D.I.Y. v. GETTING SIGNED TO A MAJOR RECORD LABEL IN THIS SOCIAL MEDIA ERA

The question these days for musical performing artists seems to be whether it is better to do it yourself ("DIY") or sign with a major record company. The answer depends.

It used to be, back in the 1970s, '80s, '90s and even into the start of the new millennium, that the major record companies had talent scouts scouring the country and searching the clubs for talent. There were layers of A&R staff at major labels (A&R stands for “artist and repertoire”) who were often producers that would take artists into studios and make recordings. That way a record label could find out what an artist might sound like on record before proceeding further. The A&R staff would also review songs from publishers and songwriters to choose “hits” for the artists already signed to the label to record. Sometimes artist managers and lawyers would pitch talent to the A&R personnel, a process which was commonly referred to as “shopping” an artist to a label. For the most part, those days are done.

These days the A&R staff could more accurately be referred to as R&D (research and development). They no longer need to scour the clubs or take demos shopped to them by managers and lawyers. Artists can make state of the art recordings in their homes and distribute it digitally with the push of a button. The labels can search the internet and websites like YouTube and Facebook to see what artists are garnering interest from the public. These days it is more about creating a “buzz” with an online presence and doing live shows to build a fan following. The record companies are interested in analyzing data before they take an interest in investing time and money in a project.

The major labels are now less about finding and developing raw talent and more about marketing and promoting the artists that have developed themselves and built the widest public appeal. Rather than bring new artists into the studio to work with them, the labels tend to find artists that are already performing live and drawing crowds, and already have at least some recordings commercially released and available on line. Since an artist can create good quality recordings in a home studio, and easily upload music for commercial release through any number of online distributors, any artist can make music and get it out to the public without the need for a major record label’s assistance. The labels actually want the DIY artist to develop its sound and test market itself. When there is interest from the public, numerous hits on an artist’s website or YouTube video, substantial sales of the artist’s music, and long lines at the live shows, then the major labels start sniffing around. The contractual downside of signing with a major record company is that in most cases their contracts assign ownership of your copyrights to them in exchange for funding (an advance and a promise of royalties); the DIY artist can retain ownership of its copyrights and then use and exploit them to generate income.

On the up side, as an artist these days you can make and distribute your own recordings on-line through the digital streaming services and promote the music through social media and with live performances - and keep 100% of the copyrights and 100% of the profits. In the "good old days" an artist needed a record company to fund the recordings in state-of-the-art recording studios and then print, warehouse and ship the physical records to stores. Before Spotify, AppleMusic and other digital streaming services, radio was the only gateway to the public, and you needed a record company to market and promote the music to radio.  You no longer need to go that route. You can do it yourself if you prefer.

If the DIY route is not for you, then you still need to do some legwork to get the attention of a major record company. What you as an artist need to do, first and foremost, is work on your art. That can be a combination of writing great songs, making great recordings, making interesting videos and creating a great live show – any or all of those things. You need to build your websites and develop your social media in order to link your fans to your work so that the public can hear your music and see your performances. An artist needs to create a “buzz”, create excitement and interest for what the artist is doing creatively. Some artists do it with a killer song and others do it with an interesting video. You need to create something unique and interesting that the public just cannot resist. It is not easy. It takes hard work and perseverance – and requires a little luck to get attention. However, if the alternative is to give up and go work in a grocery store or some other day job, then you might as well hone your craft and give it all you have to try to create something that demands that people pay attention. Then, if you want, you will get signed to a major record company that will, hopefully, help fund your expanding efforts and spread your artistry to a broader audience around the world.

