Takin' Care of Business
Nygaard, Scott, Acoustic Guitar
Steer clear of conflicts about money and management by creating a band contract.
Many bands get started without a lot of planning - a weekly jam session moves from a living room to a bar; a singer asks a few friends to join her in a one-off gig; the band jamming behind the stage is recruited to fill an empty festival slot when the headliner's bus breaks down. Plus, for most people, a band is a social gathering - an opportu- nity to hang out with musical friends and play a few tunes possibly for an audience. For all these reasons, few musicians think about the financial and legal aspects of starting a band beyond the simple act of dividing the tipjar money at the end of every show.
Once you start dealing with money that doesn't get evenly divided after every gig, though, it's important for all band members to understand the financial arrangements. You're essentially starting a small business, and you need to clarify what everybody will contribute and what they'll be paid back. How will you share expenses? How will members share in duties such as selling band product, running the PA system, sending out press releases and mailers, and maintaining the band's online presence? There are all sorts of ways to deal with these matters. The most important thing is to agree on them and then get them in writing, by drafting a band contract. The following are some of the key areas to cover.
Once a band decides to record, a contract typically becomes unavoidable. These days most bands start by recording and producing their first album themselves. If this is the case with your band, you'll need to decide how the record will be financed, how those financing the record will be paid back, how and when profits will be divided, how the record will be distributed, who will be responsible for the distribution, how royalties will be divided, who will get songwriting credit, etc.
If your band's first recording is the result of interest by a record label, the label will mostly likely initiate a contract, and you may have little input into the terms. But that contract will only cover your dealings with the record company; you'll need to create your own band agreement to deal with other aspects of your band, such as how tour and publicity expenses are paid and how you deal with people hired by the band (booking agents, managers, publicists, sound engineers, session musicians, fashion consultants, etc.).
Share the Wealth
The most obvious solution to many of these issues is simply to divide everything equally, but it isn't always clear how this can be done fairly. For example, one member of the band may write all the songs or arrange all the material, another member may do all die booking, and another member might provide, haul, set up, and run the PA. Three equal tasks? Possibly. You'll have to decide. Booking gigs and running a PA are not generally as creatively satisfying as writing songs, and if, for instance, the songwriter has sole ownership of royalties, some resentment may arise on the part of the members who feel they're working just as hard, if not harder, than the songwriter. …