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Being a Musician is a Business (Band Agreement Edition)

Don’t be another band horror story. Have that awkward conversation before it’s too late.

Being a musician is a business. If you’re in band, one of the most important elements of organizing your business, is having an effective band agreement.

Without agreement among the members of your band, whether verbal, written on a napkin (is that still done?), texted, or with a formal agreement written by an entertainment lawyer (shameless plug), some key issues will need to be negotiated at a time when perhaps not everyone is acting reasonably, or you may need to rely on the law, which may not provide appropriate solutions for your situation.

In Ontario, the law governing partnerships is the Partnership Act (https://www.ontario.ca/laws/statute/90p05). If your band isn’t incorporated, it will likely be deemed a partnership by the Partnership Act. Subject to some exceptions, highlights of the Partnership Act include that any of the partners can make binding obligations on behalf of the band, all partners are jointly and severally liable for the band’s obligations, and each partner is entitled to share equally in the capital and profits of the business. This may not be what you want, but an agreement among the band members overrides the Partnership Act.

For example, the Partnership Act provides that “no majority of the partners can expel any partner unless a power to do so has been conferred by express agreement between the partners.” Without an agreement you can’t kick someone out. A band agreement may provide for that process.

Preferably, instead of relying on the Partnership Act, the band will a meaningful conversation about key issues early on. Why? It’s easier to talk about the division of money when there isn’t any. Why talk about how to kick someone out when you’re not on speaking terms? It’s better to have a process before the mad former member uses her leverage to get more than she would have otherwise received under a reasonable band agreement.

The following are some questions your band should consider discussing. Blame me for bringing it up. Make some decisions, and if you want help formalizing the agreement, contact an entertainment lawyer.

General Structure

  • Regarding the general structure, is everyone a partner in the band partnership?
  • Does anyone have a lot more control compared to the others? Is this reasonable?

Responsibilities of the Band Members

  • What are each person’s responsibilities?
  • How much time is expected for rehearsal?
  • Who’s responsible for applying for FACTOR and Ontario Music Fund, and registering songs with SOCAN, MROC, ACTRA RACS and/or SoundExchange?
  • Without a booking agent, who’s responsible to book gigs?
  • Without a social media person, who’s responsible for managing Facebook and Instagram?
  • Without an external manager, who’s responsible for whatever they do (just kidding, they do a lot!)?

Control / Decision Making

Are the following decisions made by majority, unanimous agreement or otherwise? Does anyone have more votes than anyone else? What’s the plan if a decision is to be made by majority but there are an even number of band members able to vote?

  • Hiring and/or replacing a manager, booking agent, accountant, and lawyer.
  • Binding the band in contract including exploitation opportunities. Are there any limitations?
  • Check-signing authority. Are there any limitations?
  • Changing the terms of the Band Agreement.
  • Borrowing money.
  • Selling the band’s property.
  • Deciding which performances to accept.
  • Scheduling rehearsals.
  • Other general business decisions.

The Music

  • What’s the formula to calculate song writing percentages and performance rights royalty entitlements?
  • Who may administer the music?

The Money

  • Profits from different band activities don’t need to be distributed equally or the same way. Recording and performance funds may be an even split while publishing and merchandise might not be. What’s your structure?
  • Who decides what expenses are incurred?
  • Do all hard costs get paid before the members receive a payment for their services?
  • If money is required for expenses, must everyone contribute equally?
  • What expense-related decisions may the manager make?

Band Assets

  • What property (such as instruments, sets, and equipment) is owned by individuals and what’s owned by the band?

The Band Name

  • Have you ensured no one else is using the name? Can you get all the digital media real estate (http://namechk.com)?
  • Have you registered the name under the Ontario Business Names Act? Have you registered for trade-mark protection? If a partnership carries on business under a name other than the names of the partners, there is a legal obligation in Ontario to register the business name. If not, you could be fined, among other issues. A business name registration does NOT grant exclusive rights to the business name!(Please re-read the last sentence twice.)
  • Does anyone have more control regarding the band name? May the band only use the name if everyone is still performing together? May any majority of the members performing together use the name? Does the name follow Person A, whether she’s in the band or not? How about only Person A and Person B may use the band, regardless of whether anyone else is still in the band?

New and Former Members

  • Who has the authority to add a member?
  • How much money, if any, is owed to a former band member? If there’s a one-time payment relating to the net asset value of the band at the departure time, how is that calculated and what’s the payment schedule? If there’s an ongoing commitment, what’s the formula regarding royalties and any other income from recordings made while the former member was a member?
  • What happens if a band member gets sick, disabled or dies?
  • If a band member wants to voluntarily leave, what notice must be provided and how does that change on tour?
  • How many members does it take to kick someone out?
  • How many members does it take to switch a light bulb? (disregard)

Dissolution

  • What triggers the partnership’s dissolution?
  • Upon dissolution, what happens to the songs, profits, property, name, and who’s responsible for administering all of this?

The potential of making a lot of money and/or wanting to add someone or kick someone out may end up killing your band if the awkward conversations about money to membership didn’t happen proactively. Don’t become a band horror story. Instead, have the conversation, focus on the music, and enjoy a successful career.11249233_790079837755583_170702225390858041_o

Edwards PC, Creative Law is a boutique law firm provides legal services to Music, Film, Animation, TV, Digital Media, Game, Software and Publishing industry clients. For more information and blogs, please visit www.edwardslaw.ca

Regarding music law, Byron Pascoe works with musicians and music companies to assist with record label agreements, publishing contracts, distribution deals, producer agreements, band agreements, etc.

© 2017 Edwards PC

* This blog is for general informational purposes only and is not to be construed as legal advice. Please contact Edwards PC, Creative Law or another lawyer, if you wish to apply these concepts to your specific circumstances.

 

 

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