Wallace Collins is an experienced entertainment lawyer. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. T: (212) 661-3656; wallacecollins@gmail.com 

THE MUSIC MODERNIZATION ACT: A BREAKDOWN OF THE BENEFITS AVAILABLE FOR ARTISTS AND SONGWRITERS

The Music Modernization Act (“MMA”) passed both the Senate and the House after the herculean efforts of some individuals and organizations who worked tirelessly to negotiate compromises to accommodate all sides, and was signed into law. The MMA finally moved the recorded music industry forward in a way that facilitates more artists and songwriters being able to make a fair living from making music. The MMA proposes to reform the music licensing landscape in several substantive ways -  and vigilance is required to ensure that composers, songwriters and other copyright creators receive all the benefits available to them under the MMA.

The MMA is comprehensive and sweeping in its scope. The MMA revamped Section 115 and repealed Section 114(i) of the U.S. Copyright Act. It creates a public database to facilitate and expedite payments to songwriters and it overhauls the rate Court system and upgrades the standard for setting rates to a "free market" standard. The MMA also incorporates several other major pieces of legislation including the CLASSICS Act (Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society Act) which grants copyright protection to pre-1972 sound recordings so songwriters and artists can receive royalties on pre-1972 recordings and the AMP Act (Allocation for Music Producers Act), which improves royalty payouts for producers and engineers from SoundExchange when their recordings are used on satellite and online radio. Notably, this is the first time producers have ever been mentioned in copyright law.

Here are some details of the highlights of the MMA’s benefits explained:

Section 115 Reform and the Public Database

The MMA ends the bulk Notice of Intent (NOI) process through the Copyright Office, which can prevent songwriters from being compensated or compensated in a timely manner for uses of their works. Under the MMA, the digital services would fund a Mechanical Licensing Collective (MLC), and, in turn, be granted blanket mechanical licenses for interactive streaming or digital downloads of musical works. The MLC would be governed by publishers and self-published songwriters. The MLC would address the challenges digital services face today when attempting to match songwriters and publishers with recordings. The MMA also creates business efficiencies for the digital services by providing a transparent and publicly accessible database housing song ownership information. Additionally, because the database would publicly identify songs that have not been matched to songwriters and/or publishers, publishers would also be able to claim the rights to songs and get paid for those songs. Songwriters and publishers would also be granted an audit right which is not currently available under Section 115 of the US Copyright Act.

Willing Buyer/Willing Seller Standard

The MMA upgrades the current standard to a free market standard. Section 115 of the Copyright Act has regulated musical compositions since 1909—before recorded music even existed. Section 115 allows anyone to seek a compulsory license to reproduce a song in exchange for paying a statutory rate. Current law directs the Copyright Royalty Board (CRB)—the government body responsible for setting the statutory rate—to apply a legal standard to determine rates that does not reflect market value. The MMA replaces the current flawed legal standard with a standard that requires the Court to consider free-market conditions when determining rates.

Rate Court System Overhaul & Section 114 Repeal

The MMA overhauls the rate Court system. Currently, ASCAP and BMI are each assigned to a single, respective rate court judge. Every case must be adjudicated before each performance rights organization's (PRO’s) respective designated consent decree judge. Under the MMA, a district judge in the Southern District of New York would be randomly assigned from the wheel of district judges for rate setting disputes. The “wheel” approach would enable BMI and ASCAP, as well as licensees, to go before any judge in the Southern District of New York on a rotating basis - rather than being assigned to a single judge - for the purpose of rate setting disputes. This approach ensures that the judge will find the facts afresh for each rate case based on the record in that particular case, without impressions derived from prior cases. The MMA would also repeal Section 114(i) of the U.S. Copyright Act which prevents rate courts from considering sound recording royalty rates as a relevant benchmark when setting performance royalty rates. As a result, the playing field has been uneven, at the expense of songwriters. The MMA moves the industry to a fairer system under which PROs and songwriters would have the opportunity to present evidence about the other facets of the music ecosystem to judges for their consideration. This repeal creates the opportunity for songwriters to obtain fairer rates for the public performances of their musical works.

