Contract Law in the Music Industry
Management Contract and Concert Contract

Author: Mag. Susanne Grainer (www.polarisartists.at)
 

Every musician encounters a series of contracts throughout their career. Every performance, every tour, every major PR action, and even every CD production comes with (often a series of) contracts, which are sometimes very complex and phrased in complicated legal language.

Extensive contracts, often written in complicated legal language, can quickly seem overwhelming, while very simply worded and particularly short contracts often do not cover all relevant points, leading to surprises and, in the worst case, legal consequences. Therefore, at least a basic understanding of the basics of contract law is essential for every artist and can save many unnecessary unpleasant situations. The following text aims to provide a brief overview of the minimum requirements for, as well as some common optional contractual components of a concert/performance contract (hereinafter referred to as "Concert Contract"), as well as an agency/management contract (hereinafter referred to as "Management Contract"), and is intended as supplementary material to the interview recorded for the students of the mdw in May 2020. It does not represent a final legal assessment or analysis of these contract types.

At the end, there is a list of literature with works offering further information on these two types of contracts. Many of the listed works also include sample contracts. Additional sample contracts can be found on the website of mica Austria as well as the website of the WKO. A large portion of the existing literature (including sample contracts) pertains to the rock/pop sector and only briefly mentions the specifics of classical music. However, many of these contractual clauses can also be applied to the classical music sector, although the terminology often needs to be slightly adjusted (e.g., Band = Ensemble). It should also be noted that much of the mentioned literature refers to German law. However, the legal situation in Austria and Germany is very similar in regard to the contracts discussed here, so the listed literature still provides a good overview of the contractual situation in Austria. Further legal advice is provided by various law firms specializing in the art and culture sector. Especially for complex contracts or those involving higher sums, legal advice should be considered. In Austria, some institutions offer legal consultation for musicians’ contracts, sometimes for free (for members).

For readability purposes, the male form (artist/manager) is used for the terms "artist" and "manager" below. This, however, is not meant to imply any discrimination against the female gender but is intended to be understood as gender-neutral for linguistic simplification.
 

1. General Contract Law

In Austria, the principle of private autonomy prevails. A central element of this principle is contractual freedom. This includes, on the one hand, the freedom to conclude a contract (whether and with whom a contract is concluded) and, on the other hand, the freedom to shape the contract (what should the contract regulate).

The legislator has enacted some regulations, which, however, are mandatory and cannot be modified by the contracting parties.

However, especially in the contracts discussed below, there are, with a few exceptions (e.g., violation of public policy), very few such regulations, and most aspects can therefore be individually regulated by mutual consent between the parties.

A good overview of the most important principles of contract law can be found in the book by Robert Lyng, Musik und Moneten: Wirtschaftliche Aspekte von Künstler-, Bandübernahme- und Produzentenverträgen (2005).
 

2. Agency/Management Contract

The agency or management contract regulates the business relationship between the artist and the manager. The terms "agency" and "manager" are not used uniformly in practice. Often, the role of the manager includes more activities than the agent's role, but there is no clear definition of this. Therefore, the terms "manager" and "management contract" are used collectively below.

A good overview of the content of a management contract is provided by Hans-Jürgen Homann in Der Künstlermanagementvertrag (2012) on pages 58-115.
 

2.1. Minimum Requirements

• Contracting Parties: including address, company number, ZVR number, date of birth, or similar

• Contract Subject

• Representation Form/Scope:
  Exclusivity or Exclusion of Exclusivity: Exclusivity means that third parties (especially other managers) may not undertake the activities listed in the respective contract for the artist. Furthermore, it should explicitly state whether the artist can personally undertake these activities (e.g., handling concert inquiries themselves) or not.

  In principle, an exclusivity clause could also apply to the manager, meaning the manager can only work for this artist and no one else. In practice, this is rare unless the artist is especially well-known and therefore offers significant work (and commission) for the manager.

  Regardless of exclusivity, a limitation of the subject matter and/or geographical scope is also possible.

