“…music’s biggest stars make most of their money when they’re on stage, not in a recording studio. Much of that has to do with the strange economic incentive system in the music business–acts keep most of the money made on tour, while record labels keep most of any money made from record music sales.”
Music’s Top Moneymakers 2006 — Forbes
In the beginning, there were venues, and they were empty. Spaces of all shapes and sizes, many with questionable acoustics and more than a few in neighborhoods which may have seen far better days, but all deemed suitable for the purpose of separating consumers from their hard-earned cash under the guise of something akin to music appreciation.
How then to fill empty seats? It does not take an actual village — although now and then a village idiot will step up to book an act into a venue they have no hope of filling without massive ticket giveaways — but nevertheless, there are quite a few players involved.
The Artist: Also known as “the talent” or “the act.”
The Venue: Venues can be as small as a bar that holds 50 people or as large as a stadium with the capacity to seat tens of thousands. Venue “management” can be anyone from the owner of a local bar to the performing arts director of an annual musical festival to the director of marketing for a county or state fair to the general manager of a civic center. Then there are the ubiquitous owner-operated venues of Live Nation, seemingly intent on Worldwide Domination and the end of life as we know it! Wait…that might be the terrorists’ plot on Jericho. Anyway, even management has to answer to someone, whether it be a board of directors, elected officials (shudder!), or investors. The fearless take a hands-on approach to filling their calendars with concerts and other sundry attractions, making offers to and negotiating contracts with the licensed talent agents who represent the artists’ interests, while others rely on bookers or promoters to deliver acts that will fill all those empty seats. Revenue stream: facility fees, hall fees, parking fees, concessions – all of those refreshing beverages – and other add-ons, some of which defy explanation.
The Booker: Also known as a talent buyer (or production manager a little further up the venue food chain), the booker is responsible for booking live music acts at the venue. At clubs and small theaters in particular, the booker often has other, less glamorous duties in addition to sifting through demos looking for acts who they feel have the best potential to draw a crowd. Revenue stream: a paycheck and the thrill of booking promising young artists before their egos swell to gargantuan proportions…and probably once again after these very same egos deflate when a fickle public loses interest. And odds are, it will.
The Promoter: All promoters are not created equally. Live Nation (Clear Channel Entertainment in sheep’s clothing) has become the Goliath of the U.S. concert industry after acquiring many of the venues it formerly competed with, including the venerable House of Blues. Owner-operator promoters get to double-dip in the revenue stream, collecting the ancillary fees of a venue in addition to a percentage split and a negotiable percentage of the gross receipts and/or of net profits after recouping expenses.
The Personal Manager: The personal manager is responsible for advising the artist regarding virtually all aspects of their career, including touring. While the artist may receive tour support from his or her record label, particularly early in their career, it’s the manager who generally oversees all aspects of the tour, starting with enlisting the services of the talent agent. Revenue stream: generally 15% up to 20% of all income received by the artist, pretty much from whatever source derived (except investments).
The Talent Agent: The talent agent’s job is to “procure employment” for the artist; in most states only licensed talent agents are allowed to book live performances. Working with the personal manager, the agent will try to determine how big of a draw the artist is, whether there exists a sufficient demand to see the artist perform live, and what size of a venue the artist can be reasonably expected to fill. For new artists, the most common approach is to call in favors and book them to open for other artists or acts (for which they will be paid a flat fee). For artists ready to headline, the talent agent will try to route a tour at venues where the artist’s gross potential is sufficient to warrant a booking, and negotiate a guarantee that will at the very least cover all tour expenses. Revenue stream: most typically 10% of gross income derived from touring.
The Business Manager: The business manager handles financial matters. Essentially, the business manager receives all payments due to the artist from any source and is responsible for paying bills, as well as offering financial planning advice. The business manager puts together the tour budget and plays a vital role in making sure that the artist receives all guarantees and percentages due from the promoter. Revenue stream: most typically 5% of gross income from all sources (except investments).
The Lawyer: The lawyer may be called upon to review all performance agreements and riders, merchandising contracts, equipment leases, and any other legal documents that the artist may be asked to sign. Revenue stream: most typically, a flat fee or hourly rate.
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Thanks for the touring primer, Nevada. It’s always interesting to see how many mouths there are to feed even before one plays note one.
How does Ticketmaster get paid? Is that based soley on those “convenience fees”?
Can we get a merchandising primer one day? Maybe then we can figure out why a tour shirt costs so much.
I already did the t-shirt math back in May, courtesy of The Musician’s Handbook:
$25.00 (cost to customer/fan)
-$ 1.00 (4% taxes on average)
=$24.00
-$ 8.40 (35% hall fee; Live Nation venues charge 40%)
=$15.60
-$ 5.00 (20% cost of goods)
=$10.60
-$ 1.00 (4% miscellaneous)
= $9.60 (profit to the artist or act; subject to management fees)
Nevada, that was fantastic. Thanks for the enlightening read. Very educational and easy to understand too. :)
Do the Personal Manager (15-20%), Business Manager (5%) and Talent Agent (10%) all get a piece of that pie too? Gross or net? Because, if it’s gross (at 35%), that’s another $8.40 (after taxes) leaving $1.20 for the artist (or 24 cents each for a five piece band).
And here’s an article which addresses the Ticketmaster issue:
http://www.suntimes.com/entertainment/430979,SHO-Sunday-tickets17.article
The biggest extra charge is the “convenience fee” added by Ticketmaster: The cost averages $10 per ticket, but can climb much higher. (See sidebar on the numbers.)
Thanks Nevada. It’s always interesting too see where all the costs come from.
The personal manager and the business manager do get a piece of that pie; the talent agent does not.
Unless otherwise provided, the personal and business managers’ percentages are of gross receipts.
And here is the link to the sidebar for the Ticketmaster article above, with a breakdown of the numbers:
http://www.suntimes.com/entertainment/derogatis/430977,SHO-Sunday-tickets17-ch.article
Coincidentally, a date from Kelly’s now-cancelled tour is included in the breakdown.
Holy sh*t. There are so many animals along this great touring food chain..
I wonder how many acts actually make any meaningful money touring.. 
This is fascinating reading - wow so many people get a piece of the pie!!!! Mindboggling for sure but so interesting!
Wow.. thanks for all the info.. I am in the wrong business!! lol
An excellent article.
Isn’t it the case that sometimes an organization such as The Firm also provides accounting, tax, and especially legal services, if the client wishes? In fact, I believe many “managers” are also attorneys. I would think that the fee for services might be determined differently in such a case and the “personal manager” you describe sees to it that everything is taken care of using whatever people necessary.
Thanks for the interesting read. You have a great writing style…have you ever considered doing it for a living? I think you’d be really good at it.
Simon Fuller also offered “one stop shopping” for these and other services to the Idols he signed to 19 Management in years past, and he was portrayed as a greedy opportunist. Still, I imagine there are artists who might prefer the convenience of having everything under one roof, but most professionals appreciate the need for independent checks and balances, not to mention avoiding potential conflicts of interest.
That aside, all fees are negotiable to some extent. New artists have the least leverage, however, and in the beginning of their careers they may actually have to pay MORE than the typical percentages referenced above.
It’s a high stakes game.
And yes, writing for a living has crossed my mind…