Question from a reader, how to cut up money inside a band


Reader Oliver was kind enough to post a comment with a question that covers a topic I have intended to cover for a few weeks now. That topic is how do you cut up money within a band? What’s the whole royalty payment thing mean for individual band members over the long haul?
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Read through Oliver’s question and I’ll be back at the end……By the way Oliver is well-informed, and has put some thought into how his actions will affect other’s lives and their desire to be in the band. This proves Oliver is not a sociopath. Good for you Oliver. This may prove a handicap when dealing with all the bona fide sociopaths in the music business but it’s likely he’ll be a more satisfied rock star……………..
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Oliver writes:

Sorry if I’ve missed this somewhere but in keeping with the non-democratic approach you described, whats the best way to go about song rights/royalties? How do I avoid this situation:

i) Write every note and syllable and take all the royalties but gradually lose my band (but buy one eventually) (Dylan-esque)

ii) Write every note and syllable, split the money with band members to keep the band, drive myself crazy giving away money to the non-writing band, potentially lose the band anyway (Dandy Warhols-esque?)

iii) Agree to play/record anything good that any member writes and allow the rights/royalties go to the contributing member, run the risk of losing direction/ internal power struggles/ control over band. (Stones-esque)

None of these options seem good to me, and although I’m not greedy I’d hate to see a disgruntled band member in 30 years cruising on a yacht he bought with my songs (fanciful I know). I assume there’s no right answer, but you’ve been there and there must be a slightly better option of the three. I feel I’ve got to get this right early.

Regards and many thanks for publishing knowledge you can’t buy.
Oliver.

None of these options seem good to me, and although I’m not greedy I’d hate to see a disgruntled band member in 30 years cruising on a yacht he bought with my songs (fanciful I know). I assume there’s no right answer, but you’ve been there and there must be a slightly better option of the three. I feel I’ve got to get this right early.

Regards and many thanks for publishing knowledge you can’t buy.
Oliver.

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You’re welcome Oliver. I appreciate my readers and I know that getting an informed opinion is valuable. That’s why I write this blog.

Oliver’s predicament is classic. He is the primary creative force in his band. This is common. Most musicians are not also great songwriters.  A typical band is made up of :

A drummer – a rock steady rhythm monster with a flair for knowing exactly when to step in and a flash. He is the backbone and holds the rest of the band in the pocket and is the timekeeper.

A Bassist – He builds the groove and either adds the drive or defines the song as a dance tune. He can add darkness or light, thunder or soul.

Guitarist – Endless, colors and flavors, rhythms, melodies, flashy solos and roar.

 A Lead singer – this is the ego and the magnet and turns the writing into an experience.

Any and all of these people make up a band and make the magic that the world recognizes as rock. Any and all of the people could be primary writers. Any and all of these people make it work and without them the magic is lost. All you need to do is think of two or three great bands and it’s easy to point out an instance where the loss of a minor member seemed to change a band’s spirit and as a result the band’s golden years were over.  Making music is a touchy thing, little  changes often have big results for the better or worse.

Since this is the case how does a band split up the money?  In a way this question misstates the reality of the way money is usually dealt with within a band.  The vast majority of bands are controlled internally by one or perhaps two creative geniuses.  This is the person that writes the material and provides the vision that makes the band unique. This person has more power than the other members so saying how does a band split up its money is dishonest.  The real question is how does the person that controls the band allow the money to be split up? Or what is the best way for a band to work out a compromise that keeps everyone on board and gives credit and money to the person (s) that deserve it based upon contribution.

Another wrench that gets thrown into the possibility of an easy fair system is the fact that most of a band’s career is spent in poverty. The lifespan of bands after they get a deal or a hit, or build a base is, at the absolute extreme 10 years with 3 years being a much more likely scenario. As a result of this reality in most bands money is never discussed except perhaps as a fantasy until it is too late and there is a pie to split up without a system to do so.

I suggest quite strongly that if you are in a band, form a band or join a band that you force the band to have some kind of agreement on how money is cut up.

In the underground indy world, the world that I lived in for twenty years and helped create, there is little money to worry about as a band works out its career. Gigs can be for $50, or perhaps a $100 and recordings are simple affairs that are self financed.  So nothing to worry about right? No, there is still a little money being passed around and more importantly people will often PUT MONEY INTO THE BAND.  So you and your Mother’s Uncle’s Nephew pay for the band to record a record, who owns it? The answer is 50% you and 50% your brother. Or 50% you and your brother and 50% the band. What about the producer? I think you get the point.