Wallace Collins is a lawyer with 30+ years’ experience specializing in entertainment law and copyright, trademark and internet law matters. He was a teenage recording artist for Epic Records before attending Fordham Law School. T: (212)661-3656 / www.wallacecollins.com

LEGAL BASICS FOR THE DIY WORLD: ARTISTS, AUTHORS, CREATORS AND MUSICIANS

Four Essentials:

1) Copyright Protection 
Under US copyright law, copyright (literally, the right to make and sell copies) automatically vests in the creator the moment the expression of an idea is "fixed in a tangible medium" (in other words, the moment you write it down, type it or record it on tape). With respect to music specifically, there are really two copyrights: a copyright in the musical composition owned by the songwriter and a sound recording copyright in the sound of the recording owned by the recording artist (but usually transferred to the record company when a record deal is signed). It is important to remember that you own the copyright in your work the moment you write it down or record it, and you can only transfer those rights by signing a written agreement to transfer them. Therefore, you must be wary of any agreement you are asked to sign. 

Although it is not necessary, it is advisable to place a notice of your copyright on all copies of the work. This consists of the symbol "c" or the word "copyright", the author's name, and the year in which the work was created (for example: "(c) John Doe 2017). The filing of a copyright registration form in Washington D.C. gives you additional protection in so far is it establishes a record of the existence of such copyright and gives you the presumption of validity in the event of a lawsuit. Registration also allows for lawsuits to be commenced in Federal court and, under Federal law, allows an award of costs and attorney's fees to the prevailing party (and you can register on-line or by mailing in forms with submissions). Currently, the filing fees are low enough to make registration well worth while. www.copyright.gov

2) Trademark Protection for Your Name 
Trademark rights are rights in a name or logo which indicate source or quality. Such rights are based on "use" of the mark and vest in the owner when the mark is first used in connection with goods or services. Although the title of a work is not protected by trademark, these rights are applicable to names used by actors, musical performers, DJs and companies. The more unique the name of your company, product or band is, the more easily protection is available for it as a trademark. 

The best way to protect yourself is to file a Federal trademark registration application, since registration will give you a presumption of ownership of the name nationwide. Before investing too much in your prospective trademark, however, it is a good idea to order a trademark search to make sure no one else has been using the same or a confusingly similar name before you. You can do this through a combination of on-line researches, through your lawyer, or by contacting a searching service. With respect to the name of a performer or band, keep in mind that a mere search of current Federal trademark registrations may be insufficient. It is best to conduct a full statewide search as well as a search of the copyright office records in order to find any songs which may be copyrighted in a band's name. This is important because trademark rights are based on "use." Therefore, even if another user does not file for Federal trademark registration, certain rights vest in that user under state law when they start using the name. This has led to problems in the past. For example, when you go to release your record or film worldwide you may find that someone else has been using the name of your band or film company in, say, Illinois. If they were using the name prior to when you first started using your name then, under state law, that user could prevent you from releasing your record in that state. The usual solution to such a problem is to buy out that users rights, but this can be costly, or enter into an agreement to alter and distinguish the names (e.g., Squeeze/Squeeze UK; Dreamworks, Dreamworks SKG. 

Once you have determined that no one else is using your name, the next step is to file an application for Federal trademark registration in the US Patent and Trademark Office. Registration provides nationwide protection as well as the presumption of validity for lawsuit purposes, as well as legal fees and additional damages for infringement. www.uspto.gov
  
