While it may be hard to resist signing the first deal you receive from a record company, you should only sign a fair deal that properly compensates you. Here are some general legal tips that musicians and bands should keep in mind.
Register your songs
It is important for songwriters to register their songs with a performing rights organization (PRO) so that they can receive royalties when their songs are exploited in various mediums (radio, TV, live concerts, etc.). The most popular PROs are ASCAP, BMI, and SESAC. In addition, it is essential to register with SoundExchange, who collect digital royalties from such service providers as Pandora, SiriusXM, and webcasters. All of these service providers are required by law to pay for streaming content.
Form a business entity
Any band that is not registered as a limited liability company (LLC) or some other business entity is typically considered to be a general partnership. As a general partnership, all band members are personally liable for any legal actions and debts the band may face. However, if a band incorporates itself as an LLC, then creditors can only seize assets that belong to the LLC and not individual band members.
Keep band funds and personal funds separate
In addition to registering as a business entity, musicians and bands should try to keep their personal and business assets separate. The best way to do this is to maintain a separate business bank account and only pay for band-related items and expenses from the business account. In the event that a creditor sues you, they may be able to seize your band's assets if those assets were purchased using your personal funds.
Write up a band partnership agreement
If you are a member of a band, a detailed band partnership agreement should be in place and spell out the responsibilities of each band member. For instance, the agreement should address how royalties that are earned by the band will be paid out and what decisions need to be unanimously approved by all members. Also, if only one or two band members write the majority of the songs and they should therefore collect a higher percentage of publishing and mechanical royalties than the other members, this should be reflected in the agreement.
Only work with experienced managers
While it's very exciting when a manager first approaches you, be sure to check out their credentials and make sure that they are experienced. An experienced manager will know how to properly handle the business aspects of your career; while a bad manager may completely destroy any credibility you've built up in the industry. While it's okay to have a close friend initially manage you or your band's career, it's usually best to wait for a professional manager to come along before making any long-term commitments.
Get legal advice
Whenever you don't fully understand a contract, you should consult with an attorney who can explain the contract to you and properly evaluate it. A good attorney will be able to negotiate better terms for you, and ensure that you are being fairly compensated.
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