When your band first starts out have a serious band meeting. Discuss the following topics and write down the results. It’s better to lose a nutty bassist during an argument before things get going then to have him walk out on tour when he doesn’t get all of the door which is what his warped mind had decided was fair. (this happened to me. He started with “Everyone knows I have the most talent…..)

1. Does the band keep a joint piggy bank? Who keeps it? In what form? (cash or an actual bank account)

2.What is done with gig money? Most bands use this to build up the piggy bank.

3. If you pay for a recording what is the split on the ownership of the recording? On this one I will suggest that you work out something where the person that pays gets their cash back first, then the band owns the recording with the person that paid getting an extra share for risking their money. This is a common arrangement.

4. Is one person the leader and or main writer? If this is the case that person MUST GET SOME CONTROL over the use of their songs, and get the publishing money. I will explain this later in the blog. Let me just say that songs make money and bands make money and the songwriter is gonna end up with the song money no matter what you may want. If this pisses you off then write a great song about it, turn it into a hit and keep all the money to prove how unfair that system is….

Have a meeting. Write this stuff down. Then rewrite it in the form WE the members of Dog Dandruff being Joe, Schmoe, Larry Schmoe, Curly Schmoe and Gonzo Garbigian do hereby agree  to the following……then put all the crap you agreed to and sign it. Make four copies sign them all and Larry, Curly and Joe get a copy. Gonzo’s mom gets a copy since he can’t read.  This is a binding contract. It’s not a very good contract and it’s not a contract written up by a lawyer but in court the judge will hold his nose and respect it. Make sure it covers what to do with gig money, royalty money and songwriting money.

Now if it comes down to a fight about money and this goes to court this contract and your two-bit agreement will run smack into the LAW. There are laws about songwriting royalties. (see one of my blogs for an explanation) There are laws about contracts and working for hire and working for a cut. There are sleazy lawyers. There are sleazy bass players with sleazy lawyer cousins.  What does all this mean? As soon as you have some success and/or a manager redo all of this with a lawyer doing the consulting.  If you do end up using a lawyer YOU TELL HIM WHAT TO DO!!! He doesn’t tell you. He works for you. He will advise you and you’d be an idiot to pay him and not listen but in the end if the band wants to leave all of the money to the Museum of Idi Amin then that’s tough luck for the lawyer.

Now for some practical advise. Perhaps this will help our Reader Oliver. The vast majority of bands, and by that I mean a band formed by unknown musicians in an attempt to make it big, split their gig money evenly.  Since recordings are becoming less and less valuable as money-making endeavours this may turn out to be the lion’s share of the money.  So split the money evenly after the band covers gig expenses. The better you do the more the gig expenses cover. Once the band starts to play regularly and your fee starts to get healthier it’s wise to start a system of per diems. (that’s Latin for Per Day) What does that mean? Well, let’s say your band is getting paid $400 per gig. You are doing 4 to 7 gigs per month. The gigs are all within a day or two drive from your home base. The band will be covering a hotel room where you can all fight over who gets the single bed and which three fools have to sleep together in the King size. The gas for the van will be covered as will tolls and strings and drum sticks etc. What won’t be covered is food, drinks etc.  (of course, you will read one of my future blogs about how to get a promoter to feed you and get you drunk. But that’s only one meal a day) So in this situation you make a joint decision to give each band member a $20 per diem each day you are on the road. If you have crew it applies to them as well. (even the T shirt girl) Why would you do that? It’s simple. If  you try to have the band pay for dinner, and drugs, and alcohol you will soon be really pissed at the one guy in the band that eats steaks, smokes high-class bud and get’s loaded every day. Every band has one. Well, maybe Fugazi didn’t…well come to think of it I think they just SAID that everyone was straight…

If you go with a system where everyone gets a little cash every day then if they eat too much or drink or whatever most of it comes out of their own pocket. This is fair. You will be surprised how many days you can go on twenty dollars a day if your bed is paid for and the promoter gives you food and drink once a day.  sometimes it’s $5, sometimes $10, sometimes $50, I’ve never seen it go over a $100 unless it was a cheap excuse for the band to subsidize the members drug habits. (the breeders, The stones, Etc.)

When Miracle Legion toured Europe in 88? (I can’t remember which of the dozen tours it was) I sent a new member of the road crew out with them. His name was Tommy, he was from Philly, someone’s cousin’s friend, tough, strong, compact, didn’t say much. The kind of crew i prefered. If he had been Scottish I would have had him cloned. Hey you can clone a dog, why not a great roadie?

