Biz: The Intra-Band Agreement
Written by Aidan Rush Posted in: Biz on April 12, 2011
Biz: The Intra-Band Agreement
Written by Aidan Rush
Have you ever been told by a music industry veteran to sort all of your band’s legal work out before big money gets involved? It’s advice worth listening to. That's because the stories of bands that were too amped up on fantasies of super stardom to write intra-band agreements are countless. And once these bands did achieve their dreams, squabbling over member finance allotments that should have been set in contract stone beforehand ultimately tore them apart. We’ve done our best to compile the terms of any standard intra-band agreement below, give them a read and let us know if you have anything to add in the comments!
BAND MEMBER PROVISIONS
Goals
First, it's best to make sure everyone is on the same page. Lay out in writing what the band’s goal is (national tour, platinum selling record, sell out one show locally). Lay out what will be expected of all members in order to achieve these goals.Owner vs. Employee
You’ll want to make the distinction between owner and employee for every member. If all melodies and lyrics are written by the lead singer and guitarist, the other band members (bass players, drummers) are often considered hired guns, and are employed by the songwriters (owners). This is done for many reasons, but mostly for publishing royalties. While all band members will share in the revenue from gigs, merchandise, and recordings, only the songwriters are entitled to publishing money. If the songwriters would like to share this money with the other members, that’s up to them. A few key points:
- Non-owners are most likely not songwriters, receive less equity and are paid by owner on a monthly or quarterly basis.
- If you’re not a sole proprietor, partner, owner of corporation or LLC, then you’re an independent contractor. This distinction is also important for tax purposes.
Rehearsal
How many rehearsals will active members be expected to attend a week? For how long? Will they be expected to come with new material or just to have practiced their parts extensively since the last band practice?
Hiring
Before you’ll be able to include anyone in the vesting clause, you’ll need to hire him/her. How will you go about doing this? How many auditions will be required of the potential member before they’re allowed into the band? How many members will need to approve of the new member before it’s official? Or will the final decision come down to one person? How much time will the new member be required to commit to the band? Will you take music alone into account when trying out or will image be involved as well?
Leaving Member Clause
It happens all the time. Whether it’s for artistic differences, money disagreements, significant others, or any of the million other reasons members leave their bands, there needs to be a clause in this contract to identify the process through which a band member is required to leave. Key points:
- If the lead singer leaves, will the band still be allowed to use the band name or will the lead singer take it with him/her? Will the band be allowed to record songs written by the lead singer ?
- If member opts to quit, what time period of notification will the other band members require? Will it be the standard two weeks? Or will the departing member be required to stick around until a replacement is found/all tour dates fulfilled?
- What % of recording royalties will departed member receive and for how long? Will that share decline over time or will they receive a fixed rate in perpetuity?
Vesting Clause
This one is rare in band agreements, but might go a long way in incentivizing members to stick around for a certain period of time. A vesting clause more or less acts like a stock option that becomes cash accessible after x amount of years. For instance, you could promise members a raise in royalty percentage or possibly offer to share in the publishing revenues if they stick around for 5 years. This provision can also be tiered, i.e. offering 10% of publishing revenue after 3 years, 15% after 5, etc.
Firing
However, you might not want everyone in the band around forever. What will process for firing be? This might seem like a simple one on paper, but as is always the case with artistically c3entered entities, it's more complicated in reality. When somebody in the band wants someone else gone, will a vote be required (see below)? What is considered grounds (addiction, musical incompetence, attitude) for firing? How many auditions before band member candidate is hired?
Voting Procedures
If any decision in the band does come down to a vote, will the results be decided by a simple majority or will a higher number like 2/3 be required?
Cure Period
If a band member falls victim to addiction to the point where they’re no long able to play their parts, will the other band members allow them a period of time to get clean before getting kicked out of the band? If so, how long will this period be?
Input
Will the primary songwriter, decision maker, and band leader make all the musical decisions? If so, will input from others be considered or not at all? How do the powers of veto work?
FINANCES
Banking
As we suggest in our band bank account biz article, it’s best that one person is the point man/woman for the band’s finances. Money's just easier to keep track of this way. Who will be assigned to handle banking? Is this same person assigned to small transactional issues or is another member? What are considered band expenses (gear, food on tour, etc)? i.e. what will band members be able to spend the band’s money on? Pay-out How often will band members be paid? As the money comes in or will it be on a more regulated monthly/quarterly basis? Moreover, will band members have to reach a certain monetary threshold ($500, $1,000) before band is obligated to pay-out? If so, what will that number be?
Loan Agreements
Bands may require members’ personal money from time to time to keep projects moving. Literally. If/when this happens, will a loan agreement with a fixed interest rate and timeline be implemented? Example: The bass player throws in $100 for gas on tour, and will receive $110 when the band pays him back at the end of the month. Or, does your band want to be less formal and just assume that everyone over time will end up pitching in the same amount of money?
LEGAL
Attorney When a band agreement is signed, the band is best suited if each member consults a different attorney to avoid conflict of interest. If this doesn’t happen, the lawyer dealing with the band as a whole must acknowledge that he/she might be subject to conflict of interest to avoid the possibility of the band suing later on. Before choosing an attorney, do your research:
- Who are they representing? The band as a whole, the songwriter(s), the individual non-songwriting musician?
- Make sure they know the music business (a real estate lawyer is different than one focusing on entertainment).
- You should feel comfortable asking them anything (track record, conflict of interest).
Rights Ownership
Most songwriters think it’s best to keep songs out of the contract, saying they should be owned by the songwriter and not by the band company. However, the contract can state that songwriters are licensing songs to the band company. Aside from songs, who will own trademarks and administration rights? Will it be the band company or a specific member?
Band Companies
Will there be more than one band company to deal with different facets of business? Transaction company (licensing, expenses), Gig company (owns nothing, just books shows), Publishing company?
-----
Remember, it's very important to have an attorney look over the document you draft it it's at all affordable. Also print out two copies for each band member -- one for the band's record and one for the band member to keep for their records.
