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Click to email ChrisWhat is a Band Agreement and Why You Need One
by Christopher Knab - Fourfront Media & Music -
May 2010


Back to Music Business 101

A band agreement  (sometimes called a partnership agreement) is proof-on-paper that thereís a commitment within your group to deal with the everyday realities of being a professional musical act. 

How many times have you heard the phrase "money changes everything?" Well, itís true, and itís one of the main reasons that you want to sit down with your fellow band members and work out on paper how youíre going to deal with the successes or failures that come your way BEFORE you start making money as a band or musical group. When money enters the picture, I can assure you that does indeed change everything. 

No one wants to admit that they are ever going to be problems within a group of musicians. But, believe me personality problems, or business differences, or career goal conflicts within a group happen. 

Why rock the boat by bringing up band agreements? Some bands go on for years without a written band agreement and live to regret it. 

But hey, if you feel you donít need a band agreement, OK, forget about it. Leave everything to an unspoken agreement, to a sense of fairness, to chance. As you read the summary of typical band agreement issues below, say to yourself after reading each point, "Well, that wonít be a problem in my group." Perhaps if you chant this enough, you can conjure up a musical genie who will protect you from the jealousies, egos, and money problems that cause band breakups and lawsuits. 

Should you decide youíre not immune from these problems, save yourself some attorney fees by discussing these issues beforehand. Write notes on how youíll handle these issuesóbefore you sit down to have a legal agreement drawn up by an entertainment law attorney (at a cost of approximately $150 an hour). These are the typical issues that should be discussed and resolved in a band agreement. 

What form of business will the band take?
You can be a sole proprietorship, a partnership, or a limited liability corporation. Itís beyond our discussion here to get into the specifics of each, but do some research and make an appropriate choice. If you start making money with your music, you better realize you are a business. The IRS and other state and local agencies might just be interested in having you pay some taxes like any other responsible citizen. Besides, choosing the right business form is just the right thing to do. You did say you wanted to make money with your music, right? Well, act like a business and choose a suitable business form.

Who owns the copyrights to your songs? Who is/are the songwriter(s)?
Suffice it to say, there are as many possible answers to this question as there are members in a group. You have to take heed and resolve this issue. The real money in this business will come from the successful exploitation of the copyrights to your songs. Music publishing is a huge issue and there are many good books on the topic. If you want harmony within in your group, then agree on who writes all the songs and come up with a fair system to divide up the songwriting royalties. If you do not do this, when any kind of success comes along youíll be in deep doo-doo about the split of those songwriting royalties with your fellow band-mates.

Share of profit and loss considerations
You will have to define how the money (profit or loss) is divided. All band members could be equal partners and divide the profit or loss equally. You could also distribute the profit or debit the loss based upon the percentage owned (i.e. in case youíre doing business as a corporation, with each person owning a certain percentage). 

How do you make group decisions? How will you vote on band issues?
You have a couple choices; unanimous or majority rules. If youíre "All for one and one for all," then choose the Three Musketeers way of voting. All decisions must be made unanimously, with no dissenting votes. If the democratic system is more attractive to you, then agree to a majority vote; the dissenting members of your group will get to hold a grudge and pout for the next month. (Guess which voting mechanism Iím inclined toward? Well, the subject today is commitment isnít it? What kind of commitment is there when contention exists within a group?) 

Who owns the name of your group? Or, what about leaving members?
Never thought of that one, huh? Well, youíd better. There have been hundreds, if not thousands of lawsuits by members of groups who split up and then fought over which members could continue to use the bandís name. This could be resolved in a band meeting, after a regular rehearsal is over, rather than in a court of law. Consider the following options:

  • No one can use the name if the group breaks up, regardless of how many in the band are still performing together.
     
  • A majority of the group members performing together can use the name. For example, if there are seven people in a group that breaks up, then four of them together can use the name.
     
  • Only the lead singer, (name), can use the name, regardless of who he/she is performing with.
     
  • Only (name), the songwriter who founded the group and thought of the name, can use the name, regardless of who he/she is performing with.
     
  • (Name of songwriter who founded the group and thought of the name) and (name of lead singer) can use the name as long as they perform together, but if they donít, no one else can use it.
     
  • If the band doesnít do anything, most likely the band name will be treated the same way as any other business partnership assetómeaning that any of the partners has the nonexclusive right to use it.

How will you fire someone who isnít carrying their load?
What is meant by "carrying your load" in your band? If a band member is showing up late for rehearsals, missing rehearsals with lame excuses, missing or showing up late for sound checks and live gigs, how will you and the other band members deal with that? I suggest you agree to rules for acting like professional musicians. When a rule is broken, your band will have a policy to deal with it. What kind of vote do you use to fire somebody? Choose between majority rules and unanimous.

Ex-members and moneyówho gets what?
What happens after members are fired or quit? One option: they keep their percentage of money that comes in for past work done with the group. Or, they donít keep their percentage for past work.

Money issues: band member investments and/or loans to the band.
Letís say that someone in your band has more money than the other members. Theyíre the generous type, you know, they say things like "Donít worry about the $200, weíre in this together. Some day youíll have money when I donítóit will all work out." Right. Until there are some hard feelings, or the generous donor has some expenses and could really use that dough now. Many unpleasant scenarios can happen when money is spent without a clear understanding of how, or if, it is to be repaid. If you have a sugar daddy in your group, discuss in your written band agreement how your business form will deal with that issue.

Spending money and hiring other business professionals
What kind of vote does it take to approve spending money for the group? What kind of vote do you use to hire a lawyer, agent, or manager, to bring in a new musician? Again, the two basic options are majority or unanimous.

Who does what?
If itís true that musicians often fail in their careers because of a lack of commitment from their fellow musicians, then I find it particularly important for each band member to be responsible for a specific business task. If, for example, someone takes on booking the shows, other members can split the work of getting posters designed, printed, and put up. There are plenty of tasks: getting bills paid, finding rehearsal spaces, sending out press releases. If youíre making a recording, someone will be setting up recording sessions and planning for manufacturing, promoting, marketing and selling the CDs. Until a band has established itself as a viable money-making entityóone that is attractive to labels, management companies, booking agencies, publishers, and merchandise companiesósomebody has to take on all the jobs of being a real band. And that somebody is everybody in your group. 

Amendment of the Band Agreement
What kind of vote does it take to change the terms of the band agreement?

There are more issues that should be included in a band agreement. I recommend a book called Music Law: How To Run Your Bandís Business by Richard Stim. He gives you a template for an actual agreement plus an in-depth discussion of band agreements, legal issues and reasons why a band agreement is so important. 

There you have it. Deal with these issues or theyíll come back and bite you.
 


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