Well Tommy was new to the road so I gave him the standard lecture and then told him he would receive $24 each day. I forget why we picked that number but that was the per diem. He looked at me like and owl in the headlights. I asked him what was wrong. He said “That’s a lot of money.” The other crew members laughed.  LAter I noticed him loading a ten pound sack of rice into his backpack with a camp stove and pot. I told him he had to dump the rice. He looked hurt so I told him we would buy him ten pounds of rice in London since the issue was bringing grain across the English border (no fruits or grains)

The tour went out for twelve weeks.  When I met them all for the wrap up at tours end I asked the tour manager how Tommy had done. “Too fuckin’ good!” was the reply. It seems that Tommy lived on boiled rice and whatever he could scrounge. He didn’t smoke or drink. He got high once a week on the band’s day off.  Since the band demanded a full meal each night at the gig he was all set for food. So he hadn’t spent much money. To top it off he had lent all the other crew money when they ran out and charged them 5% interest (he ok’d this with me. How the hell could you say no to that?) He came back with everyone owing him money and he still had $1780 of the 2100 in per diems. Smart Kid. They all ended up hating him because he made them look bad. They tried to keep him off of the next tour so I made him crew boss with a different band.

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So you split up the gig money evenly. You give out per diems based upon what makes sense.  Now we come to publishing and recording which was the central issue with Oliver’s questions.

I’ve seen numerous solutions and they all have strengths and weaknesses. I’ll start with recording.

The most common solution is for the band to split the royalties from and recordings evenly. This split only pertains to records that you actually play on. If you leave the band you keep the royalty payments on albums you played on and forfeit all future royalty earnings on future albums. You have no rights to the band’s name. That remains with the band that continues on. This is important. Ask the prog rock band Yes. They had a PRODUCER take the band’s name away from them. That sucks huh?

Now we come to the complex one, songwriting and the use of songs. This is often where the big money comes in. This money is largely outside the grasp of the record company. It has the law backing it up. Radio pays it. TV pays it. Concert Halls pay it.

When a songwriter writes a song it is, by law and common sense, his property. He cannot stop someone from recording it including his own band. They do, however, have to pay him for it and the payments are set by law. (I strongly suggest that you read my blog about royalties.)

This brings us to Reader Oliver’s questions. In essence since he is the writer and guiding light he is wondering what is fair when it comes to splitting up money from his song’s publishing.  Should he give his band members some of this money so that if he becomes wealthy they will too, at least in some smaller way. There are arguments on both sides.

Now keep in mind that this does not have anything to do with songs that the whole band writes of songs that other members write.  In that case everyone will share or the individual writer will get the money. But what about a band where one member is the writing machine?

So let’s now imagine Oliver goes to see his Big NY Entertainment LAwyer Harvey Jacobowitzhofffriederstein. Yup he sounds like he’s a stereotypical NY jewish lawyer.  Don’t worry I will also send Oliver to other stereotypical characters of other races and religions in future blogs spreading his fictional life around amongst all of America’s stereotypes! whoopee! Sorry I got carried away. 

Harvey is smart, he knows the business and he has decades of experience. He says

“Kid what a you meshugenah?  You’re talkin’ about giving away your money? Don’t you think the law is fair?”

He goes on to explain to Oliver that careful consideration had gone into the law and songwriters get exactly what they deserve.  He, of course, is a lawyer and lawyers are paid to represent your interests alone. They also seem to think that the law is always fair. If they changed the law today, he would tell you it was just as fair tomorrow.  In some ways the lawyer is right. Why would Oliver give away his money?

Oliver on the other hand realizes that if he has a hit song his royalty money will pour in. The band will not see any of this cash. Yes, the record will sell but the band will be in debt to the record company for big money. All of the sales of the record will go to paying off the band’s debt and the individual members will see little of it. This brings about a situation where one member is rich and the balance of the band gets nothing.

So now Oliver goes to see his manager, Clive Bakersfield -Coopersmith, a sweating, overweight Englishman with bad teeth. The manager listens to his problem while answering phone calls and returning emails.  He says

“Oliver, baby, you’ve got to keep the boys happy. You should split up your songs and give everyone a share. You’ll get the most of course. I’ll make a call and get you a publishing deal so everyone has some money by next week. That should keep everyone happy.” 

He goes on to explain that Oliver will write many hits and will be rich beyond his wildest dreams. He shouldn’t begrudge his band mates a piece of the pie. In many ways the manager is correct as well. What to do?

Now oliver goes to see me, the retired Indy manager that has seen bands implode for ridiculous reasons and for good reasons.

And I say “Oliver, thanks for reading my blog. Here’s some advice from someone who has no dog in the fight, me. Your instincts are good. You should make some provision for the guys that play in your band. It is, after all, your band and your songs. Lots of the people who you will play with will forget that or never learn that fact fully. This members will become problems and you cannot be tied to them forever.  So this is the practical solution that I would suggest.

