Manager Taking Commission On Gross Not Net - Traps & Scams Every Musician Must Avoid

If your manager is trying to get paid on the gross and you are squinting at the contract like it is written in a lost Spotify playlist format, this article is for you. We will expose the scams, explain the jargon in plain human talk, give you real life scenarios, and hand you ready to use contract language and negotiation lines you can actually say without sounding like a lawyer or a raving TikTok comment thread.

Short version first. Gross means before expenses come out. Net means after expenses come out. If a manager invoices commission on the gross you get paid less after your team, your studio, your label, your tour rider, and the bar tab clean out the pot. That can turn a 20 percent commission into a corporate heist that leaves you with crumbs.

Why this matters

You write the song. You tour. You sweat in 90 degree merch booths. The manager is supposed to steer the ship. The manager also gets a cut. That arrangement is fair. The fight is over where that cut is taken from. When the commission is taken off the gross the manager gets paid first. You get whatever is left. That changes incentives and can let a manager profit from your expenses instead of helping reduce them.

If you want to sleep, pay rent, and not find your bank account crying in a corner, you need to know what language to spot and how to fight it without starting a scene that goes viral for the wrong reasons.

Gross versus net explained like you are texting a friend

Gross receipts means money that comes in before anyone takes their slice. Think of a pizza delivered to a party and everyone reaching in before you count slices. Net receipts means the pizza gets cut and people who bought ingredients get paid before you get your share. If a manager charges commission on gross they dip in while the pizza is full. If they charge on net they wait until the bills are paid.

Real terms to know

• Gross receipts are total money received for music related activities before deductions.
• Net receipts are money left after clearly defined deductions such as production costs, tour expenses, distributor fees, and label recoupment depending on contract.
• Commission is the percentage the manager charges on agreed income streams. Typical rates range from 15 percent to 25 percent for full service management but the number depends on bargaining power.
• Recoupment is when a label or publisher recovers costs out of your income before you see any money. Recoupment affects the net available to everyone including you and the manager.
• 360 deal is a label contract where the label gets a cut of many income streams beyond record sales. If you are in one of these the math gets messier.

Why some managers want gross and why that is often a trap

Managers ask for commission on gross for simple reasons. Gross is easy to calculate. It requires no accounting gymnastics. It means steady, predictable money for the manager. It also means the manager earns from things they did not pay for. A manager who profits on the gross can make more money by letting costs balloon. That creates a conflict of interest.

Imagine a manager who suggests a luxury studio that charges crazy hourly rates, and then collects commission on the studio fees because that money is counted in gross. If the manager is getting paid more when costs rise you can see how objectives diverge. The manager should be reducing costs and increasing revenues. If their paycheck comes from the gross they can make money even if your profits shrink.

Real life scenario one: the festival fiasco

You get booked for a festival that promises a 5 thousand dollar guarantee. The promoter pays you, but they deduct a 10 percent festival handling fee and a 500 dollar sound engineer charge that the festival says is mandatory. Your manager insists commission is on the gross 5 thousand so they get paid 20 percent on the full amount. You get your cut after the promoter reduces the payment. Result, you lose more than you expected while the manager gets a bigger slice.

What should have happened

• Commission on the promoter net check after promoter fees and mandatory deductions.
• Clear definition of promoter deductions that are allowed to reduce the base for commission.
• Audit rights so you can verify the promoter invoice and the actual deductions applied.

Real life scenario two: the streaming surprise

Streaming platforms report gross receipts to distributors. The distributor then takes a fee. Your manager wants commission on gross streaming revenue. The manager gets commission on money you never received because the distributor already took their slice. If your distribution deal includes recoupment from an advance, what the distributor reports as gross might not equal what was paid to you. The manager gets paid first and the advance recoupment eats your account later.

What should happen

• Commission on amount paid to the artist by the distributor after distribution fees and recoupment are accounted for.
• Clear audit process for digital statements and a timeline for accounting.

