Sunset Clauses: Protecting the Manager-Artist Transition

Post-term management commission is not a default legal right; it exists only if it has been expressly agreed upon by both the manager and the client. However, virtually all formal management contracts include a sunset provision to ensure that an artist-manager relationship does not simply cease on a 'hard stop' basis.

A standard sunset clause defines the mechanics of this transition:

• The Scope: Post-term commissions generally apply only to income derived from contracts signed or 'substantially negotiated' during the term of active management. Opportunities procured after the term ends are typically excluded. Commission is also generally payable on records recorded and released, and songs written and exploited, during the term.
• The Declining Rate: Rather than paying the manager’s full standard rate (typically 20% of gross or 'adjusted gross' income) indefinitely, the commission rate systematically 'fades out' over time.

Sunset Commission Structure Example:

• Years 1–2 post-termination: Full commission rate (e.g., 20%)
• Years 3–4 post-termination: Half rate (e.g., 10%)
• Year 5 post-termination: Quarter rate (e.g., 5%)
• Year 6 and beyond: 0%

Because a sunset clause is not an automatic right, an absent or ambiguous provision leaves your business vulnerable to memory, interpretation, and expensive litigation.

This exact issue triggered the high-profile legal battle between Chance the Rapper and his former manager, Pat Corcoran. Corcoran sued for $3 million, claiming a three-year post-termination commission had been verbally agreed to during a handshake deal. Because there was no written agreement in place to define the sunset terms, the dispute escalated into a public, costly legal trial. The ultimate takeaway for the music industry was clear: get it in writing.

By hardcoding a clear, declining sunset clause into your written agreement, both parties are protected: the manager secures a fair return on their early-career investments, and the artist retains the financial freedom to transition to a new team and keep their career moving forward.