3) To Incorporate or Not to Incorporate 
As a practical matter, sooner or later you may want to incorporate in order to limit your personal liability. When you incorporate your business you actually create an entity separate from yourself which will have its own bank account and tax identification number. If you operate properly as a corporation (i.e., signing documents as an officer of the corporation rather than as an individual, using a separate bank account, etc.), then, as a general rule, only the corporation is liable for the obligations of the agreements the corporation makes. The easiest example of how this protects you is if you imagine a situation where your corporation pays you a salary of several hundred thousand a year for several years. Over the years you use that salary to buy a house, a car, and a boat. Then one day catastrophe strikes and the corporation is sued for millions or goes bankrupt. Although the creditors could take the assets of the corporation, they could not pierce the corporate veil and force you to sell off your house, your car and your boat (Imagine: even when Chrysler went bankrupt Lee Iacocca did not give up any of the assets which he had purchased with his salary. In fact, he kept right on getting a salary from the corporation). If properly employed, a corporate entity can be used as a shield to protect you. In most cases, however, it is not really necessary to incorporate at the start of your artistic career. The law does require that, if you use a name professionally other than your personal name, then you should file a Business Certificate (or "DBA") in the County in which you reside or do business under that name. A DBA is necessary if you want to open a bank account in your professional pseudonym or group or company name. The DBA form is available in stationary stores or at the county clerk's office.

There are also tax advantages to operating as a corporation. As an individual making in excess of  a certain amount, as set by the IRS, even if your write-offs and deductions reduce your income substantially you will still be subject to the "alternative minimum tax' under current law. However, as a corporation, you are entitled to take the deductions and, as an individual, you are only subject to standard tax on the amount which passes through to you individually. Also, as a business matter, the individual members of a group or company may want to enter into a partnership agreement between and among themselves in order to spell out the particulars with respect to certain rights such as songwriting and ownership of the trademark rights in the name. Otherwise, any group of two or more persons operating a business for profit is considered a partnership for the purposes of applying the laws of partnership under the laws of most states. These laws generally employ a rule of sharing evenly in profits and losses, including all assets of the business
  
4) Signing Contracts 
Never sign any contract given to you without having your lawyer review it first. Do not rely on anyone else (or even their lawyer) to tell you what your contract says. And never let anyone rush you or pressure you into signing any agreement. There is really no such thing as a standard "form" contract. Any such contract was drafted by that party's attorney to protect that party's interests. Your lawyer can "translate" the deal and explain its terms to you, and then help negotiate more favorable terms for you. 

Keep in mind that it may, in fact, be in your best interest to "get it in writing" if you have an arrangement with someone. This is especially true in collaborative situations. Otherwise, you run the risk of a disagreement later over the actual terms of the oral agreement, and it becomes your word against that of the other party. That is not to say that an oral agreement is not a binding contract (as Kim Basinger recently found out). It is just that a contract is easier to prove if the terms of the arrangement are in writing. A simple contract may not necessarily require extensive involvement by lawyers. A contract can be as basic as a letter describing the details of your arrangement which is signed by both parties to the agreement.

As a general rule, you should consult with a lawyer if you are asked to sign anything other than an autograph. Too many aspiring artists want to get a record deal so badly they will sign almost anything that promises them a chance to do it. Even successful careers have a relatively short life span. Therefore, it is important for you to get maximum returns in the good years and not sign away rights to valuable income like publishing. Everyone needs someone to look out for his or her interests. That is why, at the end of the day, you may want to consult with an entertainment lawyer. Meet with several lawyers to find one whose vibe is right for you. If you believe in yourself and your talents, give yourself the benefit of the doubt, and invest in good legal representation.

Wallace Collins is an entertainment and intellectual property lawyer with more than 30 years of experience based in New York. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; www.wallacecollins.com 

PREDICTIONS FROM 1993 BILLBOARD ARTICLE: "WARNING SIGNS ON THE SUPERHIGHWAY"

Ramifications of New Technology  [*ORIGINALLY PUBLISHED IN BILLBOARD 1993 AS  "WARNING SIGNS ON THE SUPERHIGHWAY"]

The future in home entertainment technology is ever more rapidly approaching as headlines herald "mega-mergers" between and among cable, computer, electronics, telecommunications and entertainment conglomerates. The rapid development of interactive computer technology and the imminent availability of an infinite number of cable channels means that the electronic information superhighway is just over the horizon. The entertainment marketplace of the future could consist solely of a wall of interactive computer catalogues; consumers will go shopping with a compact disc and a credit card. With the addition of computer modems and/or fiber optic cable hook-ups, the consumer would not even have to leave home to choose music, video games, and movies stored in a central databank, and with the "virtual reality" apparatus, viewers may be able to experience the sensation of actually being in a film and partaking in a gunfight with Clint Eastwood or experience the sensation of sex with Marilyn Monroe. The ramifications of this global computerized information network, and other related technological developments, will be enormous for the entertainment industry, the legal community, and the world.

