Imagine this: you hustle for two years, land a real booking agent, sign a recording deal, and start earning serious money from touring. Then you discover your management contract entitles your former manager — someone you parted ways with eighteen months ago — to a percentage of everything you earn on the album you recorded during the term of the deal. Not just the album that came out while you were together. Every stream, every sync license, every royalty check for the next several years. The contract was signed in a rush, the sunset clause was vague, and now two managers are each expecting a cut of the same income. That is not a hypothetical. It is a pattern that repeats itself constantly in this industry.
The management contract is probably the most consequential piece of paper you will ever sign as an independent artist. It precedes record deals, publishing deals, and booking agreements — and it shapes the financial terms of all of them. Yet most musicians sign their first management deal without understanding what they are agreeing to, because the document is long, the language is dense, and the excitement of having a real manager tends to override caution.
This guide breaks down every major clause you need to understand before signing: how commissions actually work, what gets excluded, why the post-term provisions deserve more attention than the commission rate itself, and what key-person rights and power-of-attorney clauses really mean for your career. None of this requires a law degree. It requires attention.
What a Personal Manager Actually Does
Before getting into the contract mechanics, it helps to be clear on the role itself, because musicians often confuse personal managers with booking agents, business managers, and publicists. These are distinct jobs.
A personal manager is the general strategist of your career. Donald Passman, whose framework informs much of the industry standard thinking on this topic, describes the manager as "the single most important person in your professional life" (Passman, Chapter 3 (Personal Managers)). That description sounds like a sales pitch, but the mechanics back it up. A personal manager makes or influences decisions on: which record label to sign with and on what terms; which producer to work with; which songs make the album; how a tour gets routed and budgeted; whether a sync or endorsement offer is worth taking; how the rest of your professional team — lawyers, business managers, agents — is assembled and held accountable. When the job is done well, the manager is effectively a chief operating officer for your creative enterprise.
A booking agent, by contrast, focuses on securing live performance engagements. In most markets, the two roles are legally and ethically required to be held by different people. A business manager handles your financial affairs — accounting, tax planning, budgeting. A publicist handles press. All of these people report upward to the personal manager, at least in theory. If you are hiring someone specifically to book your shows, that is a booking agreement, not a management contract. The documents are different and should not be conflated.
The Commission: More Complex Than a Single Percentage
The first number anyone discusses when negotiating a management deal is the commission rate. Industry standard sits at 15% to 20% of your gross earnings. New artists with limited leverage often end up paying 20%. Established artists with multiple managers competing for their business can sometimes negotiate down to 15% or lower. In rare cases — true superstar territory — the figure drops to 10% or below, or flips to a flat salary entirely.
The word "gross" carries real weight here. Commission calculated on gross means the manager takes their percentage before you deduct any expenses. When you are talking about songwriting royalties or record advances, the math is fairly straightforward. When you are talking about touring income, it gets painful fast. Touring margins are thin. You might gross a significant fee for a show but net considerably less after paying crew, transport, production, and accommodation. If your manager takes 15% of your gross touring income and you are only netting 40 to 50 cents on every dollar you earn, that 15% represents a much larger share of what actually lands in your pocket — sometimes a third or more of your real take-home.
A manager's 15% of gross can take a big bite out of your net — sometimes equaling a third of what the artist actually keeps from a tour.
For bands with more than five members, the arithmetic gets even harder. If there are seven members splitting income equally, each member's share is roughly 14%. The manager taking 15% of gross earns more from the gig than any single member of the band. This is not an abstraction — it is a real source of friction in group management relationships.
Gross Versus Net Deals
Some management deals, particularly in the UK, calculate commission on the net — meaning your earnings after expenses. A net deal is far more favorable to the artist. The manager only gets paid when you actually make money; if a tour loses money, the manager loses with you rather than collecting a commission on a negative outcome. The tradeoff is that managers who accept net deals often want to control or cap the expenses that factor into the calculation, since an artist with unlimited spending power can effectively make the net disappear. A common compromise is to pay the manager on gross for record advances and publishing income, but on net for touring — recognizing that touring expenses are both high and variable in ways that studio earnings are not.