Subject Matter Scope: limits the collaboration to a specific genre (opera productions, film music, live concerts, promotional appearances, etc.) or excludes certain genres; a limitation to specific management activities such as PR activities, accounting, contract negotiations, travel coordination, etc. is also possible.

Geographical Scope: limits the collaboration to a specific geographic area (e.g., Asia, Europe, USA, etc.) or explicitly excludes certain areas.

Manager’s Duties: The activities that the manager should undertake are explicitly listed here. These can include, for example: mediating concerts/performances, promoting concerts/performances and other musical activities, communicating with organizers, negotiating and concluding contracts, tour planning and accompaniment, advising the artist in various areas (which should be defined as precisely as possible), taking care of the artist (a very broad term that can include organizing childcare and should be described in detail), representing the artist’s interests, office management including calendar management, collecting fees, creating PR and advertising concepts, negotiating and concluding sponsorship, merchandising, and recording production contracts, etc.

Powers of Attorney: General powers of attorney for the manager are rarely included. However, negotiation and signing powers for the contracts specified in the contract are common. Often, it is agreed that, despite having signing powers, the manager must first clarify details of the concert/performance with the artist. Moreover, signing powers are often limited (e.g., only up to a certain fee level, e.g., EUR xx.-; for higher/lower fees, a separate power of attorney from the artist is required for that particular contract).

Duties of the Artist: To enable the manager to carry out their duties as efficiently as possible, the artist often has to undertake duties of abstention (e.g., they must refrain from answering concert requests themselves) and/or informational duties (e.g., they must forward incoming concert inquiries to the manager).
 

Financials

Commission: The most common form of compensation for the manager's services is a commission from the concert fee (usually between 10% and 20% of the net or gross fee). In general, it is due after the concert. It can (and should) be agreed that the manager’s commission is calculated from the pure concert fee (if the organizer pays an additional flat rate for expenses, e.g., accommodation and travel costs, it should be explicitly agreed that the manager's commission is calculated only from the concert fee and not from the total amount, which may include expense reimbursement).

Commission After Contract Termination: It is also common for a clause in the contract to give the manager a share of the commission for performances of the artist that were agreed during the contract but take place after the termination of the contract.

Flat Fee: Less common is a monthly flat fee (instead of or in addition to concert fee commissions). In this case, the artist pays the manager a fixed sum each month for all activities the manager performs for the artist (regardless of success). For purely concert mediation or concert-related activities, the artist is generally advised against agreeing to this form of compensation, as they have no guarantee of how many or which concerts/performances they will ultimately receive through the manager. However, if additional activities are agreed upon, such as ongoing accounting, office management, etc., a monthly salary for these activities is reasonable. It is advisable to agree on a separate compensation for concert mediation based on commission payments.

Expense Reimbursement: It can also be agreed that certain expenses incurred by the manager (e.g., travel expenses, etc.) will be reimbursed by the artist.

Duration of the Contractual Relationship: Management contracts can either be concluded for a fixed period (= fixed-term contracts) or for an indefinite period (= indefinite contracts). Fixed-term contracts are the exception and are used, for example, in the mediation of specific projects/programs. A management contract generally aims at building or expanding the artist's career, which typically requires a long-term collaboration. Therefore, indefinite management contracts are more common.

In the case of indefinite contracts, both parties should be given the possibility of termination without stating reasons (certain notice periods up to several months are the norm). Termination for both parties for good cause (e.g., severe breach of contract) is always possible by law, both for fixed-term and indefinite contracts.
 

General Clauses

• Clause on Jurisdiction
• Clause on Applicable Law
• Confidentiality Agreement
• Amendments/Additional Agreements: It should be explicitly stated that there are no further arrangements concerning the subject matter of the contract, except those specified in the contract, and that any changes and/or additions must be made in writing. It is also important to specify whether an agreement via email fulfills this written requirement or not (laws and jurisprudence are not uniform here, so the explicit inclusion or exclusion is important).
• Date, Place, Signature
   

2.2. Optional Clauses

Image and Sound Material: It may be agreed that the artist must provide the manager with image and/or sound material for the promotion of the artist (or also for the promotion of the manager's own company, e.g., homepage of the agency’s website) and must simultaneously guarantee that they hold all rights to the provided image and sound material for this purpose.

