If the artist is a band or group of two or more performers operating under a band name, it is important to have a clear understanding of the rules under which the band will operate and what rights exist for the band members. It also helps to avoid arguments and misunderstandings within the band, and is particularly important in regard to who owns the band’s name and what happens if a band member leaves or a new band member joins. If no band agreement exists and a band member leaves with no clear written agreement about who owns the name, it could be that the member leaving forms a new band with the same name, thus resulting in two bands operating under the same name, which can cause legal difficulties and public
confusion. These agreements can also cover the way the different income streams are split amongst the band members and what happens if the band ceases to exist.
Legal Status
The first thing to decide is what the legal status of the band will be. It could be a partnership or it could be that the band members form a corporation. Another possible structure is for one member of the band to employ the other
musicians/singers in the band. The band members should take advice from their lawyer, accountant and manager as to which structure is best for them. If they choose to be a partnership, the band agreement will be the partnership agreement. If they decide to form a corporation or limited company, the band agreement will be the shareholders’ agreement. Band agreements can be difficult and sensitive, so it is best to try and conclude an agreement as soon as possible once the band starts to become known. It is far easier to conclude such an agreement whilst everyone is on good terms with each other, rather than waiting until a dispute arises.
Issues covered by Band Agreements
Here are some of the main issues that can be covered by a band agreement: How will recording income be split?
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How will public performance income in sound recordings be split?
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How will the publishing income be split?
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How will touring income be split?
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How will merchandising income be split?
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How will income from sponsorship or endorsements be split?
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Who owns the band name and how can it be used if the band splits up?
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What happens if one member leaves and what will the effect of this be on
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third party agreements?
What are the audit rights of the leaving member?
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What are the liabilities of the leaving member?
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What notice must a leaving member give?
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Expected conduct of each band member.
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Under what circumstances can band members be hired and fired?
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What is the voting system for decision-making on behalf of the band?
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On what issues does there have to be unanimous agreement from band
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members for a decision to be made?
How many band members need to attend third-party meetings before a
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decision can be taken on behalf of the band?
Who will be the signatories to the band’s bank account and what will be the
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limit for which any single member can make payments? What happens if a band member dies or is incapacitated?
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Will there be a trial period for a new member joining the band?
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Will the joining member be indemnified for liabilities that occurred before
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he/she joined?
When an individual member buys equipment with band money, is the
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equipment owned by the band or by the individual?
Will the individual have the right to buy any band equipment used by that
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individual from the band if he/she leaves, and if so, for how much?
How will band expenses be defined, and will they include a basic wage for
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Will members be able to work on outside projects if third party agreements
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such as the band’s recording and publishing agreements allow?
If outside projects are allowed, who keeps the income and what happens if
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the individual’s absence affects the band adversely?
If there is a dispute, what will be the mechanism for its resolution (e.g.
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mediation, arbitration or an alternative dispute resolution arrangement)? Will the band agreement be confidential?
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What will be the law that governs the agreement?
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How must notices concerning the agreement be given?
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Will there be an obligation for each individual to sign any agreement that has
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been agreed with a third party under the band’s voting system?
A very common situation when the ‘artist’ is a band is that there will often be a situation where there are only one or two authors in the band, with the other members being purely performers. This can result in the author(s) receiving far higher income than the pure performers, which can often lead to bad feeling within the band. In extreme cases this can lead to a situation where the author is driving around in a Mercedes and the other band members still have to catch buses.
One of the bands that the author of this book managed found a way around this problem. The sole author in the band agreed that as long as a band member stayed within the band, he/she would receive a percentage of the publishing income, even though he/she did not actually write any of the band’s songs. The sole author very generously agreed to split the publishing income four ways with the other three members of the band, i.e. each member received 25 percent of the publishing income after it had been received by the band’s sole author from his publisher and the public performance collective management organization. The sole author took the view that the band was a vehicle for his works and that without the band his writing would stand little chance of success.
It is important in such a situation for all registrations with collective management organizations and publishers to be correct. In other words, the works should be registered accurately with the publisher and the appropriate CMO as to who actually wrote the work and not how the income is to be distributed. Once the author has received the income, then he or she can distribute it according to the band
agreement. In this particular case, it was agreed that if a band member who was not one of the authors left the band or was dismissed, he/she would cease to receive any of the publishing income from that point on.
Dispute Resolution
If there should be a dispute between band members or between the band/artist and a third party, it is always recommended to try and settle the dispute by ‘mediation’. This is the least expensive and the least stressful way of achieving a settlement. The mediator is a facilitator who will examine the evidence, listen to both sides and endeavor to facilitate a negotiated settlement between the parties which, if agreed, will be binding in law. The parties will normally provide the mediator with a short position statement in advance of the mediation meeting, together with any supporting documents. It is advisable to include a clause in all contracts that in the case of a dispute the parties agree to enter good faith discussions to settle disputes by mediation. It is also advisable, if possible, to name a mediator who would be acceptable to both parties in the clause. If this mediation process fails, the more expensive and stressful options of arbitration or litigation through the courts can be considered. The other advantage of mediation is that the dispute can normally be resolved (or not) in one or two days, whereas litigation through the courts can sometimes take months to reach a final judgment, and even then it is normally open to an appeal process.
It may be that some artist lawyers may not be enthusiastic about the concept of mediation, as lawyers make a lot of money from legal disputes. More enlightened lawyers, however, understand the value of mediation to their clients, which is making mediation a more popular and efficient method of settling disputes as time goes on.