Commission Caps on Losing Tours
One of the most artist-friendly provisions you can negotiate is a cap that limits the manager's commission to a percentage of your actual net from a tour. The logic: the manager should never earn more from a performance than you do. A structure where the manager's commission is capped at 50% of your net touring proceeds protects you on thin-margin dates. If you gross a meaningful sum but have substantial expenses, your net shrinks — and the cap ensures the manager's cut shrinks proportionally rather than continuing to be calculated on the gross. If you cannot secure a zero-commission clause for money-losing tours outright, a reduced rate or a deferred commission arrangement are both worth negotiating.
What Should Not Be Commissionable
Even in a gross-commission deal, certain categories of money are customarily excluded. Some managers will not commission these items even if the contract technically permits it, but the industry standard is to spell the exclusions out explicitly rather than rely on goodwill.
- Recording costs: Money paid to you by a record label for recording purposes passes directly out to studios and engineers. It never becomes income — do not pay commission on it.
- Producer payments: If you are advancing money to a record producer out of your deal, that money is not yours to keep. It should not factor into commissionable income.
- Co-writer shares: When you co-write a song and collect money that belongs partly to another writer, the manager should only commission your share — not the full payment.
- Tour support: Money paid by a label to offset your touring losses is not a profit — it compensates a loss. Commissioning it would mean the manager earns money on an outcome where you lose money.
- Collection costs: If you have to pursue legal action to collect unpaid income, the legal fees and court costs involved in that collection should be deducted before commission is calculated.
- Sound and lights rental: When your personal appearance contract includes a fee for supplying your own sound system or lighting rig, that fee is typically treated as expense reimbursement, not earnings.
- Opening act payments: If your deal includes a separate fee that you then pay to an opening act, that money passes through you and should not be commissionable.
Beyond these standard exclusions, you can sometimes negotiate reduced commission rates for specific income streams where you were already established before hiring the manager. If you are a working session guitarist who hires a manager specifically to develop a solo recording career, it is reasonable to negotiate a lower or zero commission on your existing session income — work the manager had no hand in developing. The same logic applies to an established actor who brings on a music manager: your film income should not automatically fall into the manager's commissionable base.
The Term: How Long Are You Committed
Most management agreements run for three years, though some managers push for longer. The artist's interest is a shorter initial term with clearly defined renewal conditions. The manager's interest is a longer term that justifies the upfront work of developing a new career.
Historically, management terms were structured around album cycles — the time from recording through the end of a promotional and touring campaign. As the music industry moved toward streaming and artists began releasing music in formats that do not map neatly onto the album model, calendar-year terms became the more common structure. A three-year calendar term is now standard, with negotiated renewal provisions.
The most important protective device for an artist in a term negotiation is a minimum earnings threshold. The deal might be structured for three years, but if you do not earn a defined minimum amount in the first two years, you have the right to exit. This protects you from being locked into a long-term relationship with a manager who is not delivering results. The specific number is something your entertainment lawyer should help you determine based on your realistic earning potential — it varies enormously depending on whether you are a touring band, a producer, a songwriter, or a session player.
One important nuance: any earnings threshold should account for work you turn down, not just work you accept. A manager who negotiates a provision where income offers you reject count toward the threshold is protecting themselves against an artist who refuses to work in order to escape the deal. The standard compromise is that rejected offers count, but only if they are comparable to engagements you have previously accepted.
Another common structure is a term that auto-renews only if you hit a milestone — for example, securing a record deal or publishing deal within a defined period after the start of the term. If the deal falls apart after you secure it — say, you are dropped from the label — the manager should be required to find a replacement deal within the same timeframe, or you regain the right to exit.
Post-Term Commissions: The Clause That Outlives the Relationship
This is where most artists get caught. Commission rates and term lengths get negotiated carefully. Post-term commission provisions get skimmed. The result is that a manager who worked with you for three years can collect royalties on music you made with them for a decade after you part ways — on the exact same income you are sharing with the new manager you hired to replace them.
The standard language in management contracts says the manager collects commission on earnings generated after the term under contracts that were entered into or substantially negotiated during the term. This sounds reasonable in isolation. In practice, it means: if you signed a five-album deal six months before your management term ended, your former manager may be entitled to commission on recordings that have not even been made yet, under a contract that still has years to run. Passman describes this dynamic plainly as "the gift that keeps on taking" (Passman, Chapter 3 (Personal Managers)).
