Inter-Band Member Agreements (For Now or the Future)

Being in a band or musical group can be a complicated thing. Musicians spend their time pouring their blood, sweat and tears (not to mention time and money) into writing and performing the greatest songs possible, mastering their craft and trying to be the very best that they can be. Like any art, the process of making music can be, and very often is, a very emotional, personal and cathartic experience. Each song can feel like the artist’s child, something he or she gave birth to. In a band, the experience is shared with other individuals, and each song has many artists responsible for its creation as a result. Just as each song is a child, the band itself is also a living, breathing organism that grows over time.

The art, and the band itself, belong to its members. A piece of the band and all that it creates will be the most important (and potentially most valuable) thing that most musicians will ever own. To each member the band represents a life’s work, a source of income, and an individual artistic legacy. However, while each musician’s personal legacy is forever intertwined with the band, the band itself may grow to have a legacy all unto its own, one which will belong as much to each band member as it will to fans and the general public. Balancing these interests – each member internally balancing his or her own economic, artistic and musical legacy against each other, then the members balancing their own interests against each other, all while juggling the artistic and historic legacy of the band as a unit – can be a challenging task.

When a Band is Just Starting Out (or "Have a Cigar")

What is a band? Simply put, a band is a collection of musicians who get together to make music. However, once a band chooses to do more than practice together, it is also a business. What type of a business and what that means legally all depends on the agreement between the band members, whether written or verbal. In some instances, one individual (as a sole proprietor) may hire other musicians to perform and possibly write music. In other cases, the members may form a partnership, corporation or limited liability company, where the band members have an equity stake in the business. Where there is no written agreement or formal entity created, the band is most likely a partnership under the law. This can have unexpected and undesirable consequences (e.g., in many states each partner can take action on behalf of the general partnership without the approval of the other partners). Obviously, a written agreement is preferable so that there is clarity from the beginning as to the rights and responsibilities of the band members.

While it is easy to think about the band solely as a business proposition, the reality is that most bands also function a lot like a family. There can be hurt feelings, jealousy, feelings of favoritism and other personality conflicts that have little to do with the "business" of music. For that reason, drafting a band agreement is a lot like drafting a prenuptial agreement. And just like many married couples who do not have a prenuptial agreement, many bands never have a formal written agreement. Most bands are not formed as a result of professional musicians formally sitting down and deciding that they are going to form a band, followed by a formal handshake and acknowledgement that the lawyers will work out the details and get the papers together. The more common story is that a bunch of musicians or friends get together to jam, and they just start playing. If there is chemistry, they may get together again. The next thing they know songs are starting to be written and band names tossed around. Soon, a first gig is booked and the band is off and running (about to ride the gravy train). In other words, more often than not, it all just sort of happens. Therefore, practitioners should tread lightly when discussing the need for a formal agreement, since it could be last thing on the band’s collective mind and the idea could be disruptive if not properly presented.

Typically, the issue of a formal written band agreement does not arise until the band has started to achieve some financial and artistic success. At this point, the relationship among the band members is usually harmonious, if occasionally punctuated by squabbles of varying intensity. But if there is one thing many families do not do it is talk about money, especially when times are good, in order to avoid fights. Since bands often function like families (in that they play together, but they also fight), much like the topic of a prenuptial agreement, when band members begin to talk about an agreement (even when coming from the purest of motives) it can be awkward and cause tension. Knowing the right approach and what issues to focus on is critical.

The approach should be positive and high-spirited. Neutrality is a virtual must – an attorney is best served by representing the band as a whole, and the band members are cautioned to try and remember that taking strong, self-interested positions can result in permanently fracturing the band in the "be careful what you wish for" vein. A formal agreement should not be viewed as some intimidating legal document meant to position band members against one another. Rather, it is a valuable acknowledgment that these musicians are in a band, and a reassurance that each band member understands what that means. It is also a ceremonial celebration of the unity of the band, and each member’s commitment to work together. And of course, it is a roadmap for how the band will work together.

