The 1% versus the 15%: a money move, or are impresarios becoming obsolete?
The idea of the artist as mogul is no longer a novel concept. But where that has meant clothing lines, lifestyle brands or other endorsements, some acts are turning their attention to the traditional music management structure, trading commission-based representatives for salaried employees.
In February, Ariana Grande split with Scooter Braun and handed managerial duties to her mother, Joan, and Stephanie Simon at management company Untitled Entertainment, with whom she has worked for the past eight years (though sources say Braun stayed on as a consultant and is involved creatively). In May, Bruno Mars cut ties with manager Brandon Creed after nine years to start his own in-house company. That puts them in the same category as Taylor Swift and Beyoncé, superstars who make decisions with a tight-knit team and retain complete control over their careers.
Despite the recent spate of high-profile defections, insiders agree that commission deals, in which a manager typically makes 15 to 20 percent of an artist’s gross revenue, are still the industry standard for acts of all sizes. And for young and emerging artists seeking a foot in the door, the connections, influence and experience of a top-level manager are invaluable.
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But for the superstar elite, employee managers seem to be an increasingly enticing prospect. “If you want somebody good and you have enough money to pay a generous salary and don’t need an upside, sure,” says one representative of major pop acts. “But most artists can’t do that. The Taylor Swifts of the world can write a check, but Taylor is very business-savvy -- she’s like a female Jay Z -- and she’s the rare exception.”
Still, there are those hands-on artists who are so heavily involved in making their career decisions, like Swift or Beyoncé, that they see no financial advantage to retaining a manager on a percentage basis, opting instead to pay anywhere from $200,000 to $500,000 annually for day-to-day services. (For Swift, who earned $73.5 million in 2015, topping Billboard’s annual Money Makers list, a 15 percent cut would be $11 million.) Others, such as Sean Combs and Jay Z, run multifaceted businesses like corporations and handle the responsibilities of a CEO. Some veteran musicians may assign trusted family members a salary. And for strong-willed acts such as Grande retaining a high-profile manager like Braun, whose roster includes Justin Bieber and Kanye West, makes little sense if his counsel isn’t heeded.
“I’ve spoken to artists before that aren’t looking for advice or management; they have their own vision,” says Myles Shear, who manages Kygo and Thomas Jack. "It all comes down to what the artists feel makes sense, and what they feel is fair."
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But those who can balance business decisions with artistic expression are a rarity. Several industry insiders tell Billboard that, with the advent of social media and the changing structure of the music industry, managers today handle more aspects of an artist's career than ever. One former major label executive estimates there are only a half dozen artists on the planet who would be able to juggle being an artist without a traditional manager successfully -- and that it only works for the top of the top.
“You can’t pitch and catch at the same time; the ball moves too fast,” says Charles Chavez, whose roster has included Pitbull and Magic! “I wish those artists and managers luck.”
"Every artist that I manage, the ultimate decision is theirs; I'm here to advise and guide," says Maverick Management partner Clarence Spalding, who works with Jason Aldean, Rascal Flatts and more. "And I think that a lot of times -- not all the time -- a person who is an employee of the band is more reticent to push back."
Prince may be the classic example of the pitfalls that come with total control. In 1988, he fired longtime managers Steve Fargnoli, Robert Cavallo and Joseph Ruffalo, installing a series of employees as de facto reps in their stead (one a former bodyguard). The move coincided with the commercial flops, critical failures and high-profile battle with Warner Bros. Records over ownership of his masters that lasted for a decade, a period that resulted in waning relevance and a decline in the quality of his releases. Queen and Billy Joel faced similar challenges after bringing their management in-house in the ’80s.
Prince may have been "unmanageable," as one industry veteran put it, but his business dealings shine a light on the importance of having an outside advocate, even for a once-in-a-generation talent. One longtime manager relates a story of an act that left their manager and, after taking advice from others, promptly lowered ticket prices for their next tour believing they'd sell more tickets: "All that did was lower their gross, which lowered their guarantee," the source says.
“There are shrewd, sharp managers that make decisions and add value,” says another source. “Bieber couldn’t manage himself without Scooter; he wouldn’t be the same. Mariah Carey? Forget it.”
“It’s just greed,” scoffs another veteran manager. “Acts go up and down, and talent is only half the game when it comes to having a successful career. When you’re paying someone a percentage, they’re there for the long haul.”