Becoming a successful musician takes a lot of hard work and dedication. But even if you achieve success and start making all the money you desire, it’s important to know what comes with that success, including who has their hands in your pockets and which pockets those hands are in.
You really need to get comfortable knowing where your money is going, because if you don’t, someone else might be getting comfortable with it instead. We’re talking, of course, about royalties: the payments made to creators whenever their work is used - usually producers, songwriters, and performers.
It’s important to remember that these aren’t one-time payments; they’re on-going, which means that if you create something successful, you could be earning money from it for the rest of your life!
With that in mind...
Do Music Managers Get Royalties?
A music manager is responsible for the day-to-day operation of a musician's career. This can include everything from booking gigs and handling publicity to negotiating record deals and managing finances. So, do music managers get royalties? In most cases, the answer is no.
While managers will receive a cut of the profits from record sales or gig fees, they generally do not receive royalties.
This is because royalties are payments made to the owners of copyrights, and in most cases, the songwriter or composer owns the copyright to a song, not the manager.
Of course, there are always exceptions to this rule, so it's important to read any contract carefully before signing it. But in general, music managers do not receive royalties.
Who gets royalties?
In the music industry, royalty payments are usually made by record companies to songwriters, composers, and music publishers when records are sold, streamed, or played on the radio or TV.
The owner of the copyright usually receives royalties. However, there may be other people who have a claim to the royalties, such as the artist who performed the work, or the producer who oversaw its creation.
How are royalties calculated?
The amount of money that a copyright owner receives from royalties depends on a number of different factors. The two most important factors are how often their work is used, and where it is used.
For example, a songwriter may receive a higher royalty rate for sales of their songs in Europe than they would for sales in North America. Additionally, different types of uses (such as radio play or live performance) may be worth more or less than others.
In general, the more exposure an artist gets, the more money they will make from royalties.
What Does a Manager Get Paid For?
Music managers receive a commission (a fee that a music manager charges for their services). This fee is typically a percentage of the artist's earnings, and it can vary depending on the manager's experience and the level of success of the artist.
Managers are responsible for a lot of different tasks, including booking gigs, handling publicity, and negotiating record deals.
(Ps. We have written a post all about what services music managers do and don't do, so you can read that to learn the full run down.)
Taking A Percentage of Artist's Earnings
Music managers typically receive a percentage of an artist's earnings, which can vary depending on the manager's experience and the level of success of the artist.
The typical commission is 10-20%, but it can be higher or lower depending on the situation.
In addition to their commission, music managers may also receive perks such as free tickets to concerts, access to VIP areas, and free merchandise. These perks can be extremely valuable, as they provide access to exclusive events and can help to promote the artist's career as well as elevate the manager's status.
However, it is important to remember that music managers are also responsible for a significant portion of an artist's income. As such, they should be chosen carefully and treated with respect as an integral part of the team.
How Do Music Managers Get Paid?
You now know what they do, what they get paid for doing and a rough percentage amount they take as their commission.
So how do they actually get paid? Well, it's quite simple:
A commission is a fee that a music manager charges for their services. This fee is typically a percentage of the artist's earnings, and it is paid out of the artist's royalties.
For example, if an artist earns $1,000 in royalties, and their manager charges a 10% commission, the manager would receive $100. But commissions and fees can be determined and received in a number of ways, including:
- Percentage of artist's earnings (as mentioned above)
- Flat fee
As we have mentioned what is entailed when taking a percentage of the artist's earnings, let's move on and explore the other two options:
A flat fee is a one-time payment that a music manager charges for their services. This fee is typically paid upfront, and it is not based on a percentage of the artist's earnings.
For example, if a music manager charges a flat fee of $500, they would receive $500 regardless of how much the artist earns in royalties.
The advantage of a flat fee is that it is predictable and allows the artist to know exactly how much they will be paying for the manager's services.
The disadvantage is that it may not be aligned with the manager's incentive to get the artist the best possible deal, since they will not receive any additional compensation if the artist does well.
In general, flat fees are more common in the music business than in other industries. This is because music managers often have numerous clients and do a lot of work upfront and therefore prefer to charge a flat fee rather than a percentage of each client's earnings.
