Please review this contract and let me know if it seems fair…

Question

I am starting a music career. An entertainment company heard my music online and
is interested in managing me. They have sent me a contract for my review and I
wanted to know if it seems fair. Is there anything in particular here I should
be concerned about? Is there anything I should request that they revise?

Below are the contract terms:

Dear Sir/Madam

I (We) confirm our Management Agreement whereby we appoint you to represent us
as our sole and exclusive manager under the provisions of this agreement as
follows:-

1.This agreement relates only to my professional music activities and confers
the right to represent me as a solo artist. (Bands/groups/duo's etc need to
specify that only the band as a whole is represented and any solo activity
requires separate consent).

2.Both you and I warrant by our respective signatures that there are no existing
restrictions that prevent either party from entering into this agreement or
performing any of our obligations.

3.This agreement relates solely to activities as a musical artist and in no way
confers the right to represent or hold yourself as representing me in any other
field of entertainment or area of work not connected with the music industry
without prior written consent.

4.During the term of this agreement defined below you shall have the following
obligations:
(a)To use your best endeavors' to promote and develop my career as a music
artist and provide me with regular reports on your work.

(b)To ensure all monies due to me are promptly collected and remitted directly
to me by the parties from which they are due.

(c)To refer all inquiries connected with my (our) work in areas which are not
permitted to act directly to me.

(d)You shall not have the right to assign or transfer obligations to any other
person or company without written consent, any such act shall immediately and
retrospectively terminate your appointment and this agreement.

5.The following are the obligations I agree to:-
(a)To be available and comply with reasonable requests to undertake activities
pertaining to my music career at my sole discretion.

(b)Not to attempt to negotiate agreements with 3rd parties directly which relate
to activities which you are responsible for and to refer all such third parties
to you.

(c)To refer all Press inquiries to you.

(d)To notify you of any changes in address or contact numbers and email and
webpage addresses.

(e)All discussions-internal meetings and anything confidential should not be
disclosed outside of the initial artist team. Without your approval.

6.During the term of this agreement I shall reimburse any expenses directly
relating to your activities as my manager upon request by you, with the
exception of office expenses i.e., telephone, staff etc., will be your sole
responsibility..

7.If you are permitted to manage other artists then I require you to submit
written details in respect of expenses that are related solely to your
activities as my manager and not as manager of other artists.

8.You shall be entitled to charge for your services a commission of 15% (maximum
20%) of the (gross or preferably net) income received by myself in respect of
the activities the subject hereof during the Term and Commission Period
(excepting that following termination of the Term and commission payable shall
reduce to 10% of the (gross/net) income and will be subject to the limitations
on the source of such income set out below). Commission shall be payable based
on net income received by myself for live work during the Term and for the
avoidance of doubt during the Commission Period you shall only be entitled to
your commission in respect of income derived from recordings and compositions
made in whole during the Term. You shall be solely responsible for meeting your
own income tax, National Insurance, Corporation Tax and Valued Added Tax.

9.The Term of this agreement shall be 2 years from the Agreement Date with the
provisions that I shall be entitled at my sole discretion following the expiry
of 6 months from the Agreement Date to terminate the Term in the event that you
have not procured the signature of a publishing or recording agreement by such
date. The Commission Period following the expiry or termination of the Term
whereby you are still entitled to receive commission set out in Clause 10 shall
be 2 years from the date of termination, however in the event that I have
exercised the right to terminate the term after 6 months you shall not be
entitled to receive commission on future income derived from recordings or
compositions made during the Term.

10.You shall be entitled to appoint another person as my manager in certain
countries or territories of the Territory provided I grant consent to such
appointment and the identity of such person and provide that such appointments
shall not charge you from any of your managerial obligations as set out in this
agreement.

11.Nothing in this agreement shall be deemed to create a partnership or joint
venture between the signing parties.

12.The said named artist has thirty (30) calendar days to complete this
agreement and return a notarized copy back to the said named management company.

Sole-Responsibilities by the Artist

•Artist expenses may incur charges such as copyrights which will then be the
sole rights to the artist or co- ownership of. Artist website and/or domain name
will be the sole ownership of the artist and his or her legal guardian. The
artist is responsible for equipment such as musical instruments, microphones,
CDs, cd players, travel expenses, food, lodging expenses, clothing, hair designs
and makeup and other related supplies or materials the artist may need, unless
any of the following is management team affiliated.

Hugh · Accepted Answer

Ok. Here are some things that I have noted in this agreement that need to be
addressed.