Common traps and scam language to watch for in contracts

Contracts have tiny phrases that look harmless and act like termites. They are full of sneaky language that lets managers expand their take. Here are the most common traps and how to flag them.

Trap 1: Broad definition of gross receipts that includes other peoples costs

Watch for language that defines gross receipts as everything attributable to the artist without exception. That can include third party monies such as label advances, producer payments, and reimbursements. That language lets a manager take commission on money they did not help generate or money that is not actually income to the artist.

What to do

• Narrow the definition to money actually paid to the artist or artist entity after third party fees and mandatory deductions.
• Define permitted deductions explicitly such as taxes, promoter fees, distributor fees, and agreed expenses.

Trap 2: Commission on gross touring receipts without clear touring expense carve outs

Tour income looks big until you add bus rental, crew, lodging, promoter splits, local tax, and broken monitors. A manager who charges on gross tour receipts will earn when your tour costs climb. That is not in your interest.

What to do

• Carve out allowed tour expenses and ensure commission is on touring net after those expenses are deducted.
• Set a per show expense cap for crew and production unless pre approved in writing. That prevents surprise massive bills.

Trap 3: Commission on label monies subject to recoupment

If your label pays an advance and the manager takes commission on that advance as gross income you might later be liable to the label when the advance is recouped. The manager will have been paid for money that is not ultimately a real unilateral income item for you.

What to do

• Exclude label advances and other recoupable sums from commissionable gross until they convert into actual non recoupable income.
• Alternatively, require repayment to the artist if advances are recouped and the manager was paid commission earlier.

Trap 4: Commission on third party reimbursements and credits

Reimbursements are not income. They are repayments for costs you incurred. Managers who claim commission on reimbursements are effectively taxing your return of money you already spent.

What to do

• Explicitly exclude reimbursements, credits, and refunds from commissionable receipts.
• Define reimbursement and give examples like refunded studio deposits, travel reimbursements, and vendor credits.

Trap 5: Commission on publishing and songwriter income without publishing control

Publishing is a separate income type. If your manager takes commission on publishing global income they must actually be providing publishing services or getting your publishing agreement to say so. Otherwise you are giving away future songwriting money to someone who did not write the song.

What to do

• Keep publishing income separate. If the manager is to get publishing commission the contract must state specific services and the publishing entity involved.
• Consider a lower commission on publishing than on other income, or pay via a separate admin agreement that is transparent.

How to read the nasty bits and what to tell your lawyer

When you send a contract to a lawyer you should not just say sign or do not sign. You should ask for these specific changes. Use this checklist.

• Remove or narrow any clause that defines gross as everything without exception.
• Replace commission on gross with commission on net payable to the artist after specified deductions.
• Exclude reimbursements, credits, refunds, and third party payments from commissionable income.
• Place a cap on manager commission for costs that are passed through as expenses unless pre approved in writing by the artist.
• Require the manager to repay any commission received on amounts later recouped or reversed.
• Include audit rights that allow the artist to inspect accounting and request third party verification if needed.
• Add a sunset clause that phases down commissions if the manager leaves or is fired so you are not paying forever for old deals.
• Spell out definitions and include examples for each revenue stream to avoid future disputes.

Negotiation scripts that do not make you sound like a broken record

Say these lines. They are short, clear, and hard to argue with in a room or by DM.

• "I am happy to pay commission on money I actually receive after mandatory fees and vendor reimbursements."
• "I cannot agree to commission on advances that may be recouped. If the advance is recouped and I do not receive it, the manager agrees to return the commission portion."
• "Tour guarantees are commissionable after promoter deductions and agreed production costs are removed. Let us list those deductions now."
• "Publishing is separate. If you want a share of publishing we need a separate publishing admin or co publishing agreement that defines services."
• "I require quarterly accounting statements and audit rights. If an audit shows overpayment the manager will refund the difference within 30 days."

Contract language you can propose right now

Give this to your manager or your lawyer. It is simple and clear.

