The love of music has led millions of people to utter these words: “Hey, let’s start a band.” Playing music with others who share your talent and passion can be one of the most thrilling decisions of your life, but if you’re not careful, it can also become a painful mess. We’ve all heard the horror stories, right? After years as an artist and now managing the business affairs for many successful bands and artists, I’ve learned quite a bit about the common pitfalls, and I’d like to help you avoid them. Here are a few best practices when it comes to structuring your band for longevity and success.
Clarify Your Commitment
You’ve started a band because you want to play music and play music with these people. Before you make a business plan and assume that everyone is “all in,” it’s essential to sit down and have an honest conversation with each member and ask, “Where do you see this going? How long do you plan on being here?” Unfortunately, I’ve seen many situations that involved one or two members of the band planning to make this a long-term career and other members planning to have fun on the road for a year or two before settling into college or a traditional job. Both of these scenarios are fine, but you should know where everyone stands before you book dates or get into the studio. It’s best to partner with people who have a similar vision for the band, or at the very least, to have an exit plan ready in case someone’s season of life changes. Anytime the members of a band shift, the dynamic shifts with it, but this doesn’t have to be disastrous if you’ve thought through it and know how to move forward. It might seem awkward to have that sort of conversation early on, but it can absolutely be the thing that saves relationships and your business from ruin.
Create Your Ownership Structure
A band is a business. It’s easy to overlook this in the early days, but as you step into conversations with labels and representation, it’s essential to know who will be calling the shots. You might be unaware that most labels prefer to make a deal with one person, who will essentially employ all the other band members. I’d estimate that well over half of the bands I’ve worked have a one or two-owner structure. In my experience, this is typically the lead singer or most prolific writer, but it really just needs to be whoever is the driving force behind your creative and business affairs. As a business manager, I personally like getting decisions from one member, too. Having to circle back with four separate people in every business decision can be really time-consuming. When fewer people are involved in the business decision-making, or when some sort of clear hierarchy is present, it streamlines the process and helps things run more smoothly. This approach could also help you tremendously anytime there’s a band member change – and let’s face it, there probably will be at least one, but I’ll outline more on that later.
Business vs. Writing Credit
Once you’ve figured out who owns the band (as a business), you’ll have to work out who owns and profits from the various income streams tied to the music itself, including songwriting royalties. You can also find detailed information on this topic here, here, or on this handy chart that shows how money flows in music.
Now, we’ve all heard horror stories of a band member (traditionally the primary songwriter) becoming rich while a hard-working partner struggles to buy groceries. When it comes to songwriting, one client of mine solved this problem by using songwriting royalties to reflect other tasks that are otherwise unpaid in the life of a band. A four-piece band, they adopted a “70s and 10s” model for their writing credits. If someone wrote a song on their own, they would keep 70% of the writing credit, and all other members would get 10%. If two members co-wrote the song, they would each take 40%, leaving 10% for the others. If three members wrote, it would be 30% each and 10% to the non-writer. I like this model – it rewards the creative work of the writers, but it also ensures that all members are successful to some degree. Of course, many other bands split all profits evenly with no issue. You’ll also need to discuss who owns the masters. In recent years, masters have become a significant revenue stream, far overtaking publishing in many cases. Work out your model in the way that makes the most sense for your group, but it’s crucial to have this figured out to avoid infighting or legal disputes down the road.
Figure Out Finances
There are many aspects to finance as a band that extends beyond publishing deals. You may never attend a songwriting session, but you drive the night shift in the van. You may not receive the financial benefit of being an owner, but you’re looking for steady pay as a participant. When bands are just starting out, the owners will often field all of the initial profit and offer each band member a per-show rate. The busier the schedule, the more profit for all involved. As you grow more established and get a wider audience, members often move to a salary, while any additional session players or road players keep a per-show rate.
In my own music career, we chose to pay each of our four band members the same consistent show rate, even though two people were owners and non-owners. The owners had more responsibility, but they also fielded additional income when possible. It worked for us. But remember, the most important thing is finding what works for you and your team. The pro to being a band member is that you’ll likely receive consistent pay with little to no risk. If you go on tour, you will get paid, even if the band breaks even or loses money. The con is that you may not get a piece of the pie beyond that – if the tour is wildly successful and brings in $100,000 more than projected, for example, the two owners may keep $40,000 each and give you your per-show rate. For some people, this causes strain. For others, it’s absolutely fine. The difference-maker is almost always someone working to protect relationships by setting clear expectations and having clear communication.
In all of these situations, I believe transparency matters most. As you initially work out these ownership and payment structures, be honest with each other. If your commitment level changes, let your bandmates know. If you start to feel slighted, have a frank discussion. Secretive business practices will tear bands – and friendships – apart faster than anything else. A solid business plan, clear definitions of terms, and open communication will take you far. No matter how long you play together, your goal should be to walk away with relationships intact when all is said and done.
The music business is a small world. You’ll need your friends – cherish them.