz, J. (2009). 360 Record Deal. Retrieved October 1, 2011, from: http://www.podcomplex.com/blog/why-360-degree-deals-wont-turn-the-music-industry-around/