1. Start your own publishing company Artful Dodger Music.  This company will publish EVERY SONG YOU WRITE.  This company can collect your radio, tv and movie royalties directly without any other middleman. Choose one of the performance rights societies, either BMI or ASCAP and join as both a writer and as a publishing company.  Of course at any time this company can choose to sublicense some or all of the songs to a large established publishing company in return for a cash advance and a commitment to land soundtracks, commercials and tv spots.

2. Offer the band members a publishing contract. It would work like this. They must publish all of their songs through your company. At any point they can opt out of this requirement in which case they lose all FUTURE payments on FUTURE work. They will still retain any income or rights earned up to that point.

3. As the second part of this deal they will receive part of the publishing company’s income. It will work something like this.If they write a song and publish it with Artful Dodger Music they, of course receive all of the writer’s shares and also a share based upon the main writer’s deal (oliver’s cut) This makes it so they cut the same cut for their songs that you get for your songs.

4. The longer that they stay in the band the more interest and ownership they will gain in the publishing company.  Each year will add a set percentage until they reach a maximum cut. They will never lose this, the company will pay them royalties in perpetuity (forever or until Ronald McDonald is elected president whichever comes first) The percentage of these cuts is open to discussion  although I would suggest that  you enter into the discussion with two numbers in your head. An ideal deal for you and a compromise that you’ll except in order to do the deal. Remember ONLY WEAK PEOPLE DON’T KNOW WHEN TO COMPROMISE. I might suggest that you shoot for 50% of the publishing company and settle for 40%. This would leave 50-60 percent for them to split up.  If they stay in the band 4 years they get their full cut  of the band’s piece of the publishing company.  Each year they are in the band they receive 25% of the total amount they might get if they make it four years. As the band builds up their cuts the unassigned money goes to you.

5. If they leave they retain payments on everything published up to the day they leave.  They never lose this percentage. Any new member starts out at the bottom and has to accrue his cut as he goes, once again he maxes out at four years.

So what would this mean in the real world. OK let’s say that your write a hit “Beat’s the Dickens out a me”. It is published by Artful Dodger and released on your band’s major label record.  The record label pays mechanical royalties, radio plays it and sends in royalties and it appears in a bad kids sitcom where Miley Cyrus goes to 19th century london. For each $100 the song generates this is how it splits up.

1st year    $50 to oliver directly as the writer

                     $2.50 to each of the four band members that own 1/4 of their potential cut of 4/5ths of  50%

                         The balance of the $50, $40 goes to oliver so he earns $90 in the first year.

2nd year  $50 to oliver directly as a writer

                        $5 to each of the band members that own 2/4 of their potential cut of 4/5ths of 50%

                       the balance of the $50, $30 goes to oliver so he earns $80 in the second year

3rd year   

                      $50 to oliver directly as a writer

                        $7.50 to each of the band members that own 3/4 of their potential cut of 4/5ths of 50%

                       the balance of the $50, $20 goes to oliver so he earns $70 in the second year

4th year The band members reach full shares

                        $50 to oliver directly as a writer

                        $10 to each of the band members that own 2/4 of their potential cut of 4/5ths of 50%

                       the balance of the $50, $10 goes to oliver so he earns $70 in the second year

If they bitch about such a small cut explain to them that they are free to write their own hit records at any point at publish where ever they like. Also tell them that you do not have to give them anything and this is most commonly what is done.

What I like about a deal structured in this way is that it provides some incentive to stay in the band, do as they are told and not bitch too much. It also recognizes that they are helping your career in a substantive way.  This earns them money for good. And finally if you become stinking rich they become really rich. Most people can live with that.  Since a hit record in today’s market could generate about 1,000,000 in publishing in a year you can see how it would be a fair deal.

The band will secretly pray that you write lots of hits and hopefully help you do that by giving you the solid backing you need………with a deal like this you are on your way to succeed at rock…………………………..

©Brad Morrison/Billiken Media 2010

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4 thoughts on “Question from a reader, how to cut up money inside a band

  1. Pingback: How To Cut Up Money Inside of A Band « Music Business Heretic

    • Heretic,
      Yeah it’s long. Perhaps I should have split it up into two articles but once I started typing it all came out. Recently one of my readers COMPLAINED that I didn’t write enough really long articles….So far I have about thirty posts, some of them quite long, in a little over two months. I hope people are finding the blog useful…………..
      Brad

  2. Hey I just wanted to say thank you for this great article! It’s nice to learn from your experience. 🙂 I’am going to subscribe to your blog now :-o.

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