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Protecting Your Rights In the Digital Age - Part 2
By Guy Betar - 01/24/2006 - 01:55 AM EST

In my previous article, which of course all Muse readers read word for word (!!), I put forward two propositions as fundamental ingredients to the business of music (and all businesses for that matter). First, understand as best you can the important issues that affect you as a professional or semi-professional in dealings with others. Second, make sure these understandings are recorded in writing.

To make my point, I posed a series of questions in the context of a management/agency agreement, the majority of which are in fact applicable to contracts in general. In this article I am going to explore some of those questions in more detail, and in particular suggest some answers to give a better understanding of the issues involved. It is important to understand that the relevance of the answers is not just in relation to a management/agency agreement, but that they are generic to an array of service related and other agreements.

Question 1 – Who will actually be representing me and handling my affairs? Why is it important to be sure about the particular person representing you? There are several reasons. You need to trust the person and have confidence in their ability. After all, what they do may affect your image, your career and your earnings, or all of them. You are entitled to expect continuity of representation. If you do not know or have not met the person handling your affairs, or if that person changes with any frequency, how can you be sure they understand you and what you do, or be aware of your goals and what is in your best interests? Your agreement should identify a particular individual as representing you, and that you have a right to approve any replacement.

Question 2 – What will my agent/manager do for me? This is probably THE most important question of all. There has always been a tendency in management/agency agreements in particular, for very vague statements about what managers/agents will actually do, and very little that imposes specific, objectively observable obligations on them. Often, the only clear and precise obligation is on the artist to pay the manager/agent a specific percentage of earnings and/or fee. To be fair, this is no more than commercial reality, in terms of giving no more than you have to. The critical point being that to properly protect yourself you have to have a basic understanding of the important ingredients in your contract, otherwise you cannot negotiate over them. At the very least, there must be some specific obligations assumed by the manager/agent. These should reflect your particular goals or priorities. An example might be securing a recording deal with certain minimum returns, to be achieved within a defined period. Another example could be to arrange a minimum number of gigs of a certain standard or venue/audience, again within a defined period. Such specific obligations achieve two objectives. Firstly, they require the manager/agent to achieve specific goals for you, which can be measured. Secondly, if they are not achieved, the failure should provide a basis for the artist to terminate the agreement. Many artists have found themselves locked into a long term agreement that provide little or no return or results, with no way of getting out of them.

Questions 3 and 4 – Will my agent/manager sign agreements on my behalf and do I want them to negotiate contracts on my behalf. I have put these two questions together as they are clearly closely related. By empowering someone to sign binding agreements on your behalf, with no limitations or provisos, you authorize them to commit you to literally any sort of obligation, however onerous. They might in fact directly conflict with your goals, your image, or have little or no reward for you. Clearly negotiating contracts on your behalf goes hand in hand with this, as settling terms of agreements that affect you, that you have no knowledge of, could be just as disadvantageous for you as signing agreements on your behalf where you have not approved the agreement. Whilst it can make sense for a manager/agent to have limited authority to sign certain documents or make specific commitments on your behalf, the emphasis is on “limited”. There should be specific provisos on the agent/manager’s authority limiting the nature and duration of commitment, and the cost or value that can be dealt with. Anything outside the defined parameters you must either approve beforehand and/or sign personally. This means you need the right to review proposed commitments first, understand them, and if you do not agree with them you can reject them.

Questions 5, 6 and 7 – Do I want my manager/agent to receive money on my behalf, and how often do I get paid and in what manner? As I indicated in the previous article, it is in fact usual for agents/managers to receive and handle money on behalf of their artists. It is also usual that there is a process of accountability contained in the agreement. The real question is what should the minimum be? This might vary according to the particular nature of the agreement, but the essential ingredients of accountability are:

1. You should get regular statements/payments. You need to know as regularly as possible if you are being paid and if so, how much. There needs to be a reasonable trade-off between the administration processes of the agency, and you being kept up to date. Statements and payments once a year are far too infrequent. You should receive a statement/payment at least once every quarter, even if it is nil. Monthly statements/payments might be better, but this may not be reasonable with a large agency that needs to account to a lot of artists. The payment obligation should be expressed to be within a set number of days from the end of the period e.g. within 7 days of the end of the quarter or month.
2. Your statement needs to show the gross amount (i.e. the total before any deductions) received on your behalf, from whom it was received, when it was received, and to what it relates. It also must show what deductions were made by the agent/manager.
3. It is preferable for your agent to be obliged to make payments directly into a bank account you nominate. That way, you can see readily if the payment is made on the due date, and it avoids arguments and problems over lost cheques or worse, ones that bounce!
4. Finally, there should be a right in your agreement to inspect the books of account of the manager/agent to verify that what you have been paid and what your statements say, represent your full and proper entitlement. It is usual to additionally provide in the agreement that if there is a discrepancy of more than say 5% you should be entitled to terminate the agreement.

Question 8 – How much should the agent/manager receive from my earnings? This is not a straight forward question to answer, as it depends on industry standards in your particular country, and is a matter of negotiation. It also relates to what your representative does for you. Agents and managers do perform some different functions and their return will reflect this. Managers, in particular, are more likely to seek to share in all your earnings as they potentially have a broader role to perform. From your perspective, you, as the artist, would be better off if deductions are only made where there has been some benefit provided. Ultimately the benefits received by the agent/manager will be a trade-off through negotiation, and what each party’s bottom line is. This is a strong argument for the duration of such agreements to be short, to protect you from what turn out to be costly drains on your earnings for little value in return.

Questions 9, 10 and 11 – Issues of territory, term and exclusivity must be covered off. As with many others of the provisions of such agreements, they should be a compromise between the parties as to what is reasonable. I have touched on the duration in the above points. The agent/manager will want a term long enough to recover value from what they argue they will provide to the artist. The artist, in turn, does not want a long contract so they can be sure they can go elsewhere if the agent/manager does not perform. As to exclusivity, this is not likely to be a negotiable point. It is not feasible for there to be more than one manager/agent for an artist in the same territory, as conflicts will undoubtedly arise. Regarding the territory, or geographical operation of the agreement, this again needs to be practical and will at the least need to cover an entire country, to avoid conflicts.

As you will appreciate I have not covered every question posed in the previous article. I have selected what I consider are the more important ones, but strongly suggest you do not overlook the other ones that I have not dealt with here.

The clear message to you is this – Have at least a basic understanding of the key ingredients of agreements you are asked to sign, and the impact on you of the particular terms of the agreement.

Guy Betar

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