By George Howard
(follow George on Twitter)

We’ve spent a lot of time describing how important it is for songwriters to make sure they’re taking care of business with respect to their copyrights in order to make certain that they collect all the money they are owed when their songs are used.

We believe that the new TuneCore Songwriter Service is revolutionary in terms of collecting the money owed to songwriters, but, as you can see embedded within the name of this service – “songwriter” – the focus is on those musicians who actually compose the songs.

Undeniably, the deck is stacked in favor of the songwriter.  It is the songwriter who — until he or she transfers, assigns or sells it —  enjoys all the exclusive rights associated with the copyright that is created when an artist creates an original work and fixes it in a tangible medium (i.e. records it or writes it down).

This means that if you’re in a band — perhaps you’re the bass player — but you don’t write the songs, you likely will earn far less than the person (or people) in the band who did write the song.

For instance, every time the song is played (streamed) online, the writer gets paid; any time the song is used in a movie or a TV show, the writer gets paid, any time the song is sold as a download, CD, or vinyl, the songwriter gets paid.

Those members of the band who do not write the songs tend to get paid only a portion of money that is generated from live shows, and (if they’re signed to the label) revenue from the sale of the record or download.

Remember, labels pay two royalties: 1. A mechanical royalty that is paid directly to the songwriter when the label’s record that contains the song is reproduced and distributed. 2. An “artist” royalty that is paid to the person/people who is/are signed to the label — this is typically a percentage of either the list price of the record or the net profits (if any) the label makes from selling the record).

So, if you’re the songwriter in a band that is signed to the label, you are eligible to receive mechanical royalties and artist royalties; additionally, if the songs you wrote are used (as above) in movies/played on radio/etc., you get paid.  If, however, you’re in the band, and are signed to the label, but don’t write any of the songs, if you receive any royalty at all, it will be a percentage of the “artist” royalty — you will get nothing in terms of mechanicals or any other revenue generated from synchs, public performance, etc.

The sad part is that most people in the band (including the songwriter(s)) are completely unaware of this disparity until it’s too late.  Often, for instance, this disparity doesn’t become apparent until the bass player — still living in Mom’s basement — gets picked up for band rehearsal in the songwriter’s new car.

At a certain point, a light goes off, and the band members who aren’t writers realize that their income (or potential) income is vastly less than those of their bandmates who write the songs.

Bad things happen at this point.

This is where bands break up, or members leave, or members just “phone it in” because they know they’ll never be compensated in the same manner as the songwriters.

This is, of course, not just bad for those band members who don’t write, but also for the songwriters; they’re often left without a band (and/or their friends).

The importance of addressing this situation is increasingly relevant as there are more and more opportunities for songwriters to generate revenue from their work (and fewer and fewer opportunities for non-songwriters to generate revenue from sales/downloads).

Clearly, TuneCore’s Songwriter Service shows that there is money to be made and collected for songwriters, but what does one do if you’re not a songwriter, or if you are a songwriter who doesn’t want to lose his or her band.

Different bands deal with this dynamic in different ways.  Bands like R.E.M., for example, simply divide the copyright amongst the members irrespective of who wrote what for any song.  In this manner, each band member (whether he or she contributed to a song or not) receives the same amount of income when the song is exploited.

The flipside of this is bands like the Rolling Stones who engage other members (think Ron Wood) to be in the band, and pay them a fee.  Often, this fee is structured as a “work made for hire” agreement, which stipulates that even if the person in the band did contribute materially to a song, he or she forgoes any future income from that song, and, in fact, assigns all of his or her rights over to those who pay the work for hire fee (Mick and Keef).

These are the two extremes, but I believe there is a middle ground that may be appealing for many.  The R.E.M. option is a fantastic one if you are convinced that those in the band are crucial to the success of the band, and you can’t imagine the band going on without them.   The approach of the The Rolling Stones can work if you have enough money to compel musicians to forego any rights related to their creative output in exchange for a fee.  However, Many bands sit somewhere in between: the songwriter, for whatever reason, is unwilling to give up a percentage of her copyrights in perpetuity, and/or the songwriter(s) don’t have the money to pay the hired guns enough to make it worth their while.

One of the great things about bands is the esprit de corps, and so finding some solution that makes everyone feel part of the team (all for one, and one for all), without placing undue stress on the songwriter (relinquishing current or potential) income is crucial.

What I suggest is working with an attorney to create a simple “intra-band” agreement.  This agreement can serve a variety of purposes, and all bands should consider one.  In addition to being a general “operating” agreement that delineates how decisions get made within the band, how the money flows, etc., this agreement can also address the sticky wicket described above with respect to the potential economic inequities between songwriters and non-writers.

For instance, I suggest creating a clause in the intra-band agreement that stipulates that however long a band member is an active member (i.e. showing up at rehearsals, gigs, recordings, meetings, etc.) he or she will receive a percentage of any income derived from songwriting, irrespective of whether or not this person actually wrote the song/has any claim to the copyright of the song.  However, if the band member leaves the band (or is fired — and you’ll need to make sure you make clear what can cause someone to be fired) that member forgoes any future income generated from songwriting.

So, imagine, for instance, there are four members of the band, but only one writes the songs.  If you structure an agreement as I suggest above, the three non-songwriters would receive some percentage of the income derived from the exploitation of the songs (doesn’t have to be equal percentages, but it could be) so long as they’re active members of the band.

In this manner, the songwriter doesn’t have to assign any percentage of his copyright to the members, but instead just directs some of the income derived from the copyright to them while they’re in the band.  If one of the four band members above leaves, the songwriter can assign the leaving member’s share to the new band member.

The alternative stinks.  The songwriter divided the copyright with his bandmates so that each owns 25% of the copyright.  One of the band members leaves – taking with him his 25% of the copyrights.  Now, a new band member joins, and the three remaining members might have to divide the remaining 75% to include this new member.  In this case, the band member who left will have a higher percentage ownership of the copyright than the remaining band members!

Following the intra-band agreement approach, even if the band breaks up, the writer would retain his or her copyrights, and be able to form a new band without pieces of his or her copyright scattered around the island of misfit toys.

The other advantage of this intra-band agreement approach is that it gives incentive to the band members to stay in the band.  All bands go through bumps in the road, but those bumps can become mountains if the members don’t feel they are being fairly dealt with from a financial perspective.  The intra-band agreement rewards commitment, and its transparent nature obviates confusion.

So, as we hurdle towards increased ability to collect income from things like streaming music, and, one hopes, songwriters generate an increasing amount of revenue, it’s important to address this issue of making sure both the songwriter is protected, and the band members are given incentive and are compensated.

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George Howard is the former president of Rykodisc. He currently advises numerous entertainment and non-entertainment firms and individuals. Additionally, he is the Executive Editor of Artists House Music and is a Professor and Executive in Residence in the college of Business Administration at Loyola, New Orleans. He is most easily found on Twitter at: twitter.com/gah650

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