Telephone software already exists which will allow a consumer to listen to 90-second samples of a favorite recording artist's new album, and then, by touch-tone selection, order it shipped to him and have it charged to his telephone bill. Not only does this software facilitate sale of product, it compiles a consumer profile on the purchaser which can then be provided to record label marketing departments. This software has the capability, once appropriate fiber optic cable is in place, to transmit the product directly to the consumer at the push of a button.

For better or for worse, the arrival of computer driven consumption is eventually going to reshape the way business is conducted, from the way product is packaged, shipped and marketed to the way radio is programmed. Businessmen and lawyers in the entertainment industry will be confronted by new concepts in copyright and contract law not currently addressed in existing contracts. These delivery systems also raise new concerns regarding privacy and free speech.
Entertainment companies will soon be able to transmit their wares digitally instead of trucking them, dealing in the transfer of information rather than the shipment of product. Given the entertainment industry's investments in pressing plants, warehouse facilities, and distribution networks, this transition may not be an easy one. However, such a system will ultimately economize on packaging and transportation expenses. It will also eliminate the ecological issues surrounding the wasted plastic and paper used to package CDs and videocassettes.

With the advent of electronic distribution of music, the most basic concepts that govern contractual relationships will be effected. Fundamental movie and record contract issues could be completely eliminated from recording contracts.
With the coming of the one-world, global marketplace, transfer could be instantaneous and worldwide, and the issue of reduced "foreign" royalty rates payable to actors, artists and performers could be abolished. Sales figures for product could be compiled with absolute accuracy, and sales charts released on a daily rather than a weekly basis. Whether retail record stores and video outlets will disappear completely or continue to survive (the way radio continued to endure despite the advent of television, or people continue to go to the movies even after the arrival of home video) remains to be seen.

A particularly troublesome issue with respect to direct computer driven consumption is how to prevent the consumer from copying the transmission and circulating it (the way some computer software programs are currently copied from PC to PC in any given business office). An anti-copying code still needs to be developed and programmed into each album or movie transmission.

As we move into the future, barriers will continue to come down between telephone companies, cable TV, and video programming companies. The development of digital fiber optic networks will provide consumers with more choices and easier access to hundreds of channels as well as electronic home delivery of audio and video programs. Most troublesome is the fact that digital technology will make it possible for the consumer to make a virtually identical copy of any audio transmission royalty-free. Record companies and artists will increasingly find their products being transmitted and sold by way of cable networks or via computer modems and, yet, be precluded from collecting any revenue because such transmissions will arguably be deemed to be "broadcasts". As previously mentioned, even though these new broadcast and cable companies transmit record company product to consumers for their own commercial gain, they have no clear obligation either to secure record company permission or to compensate the label or the artist for the commercial use they make of the copyrighted works.

One apparent way to circumvent this problem would be for each major record label and movie company to develop its own cable TV channel which would allow viewers to order movies, albums and other related merchandise directly. Then, for example, the record label or movie company could charge the consumer a retail price equivalent for the transmission of a particular album.

Although such a solution has its obvious benefits, there is a downside. Operation of such a venture could prove to be costly and burdensome, specifically for a record label. In addition, there would still be nothing preventing a cable operator unaffiliated with a particular artist's label from establishing its own competing home-shopping music cable network, and then undercutting the prices offered by the artist's source label. In fact, it would be fairly easy for such an unaffiliated competitor to offer the transmission of a particular artist's album at a lower price because it does not have to bear the record company's financial investment in recording costs. Since the competitor would argue that it is merely broadcasting the product, not selling copies, the artist and its label could be without legal recourse. The competitor would only be liable for performance royalties which, at this point in time, are not payable on the sound recording.