<strong>Sample clause idea</strong>
Manager commission shall be calculated on the Artist Net Receipts. Artist Net Receipts means amounts actually received by Artist or Artist entity after deducting the following items which shall be set forth with supporting documentation: promoter fees, distribution fees, mandatory production costs, third party vendor fees, taxes, and refunds or reimbursements. Advances that are subject to recoupment shall not be considered Artist Net Receipts until such time as they are no longer subject to recoupment. Reimbursements and credits are not commissionable. Manager shall provide quarterly statements within 45 days of quarter end. Artist shall have the right to audit those statements upon 15 days written notice at Artist expense unless an overpayment of more than five percent is discovered in which case Manager shall bear the audit cost. Any overpayment shall be refunded within 30 days.

That language is tight enough to stop creative accountants from inventing new income streams on the fly.

Audit rights and why they are your best friend

Audit rights let you peek behind the curtain. Ask for them. Use them. Make sure the clause covers timing, frequency, and who pays if you are right.

• Quarterly statements are standard for small artists. If you are doing huge business push for monthly.
• Audit access should include distributor statements, promoter settlement sheets, and bank records relevant to payments.
• If the audit shows an overpayment above a threshold such as five percent the manager covers the audit cost. If not the artist pays the audit cost.
• Limit audits to a reasonable frequency like once per year unless fraud is suspected.

How to perform a simple accounting check without hiring an accountant

You do not need an MBA to find obvious issues. Do this quick check before your next payday and save yourself from an accidental robbery.

1. Get the promoter or distributor invoice that corresponds to the payment. Promoters usually provide a settlement sheet. Distributors provide statements.
2. List the gross amount, each deduction, and the net amount in a simple spreadsheet. Use three columns: gross, deduction name, deduction amount.
3. Check the manager commission line. Does it equal the percent agreed multiplied by gross or net? If gross, compare to net commission scenario to see the difference.
4. If commissions were taken on items marked reimbursement, flag and ask for correction.
5. Request supporting receipts for any unrecognized deduction such as unspecified production fees.

What to do if you find your manager has been charging on the gross secretly

First breathe. Confrontation is optional. Strategy is mandatory. You want to fix the money and preserve your leverage where possible.

• Gather documentation. Collect statements, contracts, invoices, and messages about deals.
• Request a calm meeting and present the evidence. Ask for a refund or a repayment plan. Use your contract language as the baseline.
• If the manager refuses, send a formal demand letter through a lawyer. That usually gets attention fast.
• If the manager still refuses, consider mediation. As a last resort pursue litigation but be mindful of costs and time.
• Change your team if necessary. Replace the manager and make sure to negotiate proper termination and sunset clauses so old deals stop bleeding you.

Sunset clauses that protect you after parting ways

A sunset clause controls how long a manager keeps earning commission on deals they helped secure after you end the relationship. Without a cap you could keep paying for years.

Common sunset structures

• Percentage reduction over time for deals signed within the manager term. For example 20 percent first year, 15 percent second year, 10 percent third year, then 0.
• Flat period such as manager receives commission on deals signed during the term for two years after termination.
• Commission only on deals that directly resulted from manager efforts with proof of intro or documented negotiation history.

Special cases you must handle separately

Publishing income

Publishing requires separate handling. Do not let a management commission eat a publishing writers share. Publishing money often arrives in different timelines and sometimes lags for years. If the manager contributed to songwriting or publishing admin you can structure a separate agreement such as publishing administration with clear rates and services.

Sync deals and licensing

Sync fees can be large one time payments. If a manager negotiated a sync deal most people accept commission. Still the agreement should state whether the commission applies to the gross sync fee or the net payable after agency fees, music supervisor fees, or label recoupment. Specify that commission applies to money actually paid to your account or entity.

Merchandise

Merch can be a major profit center. Decide if it is commissionable. If the manager helps design, arrange manufacturing, and manage logistics you may want to pay commission. If the manager is not involved the money should not be commissionable. Carve this out carefully.

