A few weeks ago, I was asked to present an overview of how the music business works to a group of peers. This picture is the best image I could come up with to create a visual of how it works. So here is my interpretation.
The artist is the center of the universe and each circle represents a planet orbiting them. The MANAGER acts as a regulator of gravity that pulls, pushes or manages the distance and influence over the artist. He or she solicits, negotiates and secures any professional relationship with the artist.
For that service, the manager EARNS 15-20% of all the revenue that the artist generates. Being a manager is like being both parents. The fun one and the firm one at the same time.
Starting from the top of the circle, we have the BOOKING AGENT. This person is critical to developing the artist as a touring machine that can sell out stadiums for $100 a ticket. The agent earns 10% of what the artist gets paid when they perform live. This is usually the largest income stream for an artist. The booking agents have the relationships with the PROMOTERS who are responsible for guaranteeing the artist a fee to perform and then producing and promoting the show in a specific town and venue. Producing the show means renting out a venue, hiring the crews to set up the sound system, lights and the stage. Promoting the show entails taking out advertising with local radio stations and print outlets. This part has obviously changed as both radio stations and print outlets have diminished in audience and influence.
The TOUR MANAGER is hired by the manager to manage the band, crew, buses, trucks etc while on tour. They are the “General” on the ground and responsible for making sure the operation and the band move from town to town. These are good people to know and very valuable. A good one can earn $4,000+ a week, depending on how big of venues the band is playing and how many trucks, buses and private jets are in the convoy.
MERCHANDISE is a revenue stream for artists but not a significant one until they begin headlining larger venues. Until that point, it is mainly a little gas money and branding for the group. Once they play to 2,500+, it can become real money despite the fact that it can be a distraction to the organization due to all the moving parts of designing, ordering correct amount, shipping it, selling it at shows and managing it etc. Most artists will sell the rights to a 3rd Party company who will then manage the entire process with some input from the band about designs. In exchange for the rights to the merchandise, bands will get a 20-25% amount of all sales and the MERCHANDISE company will make their profit after they pay for the design, goods and cost to have someone on the road selling it.
RECORD LABEL is not what it used to be. When I began my career, you had to have a label to break big because they had the money to help you make your album, distribution channels to record stores, the promotion team to call on radio stations and more money to pay the independent radio consultants to get it on the radio. The label gave you an advance of $150,000 to a $1,000,000 depending on how many other labels were interested in exchange for the rights to sell your music in a store for $12.99 and give you a $1.50 per CD (after you paid back the advance, marketing costs and costs to pay radio stations to play the album of course). Now that anyone can make an album in their basement and sell it on ITunes, the recording and distribution barriers are removed. In addition, radio just doesn’t mean what it used to and independent consultants were shut down for “payola”.
DISTRACTIONS are more like a comet that can blow your sun (artist) up quickly. The manager really earns his money by protecting his artist from any of these destroyers. All of them can make the artist lose sense of reality and the mission at hand.
PERFORMING RIGHTS societies collect money from radio stations and all public businesses who play recorded music for their audiences and customers. BMI, ASCAP and SESAC are the main ones and they collect millions of dollars from all over the world each year, take 20% off the top and distribute the rest to the song writers (people who actually write the lyrics and the music) and the publishers (people who manage this process for the song writer). If the artist records a song they did not write, then they do not get any of this money. As you know, many country artists do not write their own songs. Since they do not make money from PERFORMING RIGHTS or PUBLISHING, it puts more pressure for them to earn money from live concerts. Think that might explain why country artists have such a reputation for taking good care of their fans and putting on great live shows?
PUBLISHER administers the collection of royalties from the performing rights societies and from the sales of albums and exploits the song writers music in tv and movies. When a publisher gets a song in a movie, it is called a Synchronization License (synching up music and video) and the publisher is responsible for soliciting these opportunities, negotiating and collecting for the song writer. When an album sells in a store or on I Tunes, the song writer earns $.0925 for each copy of the song that is sold. The publisher collects that as well and splits with the song writer.
ATTORNEY handles all entertainment related legal issues of managing the contracts with and between all these relationships and either charges 5% of all monies earned by the artist or an hourly fee for service.
BUSINESS MANAGER is responsible for being the CFO of the organization and collects all monies, pays all expenses, budgets for tours and keeps the artist from pulling an MC HAMMER.
Ok, so there it is. My 15 years of music business experience all in one BLOG. I have been blessed to be an artist, a promoter, a manager, a record label, a tour manager and a distraction.
When the artist lives up to his or her responsibilities as the SUN, the story usually works out.
DISCLAIMER – I do not claim to be an expert and some of this data is not 100% accurate or standard, so please do not quit your job today and run down to an open mic to begin managing a band, as tempting as I make it sound….