Electronic distribution also has certain disturbing ramifications of the "Big Brother" variety. Popular culture has always thrived on decentralization - on garage bands, basement tapes, and independent film releases. If the larger entertainment conglomerates control the central databanks, what would the consequences be for independent releases and street music? Government intervention analogous to FCC regulation may be necessary to insure fair access to the databanks. New technology raises other questions: - What effect will credit card ordering directly through computer or cable hook-ups have on rights of privacy?; Would the databank also compile a wealth of personal information on each consumer?; If so, who will have access to this information?; Will centralized distribution make suppression of disturbing or "obscene" work much easier?; Will works be automatically transmitted in edited form? If so, who will decide what is suppressed and how a work is edited?

With respect to interactive technology, myriad intellectual property and related legal issues will be raised. If the consumer is enabled to manipulate the characters, the story line, and the action in a movie, movie companies need to consider how all of the alternative versions would be copyrighted. Since, in effect, the viewer would now be the creator of some essential portion of the work, the viewer might have an argument that certain derivative rights vest in him by virtue of his contribution to the work.

Interactive technology pundits predict that, with the advent of "virtual reality" apparatus, viewers will be able to truly experience a film by inserting themselves into the action and manipulating it such that the viewer could partake in a gunfight with Clint Eastwood, a prize fight with Sylvester Stallone, or experience the sensation of sex with Marilyn Monroe. As a preliminary matter, the manufacturers of the applicable interactive software would need to get appropriate clearance from the movie companies before altering the copyrighted works. However, with the proliferation of multi-national, vertically-integrated entertainment conglomerates, the company doing the altering might already be the owner of the copyright in the film (as was the case with "colorization" where Ted Turner had purchased certain films and later had them colorized). Nevertheless, supplemental legal issues would still be raised: If the viewer were to knockout Stallone, would this in some way subject the viewer to legal action by Stallone for disparagement of the actor? In the case of the Marilyn Monroe scenario, could intercourse with her image be said to violate certain privacy rights in some way, and who would assert those rights?

The ramifications of the new computer and communications technologies are simultaneously exciting and frightening. The next wave of technological developments is almost upon us and it is best that the entertainment industry and the legal profession confront the pertinent issues, review the relevant revenue streams, and resolve the outstanding legal issues now in order to capitalize on the coming changes as expeditiously as possible.

Wallace Collins is an entertainment lawyer. Tel: (212) 661-3656; www.wallacecollins.com. He was a recording artist for Epic Records before attending Fordham Law School. 

THE IMPORTANCE OF CREATING AN INTERNAL BAND CONTRACT

     Over the years there have been many lawsuits between and among the members of various musical bands. These lawsuits have concerned everything from disputes over the distribution of money to the right of departing members to use (or not to use) the band name in connection with ongoing endeavors. In most cases, it would have been better to be safe than sorry, and get the understandings of the band members in writing when everyone was in agreement just so all the parties remember what they agreed to at the start. Disputes over copyrights and trademarks as well as money could be avoided with a properly drafted "pre-nup" for the band.

     The internal group member contract between the members of a band is fundamentally important, but many musical groups ignore this crucial early step. When two or more people associate for the purpose doing business they create a partnership in the eyes of the law. General partnership law applies to the association unless a written agreement states otherwise. General partnership law provides, among other things, that all partners equally own partnership property and share in profits and losses, that any partner can contractually bind the partnership and that each partner is fully liable for the debts of the partnership. In the case of most musical groups, a written agreement setting forth the arrangement between and among the group members as partners is preferable to general partnership law.

