Disclaimer: The aim of this article is information and enlightenment; please consult a solicitor for individual professional advice.
ME, MY GROUP AND I
I received a new name recently- Rocker of Boat. The person officiating at my naming ceremony accused me, very politely of course, of rocking the boat. The system in place is working for everyone involved, he says, why spoil things with my ‘well-meaning advice’? I received the name with equanimity. I had a question he couldn’t answer, though; can a steady boat be rocked?
In any case, here I come again, a-rocking, and the boat we’re targeting today is the one carrying musical groups/bands/duos. As long as you are singing and you’re more than one person, I’m talking about you. I get personally miffed when the members of talented groups go their separate ways. There’s a whole laundry list of reasons why groups split up, personal, and business (remember the story of Lagos Boys way back on this blog? You can look it up in one of the older posts). Now, I won’t pretend to be a shrink and find a way to solve the personal issues. However, as it relates to the issues concerning the entertainment business/career, I have a thing or two to say.
If you’re in a band, or you are thinking of forming or joining one, please, consider the merits of forming a profit-making association between the group members. This could be a partnership or a company. It will ensure that the musical career is not just for personal fulfilment but also for financial consideration. However, while a partnership will do a good job of keeping things tidy, a company may be a better option because it is a separate person under the law and it limits the personal liability of group members.
Either way you decide to go, you would need an agreement between the group members. This is even more so in the case of a partnership because it is a delicate association that is prone to dissolution if things go wrong. If you are considering a partnership, this would be a Partnership Agreement and if you prefer a company, you may thoroughly spell out your terms in the company’s Article of Association or a Shareholders’ Agreement.
Now, anyone can form a company or draft a regular partnership agreement or shareholders’ agreement. However, you need a good entertainment lawyer to draft that type of agreement between the members of a musical group for the purpose of their musical career/business. I’ll just mention a few things to watch out for while preparing such an agreement, and I’ll assume that you have chosen to form a limited liability company.
1. Who owns the company? That’s a question with a pretty straightforward answer. Naturally, the members of the group should be the owners/shareholders of the company. In the interest of everyone, the members should hold equal shares to prevent squabbling later. It is possible that a major financier or manager will want to be a direct part of the business and hold shares. This is a consideration that should be assessed depending on the situation.
2. Distribution of profits. It seems obvious that the profits should be shared equally between the members. That is until you remember that one member is the lead singer doing the bulk of the singing, and another member paid the studio and engineers that produced the demo that helped the group shoot to fame. And then, yet another member is the major song-writer. Then, distributing profits equally is a sure way to build resentment and make sure that the group does not see the end of 2011 together. It is quite amusing to see a bunch of grown ups bickering like junior secondary school students.
3. The name of the group. As the brand behind the success and the cash, the group’s name is such an important part of a company of singers that it merits its own discussion. This is why I’m giving it its own entry on the blog - Me, My Group and I (Part 2).
4. Accounts and financial records of the company. It is imperative to keep accounts of the company, so that if one member or another person entirely lends the group some money, the money could be treated as a loan to be repaid with interest. Since the company will be making profit, it is important to bear in mind the necessity of paying tax. If you do not like the idea of paying tax, please stick to singing in the choir and in buses (and don't think of making profits). Note that at some point in time, it will become necessary staff.
5. Copyright ownership. This is a somewhat tricky issue. The members of the group are usually joint owners of the works of copyright created by the group, and joint ownership comes with a lot of issues. For instance, generally, where a member licenses the use of a song to a third party, it will be valid under the law, even if other clients do not know. An agreement will put a lot of things in perspective by clearing out terms on which this issues may be addressed.
6. Other businesses. The company may decide to venture into other businesses. The modalities of these should be considered.
There are a lot of other things to be considered including voting, admission of a new member, death and disability of a member, and other issues, all of them important. However, we’ll be discussing the group names next.
Hang on tightly to your boat.
© 2010 Tinukemi Alabi
Comments/Questions: tinukemi@gmail.com