Band agreements can become very complicated and nuanced based on particular facts and circumstances. However, when dealing with new bands the main issues are the following:

  1. How is income divided? It is common for band members to split all revenue generated by the band equally, but circumstances may dictate otherwise. For example, where there are revolving members, or separate recording and performing personnel, the band may want to clarify that royalties will be shared based on who performed on a particular recording and/or who performs at a particular show.
  2. How are most band decisions made? Does the band act by a majority, supermajority or unanimous vote? Is there perhaps a single band leader that calls all of the shots?
  3. How are publishing rights owned? Publishing (i.e., the rights regarding musical compositions) is unique in that each composition can have one or many creators contributing independent creative material, where custom and practice have evolved so that each contributor can claim a specific percentage of the particular composition. Some bands take an all-for-one approach to publishing rights (i.e., every song is written by "the band"), and all royalties are split evenly among the band members at the time the song was written. In some bands, there may be one or two members who get all of the credit for particular songs (e.g., Lennon-McCartney or Page-Plant), or one band member may write all of the lyrics (e.g., "Written by U2/Lyrics by Bono"). Others prefer a more complicated formula approach, where each instrumental part, lyrics and melody are assigned a percentage and the person who contributed that part receives that percentage of the song’s publishing royalties. It all depends on how the band writes its songs, and what they agree is accurate, or at least fair.
  4. Who owns the band’s name and who can use it outside of the band? Sometimes one band member, typically the founding member, may seek to own the name of the band and continue to perform under that band name even though all of the members have changed (e.g., Guns N’ Roses).
  5. Who owns Everything Else? In addition to publishing rights and the band’s name and logo, there are typically a variety of other assets owned by the band (e.g., merchandise and master recordings). Does the band own all of these assets, in which case each member owns an indirect percentage interest, or is there some other arrangement?
  6. What happens when a band member leaves or is terminated? Can the former band member continue to use the band’s name for promotion purposes (e.g., Can Slash continue to refer to himself as the "former lead guitarist for Guns N’ Roses?"). Does that former band member continue to benefit economically from recordings and other merchandise that he or she contributed to? Is there a difference between a member who has retired or resigned versus one that has been fired? Is there a difference between a member fired for cause or fired without reason?

These issues all pertain to how the band functions while the band is still together and all of its members are still alive. But what happens if the band breaks up or simply retires? For that matter, how do you know when the band is "retired" and not "resting"? How are assets owned by the band divided up?

How do royalties continue to be shared? Who can use the band logo and name, etc.? And what if a band member dies? Does his family inherit some interest in the band and all of its assets and earnings? If so, can they vote? These issues are also very important but can get rather complex and may seem only remotely significant to a brand new band that has made very little, if any, money. It is also often these types of issues that can stall the negotiation of a band partnership agreement. For that reason, it is important to keep in mind that the band’s agreement, much like the band itself, also functions like an organism and can evolve over time. It is often better to have something in writing that addresses the immediate issues than to not have a written agreement at all.

Evolving Over Time (or "Doing the Evolution, Baby")

There can come a point in a musician’s life, particularly where they have achieved some historic relevance, when they realize that what they have created is something larger than themselves. That the impact they have had on the lives of so many fans has created a responsibility to preserve that band and its works for the fans and for history, as well as their own individual legacies. Pearl Jam, The Red Hot Chili Peppers, Green Day, and Soundgarden are modern examples of bands that are still current and making music today, yet their place in rock n’ roll history has already been solidified. While there still remains room for growth and change, these bands mean something to their fans, and to history.

Still, each of these bands at its core is still just a group of guys who got together a long time ago to make music. They are just people, with families to take care of, bills to pay, somewhat day-to-day concerns. Then there is the band – their otherfamily. There is the reality that what they created together as a band has touched people in a way only understandable because they too were once touched by bands they idolized growing up. There is the reality that the band that they were so fortunate to be a part of, that the legacies they have created both as individual musicians and, more importantly, together as a unit, will exist forever. The music, the performances, the images, the merchandise, the books, etc., will continue to be available to the public for years to come and new ways of bringing the band and its music to the general public will become available. All of this can potentially provide a great deal of income and financial security for the families of each band member, long after they have all passed away. Without a written agreement and understanding as to how the band will continue to operate as an entity, and how its legacy will be controlled, there is a great risk of disagreements and lawsuits among those who end up inheriting and controlling what the band has created. This can result in the band’s work not being properly exploited, which means less money being generated, and it can also result in the legacy of the band being tarnished. All of which can be easily avoided by simply thinking and planning ahead, and putting it all in writing.