     A band agreement can address issues such as who owns the group name (and whether and in what capacity a leaving member can use the group name), who owns what property (including not only sound equipment but intangible property such as recording agreements and intellectual property such as the songs and the recordings created by the group), and how profits and losses are divided. Since it almost goes without saying that members of a band inevitably leave and groups inevitably disband, it is important to structure an inter-band agreement in the early stages of a career. It will function in a sense like a prenuptial agreement when matters start to disintegrate, and it can make the break-up process less painful.

     Some bands may deal with this agreement among themselves and some bands may have a lawyer prepare a basic inter-band agreement. If it is a fairly equal partnership where all members are writing and performing and sharing equally, it is a fairly simple process. However, where some members are songwriters and others are not and/or where one member claims ownership in the name or another makes significantly larger financial contributions than the others, it can become a complicated process. If the band cannot work it out among themselves, they can either sign a conflict waiver permitting the one attorney to act solely as scribe (and not as advisor) on behalf of the group, or each member of the group may need to get his or her own lawyer to protect each respective member's interests. Like it or not, as artistic and creative as forming a band can be, this is a business and it is wise to recognize that and deal with it. These inter-band issues are better dealt with at the beginning when everyone is optimistic and excited rather than later when tempers flare and bitterness pervades as egos clash.

     A typical band contract will address certain fundamental group issues. One important issue is who owns the group name if one member leaves or if a group dissolves which group of members are entitled to use the name. Under partnership law the partners would be the joint owners of the name and any member would probably be permitted to use the name (or maybe no members would be allowed to use the name once the partnership is deemed dissolved). Trademark rights are determined based on the "use" of a mark (not on who thought of the name) so each of the members of the group would be an equal co-owner of the group name under trademark law. The end result under either partnership law or trademark law might be impractical.

     In most cases, the band agreement will state that if a particular founding member was the creator of the group name then only a group comprised of that member and at least one other member can use the name. This will apply whether one other member leaves or if the group disbands and only the founding member and one other reform the group. There are as many different ways this provision can be drafted as there are different group names. When a group member leaves, the remaining members are going to want to keep the group name and are not going to want the leaving member to dilute its value or confuse the public by using it in any way. The band agreement provision may say that a leaving member cannot use the name at all or that the leaving member can only mention that he was "formerly" a member of the group (provided that such credit is printed smaller than the member's name or his new group's name, etc.).

         

     Rights in the group name may also concern revenues generated in addition to rights, specifically as they concern the sale of merchandise (e.g., hats, t-shirts, calendars and other products and paraphernalia). The band agreement should have a "Buy-Out/Pay Out" provision which would deal with this financial aspect of the group name.

     The band agreement will need to contain provisions regarding the sharing of profits and losses. One provision may pertain to revenues earned during the term while each member is in the group and another may pertain after the departure of a member or the demise of the group. In most cases, a group just starting out will have a provision that all profits from the group are shared equally between all members with an exclusion for songwriting monies (which each of the respective songwriter members would keep for themselves). Where an established group adds a new member, the provision may provide that the new member gets a smaller percentage than the founding members.

     However, in most cases, during the term there is not a problem determining appropriate revenue shares. The more complicated problem of revenue division arises after a member departs. The agreement may provide that the leaving member is entitled to his full partnership share of profits earned during his tenure but a reduced percentage (or no percentage) of profits derived from activities after his departure - or the agreement may provide for a reduced percentage for a short period of time after departure (e.g., 90 days) and then nothing thereafter. This is an easier issue to remedy as it relates to live performances and sales of merchandise during those performances than it is as it relates to record royalties. The group needs to determine what happens, for example, when a group member performs on 3 albums but leaves before the fourth album is recorded. Although it might be acceptable to refuse to pay the leaving member any royalties on the fourth and future albums recorded by the group under the record contract the leaving member signed as part of the group, it might not be fair to refuse to pay that leaving member his share of royalties from the 3 albums that he did record with the band. Of course, this might vary in the agreement depending on whether the leaving member quit or was fired.  

