New and Innovative Music Management Business Models

11 January 2017

The music industry used to be a simpler place. Deals were done for records and publishing and that’s where most of the revenues in any musical career would pour from, alongside cash racked up during periodic stints on the road.

With relatively standard contracts producing a handful of predictable revenue streams, the ‘20% of everything’ agreement was a simple but effective relationship between artist and manager.

And for many it still is. However, the music business is a far more complicated affair today than it was even 10 years ago. The coexistence of four different formats in streaming, downloads, CD and vinyl is complicated enough but, now more than ever, a musician’s career encompasses far more than singles and albums, with brand deals, video monetisation, clothing lines and any number of other ventures contributing to their overall income.

That being the case, and with traditional music sales not necessarily being the financial bedrock they once were, the manager’s role has become more involved, diverse and nuanced.

We spoke to a number of MMF members who have adopted interesting models with their artists to accommodate the changing industry.

Caius Pawson – Young Turks

On November 24, excellence, innovation and creativity across the artist management community came together to celebrate at the MMF and FAC’s Artist and Manager Awards at the Troxy in Shoreditch. Among those up for awards was Young Turks founder Caius Pawson, who was handed the prize for Entrepreneur of the Year.

Like some of his peers, Pawson runs the Young Turk management company alongside connected label and publishing operations, but he actually began as a label and supplemented that with a management offer when he saw the need in the early years of a now well established act.

“I was working with The xx while running the label, but I didn’t want to sign them at the time so it wasn’t a formal relationship, I was just helping them develop by getting them get rehearsal space and booking shows,” he explains. “They eventually asked me to manage them and then actually only signed a record deal after their album came out.”

When it comes to Young Turks, Pawson says the main benefit of having a record label and management – although they are separate companies with separate employees in this case – is that “there’s a full integration with a single vision and proper communication”.

Pawson is keen to acknowledge that some in the music business feel strongly about there being a separation of powers between label and manager traditionally, but he argues that there are many benefits to having the two sides intrinsically linked.

“The dynamic between a manager and label has to be both cooperative and questioning, but I think that’s still possible when they are the same if you put the right checks and balances in,” he says. “And you get the added bonus of incredible rhythm between the two parties.”

And a Young Turks artist doesn’t necessarily have to tether their entire career to the company: “Some of our management clients are on other labels, we have loads of acts on our label that are managed by other people and we’ll do a publishing deal if it makes sense,” says Pawson. “It’s definitely not about land grabs – it’s about putting the best team together for the act.”

While the lines between label, publisher and manager are indeed blurring, Pawson suggests the dynamics between exec and artist in each different role are still unique.

“There’s a different relationship when it comes to being a manager and a label,” he points out. “A label is a very intense relationship but for a short period. It’s vital in the artist’s career but it isn’t 24/7. When you’re the manager, you have to have a special relationship with your acts on a very high level – and we’re only human, there’s only so much time and energy we can put into an artist. You have to consider that when you decide who you manage and who you sign.”

Teriy Keys – R.O.A.D Entertainment

Founded in 2010, Teriy Keys’ R.O.A.D Entertainment combines a commercial entertainment company offering management, publishing and label services with a third sector enterprise through the R.O.A.D. Academy and Training Centre, providing creative arts and business training for 8 – 15 and 16 – 24-year-olds who have come from troubled or less privileged backgrounds. The company’s tag line is ‘From the streets, to the industry’.
Keys’ R.O.A.D Entertainment is a perfect example of how managers are investing more in artist development early on with a hands-on approach as a result of labels having to tighten their purse strings.

“We are a sort of artist accelerator,” explains Keys. “We will advance an artist enough money based on where we see them. It takes a certain amount of capital and/or resources for an act to build a portfolio, a press pack, some photos, have some music recorded… Then we can go and pitch that to a label.”

That initial advance that Keys offers has traditionally come as part of a record or publishing contract, but today most artists will need to demonstrate that they have a strong foundation before a label will even think about chilling a bottle of bubbly – so it has fallen to some managers to fund their acts’ formative years.

Of course, with that extra investment in mind, it’s only right that their share of any returns increases proportionately. Keys often operates on a 360 basis with his artists, with a 60/40 split.

But it’s not just contract terms that Keys has adapted to fit the new music business. With its role as a 360 development house in mind, R.O.A.D Entertainment has developed infrastructure far beyond a simple management office, boasting its own recording and photography studios, marketing and PR outfits as well as venues, alongside its aforementioned label and publishing operations.

