Wow. This. Just. Got. Serious. Why Every Band Needs a Band Agreement.
You started out innocently enough. A group of friends, compatriots, playing music, enjoying each others’ company, building a set, and busting to get that initial show at the local bar. But you’ve got a great sound and before you know it, the stage at the bar down the street is replaced by opening gigs for national artists, and then headlining.
You never did this for money, but thankfully, money is starting to come in. And that’s when the disputes begin. One member writes more than another. One practices more than another. One handles all booking and communications. Another has donated the majority of band equipment. Such are the perils of success. This is why every band needs a band agreement.
The band agreement is the single most important document a musical act has. Much like formal corporate documents, and sometimes in the form of formal corporate documents, a band agreement governs the rights, responsibilities, and obligations of each band member. It is a critical component of any act’s long-term success.
WHAT: A band agreement is a contract among the members that clearly defines which members control the creative direction, how the business runs, how income and investment divide, and who ultimately owns the fruits of labor. When drafted properly, it will generally govern:
How decisions are made.
Ownership percentage and distributions of income.
Division and ownership of intellectual property (IP), including for the band name (by far the most valuable aspect of a band), the masters song recordings, the songwriting copyrights, and publishing.
What happens to the IP upon a member leaving, dissolution, death, or disability.
How essential personnel are retained (e.g., managers, publicists, agents, attorneys).
Division of expenses.
Who can be a member and when.
WHY: A band agreement protects against the 3Ms: “Mood, Memory, and Misunderstanding (Thanks to Don Passman).” Moods change. Memories get foggy, especially when money is involved. Parties often misunderstand the original terms of an agreement. A band agreement prevents later disputes by clearly defining each members’ rights and responsibilities. It also provides mechanisms for resolving disputes when they inevitably occur. You simply never know when the lead singer might decide to leave for a more glamorous solo career. Groups as famous as Pink Floyd, the Eagles, Guns’N’Roses, the Beach Boys, NKOTB, Van Halen, Stone Temple Pilots, and the Drifters have found themselves on the wrong side of inadequate or disputed band agreements. Don’t let it happen to you.
An additional consideration is what entity a band will be (e.g., an LLC, partnership, or other). This consideration can be part of or outside the band agreement. In this instance I typically recommend forming an LLC. It often makes the most sense for tax purposes and in most states, without formalizing the entity, a band is a partnership by default. This means you could be liable for each other’s negligent or “tortious” conduct whether or not you were involved in it (read: your personal assets could possibly be subject to a lawsuit over another member’s DUI after a show).
WHEN: As soon as the band starts making money or takes on liability. In the words of veteran music attorney, Don Passman, the time is now, “while everyone is happy and kissy-faced … [d]o it later and all of your hard work will just support an attorney’s children’s education.”
DISCLAIMER: The above discussion is for informational purposes only and is not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Use of and access to this website do not create an attorney-client relationship between Warkentin LLC and the reader.