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Income distribution to ex-bandmates... what's fair?

Discussion in 'Band Management [BG]' started by ishouldbeking, Oct 5, 2010.


  1. ishouldbeking

    ishouldbeking

    Feb 5, 2007
    Hollywood, CA
    Endorsing: SIT, Eastwood, Hanson
    My band is having a minor debate, and I was wondering if anyone could offer some input. Better yet, if anyone is aware of the specific legalities involved in a situation like this... EVEN BETTER.

    I play in a six-piece indie pop band. We earn money from shows, we do some touring, and sell music through all the usual sources (itunes and other tunecore affiliates; cd's at shows)... but most of our income has been from television placements. We have a partnership agreement, and the money is kept in a joint business account. Generally, in the past we've invested most of what we've made back into the band for recording, touring, and other expenses, with occasional payouts (split evenly between all members).

    Recently, however, we had to fire our drummer. Not because he breached a contract or anything so dastardly, it had to do with long-running technical issues that seemed to be getting worse, and his attitude seemed to be going downhill as well. So the 5 of us voted him out of the partnership (as our contract allows), and he was given 1/6 of the band funds minus tax preparation costs.

    About 3 weeks after he got the axe, we got another television placement for one of the songs off our last album, which he was a part of. Per our contract, he is entitled to his "share of the profits, minus band expenses". The issue here, is the definition of what those expenses should include.

    I'm a stickler for fairness, and I say the expenses should basically only be actual expenses related to the acquisition of this money. Our lawyer will be negotiating the master agreement for the placement, and taking a percentage of our fee, and our publishing company will be taking a slightly larger chunk of the sync fee, as per their contract. Those expenses he's clearly going to share. And tax preparation / accounting costs for this as well.

    But my bandmates argue that his payout should also be counted against our continuing band expenses (or our "cost of operating")... which doesn't seem right to me. By this I mean tour-related costs and other day to day band expenses, which my bandmates argue is "the band investing in itself in order to earn all of us additional profits". I take issue with it since our drummer doesn't have any input into those decisions of how "his" share of "our" money is spent.

    Maybe its an ethical debate, or maybe its a simple matter of legality, but if anyone has any advice, I'd greatly appreciate it!
     
  2. His true band expenses stopped when he wasn't a part of the band.

    I'd just give him his cut and keep it simple.

    OR you have a PR headache determining what is what.
     
  3. pacojas

    pacojas "FYYA BUN"

    Oct 11, 2009
    MEXICANADAMERICA
    do you want to be fair or do you want to survive? it seems the rest of the band wants to survive! (go with the flow and don't look back)
     
  4. ishouldbeking

    ishouldbeking

    Feb 5, 2007
    Hollywood, CA
    Endorsing: SIT, Eastwood, Hanson
    that's basically the argument. i want to be fair, personally. but if I'm outvoted, so be it. it's amazing how complicated it can be to do the "right" thing.
     
  5. VonCakeman

    VonCakeman

    Sep 22, 2010
    Chicago, IL
    I'd say do what the contract says you need to. That way it's not personal for anyone. If he has publishing rights give him his fair share. If not, you already paid him out. If you worked at a company and developed a great product, they wouldn't continue to pay you for it after you were fired.

    It may sound like a good idea to give him something for his work. However, that could be dangerous. It could be interpreted as a modification to the contract by exicution if I remember business law correctly. You mentioned you have a lawyer. Ask him and CYA.
     
  6. pedroims

    pedroims

    Dec 19, 2007
    Michigan
    IMO if you want to deduct expenses then those should be a portion of expenses incurred only for this particular song and contract ( lawyer fees, taxes, etc) , you should not include band expenses that are not related to this income ( gear, gas, travel expenses etc), but you need to read the contract and do whatever is there, you may realize that your ex band mate will be getting money for the rest of his life, if that the case the easier way to fix this is buying all the rights to the ex.
     
  7. StuartV

    StuartV Finally figuring out what I really like Supporting Member

    Jul 27, 2006
    Manassas, VA
    If you can't be fair (i.e. do the right thing) and still survive, then you don't deserve to survive.

    Imagine that you didn't have this TV spot. Expenses that you would still have are not expenses related to the TV spot. Those expenses should not come out of the ex-drummer's pay.
     
  8. VonCakeman

    VonCakeman

    Sep 22, 2010
    Chicago, IL
    I'd say do what the contract says you need to. That way it's not personal for anyone. If he has publishing rights give him his fair share. If not, you already paid him out. If you worked at a company and developed a great product, they wouldn't continue to pay you for it after you were fired.