Career Promotion: It can be agreed as a duty of the manager to promote the artist's career or create a "career plan." These terms are very broadly defined and not uniformly defined, so it should also be at least exampled what specific activities (e.g., arranging a recording contract, artist portraits in various media, etc.) are meant.

Band/Group Clause: If the management contract is concluded for the representation of an ensemble, either each ensemble member must sign the contract, or a representative of the ensemble must sign it on behalf of all ensemble members (the second option is more common and practical). In the latter case, the ensemble representative must clarify and agree on this authority internally (i.e., with all ensemble members) and ensure that all ensemble members comply with the obligations of this contract.

The management contract should also regulate what the (temporary) absence of an ensemble member means for this or any concert contract entered into based on this agreement. (Does the concert still take place? Who needs to be informed? Who arranges for a replacement, and who has to approve the replacement? Etc.) It should also be specified whether performances with different line-ups (e.g., an 8-member ensemble performing a concert under the same ensemble name but with fewer members) are also covered by this management contract.

Key Person Clause: If a management contract is concluded with a company on the manager's side that employs multiple managers, the artist may insist that their agendas be handled only by a specific manager (= key person) of this company (in practice, brief situations of substitution by another manager, e.g., due to illness of the key person, are excluded from this rule).
 

3. Concert/Performance Agreement or Tour Contract

Especially with concert or performance contracts, the problem often arises that these are particularly brief or standard contracts that are used for all events of the organizer and therefore do not sufficiently address the specifics of the particular concert/performance. Therefore, it is especially important here to check whether the minimum requirements are met and all relevant details for the concert/performance are regulated.

Tour contracts are usually very similar to individual concert contracts; what is important is that they contain information in addition to the concert/performance details, such as accommodation, transport, visa, etc.
 

3.1. Minimum Requirements

Contract Partners: Including address, FB number, ZVR number, date of birth, etc.

Subject of the Contract:
 

• Details of the concert(s) or performance(s): Date, time, duration, location, program including encores, rehearsal possibility, rest periods, etc.
• Technical Rider: If available, it should be included as an annex to the contract. It should also state who provides the technical equipment, who bears the costs, and whether certain logistical requirements need to be met (e.g., access and parking possibilities, electrical connections, etc.).

Finances

Flat Fee: A flat fee is usually agreed upon for the performance/concert (it should state whether this is a gross or net amount); it should also explicitly state whether this amount covers all expenses incurred by the artist (travel costs, accommodation, but also sheet music acquisition, etc.) or if certain expenses will be reimbursed separately and, if so, what the payment terms are.

Participation in Ticket Sales: Alternatively or in addition, a participation of the artist in the revenue from ticket sales can be agreed upon.

Free Tickets: It should also be specified whether the artist will receive free tickets for the relevant concert, and if so, how many and for which category.

Payment Terms: The payment terms for the fee (and any reimbursed expenses) should be specified (including the artist’s bank details, clarification of who covers the bank fees, when the amount is to be transferred, etc.).
 

General Provisions

• AKM: Who is responsible for the AKM registration of the concert and who covers the AKM costs? (Typically, this is covered by the organizer, but it should still be stated in the contract.)

• Force Majeure: This clause addresses the cancellation of the concert due to force majeure (including all types of natural disasters or inability to perform due to reasons that do not fall under the fault of the artist or the organizer). In this case, the mutual rights and obligations under the contract usually expire.

• Cancellation of the Performance by the Organizer/Artist: In this case, it is often stipulated that the canceling party must pay the already incurred expenses of the other party and/or a contractual penalty (e.g., part of the fee). A tiered structure of reimbursed costs, depending on how far in advance the cancellation is made, is common.