1) Management duties. This is often generalized in agreements, however you may
want to add more specifics. "To use your best endeavors to promote and develop
my career as a music artist and provide me with regular reports on your work."
is not much to go on here. There is nothing of substance that relates to what
they are going to do for you in relation to activities. Also, what will be the
time frame on providing regular reports on work? Will it be weekly, bi-weekly,
monthly? That needs to be outlined.

2) Expenses. It is customary for managers to get reimbursed on expenses, however
you provide no "cap" or checks and balances when it comes to this. With this
agreement, they could incur major expenses on behalf of you as their artist
without any input or "permission" from you. You don't want to wake up one day
and get a hefty bill for reimbursements. Obviously, you don't want to hinder
their job....but you don't want them to go overboard either.

3) Commission. This section is a bit ambiguous. Not good for you. 15% "or" 20%?
Which one is it? Needs to be one or the other, unless you have some specific
income streams or income exceptions (such as losing money on a tour) that a
certain commission rate is tied to. If you are talking about just the typical
percentage, then that needs to be outlined. Is it 15 or 20....not either, or!

Also, net or gross? In parenthesis it states "gross or preferably net." Not
good. This creates questions upon (God forbid) litigation. Again, which one is
it? Gross or net? Now, this is a question in itself. That being said, there are
typical deductions that are made BEFORE the manager's point deduction. These are
as follows:

* Recording expenses. Typically not commissioned.
 * Producer expenses. Usually not commissioned.
 * Production such as your sound or lighting expense.
 * Any tour support. This is usually paid out by a record company. This makes up
   for a "loss" in your income or revenue. Should not be commissioned.

Additionally, there are other areas you may want to reduce the commission on.
Say you take a loss on your tour. Many managers won't take their commission.
Also, some manager's take less commission on your songwriting income. There are
many exceptions. You may just want to go with a general percentage, but
nevertheless, the percentage that is commissioned should be specific and related
to net or gross. It shouldn't be a random situation to be decided whenever.

Also, what is "live" work? (#8). What does this mean? Performance? The following
sentence relates to commission on recordings and compositions. Very confusing.
It also mentions "net" on live work. Previously, net/gross is used. Not well
defined at all.

4) Commission after agreement. It seems that after the agreement expires, they
still get 10%. Not sure of what? What are they getting 10% of? Maybe I'm missing
something here. Also, for HOW LONG? Say you get into a bad deal with them. They
get you a publisher or a recording contract...and thus you can't terminate the
agreement early. You record and start gaining momentum. Once your agreement is
over, they can keep collecting on money related to that record (note that
records are defined as any recordings...CD's, mp3s...whatever). What is the
definition of that? Don't know...could be anything related to the recording
within the term.

5) Getting out of the deal in 6 months based on deliverables. This means that
you can terminate the deal (from what it seems....no strings attached) if they
don't' get you a publisher or record deal. Good for you in that you can get out
of it fast, but here is the deal.

This used to mean something back in the day when signing to a record company
might equal advancement. But, my concern is 6 months is a short amount of time
to get a publisher or record company involved. Now, I don't know about their
level of contacts (the manager), however you don't just want to sign with "any"
publisher and especially a record company. They need to be reputable publishers
and record companies that could do something for your career. Will the record
company have distribution? And...what type of distribution? If it's just over
the Internet....say like putting your CD's up on Itunes and CD Baby etc....big
deal. You can do that. Don't commission your money away. Some managers mean
well...but don't often make the best moves. And a publisher is worse. A
publisher needs to have major contacts to get your songs out. If they
don't....then they will also be making royalties off of the work you are doing.
I've seen this play out time and time again.

There is far more to a record deal than meets the eye....the biggest is money.
It takes a lot of money to promote a record. If you sign with a record
company...how much of their marketing dollars are they going to put forth to
help promote? This aspect and distribution are the biggest issues that define
your success. You have to look at your career like a chess game. You always need
to be looking forward...not just one move, but several moves ahead so you won't
get burned.

7) Arbitration or disputes. This is not outlined. The procedure needs to be
outlined.

Anyway...hope this helps. I was an artist manager for years. Currently I'm a
consultant, producer, session player and composer.

Lastly, don't go to the management company for advice relating to this
agreement. I highly recommend an ENTERTAINMENT lawyer as you say. They will be
able to guide you. It's worth the extra expense, believe me. I'm sure they will
concur with my points here...and probably offer a few more. I'm not an
attorney....so don't take this information as such....this info comes from my
experience in the industry.

If you like this answer, please ACCEPT, as that is how I get credit. We can
continue the thread, if you wish. Also, bonuses are appreciated!

Thanks.

Edited by Hugh on 7/22/2010 at 4:00 PM EST

Please review this contract and let me know if it seems fair…

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