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The agency is entitled to 20% commission out of your total fee per our representation agreement. When there is mention of a + 20% agency fee, this is a separate fee that goes to the agency but is separate from the commissionable fee paid to talent (base fee). I'm bringing this up so you have the opportunity to ask questions, but I'm seeing why this is standard practice, as it is proving much more labor intensive to run an agency and submit on non union gigs for our clients.
I've included an excerpt from a published article on the topic of agency commissioning practices written by
Adam Lieblein is a graduate of the UCLA School of Theatre Film and Television, and spent eight years as a producer of films, commercials and television projects until 1993 when he opened a talent agency. Adam was the president of Acme Talent & Literary for sixteen years, and together with his eighteen agents represented actors for film, television, commercials, print modeling and voiceover work, and writers for film and novels. At the end of 2008, Acme’s several divisions were sold to other agencies, and Adam returned to the business of producing and teaching at UCLA. In 2011 Adam was recruited by Casting Networks to work in Business and Product Development.
By far the biggest area of confusion among newly-successful models (or actors who occasionally book modeling jobs) is how their management companies and/or modeling agencies process their payments. Nearly every day an actor or model will book his or her first modeling job, and expect to receive more money than they actually do. Inevitably, this leads to an uncomfortable discussion with the agent or manager, and depending on how tactful the representative is, this can leave the model with a bad feeling about the industry in general, or about that representative in particular. Let’s look at what happens on a typical job, and how you can establish the proper expectations:
Let’s say a new model named Robin books a job. The booker tells Robin that the rate is $1,000 plus 20%. Robin thinks that she will receive $1,000, and that her agent will be getting the additional 20% as their commission. Is she wrong? Yup. She’s wrong. Firstly, an experienced agent wouldn’t have even mentioned the additional 20% to her, but that’s another story. Anyway, this information usually gets out, and models get confused. That 20% is not actually the commission. That is the agency fee, and is charged to the vendor for the services of the booking agency, not the services of the model. This is separate and distinct from any commissions. Robin’s base rate on this job is $1,000. The agency will charge her a commission on that base fee, at a rate that is typically 20%. The commissions, therefore, are $200. Robin will receive a turnaround check for $800.
When this happens to a new model, the most common phrase we hear from them is that their agent is “taking 40%!” Putting aside for the moment that half of those funds weren’t part of the models compensation anyway, that statement is still mathematically naive. It’s not 40%. I can understand why 20% + 20% may sound like 40%, but it’s not. Adding 20% on top of the model fee, and deducting 20% from the base model fee, only equals 33.3% of the gross revenue. Using the above example, the agency bills $1,200, and deducts the $200 agency fee and the $200 commission. This leaves the model with $800, and the agency with $400. That’s 66.6% for the model, and 33.3% for the agency. Not 40%. The fact that a model incorrectly complains that they are being charged 40% is just a symptom of the fact that most new models have no idea how the system works. Why don’t they know? Because they don’t ask. And agents don’t bother explaining it unless they are asked. Good agents are usually too busy to educate every new model about how this business works. It’s up to the model to learn as much as they can about their business, and let the agents do what they do best – obtain job opportunities for their models.
Without knowing ahead of time how this process works, and with so many reports of scammers in this industry, many models jump to the conclusion that their representative is double dipping. They assume that they are the victims of a scam. Fear not. You now have information that most newbies will learn the hard way. This is the way the business has been run for decades upon decades. It’s a common business practice in an industry that has no residual structure and is not regulated by any union. There have been several legal challenges to this, but in every case I am aware of, this practice has been upheld as acceptable, standard, and fully legal. It is—for all practical purposes—the only way it’s done. That’s the deal.