Paying Retainers to Managers
By: Edna Landau
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A note from Edna Landau:
As summer is fast approaching, many of our readers will be traveling and enjoying holidays in the coming months. Therefore, Ask Edna will be taking a break during the summer months (June through August). We look forward to having you back with us in September. Meanwhile, please feel free to continue to send questions to Ask Edna during the summer, as they will help us to “hit the ground running” when we return. I wish everyone a most enjoyable summer.
Dear Edna:
I am a member of a chamber ensemble which is in discussions with a small agency regarding management. We have been asked to pay a monthly “administrative fee” to cover the management’s expenses on our behalf. Can you please tell me whether this is customary? Also, should these payments cease when the manager begins to receive commissions from concerts we perform? – D.B.
Dear D.B.:
The answer I am going to give to your question is very different from what it might have been five years ago. At that time, artists were very leery of an agency that asked for a monthly retainer. Today, I think it is incumbent upon artists to take a broader view. It is becoming increasingly difficult for soloists, ensembles, conductors and dance companies to obtain management. Times are challenging and managements need to focus their energies more than ever on the bottom line. A small or new agency faces the biggest challenges because they can’t amortize the cost of developing young artists’ careers against the hefty commissions received from well established artists. When Charles Hamlen and I worked together in the pre-IMG Artists days as Hamlen/Landau Management, we charged our artists for all expenses incurred on their behalf. This included phone, postage, printing (promotional pieces and inclusion on our printed artist roster), advertisements, and the like. Once we became IMG Artists and the roster became large and varied, we abandoned the practice of charging for phone and postage since it was too time-consuming to do the calculations. We continued to charge for promotional materials specifically prepared for individual artists. The administrative fee you are being asked to pay is not unjustifiable and it streamlines the expense reimbursement process for the manager. A reasonable monthly fee might be in the range of $300-$400 a month. Today there are a growing number of small, respected agencies who charge not only for the above expenses but for their travel to booking conferences, their exhibit costs at those conferences and the conference registration fee. Some are also charging their artists for maintaining and updating their presence on the management’s website. I know of one agency that charges an annual fee, which they are willing to accept in installments if that is easier for the artist. This fee might be anywhere from $2000 to $4000. These monthly and annual fees might even be slightly higher than the actual total of documented expenses. I can assure you that managements charging these fees wouldn’t do so if they didn’t need to. There are various times during the year, such as the summer months and December when income from commissions is way down. The monthly or annual fee enables the management to pay their own operational expenses during such times. I should add that there is so much that a manager does for an artist on a regular basis that is not related to concert booking ( such as setting up auditions, writing and updating bios, coordinating interviews, offering general career advice, showing up at performances) and that cannot be adequately compensated for solely from commissions, especially when the artist is starting out and fees are rather low. In your particular case, your manager won’t earn any income from you for at least 12 to 18 months, since engagements are booked with a long lead time. Once this period has passed and you begin to generate commission income for the management, there is no reason why you can’t discuss the administrative fee and see if it can be lowered or waived. If the answer is no but you are otherwise happy with how things are going, you should consider yourselves lucky to have management at all and view these payments as you do other career related costs such as a tax accountant, concert clothing, and purchase or maintenance of your instruments. Remember that at least in the U.S. , they are tax-deductible.
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© Edna Landau 2012
June 1st, 2012 at 2:21 pm
Edna has made very astute obsevations about a situation I am often confronted with. Artists I know, but cannot add to my own roster here at CAMI, often call me to ask about this very issue with smaller managements which haven taken an interest in representing them.
June 1st, 2012 at 3:19 pm
I agree with all of Edna’s points. The one thing I would magnify is that you should understand whether the administrative fee covers real out-of-pocket costs rather than providing income for the agency (or some combination). If it is covering out-of-pocket costs of the sort Edna enumerates then it is essentially the same as the standard model used by Hamlen/Landau, but doing it on a flat estimate rather than penny-by-penny. A strong argument in favor of this method, as Enda points out, is that it helps the agency spend less time on accounting and more on forwarding artist careers.
Also, I would not expect that an administrative fee of this sort would cover expenses that are specific to your group, for example printing costs for a flyer for your ensemble or postage for mailing it to a large list, or an ad devoted entirely to your ensemble in Chamber Music Magazine. If you get billed for all the expenses Edna enumerates and this administrative fee on top of that, then the agency may be charging what is traditionally called a retainer.
If the administrative fee covers the expenses expected, but also includes some additional income for the agency, I see Edna’s point that it is not necessarily unreasonable to accept that sort of arrangement as long as you feel the income it provides to the agency is not serving as a disincentive to making bookings happen for you. I will point out that the “standard” commission of 20% is not a directive Moses carried down from Mount Sinai on carved stone – rather we managers charge that rate because, frankly, we can. While it is not my sense that retainers are a pervading practice, things may indeed be changing.
Ultimately, the critical question to ask a potential management is what is the estimated bottom line for your (non-commission) expenses for the first year and subsequent years. (You should ask about both because in a first year it would be normal for you to need to lay out for materials created which are likely to have a shelf life of at least a couple of seasons. You may also be told that you must have a photo shoot, record a demo, etc., which you will likely pay for directly.)
Any manager should be ready and willing to be open about what you are being billed for and what you should expect. You in turn should not be reticent about asking, either before you sign the contract or any point along the way. If you can’t have good communication about this, it is not a good indicator for a healthy overall relationship.
June 12th, 2012 at 6:22 pm
Thanks so much to my esteemed colleagues for sharing their thoughts with our readers. It is gratifying to have your validation of the essence of the column and also Mr. Besen’s very helpful practical advice about further particulars of what to expect in a manager-artist relationship, especially in the case of a smaller agency.