STRUCTURE
Misalignments, Power Dynamics, and the Role of Management

As musicians transition from “artist” to “music professional,” the structure and leadership of their LLC become critical to long-term success. Whether you’re running a music LLC, a restaurant LLC, or a real estate LLC, the core principles of managing a business remain the same: investment, delegation, and strong leadership.

This blog will dive deep into the following:

1. The misalignment in industry terminology around music managers.
2. The role of power and authority in effective leadership.
3. Why education is essential for managers operating in C-Suite capacities.
4. Management Fees.

Misalignment in Music Industry Terminology

In the music industry, the term “manager” often fails to reflect the level of responsibility and expertise required to guide an artist’s career. While some managers can operate at a Chief Operating Officer (COO) level due to higher education, many do not—and this discrepancy creates confusion.

1. The Industry Definition of “Manager”

• A music manager is often tasked with handling everything from booking gigs and negotiating contracts to overseeing branding and marketing.
• These responsibilities align more closely with traditional COO roles, yet the title “manager” satisfies industry norms and superficial expectations.

2. COO vs. Manager: The Key Differences

• COO (Chief Operating Officer): In traditional businesses, the COO handles day-to-day operations, strategic execution, and resource management. They report directly to the CEO and ensure the company’s vision becomes reality.
• Music Manager: While some managers do function as COOs due to higher education, others focus on more limited tasks, lacking the authority or expertise required to oversee an artist’s career at a COO level.

3. The Importance of Leadership Dynamics

The true power of a music manager depends on the leadership dynamics within the LLC, which are shaped by two types of power:

• Legitimate Power: Authority granted by position, such as a COO’s formal role within a company.
• Expert Power: Influence derived from knowledge, skills, and experience, regardless of formal authority.

A manager who embodies both legitimate and expert power is more likely to operate effectively at a COO level, but not all managers achieve this balance.

Leadership Dynamics: Power vs. Authority

Understanding the distinction between power and authority is critical for structuring a music LLC.

1. Authority (Positional Power)

• Authority is the formal right to make decisions, granted by a specific role or title.
• For example, a CEO inherently holds authority by virtue of their position at the top of the hierarchy.

2. Power (Personal and Positional)

• Power refers to the ability to influence decisions and drive outcomes. It can stem from expertise, relationships, or resources.
• A manager may have power (expert or personal) without holding formal authority.

3. Kanter and Korda’s Symbols of Power

Rosabeth Moss Kanter and David Korda have defined power from two perspectives:

• Kanter’s View: Power is derived from the ability to mobilize resources, build influential networks, and create opportunities.
• Korda’s View: Power manifests through visible symbols, such as access to decision-makers, control over information, and discretionary authority.

Managers operating at a COO level often embody both Kanter’s and Korda’s perspectives, making them instrumental in driving the success of a music LLC.

Why Education Matters for Managers Operating in C-Suite Capacities

For a manager to function as a COO within a music LLC, education is a critical component of their expert power. While passion and connections are valuable, formal knowledge provides the foundation needed to handle the complexities of running a business in the music industry.

1. The Role of Education in Building Expert Power

Education equips managers with:

• Financial Skills: Budgeting, forecasting, and managing profitability.
• Operational Knowledge: Overseeing logistics, resource allocation, and project timelines.
• Strategic Planning: Setting long-term goals and creating actionable plans to achieve them.
• Up-to-date Industry Knowledge

2. Industry-Specific Expertise

Degrees in music or entertainment provide:

• Entertainment Law Knowledge: Understanding contracts, royalties, and intellectual property.
• Music Marketing Skills: Navigating social media, branding, and audience engagement.
• Production Management Expertise: Coordinating studio sessions, tours, and merchandise.

3. The Balance of Education and Experience

The most effective managers blend education with practical experience.

• Education provides a structured foundation for decision-making.
• Experience enhances intuition, relationship-building, and adaptability.

A Music LLC Is No Different from Any Other Business

At its core, a music LLC operates like any other business, whether it’s a restaurant, real estate firm, or physician’s practice. The fundamentals of organizational structure, reinvestment, leadership, and operational efficiency apply across industries.

1. Revenue Allocation in Any LLC

Every LLC requires a portion of gross income to be reinvested into the business, covering operational costs, marketing, and long-term growth. When studying J-Curve and venture capitalists, we will see how the first Board of Director is the founder.

2. Misconceptions About Music LLCs

Many musicians view their LLC as a simple structure for managing income and expenses. In reality, it’s a business entity that requires strategic oversight and investment to thrive.

Typical Gross Percentages to Management

One common concern among musicians is the idea of paying a large gross percent of monthly income to management. While this may go as high as 50%, we need to dissect why music industry management fee can be considered a bargain compared to other industries.

1. Reinvestment Is Essential

Every business requires reinvestment to grow. In most industries, operational costs consume 50% or more of gross income. Many entrepreneurs have a growth and problem-solving mindset, taking risks and often heavily investing in their idea. At some point, with much bootstrapping, these ideas reach a point of expansion at some level, which is usually delegation to another party.

2. Breaking Down the Value

Management fees typically covers:

• C-Suite Services: Fractional COO, CFO, and CMO support.
• Operational Oversight: Day-to-day management of schedules, finances, and logistics.
• Growth Initiatives: Identifying new revenue streams and opportunities.

The figure below displays only a portion of today’s tasks to operate a music production LLC.

Structuring Your LLC for Success

A strong leadership structure is key to a successful music LLC. The ideal setup includes:

1. CEO (Music Professional): Focuses on vision, strategy, and high-level decisions.
2. COO (Manager): Oversees day-to-day operations and ensures alignment with the CEO’s goals.
3. CFO (Financial Advisor): Manages budgets, taxes, and long-term financial planning.
4. CMO (Marketing Lead): Handles branding, audience engagement, and promotional strategies.
5. CLO (Legal Counsel): Views and creates agreements and dispute resolution, finds and secures investors and sponsors, and creates sync deals.
6. Team Members (Associates): Execute tasks like design, content creation, stage managers, sound technicians, and event coordination.

Final Thoughts

Building a music LLC is no different from running any other business. It requires strong leadership, strategic reinvestment, and a clear organizational structure. Furthermore, your idea will reach an intersection on the J-Curve marking the next developmental stage of what could be potentially be a successful career, with the right people on your team.

While the misalignment in industry terminology can create confusion, understanding the dynamics of power, authority, alongside connection and education ensures that roles are assigned effectively. When it comes to management fees, it’s an investment in the future success of your company that every business owner makes.