Jon Webster is CEO of the Music Managers Forum, the organisation that represents the common interests of the people who represent the talent. As the record companies retreat, these are the people who will increasingly call the shots over the way the music business works. David Hepworth wondered what was on their minds.

How does a manager make money?
When an act makes money. A manager generally takes a commission, often twenty per cent. But some argue that it's difficult to exist on that. Chris Morrison, who manages Blur and Gorillaz, said to the band 'you're alright with 20% each but I've got to run an entire organisation on that basis, whereas you've just got to spend it.'

What proportion of acts make money?
One in ten. But record companies can make money out of acts before the acts make money. They give an act £100,000 out of which they have to make a record and live for a year. If they sell 100,000 records the record company starts making money before the artist recoups. That's the classic trap.

How have things changed recently?
In the last five years as CD sales have decreased, digital sales have not made up the gap and prices have decreased, record companies are not seeing the sales that they used to. So they're looking for ways to start clawing that money back from touring income and things like that. At the same time managers are saying 'why do we need you any more?' As such the power is moving from record companies to artists and management who are looking at creative ways to get money and release records.

You don't need a record company today. You could do it yourself.
DIY is the big thing that's happening. If you're an acoustic singer songwriter you can record something in your bedroom for nothing and put it on your MySpace page tomorrow. That's for free but there are ways that you can start to monetize that. Unfortunately, or fortunately depending on the way you look at it, there is a vast amount of music out there, much of which would never have seen the light of day before.

How important are other revenue streams like merchandise nowadays? I get the impression that it's increasingly the driving force behind the whole music business.
That's right. You can play live gigs where you don't make any money at all from the ticket but all the bunce comes from the merchandise. That's why some halls are taking large percentages out of band's merchandising revenue just for allowing them to sell their tee shirts in the venue. It's a huge bone of contention at the moment. It involves acts having to put up the prices of their tee shirts which they don't want to do. The venues will generally charge 25% of what you take on the night. Record retailers don't make 25%. Why should halls make that for doing nothing?

What would most surprise people about the music business and managers?
I think how little money they make for an awful long time. If you sign for a major label and let's say you get £100,000 personal advance and £100,000 to make the album, if you divide that personal advance by five band members and a manager, it's £16,000 each which is just about enough to keep you alive for a year. Of course it can eventually lead to a situation such as Ed Bicknell described when he was managing Dire Straits. He said 'it's like being in a bank vault with a shovel.'

You can hear Jon talking to David about these and other issues in detail, including Radiohead, bands who don't talk to each other and how Kate Nash made it. Either listen below or go here to subscribe for free and Backstage podcasts will be delievered to your digital door whenever they appear.