When the Band Stops Playing
The importance of having a band member agreement before the opening act.
So, you and your buddies have formed a band. You’re stoked to play and chase that record deal. Ready to take on the world and collect those royalties! Wait! Have you discussed how you are going divvy up those royalties? Will all band members be sharing publishing income if only some are writing the band’s music? How you will make decisions when that deal comes along? Have you even thought about what happens if one band member isn’t pulling his or her weight by not showing up at rehearsals or gigs? Or if a band member leaves, what continuing payments is he or she entitled to?
Now, you may be saying to yourself: “My band doesn’t need a piece of paper to tell us what to do. We get along so well and can easily make these decisions. And anyway, there’s no way that we’ll have any of these problems. Why upset the applecart?” Well, I hate to burst your bubble, but 9.5 out of 10 times, these issues arise. Unless you have a clear roadmap to address them, what would otherwise be a procedural exercise can become contentious and perhaps litigious. And certainly more expensive than having an attorney draft an agreement at the very beginning.
Assuming that you are willing to accept that your band is not immune to this reality and that you are a “business,” the following is a discussion of some topics that should be deliberated and memorialized as early as possible. This article assumes there is a band of 5 members that have formed an LLC or s-corporation through which to operate its activities (choice of entity is a very important discussion for another day!)
BAND DECISIONS
What level of consent amongst the group is required for the band to take action? Majority? Supermajority? Unanimous? This is a very important decision in and of itself. If your gut reaction is ‘unanimous,’ remember that everyone has to agree before the band proceeds. So, for example, if only 4 of 5 members want to hire a manager or purchase new equipment, the band can’t. In order to avoid this gridlock as much as possible, I have developed what I call the “basket approach.” I ask clients to create different “baskets” of decisions and assign a level of required consent for each basket. For example, one client split their decisions into day-to-day (i.e. when to rehearse) majority; creative (i.e. song selection, artwork for an album; hiring producers, mixers etc.) majority; business (whether to enter into a certain merchandising agreement, hire or fire a particular manager or expel a member)-super majority; fundamental (whether to sell assets, dissolve the company or take on a substantial loan)-unanimous. These baskets are not written in stone and can be adapted as a band sees fit. One factor to keep in mind if your band has an even number of members: you must provide a mechanism to break a deadlock. Otherwise you will find your band at a standstill.
INCOME SPLIT
Your band is an income producing business that sells music instead of cars or widgets. Before money starts to roll in (and egos inflate) there should be a meeting of the minds on the income split. While bands typically split record royalties in accordance with each member’s ownership of the company, the publisher’s share of the publishing income warrants more consideration. If all members write the music, the publisher’s share can be split in accordance with equity ownership or, alternatively, based on the percentage of the song written by each. If not all members write, then do only the writers own the copyrights and share in the publisher’s share? I recently had this exact conversation with the lead singer and sole writer of a band after the band landed a deal. Needless to say, there was a bit of discord amongst the members that could have been avoided had the band initially sat down with a knowledgeable attorney.
DEPARTING MEMBERS
It’s no secret that band members come and go. Whether it is the lead singer who wants to go solo, the drummer who wants to stop touring to be with his family, or the bass player who drinks too much and consistently fails to show up, this is an issue that needs to be addressed head on. What are the rights and liabilities of a departing member? Should he or she continue to collect the same income from past work? There are many variables that dictate the answer – such as whether the band member left voluntarily or due to expulsion. Was the band in the midst of a tour promoting a new album? Should the departing member collect royalties from the album if departure was during the album cycle? Can the band continue to use the same band name? Does the company continue to administer the departing member’s copyrights? There is much to ponder on this topic and failure to do so has led to a plethora of litigation.
THE UNTHINKABLE
This topic is taboo. It is a stark reality that musicians have died prematurely for a variety of reasons. It is important to decide upfront whether a member’s interest in the company passes to heirs. If so, should they have the right to make decisions related to recordings that contain the deceased’s performances? Alternatively, should the other members buy out the deceased’s interest? If so, a discussion on how to value the interest is critical. What if the unthinkable happens: all of the members die simultaneously? How will the band’s assets be administered and the legacy of the band protected? There are many notable cases on this subject due to the absence of a clear agreement.
I have only scratched the surface here. And while it may seem like an unpleasant task to undertake, ironing out a band member agreement in the beginning will likely save you money and your relationships down the line.
ABOUT THE AUTHOR
Robyn L. Sandak is a member of Fox Rothschild’s Corporate and Entertainment practices. Her understanding of the music business and experience as a corporate attorney informs her role as a trusted advisor to talent as well as entertainment related companies. She can be reached at rsandak@foxrothschild.com.
This article is intended for general information purposes only. It does not constitute legal advice. Readers should consult with knowledgeable legal counsel to determine how applicable laws apply to specific facts and situations. This article is based on the most current information at the time it was written. Since it is possible that the laws or other circumstances may have changed since publication, please speak with legal counsel to discuss any action you may be considering as a result of reading this article.