Brand deals and sponsorships

Brand deals are often negotiated by managers. Agree whether the manager takes commission on gross brand fees or net after agency or production costs. Many artists choose a lower commission for brand deals than for label deals because these often include large production expenses that the artist might front.

Red flags in everyday interactions

• Manager refuses to explain what counts as gross and what is a reimbursement.
• Manager insists advances are commissionable immediately regardless of recoupment.
• Manager asks you to sign away audit rights or to limit the audit period to a tiny window.
• Manager tries to include language that allows them to take commission on money paid to another party such as a songwriter or producer.
• Manager requests commission on future income streams without specifying timeframe and sunset mechanisms.

When to accept gross commission anyway

Yes there are times when gross commission is acceptable. If your manager is bringing in major placements, paying for campaign costs up front, or funding tours, they may ask for gross. If they are taking financial risk they deserve compensation for that risk. If that is the case make sure the contract reflects the risk with clear terms.

If the manager funds costs you cannot afford you can accept gross but protect yourself with these must have items

• Detailed accounting and monthly statements.
• Repayment terms if the manager financed costs that later yield no income.
• Caps on what can be considered a recoverable expense.

Checklist to protect your income before you sign

1. Where is commission calculated on gross or net. Ask for net.
2. What deductions are allowed. Get a list now and add examples.
3. Are advances excluded until they are non recoupable. Require exclusion.
4. Are reimbursements excluded. Confirm yes.
5. Is publishing separate. Decide upfront.
6. Audit rights included. Get quarterly or monthly statements.
7. Sunset clause included. Cap manager earnings after termination.
8. Clear termination and repayment mechanics. Make sure you can remove manager and stop bleeding money.

Common questions artists ask

Is it normal for managers to ask for gross commission

It happens, but normal does not mean fair. New managers or managers taking on financial risk may ask for gross. Established managers with big track records typically accept net commissions or handle financiers separately. Always ask why the manager wants gross and what risk they are taking. If the answer is no risk then push for net.

Can I negotiate commission rates

Always. Commission rate is negotiable. Typical full service manager rates fall between 15 percent and 20 percent. Superstar managers may charge more, especially if they bring major infrastructure. Consider blending rates for different income streams such as 15 percent on touring and recorded music revenue and 10 percent on merchandise. Negotiate in writing.

Do I need a lawyer to negotiate these clauses

You do not need to hire a shark. A good entertainment lawyer or an experienced music business attorney is worth the fee because they will spot the creative accounting tricks and draft crisp language. Think of the lawyer fee as insurance that pays for itself when you are not giving away thousands of dollars each quarter.

FAQ

What does commission on gross actually mean

Commission on gross means the manager takes their agreed percentage from the total money related to the artist before most or all costs and deductions are taken out. That can include advances, promoter guarantees, and fees. This often results in the manager getting paid on funds that the artist does not actually receive after deductions and recoupment.

How do I prove a manager overcharged me

Collect all relevant statements and invoices. Compare the manager commission to the agreed percentage multiplied by the gross or net depending on your contract. If you do not have access request it in writing. Use the audit clause if it exists. If there is no audit clause you can still request documentation. A lawyer can send a formal demand if the manager refuses.

Can a manager take commission on producer fees

Not unless your contract explicitly allows it. Producer fees are typically paid to producers and not considered artist income unless they are passed to the artist. Be careful about language that counts payments to others as part of your gross. Exclude payments to third parties from commissionable income.

What is a recoupable advance and how does it affect commissions

A recoupable advance is money the label gives you that the label expects to recover from future royalties. If a manager takes commission on an advance that is later recouped you have effectively paid the manager for income that was not actually yours. Exclude recoupable advances from commissionable income until they are no longer subject to recoupment or require manager repayment if recouped.

Is merchandise income usually commissionable

Merch income is negotiable. If the manager is actively involved in the merch design, manufacturing, or logistics then commission is reasonable. If the manager is not involved do not agree to commission. Many artists prefer to keep merch separate or agree to a lower percentage.

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