“The amount of information that we have in the management role kind of allows us to do things and save costs along the way as well,” he says. “Even though we are taking a cut, you would probably lose 70% if you had other people in the mix. We’re trying to protect the asset and keep as much money within the camp as possible.”

Eric Harle – Def Management

The model that DEF Management offers some of its artists evolved out of necessity when Eric realised that the traditional record deals were either too restrictive and one sided where the commitment from the artist was too much for the ever diminishing return commitments of the labels. Similar to a number of his management peers today, DEF’s owner Eric Harle decided to circumnavigate the industry’s traditional gatekeepers with a DIY approach.

Take one of DEF Management acts: The Knife. The Gothenburg born electronic music duo already had their own label set up in Sweden and, when the time was right, Harle and his team took it upon themselves to replicate the approach to the rest of the world mainly as the artist was not interested in most traditional record company functions like a&r and production.It offered freedom of expression and would avoid often frustrating discussions with labels about artistic direction.

“We decided to operate as a label on behalf of the artist and needed to come up with a deal structure for that,” says Harle. “At the time the indie labels used to use a 50/50 profit share, so we thought we suggested the same as a true partnership. The difference was that we wouldn’t own anything, we would just act on the artists’ behalf, run their label and have some kind of joint venture scenario that would then share the profit if there was one but not charge management commission.”

It’s a model that DEF has developed over time and one that is now used by some of its artists (moby, robyn royksopp). Importantly, however, the management company has traditionally only entered into joint ventures with its artists for records – all other aspects of the career are subject to the traditional 20%. Although Harle points out that, as the balance of business shifts, management companies are constantly having to adapt.

“Now that the recording has become so labour intensive with much less return, we probably have to adjust somehow,” he muses. “The whole recording model has changed so dramatically. When you look at the major labels, they are effectively healthy because they have catalogue, which is where they make their money from on the streaming side. Establishing new music is quite difficult. If you’re at the high end and you’ve made a hit you can create serious revenue, but not so much for everyone else.

But that doesn’t mean that Harle shies away from artists that are building a bedrock of new music – far from it. While the majority of revenue is likely to flow from other areas of an act’s career, the recorded music is still central to the artistic endeavour.

“New recordings might not always represent as viable business by itself as in the past, but they are a very important component for the development of the artists so there needs to be solutions for that,” he says. “We think about the record company from the point of view of the artist, within a holistic approach to an artists career, not in terms of trying to maximise money as the record company.”

Meredith Cork – Yellow Brick Music

Yellow Brick Music founder Meredith Cork is an industry veteran. Having been the founding manager of Garbage, she’s also represented big name producers such as Butch Vig and Jimmy Miller, and multi-platinum selling artists such as Marcella Detroit, Dot Allison and Womack and Womack. Today her company represents Glen Matlock, Right Said Fred and breaking artists AFFAIRS, Fjokra, Van Susans and The Clear.

Over her more than 30 years experience in the music business, she’s seen traditional record deals lose their appeal for a number of reasons.

“What we’ve found as time’s progressed, when it comes to breaking and developing new artists, you’ve really got to deliver it on a plate to labels,” she says. “Then the question is, do you want to sign it away to a major record label after you’ve spent five years on something, give them 85% only to have them fuck it up in six months’ time?

“The question, then, is how do you develop an artist without relying on some sort of cash injection from something like PRS for Music’s Momentum Fund?”

Trained in graphic design, marketing, journalism and PR prior to moving into artist representation, Cork is another manager both able and willing to take matters into her own hands. Yellow Brick offers a model much like the label services approach that has become increasingly popular for acts that have developed large fanbases and are able to stump up the capital for campaigns, but crucially keep hold of their rights.

“We function as marketing and management across the board and we can bring any element in, such as radio promotion or press. We search for sync opportunities and have a very skilled social media team, and we can even book small to medium sized gigs,” she explains. “We build a campaign around a project and then oversee it for the duration. The money we generate from the retainers from more established acts help us to take on developing artists on a standard management deal where we normally might not be able to afford to.

“It is like label services, except we are a whole lot cheaper than label services as a rule,” Cork emphasises. “And we offer a total management service, meaning we look after all sorts of personal bits and pieces as any manager would. So it’s very hands on and a lot more personal.”

Ric Yerbury – Funnel Music

Ric Yerbury’s Funnel Music is similarly built with a view to nurturing artist potential rather than race to the finished project. But Funnel’s approach is particularly patient, often working with artists for years before they even think about releasing a track.