    It may sound like a good idea to give him something for his work. However, that could be dangerous. It could be interpreted as a modification to the contract by exicution if I remember business law correctly. You mentioned you have a lawyer. Ask him and CYA.
     
  9. I'd look at him as a shareholder getting dividends for past contributions. He gets his share once every other expense is accounted for and only when he was a part of the writing process for the song/performance in question. So, if you play a 10-song set and he helped write 3 of them, he gets his share of 30% of the profits from that show/set.
     
  10. ishouldbeking

    ishouldbeking

    Feb 5, 2007
    Hollywood, CA
    Endorsing: SIT, Eastwood, Hanson
    i'm starting to see how impossibly complex this is. theoretically our 3 sources of income (at this moment) are publishing and royalties, live performance, and album/song sales. as an ex member, he's entitled to his share of publishing and sales, but not performance. my bandmates are arguing that our live performance expenses are in investment towards sales, but the way i see it... if we want to do it this way, where all expenses count toward all band profit... we'd have to pay him a share of our live performance money as well, even though he won't be performing.

    that can't be the right way to do this.
     
  11. How tough would it be to punch in a new drummer?
     
  12. pedroims

    pedroims

    Dec 19, 2007
    Michigan

    you are right!! thats why Macca was paying royalties to Michael for playing the songs that he wrote !!!
     
  13. lowfreqgeek

    lowfreqgeek

    Mar 15, 2010
    Tijeras, NM
    The only fair way to do it (based on what you've said regarding your contract) is to cut him his portion of the publishing/recording rights after the publishing/recording expenses are met.

    Seems pretty simple in concept, though I'm sure the accounting gets pretty tricky - especially when you hire are new drummer and he gets his share of any new publishing rights.

    Your band mates' logic is suspect, IMO.
     
  14. ishouldbeking

    ishouldbeking

    Feb 5, 2007
    Hollywood, CA
    Endorsing: SIT, Eastwood, Hanson
    yeah, i agree. I think the logic i'll use at the inevitable meeting will be that unless we want to open the door to paying members a share of shows and tours they don't participate in, we can't expect them to contribute to the expenses of those shows. i feel like we still owe him a share of that particular CD if we sell it at shows, but like, if we're selling t-shirts, i don't necessarily agree that he'd get a piece of that. I think that's how I'll draw my personal line: the music he was a part of is what he should get paid for, the other stuff ended when he left the band.
     
  15. sloasdaylight

    sloasdaylight Inactive

    Feb 4, 2009
    Tampa, Florida, US
    If he is on the CD and his performance on that CD is a reason why it sells, then he's entitled to his royalties. If he's an ASCAP member (as you all should be) you need to pay him his royalties from the sales of at least the record, and anything that has I believe his likeness on it, or he can go legal on you guys, sue, and quite possibly win.
     
  16. SH69

    SH69

    Jan 7, 2010
    what a sad word we live in when people give this kind of advice.:atoz:
     
  17. ishouldbeking

    ishouldbeking

    Feb 5, 2007
    Hollywood, CA
    Endorsing: SIT, Eastwood, Hanson
    that's actually part of the reason it gets tricky, because we collectively have our own publishing company, which is registered to ASCAP. the individual songwriting share is then distributed according to who wrote what. Luckily its pretty simple to figure that out, at this stage, since our lead singer/guitarist wrote almost all of our songs on his own. our drummer is entitled to his share of the royalties, but again, its after expenses. we have a publishing administration deal where they hunt down and round up any and all royalties (particularly useful for collecting foreign money), and they take a share, so an expense like that would be passed along to our drummer. but the other stuff... yeah, i feel like it should be separated.
     
  18. derrico1

    derrico1 Supporting Member

    Apr 12, 2005
    Charlottesville, VA
    You do have the services of an attorney who specializes in entertainment law, no?

    In your shoes, I wouldn't be letting my bandmates vote to decide how we're going to interpret contractual obligations.
     
  19. ishouldbeking

    ishouldbeking

    Feb 5, 2007
    Hollywood, CA
    Endorsing: SIT, Eastwood, Hanson
    we do, yes. though we're pushing the limit of how many free consultations we can take advantage of. that said, we sent him an email about this already, and if need be, we can pay him to tell us what's legal. but i like to ask around before I throw down $300-$500, and I know there are (or used to be) a few music lawyers on this site, as they've given me great advice in the past.
     
  20. Stumbo

    Stumbo Guest

    Feb 11, 2008
    IMO, seems like you need to update your contract since this situation will happen again. It should have been spelled out in your current contract. Who wrote your current contract? I'd call and ask why the details of dissolution weren't included or discussed.
     
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