Post-term commission provisions can result in a manager collecting royalties seven, ten, or more years after they last provided any service to you.
Sunset Clauses: How to Limit the Tail
A sunset clause defines how long, and on what, a manager continues to earn after the term ends. Negotiating a strong sunset clause is as important as negotiating the commission rate itself — arguably more so, because the sunset clause determines your financial exposure over the long term while the commission rate only affects your earnings during the active relationship.
For recordings, the most artist-favorable outcome is that the manager only commissions records that were both recorded and released during the term. A reasonable compromise is to extend that to records released within a few months after the term ends. A further compromise — common in practice — is to pay a reduced commission (sometimes half the standard rate) on records recorded during the term but released afterward, on the theory that the manager supervised the recording but not the promotion and release. Records recorded entirely after the term should attract no commission from a former manager, full stop.
For publishing and songwriting income, the same logic applies. The most favorable position is that the manager only commissions songs written and exploited during the term. A workable compromise is a reduced commission on songs written during the term but exploited afterward, ideally with a cutoff of a few months post-term for exploitation to qualify.
Regardless of how you structure the per-category sunset, you should also negotiate a hard final cutoff date — a date after which all post-term commissions end regardless of what deals were signed during the term. Aiming for three to five years after the end of the term is reasonable; agreeing to more than seven years is rarely in the artist's interest. You can also structure a sliding scale: full commission for the first couple of years after the term, a reduced rate for the next few years, then nothing.
The practical reason this matters is not just financial arithmetic. After a management relationship ends, you will hire a new manager. That new manager will expect to be compensated for their work. If your former manager's post-term commission rights are broad and long-lived, your new manager faces the prospect of working for reduced or no compensation on projects where income is already committed. Most new managers will accommodate this for a limited time — perhaps for an initial album cycle or a single tour — but not indefinitely. An overly generous sunset clause for your former manager can make you genuinely difficult to represent, which narrows your options precisely when you need them open.
The Key Person Clause
When you sign a management contract, you are almost always signing with a company or a formal business entity — not with an individual. The manager you met, the one whose taste you trust and whose industry relationships you want access to, is an employee or partner of that entity. The entity is the legal counterparty. Which means if your manager leaves the firm, is promoted out of your account, or becomes unavailable, your contract may remain in full force with a company that is now effectively a stranger to you.
A key person clause — increasingly called a key-person clause as the industry modernizes its language — addresses this directly. It specifies that a named individual must personally manage your career, and if that person is no longer fulfilling that function, you have the right to exit the contract.
The clause is easiest to enforce in clear-cut situations: the key person dies, becomes incapacitated, or leaves the company entirely. It is more contested in the middle-ground scenario where the person is still employed by the management company but has effectively handed your account to a junior associate. Broader language — requiring the key person to be "actively involved" in managing your career — gives you more protection but also more room for dispute, since the management company will have an incentive to argue that any involvement, however minimal, satisfies the requirement.
Larger management companies with many clients sometimes resist the key person clause altogether, arguing that the firm's infrastructure and relationships are what provide value, not any single individual. Whether that argument holds for your specific situation depends on why you signed with that company in the first place. If the attraction was a specific person's relationships in a specific market, the key person clause is non-negotiable.
Power of Attorney: What to Accept and What to Reject
Many management contracts include a power-of-attorney provision giving the manager the right to sign contracts on your behalf, hire and fire team members, approve use of your name and image, and in some cases access your financial accounts. Read this clause carefully, because it is far broader than most artists realize when they skim it.
The practical limit on what you should grant is narrow. A manager signing a short-term personal appearance contract on your behalf — a single show, booked for the near term, where you have verbally approved the deal and are genuinely unavailable to sign — is defensible, particularly since electronic signature tools make genuine unavailability increasingly rare. Anything beyond that deserves scrutiny.
You should personally sign your own major contracts. You should personally hire and fire your lawyer, business manager, and booking agent. You should have final say over commercial endorsements and major licensing decisions. If you want to give your manager approval authority over routine publicity uses of your name and image — photographs for promotional materials, standard social media content — that is reasonable, provided the authorization is limited to uses of images you have previously approved and explicitly excludes commercial endorsements, merchandise, and anything involving significant money.