     Another important financial issue is the question of the leaving member's share of partnership property such as band recording equipment or a group sound system. Again, the agreement might specify a monetary payout to the leaving member if he is terminated but forfeiture if the leaving member quits. If merchandise with the leaving members name and likeness still in inventory is sold after the member leaves, a decision will have to be made about whether and how much the departed member might receive for the use of his name and likeness.

     The issue of control is also very important to deal with in inter-band contract. In most cases, each member will have an equal vote and a majority will rule. However, there are as many variations as there are bands. For example, some acts might require unanimous agreement or an important member may have two (2) votes and/or the band’s manager may have a tie-breaking vote. The agreement may also provide that certain matters such as requiring financial contributions from group members or incurring debts on behalf of the band require a unanimous vote. Again, there are endless variations including situations where a particular member makes all of the decisions or where new members do not have a vote on band business. One interesting inter-band arrangement was that of The Beatles.  In answer to that age-old question, "no", Ringo did not get less. In fact, my understanding of their arrangement was that it was what might be called a reverse democracy: each member had one vote but if any member voted against doing something then the band would not do it. In other words, their arrangement required unanimous consent to proceed with an activity.

     Another issue of control that must be decided for the band agreement concerns the hiring and firing of band members: how votes are calculated (e.g., will each member get one vote or will a particular member's vote count double) and how many votes are needed (e.g., a majority or a unanimous vote) to fire a group member and/or hire a new member. In most cases, a new member voted into the group will then be required to sign on to the internal group contract. It must also be decided how to vote on any amendments to the band agreement since this may materially effect the relationship between the members after the group has started. In most cases, a majority vote will be deemed determinative but some members may prefer a unanimous vote on such things as amending the agreement (as well as hiring or firing). This will have to be decided between and among the members of the group.

     Finally, the group’s internal agreement should contain a comprehensive Buy-out/Pay-out provision that deals with departing members. In most cases, whether the leaving member quits or is fired the agreement will provide that the leaving member waives all rights in the intangible assets of the partnership (e.g., the group name, the group contracts, etc.). If the member quits, he might waive any right to and benefit derived from the hard assets such as band sound equipment. If the leaving member is fired, the agreement might provide that he or she is entitled to the pro rata percentage of the current value of the hard assets. With respect to this payout, the band agreement may provide that if the valuation exceeds a certain amount (e.g., $25,000.00) or would put the band partnership in financial distress, the payout would be in a certain number of equal monthly installments (e.g., over 12 months).

     Again, this Buy-out/Pay-out provision can be as simple or as complicated as the band members deem necessary. There are as many variations in this as there are differences in personalities between the members of a group. Each member and each group must find its own balance.

     Inter-band issues and disputes are many and varied. Recently, a member of the Eagles sued the remaining members saying he was forced out of the Eagles’ corporation by the other shareholders (and invoked provisions of the California corporate law pertaining to minority shareholders in close corporations). Years ago an ex-member of The Black Crowes sued his former band mates claiming that he was entitled to an equal share of all the money they made after they threw him out of the band. His contract claim was based on nothing more than a pie chart drawn on a napkin. Legend has it that, years before while eating at a diner after a band rehearsal, each member had signed his name on his slice of the "pie" drawn on the napkin allegedly agreeing that they would stay together and share all of the money equally come what may. Of course, when circumstances changed the fired member used that napkin to assert his rights.

     It is difficult to form a good band and to achieve a successful career in the music business. Any group of two or more musicians working together would be well-advised to create and sign a good Internal Band Contract so that the band does not later self-destruct over money and ego issues and forfeit its hard-earned career success. In a perfect world, each member could afford its own lawyer to quickly and inexpensively prepare and sign such an agreement. In the real world, that may not be the case. In any event, some kind of basic band agreement is a good starting point for any new band.

Wallace Collins is a New York lawyer specializing in entertainment, copyright, trademark and internet law. He was a songwriter and recording artist for Epic Records before attending Fordham Law School. Tel:(212) 661-3656 / wallacecollins@gmail.com / www.wallacecollins.com