When an agent is hired by a talent agency, a deal is negotiated that sets how he or she will be compensated. The specifics are determined by the agent's employment history and by which clients will follow the agent to his or her new home. For the most part, there are three ways these deals are structured:
1) Some agents make a substantial weekly salary with no commissions. Instead, they receive a year-end bonus based on performance. This is common practice at the larger companies, and it provides the agent with financial security. The upside is you know how much you'll be earning on a weekly basis. The downside is that without pressure to bring in commissions, you might get lazy, not book enough to cover your salary, and end up with a year-end kick out the door.
2) The flip side of that arrangement is working on a commission-only basis. This is a dangerous way to go, unless you represent actors like Brad Pitt and Matt Damon. With no weekly salary to help you survive the slow times, you might get desperate and start booking anyone on anything, just to make some money. And that's not good for the clients. These kinds of deals are common at smaller agencies that don't have deep pockets.
3) Another option is the way I've always worked. You receive a small weekly salary, enough to cover the basics, plus a percentage of everything you book. This kind of deal provides enough security so an agent can focus on the clients without having to worry about paying the rent.
Now let me ask you a question. When an actor books a job, how much does the agent get? If your answer is 10 percent, you're way off. No agent gets 10 percent. The truth is, most of the commission goes to the agency and the rest goes to the agent. In other words, we get a piece of the piece. So if the company takes 7 percent, the agent who booked the job gets 3. If not, how would the owner pay for rent, phones, breakdowns, office supplies, and all the other expenses involved in running a business?
Signing good actors is an important part of the job, but it's especially important when we're talking about commissions. Here's why: If I bring in a new client, I become that actor's point person. On a financial level, that's significant, because it opens up an additional way for me to make money. Let's say I'm your point person, and agent Bob down the hall books you on a pilot. He pitched you, got the audition, negotiated the deal, and did all the heavy lifting. So Bob gets his standard commission, but I also get a piece of that pie, because you wouldn't be at the agency if I hadn't signed you. My cut is smaller than if I had booked the job myself, but hey, every little bit helps. And I might do a similar deal in the future for one of Bob's clients, so it's all good.
Talent agencies aren't charities. Agents are expected to produce income in the same way that actors are supposed to book jobs. We can get fired just like a client can get dropped. So keep that in mind the next time you mouth off about how agents don't understand the pressures of being an actor.