For a variety of reasons, a band may be reluctant to sit down and, well, face the music. For some, it raises questions of mortality that they would rather not acknowledge. In other cases, the band dynamic may have changed and there may be tensions (perhaps unspoken) that were once not there. In any event, the likelihood is that addressing the band’s legacy will be a delicate task. Again, taking the right approach will be critical.

First of all, the conversation is not one about mortality. It is a discussion about immortality – the band’s immortality. It is a discussion about how to preserve what the band has created, and how to make it grow and continue to reach new audiences. It is an acknowledgment and celebration of just how successful and relevant the band has and will become. This is a discussion about greatness, the stuff rock n’ roll legends are made of. What could be more exciting and interesting to talk about than that? Once you set the stage (no pun intended) and explain why the band needs to focus on certain issues regarding their future, then it is a matter of working through those issues and the decisions that need to be made. To keep things simple and begin the conversation, there are two overarching themes to keep in mind: (1) who controls the band and its output, and (2) who financially benefits from the band. Keep in mind, there is no right answer to any of these issues.

Who gets to benefit economically is probably the easier of the two issues to navigate. Often, if the band members can agree on how they will share in revenues and royalties generated by the band, most would agree that if a band member dies, his heirs should continue to receive the deceased band member’s share for material he worked on. A band also needs to consider what happens if a band member is fired or quits. Does the former band member continue to receive royalties from recordings he was a part of? Is there reason to give the former member a continued share in all earnings of the band? How these issues are resolved will depend on the relationship between the band members and the former band member’s contribution to the band.

Who controls the band and its output ultimately controls the legacy of the band. These are the people charged with managing everything from when and how the band’s music is played to where their images appear. A classic example would be the use of The Beatles’ music in a Nike campaign or John Lennon’s face appearing on a coffee mug. While a band and all of its members are still alive, presumably they control these decisions either directly or indirectly through a manager (and perhaps with some input from interested third parties, such as the record label). As discussed earlier, these decisions are typically made by some vote of the band members (either majority, supermajority or unanimous vote). As the band evolves and begins to solidify its place in history, other issues begin to take center stage. The main issues are:

  1. What happens if a band member is fired or quits? The quick reaction may be to say that band member no longer has a say in band decisions, but should that necessarily be the case? If someone has spent 20 years building a music legacy and is fired or quits because they are no longer interested in continuing to tour, should they no longer have a say in how that band is perceived?
  2. What happens if a band member dies? When a band member dies, his heirs will presumably inherit his portion of the band in some way. Does that mean that a deceased band member’s heirs should have his or her vote when it comes to band decisions? Should they have absolutely no control?
  3. What happens when all of the band members die? Will the band now be controlled by the heirs of each band member? Assume there are five members in a band, and each has an equal vote and the band acts by majority vote. In order to make any decisions, the band will require three band members to agree. If those five shares are now inherited by separate families, you will need to now have five families agree on each decision, and there may be multiple family members within each of those five families. This can get quickly out of hand, become grossly inefficient and lead to litigation. Perhaps a long-time manager or business partner is better equipped to make decisions regarding the band’s legacy, someone who understands what the band is and means better than any individual band member’s heirs. If so, the band may consider implementing a structure that separates who controls the band and its output and who benefits economically from the band. Thus, decisions relating to the band can be controlled by objective, non-family members (e.g., a board of trustees or directors), while family members can remain economic beneficiaries. Family members could also be given some overriding veto power or ability to change who controls the band’s assets (perhaps by unanimous vote), in order to protect against the band’s legacy being mismanaged.

There are a variety of ways to implement the band’s decision on how they would like to be owned, operated and controlled. The key is to first get the band to talk about these issues and understand how they see it working, then to find the best structure to accommodate the band’s goals. But remember, this is not just some agreement to close a deal. This is art, and it’s a family affair. Different bands will require different structures. After all, there are always different strokes for different folks.

Paul Gutman

AS APPEARED IN NYSBA ENTERTAINMENT, ARTS AND SPORTS LAW JOURNAL, SUMMER 2013