One of the first artists on Funnel was Joe Probert. The singer/songwriter is now 19 years old and released his first EP at the end of September – but Funnel has been working with him since the age of 16. It’s a long game that traditional record labels would have struggled to play even in their heyday.

“We mentored Joe and taught him a lot about the art of songwriting and performing and how to go from being a busker through to being somebody who knows how to control a stage and an audience,” explains Yerbury.

“We start, first and foremost, with the artist and their product and there is inevitability a period of evolution of development, mentoring, creative writing – whatever it is they need to pull them from being a talent with potential to an artist.”

Funnel acts as the umbrella company for its client’s careers. Distributed by INGrooves with publishing administrated by Sentric Music, the company helps its acts produce, deliver and manage their music and rights without the need for a label or publisher.

“As far as recording is concerned, the careful early development of the artist, their music and their writing is something that is often woefully missing from most major labels and it’s difficult for some of the independent labels to put the same level of application that’s needed to take an artist through to a point where they actually have credible products,” he says.

Importantly, however, while his work will be released with significant help and guidance from Funnel Music, Joe Probert’s EP is considered a self release.

“We take a tech approach to the way we work in terms of the pipes that deliver the music, administer the composition rights and so on,” says Yerbury. “Joe Probert comes under that umbrella, if you like, but if you ask what label he is on, it’s Joe Probert.”

Of course, Funnel has to make sure that taking on the extra responsibility of fulfilling development and label duties makes sense for its business, so it owns the rights of any recording project it produces in this way, but splits recording revenues 50/50 with the artists. The company also doesn’t spend the kind of money that’s usually needed to produce world-class recordings.

“We have our own studios and we’ve got access to other word class facilities and great engineers and producers under our shared outcome model. so you get world-class recordings at a very low cost and that’s really important,” says Yerbury. “You haven’t spent £100,000 to get your album, you’ve spent £10,000 or £5000 but it’s still world-class and well thought out, so it’s a kind of holistic approach to developing it.

“Business-wise we have to make money of course, so we have rights on their recording, sometimes their publishing, it depends. We also manage them, and yes there’s a sort of 20% commission there, but what we’re not going to do is to bump them up, flip them on to a major label, take 20% off them and wave goodbye. That’s definitely not our model.

“We refer to ‘Our World Without Labels’, but we aren’t kicking the major labels, we just think there is another model that you can pursue if you so wish.”

Gary McClarnan – Sparklestreet

Renowned producer and DJ Mr. Scruff is Gary McClarnan’s most longstanding client, and the pair’s two decade long relationship is a great example of how more formal partnerships can create a structured, involved and accountable relationship between managers and artists both in music and beyond.

McClarnan uses a number of different business models for his artists depending on their needs – including the traditional 20% system or a simple admin fee for those looking for basic asset management without much creative or commercial input.

In certain cases like that of Mr. Scruff, however, McClarnan has actually gone into business with his artists as a partner in a limited company.

“I’ve set up restaurants, cafes and various other things with artists based on their reputation,” he explains. “I’ve got three restaurants with Mr. Scruff and at one point we had a tea business. I’ve set up T-shirt businesses with other acts that have done really well.

“A lot of artists do these things just because they want to try them out, because they’re interested in fashion or cheese or whatever. It’s a hobby that they can put some money into and, like music, can create something interesting.”

McClarnan says there are many benefits to forming limited companies with his clients as opposed to working on a percentage commission. If nothing else, they are often clearer and better defined arrangements, which can make for an easier working relationship at crucial points.

“What’s interesting about limited company deals rather than 20% agreements is that, if I form a company with someone and act as a managing director with the artist as the creative director, we each have a portion of the company,” he says. “As an MD, I can get fired if I’m not doing a good job. Or I can walk away cleanly or get paid off if I’ve made a fair contribution to the business – that’s been a hell of a lot easier than trying to negotiate sunset clauses in management deals. It’s very impersonal but there’s legislation that gives you a place in a limited company. You miss that in a 20% service agreement.”

While McClarnan is keen to point out that the 20% model is still the best way to go for many artists who aren’t looking to set up unusual ventures outside of music, forming a limited company can also be sensible when it comes to more traditional elements of an artists’ career such as touring.

“As an entity itself there are a lot more costs with touring and it’s good to keep it in an audited centre,” he says. “Touring involves thousands of transactions and needs to be managed like a small business – whereas records and publishing involve a couple of settlements every year and a couple of licenses. There’s less work.”


This article was written by MMF CEO Annabella Coldrick, and first appeared in Music Business Worldwide.


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