Unsigned Artists

Stewart is a veteran entertainment lawyer whose clients have included Tupac Shakur, Queen Latifah, and The Wailers.

I. Forming A Band

The very nature of a band, consisting as it does of multiple members, poses problems which simply do not exist when the artist is a solo performer.

The question which band members must decide at the very outset is the political framework of the band – is it a pure democracy, where all members are equal, a republic, where chosen members exercise power on behalf of the others, or a dictatorship, dominated by one person. Knowledge of Plato’s Republic is not required, but it could prove useful!!! However, the answer to this question determines many of the other questions which arise in the formative stages of a band.

Many bands deal with the structure of the group by entering into a partnership or stockholders agreement. Just picture yourself together with Ben Franklin, George Washington, James Monroe and the other Founding Fathers at the Constitutional Convention in 1787. They needed a blueprint which the new government could follow. They had to deal with many delicate issues ranging from the existence of slavery to the role of the federal government to states’ rights. Band members may not be confronting such weighty issues, but for the band the issues are also important. These include:

a.Who owns the name of the band?

b.Who makes decisions on the part of the band?

c.Who owns the publishing rights in songs created and recorded by band members?

If the band is to be a dictatorship the answer to all three questions is clear – the dictator owns everything and makes all decisions. But what if the band opts for a democracy or a republic? In those cases, the band members must specify in a partnership or stockholders agreement the answers to these questions.

Whether the vehicle used is a corporation or a partnership depends on many factors, including tax issues, and will not be dealt with in this article. Suffice it to say, however, that in both types of agreements, the band members can specify how much of the band they own. Shareholders in a corporation can own different percentages of the corporation’s stock, just as partnerships may be comprised of partners who each own different percentages of the partnership. The income generated by the band’s performances and compositions goes into the corporation or partnership, with the band members sharing in this income in proportion to their interests in these entities.

For example, the band members can agree that the name of the band belongs to the partnership or the corporation which they form. In the event a band member leaves the group, the ownership of the name can stay with the remaining members and, if the parties provide in their agreement, the leaving member can be compensated for relinquishing his share of an ownership claim in the band’s name.

Similarly, the band members can designate one or more members to represent them in the everyday business decisions of the band, reserving for unanimous approval decisions they deem to be “major.” For example, opening a bank account should not usually require unanimous approval, but choosing a manager may.

When it comes to collaborating on music the band members should establish a system for determining who gets writing and publishing credit. The system may just simply be that the band members negotiate among themselves these credits on a song by song basis. Or they can agree that all songs composed and recorded by the band belong to the partnership or corporation in which they each own shares or have partnership interests. Another option is for the band members to agree that the writer credits will be apportioned among the clear writers of the songs, but that publishing rights in those songs belong to the band’s partnership or corporation. In this way, in the event the band’s songwriting is dominated by one or two people, the other band members will not feel marginalized and will be encouraged to contribute, however small, to the composition process, by knowing that they will have a “taste” of the income from songwriting by owning, through the corporation or partnership, a share of the publishing of those songs.

In deciding what form of “government” should apply to the band, the band members should realize that they each may have their own interests separate and apart from the other band members. It would, therefore, be optimal if each band member had his own counsel in the negotiations aimed at setting up the band’s governing rules. Having one attorney represent all the band members raises thorny ethical issues of which the band members must be aware if they choose to have only one representative.

II. Intellectual Property

Once the band has established its form of governance, its designated leader should take steps to protect the intellectual property created by the band. This involves copyrighting all original songs and filing for federal protection the band’s logo, artwork and/or trademark. Copyright registration forms are available on line at the Library of Congress, Copyright Office website [www.copyright.gov] and usually are easily filled out by the band members. The trademark application, however, is more complicated and should be completed by an attorney or someone familiar with the process and its forms. However, the website for the U.S. Patent and Trademark Office (www.uspto.gov) should be able to provide answers to many basic trademark related questions.

III. Interacting with the Music Business

The cardinal rule is – DO NOT SIGN ANYTHING WITHOUT UNDERSTANDING WHAT YOU ARE BEING ASKED TO SIGN.

Much of what is contained in business agreements related to the music industry, be they management, record or publishing agreements, contain what people refer to as “boilerplate” – hoary language found in most agreements. That the agreement may be rote or standard, however, does not make it any less binding or, at times, oppressive. Do not let anyone tell you that you need not know what the boilerplate means because it is, after all, “just boilerplate.”

To avoid these pitfalls, the band should seek the advice of professionals familiar with the industry. A good accountant and attorney can prove of enormous assistance concerning areas of the law and tax questions. They can provide advice on various issues including how to deal with the sampling of excerpts from songs or master recordings written and/or performed by others. (Answer - Do not do so without the written permission of the owner of the songs and/or masters being excerpted). However, do not confuse these professionals with managers and agents. The role of the manager is to guide the band’s career, which involves, among other things, advising it about creative elements, venues to play, other bands to appear with, meeting with record industry personnel about the band and, absent the band having a deal with an established record company, arranging for the band to sell its own records both in tangible form and via the internet. The agent, usually chosen with the assistance of the manager, attempts to get jobs for the band. A good manager and agent, combined with a competent counsel and accountant, make an invaluable team.

Disclaimer

The aim of this article is to give a brief overview of issues, both legal and practical, which a musician may face in the course of his career. It is not intended to be comprehensive or to furnish legal advice. Nothing contained herein be construed as providing such advice.

On the contrary, legal advice should be tailored to the needs of the individual to whom it is being given. It is highly recommended that an individual seeking such advice seek a reputable attorney familiar with the issues.

Stewart Levy is a partner at Eisenberg Tanchum & Levy, a firm that specializes in corporate, real estate, litigation, finance and entertainment law. He has had considerable experience in copyright and trademark matters and is well-versed in many facets of the recording industry. Stewart graduated from the Yale Law School in 1977 where he was an editor of the Yale Legislative Services after having graduated summa cum laude from Columbia College in 1974.