How Do Music Managers Get Paid: Beyond Just Music Income

When it comes to earning a living, music managers typically rely on a commission-based structure. This structure often raises questions about how much they truly earn and whether such earnings are fair or not. This article delves into the details of how music managers get paid, focusing on various sources of income besides just the music side.

Commission on Earnings

The most common way music managers earn is through a percentage of an artist's gross income. This can range from 10% to 20%, depending on the manager's reputation and the artist's success. Here's a breakdown of how this income is generated from various sources:

Touring

Touring is a significant source of income for many artists. Revenue is generated from ticket sales, merchandise, and sponsorship deals. Managers receive a commission on all these earnings, ensuring a consistent and stable flow of income.

Record Sales

Income from both physical and digital album sales contributes to a manager's earnings. As streaming becomes more prevalent, streaming royalties also become a crucial part of an artist's income, which managers are entitled to based on their commission.

Streaming Royalties

Platforms like Spotify, Apple Music, and others generate royalty payments from streaming services. Music managers receive a percentage of these royalties, helping to sustain their income even when physical album sales might be lower.

Licensing

In addition to performing and selling music, artists can license their songs for use in commercials, movies, or TV shows. Managers often negotiate these deals and receive a commission on the license fees, ensuring that the artist's income remains substantial.

Merchandising

Profits from selling branded merchandise, such as T-shirts, hats, and other items, also contribute to an artist's earnings. Music managers are included in these profits, ensuring a steady income stream.

Additional Revenue Streams

So, do music managers just rely on the music side for income? Not at all. Many managers negotiate additional fees for specific services or projects:

Consulting Fees

Managers often provide strategic planning or business development services. These consulting fees are separate from the commission and can significantly add to their overall earnings.

Flat Fees

Many managers receive flat fees for organizing tours, album releases, or other specific projects. These fees can be substantial and often supplement their income.

Long-Term Relationships and Perceived Value

One of the reasons managers can justify such high commissions is the long-term relationship they build with artists. These relationships go beyond just financial transactions; they are built on trust, support, and a shared vision for the artist's career.

Managers invest significant time and resources into developing an artist's career, negotiating deals, and handling logistics. These efforts directly contribute to the artist's success and, consequently, their overall income. Without managers, many artists would find it much more challenging to navigate the complex music industry.

A Real-Life Example: Levi Roots and His Kitchen Business

Levi Roots, a British entrepreneur, offers a compelling example of the value a manager can bring. In his case, Levi ran a local kitchen business selling Caribbean sauces. When Peter Jones of The Dragon’s Den invested in Levi's business, it became much more than just a kitchen venture.

Within a year, the business had made a profit of ￡20 million. Levi, rather than resenting the 6 million pound profit Peter Jones received, recognized the value of the investment. Peter had the strategic vision and distribution network to take the sauce brand to the next level.

Core to this example is the notion that a manager's knowledge of the target market and their ability to leverage that market's potential can lead to substantial financial gains. Levi's takeaway was that successful management can lead to far greater overall success and profits than a manager might initially receive in a commission.

Elvis Presley and Col. Tom Parker

A similar scenario was evident in the relationship between Elvis Presley and his manager, Colonel Tom Parker. Elvis had the talent, but Colonel Parker, known for his hustle, had the contacts and business acumen to exploit this talent. Parker's 50% cut may have seemed high, but it ultimately led to Elvis making millions more than he ever could have dreamed of.

The intrinsic value of a manager's investment in an artist's career, combined with their business acumen and experience, undeniably justifies the commission they receive. Managers bring a unique set of skills to the table, and these skills contribute directly to the artist's success and earnings.

Conclusion

The commission structure may seem high, but it is often justified by the value that managers provide in helping artists navigate the complex music industry and maximize their earnings across various revenue streams. Earnings of 20% on a $200 million income, resulting in $40 million, are substantial, but the managers' role in helping achieve that level of success cannot be understated.