Management Agreements: What Managers Earn, What They Control, and How the Relationship Ends

By Hank FasthoffJuly 6, 2026

A manager advises and counsels the artist across every aspect of the artist's career in the entertainment industry. The manager negotiates deals, coordinates the professional team (booking agents, attorneys, accountants, publicists), develops strategy, manages day-to-day business decisions, and serves as the primary point of contact between the artist and every third party that wants the artist's time, talent, or money. It's the most personal and most influential relationship in a music career, and the management agreement is the contract that governs it.

Most management disputes arise because the agreement didn't define what performance meant, didn't specify what income was commissionable, didn't address what happens when the relationship ends, or didn't exist in writing at all. The Chance the Rapper v. Pat Corcoran trial in 2026 consumed two and a half weeks of courtroom time and years of pre-trial proceedings, all because the parties couldn't agree on whether their oral management deal included a sunset clause. A written agreement would have answered that question on page three.

Commission Rate and Structure

Management commission in the music industry is 15 to 20 percent of the artist's income. Developing artists with limited income and new managers building their rosters may agree to 20 percent. Established artists with significant revenue may negotiate 15 percent or lower. Rates above 20 percent are uncommon and should correspond to an exceptional level of service or a demonstrated track record of career-building results.

Whether the commission is calculated on gross income or net income is one of the most consequential terms in the agreement, because the difference can be tens of thousands of dollars per year. Gross income means total revenue before deductions. Net income means revenue after certain costs are subtracted. If the artist earns $500,000 in gross touring revenue but spends $200,000 on production, travel, and crew, a 20 percent commission on gross is $100,000 while a 20 percent commission on net is $60,000. Most management agreements commission on gross, but the definition of "gross" should exclude certain pass-through costs that the artist never receives as income (recording costs funded by the label and recouped from royalties, tour support reimbursements, sound and lighting expenses paid by the artist for live performances, and payments the artist makes to producers, musicians, and other collaborators).

Sliding-scale commissions are increasingly common. A commission structure that starts at 20 percent in year one and steps down to 15 percent by year three rewards the manager for early-stage development while reducing the cost to the artist as income grows. Income-tier structures (20 percent on the first $250,000 of gross, 15 percent above that) accomplish a similar result by acknowledging that the manager's workload doesn't scale proportionally with the artist's income.

What Income Is Commissionable

Every management agreement should identify the revenue streams subject to the manager's commission and the revenue streams excluded from it.

Commissionable income typically includes recording royalties (sales, streaming, licensing), live performance fees (guarantees, door splits, festival fees), merchandise revenue, endorsement and sponsorship fees, sync licensing fees received by the artist, and any other entertainment-related income the artist earns during the term.

Excluded income should include songwriting and publishing royalties from deals predating the management relationship (the manager didn't procure these deals and shouldn't commission them), income from non-entertainment businesses the artist owns or operates, sound and lighting costs the artist absorbs for live performances (these are expenses, not income), tour support from the label (pass-through reimbursements the artist doesn't retain), and recording fund payments that go directly to studios, engineers, and producers rather than to the artist.

If the manager's scope of services doesn't extend to a particular activity (the agreement covers music but not the artist's acting career, for example), income from that activity should be excluded from the commission calculation. Conversely, if the manager provides services across all entertainment activities, the commission should cover all entertainment income, but not income from activities outside entertainment entirely.

Term and Options

Management agreement terms typically run one to three years for the initial period, with options for the manager to extend for additional periods if specified conditions are met.

Artists should negotiate the shortest initial term that provides the manager enough time to demonstrate results (12 to 24 months is typical). Managers should tie their option periods to performance benchmarks rather than automatic renewals. A performance-based option (the manager can extend the term for an additional year if the artist's gross income exceeds a specified threshold during the initial period) aligns the extension with the manager's results. An automatic option (the manager can extend regardless of performance) provides the artist no exit if the relationship isn't producing results.

Artists should also negotiate a performance-based termination trigger. If the artist's gross income doesn't reach a minimum threshold by the end of the initial period (or by the end of a probationary period within the initial term), the artist should have the right to terminate without penalty. This provides the manager an incentive to deliver measurable results and provides the artist an exit if the relationship isn't working.

Sunset Clauses

When the management relationship ends, the manager's commission doesn't necessarily end with it. If the manager negotiated a record deal during the term, that deal will generate income for years after the term expires. A sunset clause determines whether and how long the manager continues to commission on income from deals procured during the management period.

Without a sunset clause, the manager either receives no post-term commission (which may be unfair if the manager built the artist's career and negotiated the deals that generate ongoing income) or commissions in perpetuity on every deal from the management period (which creates the problem of paying two managers simultaneously when the artist hires a replacement).

A well-structured sunset clause uses a de-escalating commission schedule that reduces the manager's post-term commission over two to three years until it reaches zero. A common structure reduces commission to 75 percent of the full rate in year one after termination, 50 percent in year two, 25 percent in year three, and zero thereafter. The sunset applies only to income from deals the manager personally procured or substantially negotiated during the term, not to income from new deals the artist enters into after the relationship ends.

Sunset clauses have shortened in recent years. The 36-month sunset that was standard five years ago has compressed to 18 to 24 months in most current agreements, reflecting artists' increased negotiating awareness and the impracticality of paying two managers full commission on the same income.

Key-Person Clauses

If the artist is signing with a management company rather than an individual manager, a key-person clause is essential. The clause specifies that the artist's agreement is with a particular manager within the company, not with the company itself. If the key person leaves the company, the artist has the right to terminate the agreement or to follow the key person to their new firm.

Without a key-person clause, the management company can reassign the artist to a different manager the artist didn't choose and may not trust. The artist is contractually bound to the company, not to the individual, and has no exit if the relationship with the replacement manager doesn't work.

Power of Attorney

Some management agreements include a power of attorney clause giving the manager authority to sign contracts and conduct financial transactions on the artist's behalf. Limited power of attorney (authorizing the manager to sign performance agreements under a defined dollar threshold, for example) may be convenient for routine bookings. General power of attorney (authorizing the manager to sign any contract and handle any financial transaction) provides the manager sweeping control that can be difficult to reverse if the relationship sours.

For independent artists, general power of attorney is rarely appropriate. If a management agreement includes a power of attorney provision, limit it to specific categories of transactions, require the artist's prior written approval for any commitment above a defined dollar amount, and specify that power of attorney terminates automatically when the management agreement terminates.

Practical Recommendations

Put the management agreement in writing before the manager starts working. Verbal agreements are enforceable but nearly impossible to prove when the parties disagree on the terms. Every commission rate, every exclusion, every sunset schedule, and every termination right should be documented.

Define "gross income" and list every exclusion. Don't assume both sides understand which income streams are commissionable and which are not. A list of excluded items (pass-through costs, non-entertainment income, pre-existing publishing deals) prevents disputes that would otherwise consume the relationship.

Negotiate a de-escalating sunset clause of no more than 24 months, limited to deals the manager personally procured during the term. Don't accept perpetual post-term commissions or a sunset that applies to income from deals the manager had no role in obtaining.

Include a key-person clause if the artist is signing with a management company. The artist hired a specific manager, not the company's letterhead, and should have the right to leave if that manager does.

Require performance benchmarks for option periods. The manager's right to extend the term should be earned through results, not exercised automatically. A minimum income threshold or a requirement to secure a specified type of deal (recording agreement, distribution deal, or a defined number of sync placements) ties the extension to measurable outcomes.

Don't grant general power of attorney. Limit the manager's authority to specific transaction categories, cap the dollar amount the manager can commit without artist approval, and terminate the authority when the agreement terminates.