Playing in the same key – the cooperation between a musician and a manager

One of the key aspects of building a musician’s career in the artistic field is their relationship with the manager. The manager does not only support the artist in organization and promotion but often takes responsibility for financial issues, contracts, negotiations with partners or even manages the artist’s copyrights. This collaboration should be based not only on trust, but also on a properly constructed contract, which secures the interests of both parties in the event of any dispute. Because – as we all know – even the best relationships, in the heat of business challenges, may not survive the trial of time.

When the trust isn’t all…

We have a lot of examples of such bad times in contemporary music history, especially in the American field. What is worth mentioning here is the case of Michael Jackson, who in the last years of his life entered into cooperation with Tohm Tohm. After Jackson’s death in 2009 his family and his heirs accused the manager of taking actions which supposedly led to serious financial losses of the king of pop. Although the case ultimately ended with a settlement, this conflict showed how important it is to precisely set the limits and rules of cooperation in the relation between an artist and a manager, before the situation gets out of control.

The story of John Elton, whose manager was John Reid (privately Elton’s partner), also demonstrates that mere trust (although necessary) in such a relationship is insufficient. In the nineties Elton discovered that his manager dealt with finances in an adverse manner, which led the musician to financial difficulties. After the end of the cooperation, Elton John brought a claim, accusing Reid of inappropriate fund management, which resulted in a media scandal and a long-standing legal dispute.

First – defining expectations

Regardless of interpersonal relations, it is worth relying on a well-structured contract, as it constitutes both the foundation for fruitful cooperation and, above all, it allows parties to avoid potential conflicts and misunderstandings in the future. A good agreement should always be custom made and should take into account individual needs and expectations of musicians and their managers – financial as well as artistic, cashflow, tax and organizational.

The starting point for the creation of a secure contract is always defining parties’ fundamental expectations. In this case it is worth starting with setting the manager’s tasks, which may differ depending on the nature of the cooperation. What most often can be distinguished are tasks related to marketing and PR, which involve acquiring new contractors, conducting negotiations with concert organizers and record companies, as well as supervising the musician’s image in the media and on the Internet. A manager organizes an artist’s professional life, takes care of his/her calendar and tour dates and constitutes the first point of contact between the artist and the media or contractors.

Many musicians also decide to pass on to their managers their funds and copyrights management. Then managers also become responsible for the income and costs related to the artist’s activities and concluding agreements related to rights to songs and phonograms, with event agencies, concert organizers or record companies among others.

Later – a well-constructed contract

An agreement should essentially be some kind of manual, which instructs the parties on how they should operate to achieve their goal. In relations between an artist and a manager it will usually take the form of a contract for the provision of services (Article 750 of the Civil Code), to which provisions on commission or agency are applied accordingly (Article 758 of the Civil Code). It is largely up to the parties how they will tailor the contract to meet their needs, although it is worth including in every contract, above all, the following points:

• The duties of the parties – detailed information on what parties are responsible for, what they can expect from each other and which duties they can enforce from each other;
• Manager’s salary – for the correct performance of their services a manager shall receive a salary, unless the parties reserve the right that no payment shall be made (which rather doesn’t happen). Defining the salary should correspond with the number and seriousness of the manager’s duties, although it can be determined in different ways – for example as a flat rate or as a percentage of profits. Anyway, to avoid any disputes a contract should specify the precise method of calculating such salary;
• Costs incurred to conclude a contract – it is important to remember that regardless of remuneration, the manager is entitled to reimbursement of the costs he incurred to properly perform his duties, together with the statutory interest (Article 742 of the Civil Code). In the case of an agency agreement – in addition to remuneration (usually taking the form of a commission) – an agent can demand the refund only of the necessary costs, which were justified and at the same time their amount ,,exceeded the standard measure in the circumstances” – so, when these are non-standard but necessary expenses (Article 762 of the Civil Code);
• Settlement rules in the event of termination of cooperation – it is worth to regulate the settlement rules in the event of termination of the cooperation. It is especially important for an agency agreement, as an agent could demand commission from contracts that were concluded by an artist after the end of cooperation with the agent, if the artist received an offer of a contract before the termination of the agency agreement. Moreover, even if an offer came to the artist after the termination of the agency agreement, the agent could demand a commission if the contract was concluded predominantly as a result of the agent’s activity during the term of the agency contract and also within a reasonable period of time from its termination (Article 761 of the Civil Code). What is more, after the termination of the agency agreement, the agent may demand compensation from the principal, if during the term of the agency agreement he has acquired new clients or brought about a significant increase in turnover with existing clients, and the artist continues to derive significant benefits from the agreements with those clients;
• Contract terms and possibility of termination of the agreement – in a contract it is worth to settle the contract period and the terms of cooperation’s termination. If parties don’t specify these issues, then the contract can be terminated at any time, which follows from Article 746 of the Civil Code. From the provisions on the agency agreement concluded for an indefinite period it follows that the relationship may be terminated with one month’s notice in the first year, two months’ notice in the second year and three months’ notice in the third and consecutive years – and these statutory deadlines cannot be shortened. In the case of fixed-term contracts the relationship expires upon expiry of the term for which the agreement was concluded. At the same time, the possibilities of early termination of these agreements are limited. It would be beneficial to modify the general rules, to gain protection from the sudden end of cooperation, at the same time avoiding extreme situations in which parties would be bound despite the lack of good mutual relations;
• Responsibilities of the parties – It is worth planning ahead, for what kind of activities or omissions the parties would bear responsibility, and additionally – which circumstances would enable the parties to terminate the agreement with immediate effect. In the case of a contract agreement, first of all it can be an objectively justified loss of trust, when in the case of an agency agreement (even if concluded for a fixed term) – failure by one of the parties to perform the whole or a significant part of their duties, and also in the event of any exceptional circumstances. When formulating the principles of responsibility, it is worth remembering the so-called del credere clause, which enables restriction of the agent’s liability towards the artist for the performance of obligations by contractors. In such a case the restriction must be subject to payment and must precisely define the scope of the obligation;
• Activities which manager may perform without an artist’s agreement – there are some actions that a manager can undertake independently, while others to be valid may require the artist’s consent. The scope of these activities will probably follow from their rank, however, it is worth defining precisely what the agreement requires of the parties to avoid abuse. In a different case, unless otherwise agreed, the contract includes authorization to perform activities on behalf of the artist.
• Confidentiality – in the music industry the duty of confidentiality is especially important. Musicians share with managers information, disclosure of which could lead to irreversible damage to the artist’s reputation. It is therefore worth protecting oneself from disclosure of such information.
• Copyright and related rights – a management contract usually does not provide for the acquisitions of the rights from an artist by a manager. However, the parties may additionally conclude a publishing agreement as well as regulations relating to written texts, composed music or recorded performances. After all, these are key aspects of creative activity so it is important that the parties have a full understanding of the consequences of certain solutions as they may be irreversible.

At the end – a contract doesn’t have to specify everything

In the case of an agency agreement, the provisions of the Civil Code apply, unless parties opt-out or modify them (Article 758 of the Civil Code and following). Similarly, as with service contracts (to which provisions of the Civil Code on orders apply). Many issues have therefore been regulated by the legislator, and these provisions remain in force unless the parties decide otherwise.

Regardless of an agency agreement or service provision (order) it is worth remembering that the Civil Code regulates many other issues related to the performance of the agreement or responsibility for non-performance or improper performance. In particular, the parties will be liable under the general principles for non-performance or improper performance, unless it is a consequence of circumstances for which the debtor is not responsible (Article 471 of the Civil Code).

A lot of provisions of the Civil Code can be fitted to one’s individual needs and regulated accordingly to be partly different or completely eliminated from use, but it requires a deliberate decision of the parties. In any case, it is worth spending some time and energy on drawing up and understanding a contract – so that both parties are content and their interests are properly protected. At the same time, it is important to be aware that, although after signing a contract the manager and the artist generally are playing for the same goal and in a properly built relationship they have the same aim, at the negotiations and contract signing stages they are on the opposite sides and their interests may be contradictory.