Management is Part of a Big Business
Managing artists in the music business is done within the context of the general business environment, which is influenced every day by the economy, technology, politics, social and cultural factors, the price of energy, and international tension.
Likewise, the practice of artist management is done within the environment of the music industry, which deals with issues such as illegal file sharing, shrinking market shares, competition by other entertainment media, and rapidly advancing technology. For example, Chris Anderson’s disputed idea of The Long Tail (2008) suggests to the music business that the industry is moving from being one that is hit-driven to one that serves countless niches of appetites for unique music. Anderson’s theory is fueled by the speed of the development of technology and the speed of its adoption by consumers of music. Alternatively, Anita Elberse says in the August 2008 issue of Harvard Business Review that her research demonstrates that entertainment continues to be driven by music and motion pictures that are defined as hits that have broad appeal to consumers. Her 2013 book, Blockbusters , goes even further to say that having huge hits is the only way that a company can assure itself of long-term success.
To underscore Elberse’s point, an artist manager whose artist is also a songwriter and writes a song for someone else that sells 250,000 as single downloads and album cuts, earns only $1,700 US for the manager and $9,675 US for the songwriter. To some, collecting writer royalties for the sale of a quarter million copies of a song is a huge hit but the reality is considerably different. We’ll look closer at how the math works for songwriting in a later chapter.
Several years ago, Live Nation was researching ways to expand its business and discovered that artist managers and booking agents globally earn a combined $10 billion, which is a substantial source of income within the music business (Leeds 2006). Agents and managers are responsible for connecting artists with career income, and both earn a percentage of the economic activity they generate for artists and for themselves.
The International Federation of Phonographic Industry provides its 2013 annual estimates of earnings by the music business from a global perspective, showing its broad impact as well as areas of opportunity to managers of artists’ careers.
The range that an artist manager typically earns is 10–25% of the earnings of an artist with the average being 15%. However, if no artists under contract with the manager are earning enough to cover their own expenses, the reality of when commissionable money flows as income to the artist can be a shock to new managers if they’re not prepared for it. Recording royalties from large labels can be two years or more from the release date, assuming the album earns enough from artist royalties to pay back advances paid by the label to the artist. The sale of tickets to performances can be minimal to nonexistent at first, but it can often become the quickest regular income source for self-managed bands and artists as well as those with a personal manager. Earnings from publishing royalties can be impressive but slow to develop if the artist is new to songwriting. So a new manager should be prepared to finance his or her own management business for three to five years. There are other ways to enter the business of being a professional artist manager, which are discussed in this chapter. Meanwhile, a more detailed analysis of a manager’s compensation is presented in Chapter 6, where we examine the contract between the artist and the manager.
Excerpt from Artist Management for the Music Business, 3rd Edition by Paul Allen © 2014 Taylor & Francis Group. All Rights Reserved.
About the Author
Paul Allen is Associate Professor in the Department of Recording Industry at Middle Tennessee State University and co-author of Record Label Marketing, also published by Focal Press. He is also a frequent lecturer at other universities on artist management and other music business subjects. His career work has included radio, TV, political management, and the music business.