• Jurisdiction Clause

• Applicable Law Clause

• Confidentiality Agreement

• Amendments/Additions: It should be specified that there are no further agreements regarding the performance except those made in this contract and that any changes and/or additions must be made in writing. It is also important to clarify whether an agreement via email satisfies the written form requirement or not (laws and case law are not uniform here, so the explicit exclusion or inclusion is important).

• Date, Place, Signature
   

3.2. Optional Clauses

Band/Group Clause: See comments under 2.2. (Management Contract)

Image and Sound Material: A clause may be agreed that obligates the artist to provide image and sound material for the promotion of the event. In this case, the artist usually also has to guarantee that they hold all rights to the provided material (this is often referred to in contracts as "indemnification").

Travel Expenses: If the artist incurs travel expenses, the contract should specify who is responsible for booking and covering the costs of accommodation/transportation/meals.

Merchandising Sales: In classical music, this usually only applies to the sale of recordings; larger organizers often offer artists the opportunity to sell CDs before/during/after the concert. The organizer usually retains a small commission from the sales.

Spatial Exclusivity: The organizer may demand that the artist not perform in a specific radius around the concert location before and/or after the relevant concert. The purpose of this is to ensure that the organizer does not lose their audience to another event. The time span and the spatial area to which this clause applies can vary and is often negotiable, especially if the artist is performing with a different program or in another formation (e.g., a different ensemble, etc.).

Tour Contracts: In addition, it should be regulated in tour contracts how the compensation will be handled if the tour is only partially carried out (due to cancellations caused by force majeure, etc.).

Image and Sound Recordings of the Performance: If either of the parties intends to record the performance (or parts of it) (video and/or audio), this must be regulated in the contract. An artist will almost always have to agree to a recording for archival purposes, as well as to the regulation that a limited number of seconds (maximum minutes) may be used for reporting and/or promotional purposes free of charge. If a recording is to be made for commercial purposes or for longer reports, etc., a separate contract should be concluded in which the details for the planned use and the corresponding financial compensation are regulated.
 

3.3. Practical Tips for Contracts with Organizers Based Abroad

Payment Terms: Especially with higher fees or tour contracts, it is advisable to insist on receiving at least part of the fee before the performance(s).

Currency: Ideally, the fee should be agreed upon in euros. If an amount is agreed upon in another currency, it should be considered that there may be exchange rate fluctuations.

Bank Fees: Especially with transfers from abroad, there are often (relatively high) bank fees. It should therefore be clarified in advance who will cover these fees.

Travel Arrangements: It should be clarified who will handle the booking of transport (international and national) and accommodation, as well as who will bear the costs.

Visa Costs: Visa costs vary greatly depending on the country, ranging from EUR 0 to several hundred euros. There are also frequent changes regarding visa requirements. It is therefore important to clarify in advance who will cover the costs for the necessary visa.

Contracts in the Local Language: Some countries require signed concert contracts in the local language (often because these are necessary for obtaining official permits for the concerts). To avoid signing something one doesn't understand, always insist on (at least) an English translation in the same document as the contract in the local language.

Withholding Tax (often colloquially called "foreign tax"): For foreign artists, the organizer often has to pay withholding tax, which is calculated based on the artist's fee. It should be regulated in the contract whether the stated fee is already net of the withholding tax or if this will be deducted from it.

Literature List

• Robert Lyng, Musik und Moneten: Wirtschaftliche Aspekte von Künstler-, Bandübernahme- und Produzentenverträgen (2005)
• Donald S. Passman with Wolfram Herrmann, Alles, was Sie über das MusikBusiness wissen müssen (2011)
• Hans-Jürgen Homann, Der Künstlermanagementvertrag (2012)
• Kurt Hodik, Theater- und Konzertverträge: Rechtskunde für die Praxis (1995)
• Mathis Fister, Das Recht der Musik (2013)
• Florian Drücke, René Houareau, Musik, Recht und Verträge: Ein Einstieg für alle an der Musik und der Musikbranche Interessierten (2013)

Further detailed information and sample contracts can be found on the website of mica - music austria.