Whether you're a music manager or an aspiring musician, I believe you should always hope for the best when you sign your music management contract. After all, your partnership signals the beginning of some very great things. With lots of hard work and a little time, a manager and a musician can accomplish a lot together.
Of course, it does not always work out that way. The reality is that even successful musicians do not always stay with the manager that bought them to the first big break in their careers. Managers and clients often separate when a record label demands that a signed action bring in experienced supervision before cutting an advance check. Other times, managers that are tremendously effective for clients in their home region can get stretched too far when their clients start touring nationally. And, in the worst cases, managers and clients start behaving poorly towards each other after a personal dispute.
Whatever the reason for a split between a music manager and an artist, both parties must protect themselves from exploitation by adopting a "sunset clause" in their music management contract. A sunset clause recognizes the contribution that a manager has made to an artist's career, while leaving the door open for artists to effectively void their agreement and work with other professional advisers.
In most cases, the "sunset" refers to the amount of commission paid to a manager over the two years after a split. Most music industry professionals agree that it can take two years for a band and their new management to put a new strategy in place. Therefore, a sunset clause typically grants the old manager full commission for six months following the split, stepped down by a third every six months until the former manager no longer can claim a commission.
Without a sunset clause, a band could split with their management and still find themselves liable for paying commissions of twenty percent or more for a period of up to seven years. Some unscrupulous managers sign transactions with clients, only to perform no obligations and sue for management decisions. On the other hand, an effective manager can use the sunset clause to recoup their investment of time and money when a client becomes successful enough to warrant signing on with a larger, more experienced management team. The sunset cause forces both parties to take their relationship seriously, while allowing for the possibility that a band and their manager might grow apart before the end of their traditional seven-year contract term.