A manager with overly broad power-of-attorney rights can create complications that extend well beyond the relationship itself. Decisions made under that power of attorney may bind you to contracts you did not review, team relationships you did not choose, and public commitments you did not sanction.
Double Commission and Corporate Structures
If you have set up a personal services company or LLC to receive your entertainment income — a common tax and liability management practice — your management contract needs to address the commission calculation carefully. Most management contracts specify that commission is calculated on earnings at the company level, which is fair: otherwise you could channel all your gross income into the company and pay yourself a minimal salary, leaving the manager to commission only the small amount that flows through to you personally.
The risk runs the other direction too. If the contract is not explicit, a manager could technically commission the income at the company level and then commission it again when it flows out to you as salary. This double-dipping is not standard practice among reputable managers, but the contractual language sometimes permits it. Add explicit language prohibiting commission on the same dollar twice.
A related concern arises when your manager also owns or has an interest in a company that does business with you — a record label, a publishing company, a venue, or a festival. In that situation, the manager cannot objectively negotiate on your behalf against their own entity. You should get independent legal advice before entering into any deal with a company in which your manager has an ownership stake, and you should not pay a management commission on the earnings from that deal in addition to whatever the company earns from the relationship.
Choosing the Right Manager: What Experience Levels Actually Mean
The instinct when looking for a manager is to aim for the most powerful, best-connected option available. That instinct is understandable but sometimes leads artists to bad outcomes. A senior manager at a large firm who takes you on as a minor client will have the industry relationships but not the time. An enthusiastic junior manager with limited connections but genuine commitment to your career can outperform that arrangement purely through effort and attention.
The pattern Passman identifies in how managers' careers develop is instructive. Managers typically begin hungry, attach themselves to a promising developing act, and build that act through sustained personal effort. As that artist succeeds, the manager's reputation grows, other clients come in, and the manager's time becomes divided. The early clients who benefited from full attention now compete for calendar space with a roster of more established acts. Eventually the manager may staff up, hand off day-to-day work to associates, and begin to lose the personal engagement that made the relationship valuable in the first place.
This cycle suggests that a young manager who is genuinely motivated by your music and willing to prioritize your career can be a more effective partner at the developing-artist stage than a senior manager who slots you into a crowded roster. The key variables to evaluate are not just the manager's current client list — they are the manager's attention, industry relationships relevant to your specific genre and market, and the quality of their judgment on the decisions that actually matter to your career trajectory.
Some of the most trusted managers in the industry operate without written contracts. Their position is that the relationship matters more than the paperwork, and that an unhappy artist should always be free to leave. This is not naive — it reflects a management philosophy where the manager's leverage comes from genuine value rather than contractual obligation. That said, even informal arrangements should be documented in an email or short letter that confirms the commission percentage, the post-term framework, and the basic conditions for ending the relationship. Leaving those terms undefined creates the exact kind of disputes that end careers and drain money from both sides.
The Contract You Sign at the Beginning Shapes the Career That Follows
A management contract is not just administrative paperwork. It is the document that decides, in advance, who benefits from your success and for how long. The commission rate you agree to today applies to every dollar you earn under that deal. The sunset clause you negotiate today — or fail to negotiate — determines whether your next manager can actually afford to work for you. The key person clause you include or skip determines whether the relationship you are investing in is protected or transferable to someone you never met.
The most common mistake independent artists make is treating the management contract as the easy part — the necessary paperwork that comes before the real work begins. In practice, it is the foundation that everything else is built on. Taking the time to understand the commission structure, negotiate the post-term provisions carefully, and make sure the key-person rights reflect the actual relationship you are entering is not excessive caution. It is the minimum due diligence that your future self will thank you for.
Every clause discussed in this article — commission rate and base, exclusions, term length and exit conditions, sunset provisions, key-person rights, power of attorney limits, and double-commission protections — belongs in a properly drafted management agreement. Leaving any of them vague or absent is not neutral. It defaults to the manager's interest, because the standard boilerplate that managers bring to the table is written by and for management companies, not for artists.
References: Passman, Donald S. *All You Need to Know About the Music Business* (11th ed.). Chapter 3 (Personal Managers).