A retainer is an ongoing monthly payment that a music manger charges for their services. This fee is typically paid upfront, and it is not based on a percentage of the artist's earnings.
For example, if a music manager charges a retainer of $500 per month, they would receive $500 per month regardless of how much the artist earns in royalties.
Although retainers are not based on a percentage of earnings, they can still be very expensive. In some cases, a retainer can be upward of $1,000 per month.
For up-and-coming artists who are trying to break into the industry, this can be a significant financial barrier.
Music managers typically charge retainers because they provide ongoing services, such as promotion and marketing, that require a more consistent level of effort. In other words, a retainer provides music managers with a steady stream of income that they can rely on to cover their costs.
For artists, retainers can be a valuable way to access professional services.
How Is a Manager's Share Calculated?
As mentioned above, a music manager typically receives a commission, which is a percentage of the artist's earnings. But how is this commission calculated?
There are two ways to calculate a commission:
The first way is to take a percentage of the artist's gross income. Gross income includes all forms of income, such as performance fees, merchandise sales, and record sales.
The advantage of this method is that it is simple to calculate. The disadvantage is that it does not take into account the expenses that the artist incurs, such as the cost of recording an album or hiring a publicist.
The second way to calculate a commission is to take a percentage of the artist's net income. Net income is the artist's gross income minus their expenses.
The advantage of this method is that it provides the manager with a greater incentive to help the artist save money, since the manager's commission will increase as the artist's expenses decrease.
The disadvantage of this method is that it can be more difficult to calculate, since it requires knowledge of the artist's expenses.
In general, music managers prefer to receive a commission on the artist's gross income, while artists prefer to pay their manager a commission on their net income.
However, the method of calculation should be negotiated between the artist and manager before entering into an agreement.
What Happens When You Earn More?
The way that a manager's share is calculated can have a big impact on an artist's career. For example, if a manager takes a smaller share in order to reinvest more money into the artist's career, the artist may be able to achieve greater success in the long run.
However, if a manager takes a larger share, they may be less incentivized to invest in their artist's career. Of course, this is just a theory, and many factors can affect an artist's career, regardless of how their manager is compensated.
Depending on the commission schedule, when you earn more money, your manager may start receiving a higher percentage of your earnings. This could be in the form of a bonus or an increase in their regular commission.
For example, if a manager's commission is 10% on all income up to $10,000, and 15% on all income over $10,000, then the manager would receive $1,000 when the artist earns $10,000.
If the artist then goes on to earn $20,000, the manager's commission would increase to $2,500 (10% of $10,000 plus 15% of $10,000).
What Are the Benefits of Having a Music Manager?
As anyone in the music business knows, there are a lot of moving parts to keeping a band or artist afloat. From booking shows and recording albums to promoting the music and dealing with finances, there's a lot to keep track of.
That's where music managers come in. A good music manager can take a lot of work off of your plate so that you can focus on making music, which is what you're good at!
- Music managers can help you get gigs and book shows.
- They can also help you record and release your music, as well as promote it to the public.
- They are incentivized! Music managers typically receive a percentage of the band's earnings, so they only get paid if the band is successful.
- Having a music manager can take a lot of work off of your plate so that you can focus on making music, which is what you're good at!
1) One example of a benefit that a music manager can provide is helping to get gigs and book shows for their artist or band.
2) Another example of a benefit that a music manager might provide is helping to record and release an artist or band's music, as well as promoting it to the public through various channels such as social media or online press outlets.
3) As stated before, one of the main benefits of having a music manager is that they typically receive a percentage of the band's earnings, so they only get paid if the group is actually making money from their musical endeavors! This incentive-based system ensures that both parties are working towards success in order for anyone to see any sort of return on investment.
4) Finally, having a music manager can take a lot of work off of your plate so that you can focus on making music, which is what you're good at! This allows artists and bands to really hone in on their craft without having to worry about the business side of things as much.
In Summary: Paying Your Manager
The two most common ways a personal manager in the music industry can be paid are a percentage of the artist's gross income or a flat fee. Most personal managers seek to be paid a commission of 15-20% based on the artist's gross income, but 25% is not unheard of. Managers usually receive commissions in between 15-25%, as it is difficult for them to provide management services without being paid. Managers need to be paid in order to continue investing in an artist's career and maintain their office staff and costs.