The Basics—and What Purpose They Serve
A band partnership agreement does exactly what it says on the tin—it is a written binding contract stating the exact terms the members have established concerning how to run the many different aspects that make them a band. Distinguished from a Partnership, the legal entity created when two parties agree to make themselves a business, the band partnership agreement is just the contract that rules the business affairs of the band. Often, this includes making the band a business (as a Limited Liability Company or a Corporation), but more on that later.
The Purpose of the Agreement
A contract amongst friends often seems hard to justify. While occasionally there are bands put together with the purpose of making money (see: N’Sync and the Backstreet Boys as a product Lou Pearlman’s want to jump on the boy bandwagon of the late 1990s), most bands, obviously, start out differently. Most commonly a band is exactly what the traditional use of the word implies: a group of like minded individuals drawn together out of similar interests to produce a common goal. In the case of bands, it’s usually as simple as a group of friends that like and play similar music coming together to make new music. The story is common.
But the very essence of what brings bands together is a driving force behind what motivates them away from contracts among each other. “Why mix business and art?” they’ll say. And the answer is simple: because, in the case of a band, the art is business—or, it can be. Once money (of whatever amount) begins to come in, there has to be some sort of guidance in place to determine what happens to that money. A band partnership agreement inherently is that guidance. Put in place before business matters have to be considered, the agreement is created with clear heads thinking about what was fair relating to how members contributed to the band. All too often in cases where these agreements were not in place, the money coming in is already the driving factor in how certain members feel about the “deserved” amount of other members. And this is when bands tend to be pulled apart at the seams before they even get started.
The above speaks mainly to young bands getting started in the crazy climate the music industry has become today, as band partnerships are often (and should be) written by young bands, but the repercussions of not following this model has been seen countless times in far larger and well known acts.
After being fired by the Eagles in 2001, Don Felder filed two lawsuits claiming he was wrongfully terminated from the group, as his being forced out violated his contract: the band partnership agreement. The suit was later settled out of court for an undisclosed amount of money. Members of the Beach Boys have often been involved in legal battles throughout their decades-long career.
The Contents of the Agreement
To take a deeper look into what a band partnership agreement includes, let’s look at a hypothetical situation to not only cover all the points in the contract, but also how (relatively) easy most of these can be agreed upon.
A brief history: The Awesome is a band that is about six months old. They’ve collectively written enough songs for a set in their practice space and practiced three times a week until everyone in the band can play their 12 songs in their sleep. All songs were an equal collaboration between all members, and next week they have their first gig booked (a non-paying opening slot). Here they sit in the same practice space with a band partnership agreement, ready to discuss all the points and come to decisions about everything before the money starts rolling in (as they know it soon will).
Everyone rolls their eyes and puts their hands up when Johnny, the lead singer, asks who agrees the band name should be listed as The Awesome. While it seems like the most obvious point, this act allows the rest of the contract to state the allowable use of the band name, as well as who owns it (just one person or if it is shared equally amongst the band). Among other things, this establishes who (if anyone) can use the name following a break up.
The remaining members of the Doors have been in legal disputes over many years concerning who has the rights to tour and record under the famous name.
Income and Expenses
Reading down to the next point on the band partnership agreement, The Awesome quickly and unanimously agree that all income will be split evenly between all four members of the band, as they all shared an equal proportion of credit to the creation and performance of the songs. Other bands, however, will not share income equally, and the percentages each member will get will be agreed to at this point. Additionally, this is where the band will agree what percentage of expenses each member will pay.
Similar to the previous point, the band partnership will establish what percentage of publishing and songwriting royalties each band member will receive. Again, the members of The Awesome quickly agree that these will be split evenly, but some bands will, of course, have certain members that write the songs who will receive songwriting royalties.
New and Leaving Members
The Awesome decides that for any member to be dismissed from the group, the other members must come to a unanimous decision affirming the dismissal. They agree that the same unanimous decision must be reached to admit a new member.
No matter how devoted a young band is to keeping its core group together and not allowing in outside personnel, the fact is that bands must change as they grow. And occasionally there will be members that choose to leave, and this portion of the agreement is integral in determine how those matters will play out in the future.
Unanimous Consent vs. Majority Voting
Playing off of the last item, Johnny reads off a series of points, and he and the rest of the band decide whether these points, when they arise, must be resolved by unanimous consent or majority voting (which in this band’s case would be three of the four members). The following of some of the conditions that may be addressed:
- Making amendments to the band partnership agreement
- Borrowing money in the band’s name
- Selling any band property
- Check signing rights
- Dissolving the Band Partnership
Dissolution of the Band Partnership
The last point above leads to the darkest portion of the agreement. Though no one likes to think about it at the time of writing a partnership establishing the official beginning of the band, but the ending of the band has to be official, as well.
The Awesome agree that there must be a unanimous decision to end the partnership. They also discuss how any remaining debt will be handled and state that the band partnership agreement itself will terminate at the dissolution of the band.
Additionally the band will state whether the band will make itself a business, and the usual recommended path for a young band is to form itself into a Limited Liability Company, though some bigger bands will want to make themselves a corporation. Other factors will be stated in the contract, but the points above are the major points covered.
Though a band partnership agreement may seem like a way to put a negative legal binding over a group of friends, the amount of pain, time and money it is able to save in the future is invaluable.