September 19, 2020

Management deal vs Record deal: Which one is better?

management deal vs record deal

In the music business there is often a debate about the kind of deals offered and for a new artist, all this talk can be confusing. If you are starting out, you might want to know more about management deal vs. record deal.

That’s why I wrote this blog post. I will explain to you clearly so you can understand the difference between the two by the time you are done reading this article.

What is a Management Deal?

It goes without saying that you need a manager or some kind of representation in order to succeed in the music industry (especially if you goal is long term).

But that’s easier said than done because most established and successful managers will not work with you unless your name rings a bell. However that’s a topic for another day.

A management deal is basically an agreement between the artist and the individual (or company) acting as the manager. Whether the agreement is written or verbal is irrelevant (but I would opt for the former).

Under the management deal, a talent manager is expected to perform certain duties such as but not limited to the following:

  • Promoting the artist
  • Finding and booking gigs for the artist
  • Public Relations
  • Shopping for endorsements deals 

Activities performed by the manager or management company will depend on the terms of agreement. And this differs from artist to artist.

The typical industry rate for talent managers is 20% while the difference goes to the artist or band to share.

However, there is always an exception to every rule. It is not uncommon for managers to take the lion’s share of the proceeds depending on the amount of personal funds they invest in an artist’s career. This is mostly the case though with new and inexperienced artists.

What is a Record Deal?

The term “record deal” can mean different things to different people. When a fellow artist says to you “I have a record deal”, ask him or her “What kind of a record deal?”

There are different types of record deals in the music industry, from your standard to very complex deals.

The type of deal you get will also depend on a number of things such as your brand, fan base, sales history and so forth.

Having said that, let’s quickly go through the different types of record deals.

Standard Deal

Also known as the traditional record deal – this is when the record label signs an artist to an exclusive contract to record and release music for a period of time. 

The label will invest a large sum of money in the recordings, marketing, public relations, manufacturing and distribution in exchange for the masters, full publishing rights and a large chunk of the profits.

The artist will get a small per cent of the royalties between 2-20 % (20% if you’re a high selling artist). The royalty percentage will increase when you sell more records. But of course that has to be stated in the contract.

Joint Venture Deal

Under a joint venture deal, the artist is now in partnership with the label. Although some people might refer to this as a record deal but it’s not in true essence.

How this works is that, you have to invest your own music. Meaning that this time the artist will have to fund all the studio recordings and production from start to finish under his or her own Production Company or label.

Once that is done, you can license your master recordings to a record company (for a set period) with deep pockets to market and distribute your music to the buying public.

But this time you will retain all your music rights not the label.

360 Deal

A 360 record deal is similar to a standard deal. In fact in these times, most labels prefer to tie down musicians to this type of deal for economic reasons.

Record labels are not making the kind of money like they used to because profit margins have declined thanks to the large consumption of digital music and the rise of artist-run DIY labels.

A 360 deal allows the label to make money of everything you generate as an artist or band.

Management deal vs. record deal?

You are now probably asking yourself which one is best for you. But to be honest, you need both so you can thrive as an artist.

Management takes care of the day to day running of your affairs while record labels are in the business of promoting, distributing and selling more and more of your music.

And again it’s not uncommon for artists to sign a management/record deal with one company. The bottom line is that the two should work in concert and not against each other.

Final Thoughts

You might be caught up between management deal vs. record deal but don’t because there is no need to. If you are a one man army just know that at some point you will need a team to help you to execute your goals.

A manager and a label perform different functions yes but both are integral to an artist’s career.

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