Splitting revenue and such in originals band

Discussion in 'Band Management [BG]' started by Bob Palmer, Jul 8, 2013.

  1. Bob Palmer

    Bob Palmer

    Apr 17, 2013
    Hey all, just looking for some general best practices, accepted standard, etc. regarding revenue and original bands.

    The short background: Three piece with an occassional fourth, one member does all of the songwriting and composition, and these have been in place for a couple of years. Both the drummer and I are newer to the band (say, a couple of months).

    We're considering going to a studio to record one or two of the originals, and as we're now into the realm of more cash outlay, I was curious what the standards are on this kind of thing.

    - For gigs where all of us play the BL's original tunes/music, what would the expected split be?

    - If we were to sell some music on ITunes, or sell CDs and other merch (we could do an LP easily), for music that the band all performed in the recording of, what are generally accepted best practices for that?

    This is my first time with an all originals band where there was not some collaborative songwriting going on and where one person came in with all of the stuff pre-written, so any advice or suggested norms would be awesome. I understand that every situation is different, but just looking for some baselines to go off of.

    Thanks in advance!
  2. RustyAxe


    Jul 8, 2008
    If you are band members, then it most often would be an even split. The writer doesn't get more every time his songs are played, that's nuts. If you are a hired gun working as a backing band for a singer/songwriter then you get paid whatever you agree to, usually a fixed fee.

    Just like the live performance, above.

    Writers make their money on the publishing of the song, and selling the mechanical rights if someone wants to cover it. But don't be surprised when your writer makes noise about HIS work being the most important, the hardest, etc, etc. Just remind him that without the band he's just another fool on a stool. Well, don't say it THAT way ... ;)
  3. scotch

    scotch It's not rocket science!

    Nov 12, 2006
    Albany, NY USA
    Please see Profile for Endorsement disclosures
    My opinions & what I've seen in the music industry after almost 20 years playing professionally with 'national' acts and as a member of a group:

    - Touring revenue, music sale revenue (cd's, downloads, licensing, etc) and merchandise revenue are all treated differently.

    - Make sure you know what your role is in the band/business is. Are you a member with profit sharing, or a hired-gun subcontractor, or perhaps something in-between? Having this relationship spelled out clearly is critical!

    - Educate yourself on publishing (related to songwriting) as well as the difference between mechanical royalties, performance royalties and licensing. Depending on your role in writing original material you may be entitled to some or all of these (again, defining your role in the group is critical ahead of time! I will keep repeating this! ;))

    Expect credited songwriters to get the lions share if not all publishing royalties. What entitles you to 'songwriting credit' is going to differ in every group of people! Keep in mind that Jamerson got nothing in terms of songwriting credit for all of his iconic bass lines! (Not fair, sure, but welcome to the real world...)

    Touring/performance income - there are no hard and fast rules. I have received everything from a per-day rate, regularly salary and various levels of profit sharing depending upon my role in the group. (Did I mention how critical it is to define your role ahead of time?) Generally speaking, most of my gigs have been "independent contractor" gigs where I negotiate for a day rate. In bands which I'm a part of, I get a piece of the action commensurate with how integral I am to the group (if that makes sense).

    Don't expect any merchandise $$$ unless you are a recognized member of the group, and/or have invested financially in the group in a significant way. Merch can be HUGE and often (if not usually) makes or breaks a touring bands balance books! Again, it's all bout how valuable you are in the group (whether it be songwriting contributions, a distinctive style that makes you indispensable or other intrinsic value you bring) & what you negotiate ahead of time.

    Whatever you do, don't end up spending time with a group without clear role definition & end up getting burned (it's your own fault if this happens). Have frank discussions with the artist, group or bandleader to determine where you stand before you get too invested with time or resources. Then, do your best to carve out fair compensation parameters (perfectly fair is perfectly impossible, but we all do our best!).

    "This is my first time with an all originals band where there was not some collaborative songwriting going on and where one person came in with all of the stuff pre-written..." It sounds to me like this musical venture is really an 'artist' gig where you are a hired guy. Honestly, in my opinion and experience, all you can really expect is a per show rate unless things develop differently. Be careful not to over-invest if you don't see the relationship being mutually beneficial in the near future! Even if it ends up being a "band" where just one member is doing the writing, don't expect much or anything from music sales/publishing (although, there are occasional exceptions - myself included).

    Lots of info... hope that helps! My website below has a little of my resume if that helps for reference sake. Everything from local pick-up bands to platinum selling international acts.

    Good luck! :)
  4. Bob Palmer

    Bob Palmer

    Apr 17, 2013
    Thanks! This is great info. The singer/songwiter/guitarist is on the young side, but does refer to us (me, drummer) as 'permanent members of the band', which is fine, but in my limited reading it seems that's not enough to get any cut of the action above what we would get for gigs, and even that seems a bit nebulous since there has not been one that has paid yet.

    And before I drop any of my own money on a recording, I just want to make sure I'm not, essentially, making a donation to the BL's future royalties with no recourse if I get cut from the group, or if that recording session turns into a viray iTunes download, if all of that makes sense.

    And thanks again for the reply, I really appreciate it!

  5. scotch

    scotch It's not rocket science!

    Nov 12, 2006
    Albany, NY USA
    Please see Profile for Endorsement disclosures
    That's awesome! It's always exciting to be part of something new. THAT'S something you can never get back! :)

    At the same time, be wary of what 'permanent member of the band' means. (Which it sounds like you are.) Even the most well intentioned artist isn't prepared for the realities of business. If you do invest your time or money (be careful), make sure you have a clear understanding up front. Heck, direct the young artist to this thread! I was certainly burned when I was younger & learned that it's best for all parties to spell things out at the beginning. Don't let the lure of "being in the band" get you in deeper water than you are confortable in.

    With risk comes reward- but that cuts both ways.
  6. JohnMCA72


    Feb 4, 2009
    ...which is the deal he negotiated up front (again, define your role ahead of time), which may or may not have had other terms he considered more favorable at the time.

    That, & you can expect that when & if the "artist" gets signed or otherwise moves up the food chain, he's going to run into "producers" whose first move is going to be to install "their" people in key positions (such as yours) & you'll be kicked to the curb before you have a chance to thank them for the practical lesson.
  7. ShoeManiac


    Jan 19, 2006
    New Jersey
    This is the complicated territory that has led to the demise of many a musical act. Going into the project with a clearly defined *MAY* help you avoid some of those pitfalls. But if your band is lucky enough to become successful, you still have the potential for money to complicate matters.

    First, the business relationship: are you equal partners in the project in terms of the finances? Meaning, are you all equally responsible for financial expenditures, ie studio time, transportation costs, etc? Or is one person making the financial outlay?

    If the band is set up as a partnership, then gig pay should be equal amongst the members. However, in some cases where one band member may be responsible for managerial duties (promotion, bookings, scheduling, or the PA), you may wind up with an arrangement where that band member draws an extra share of the gig income as compensation for that work. Each band is different, but band leaders are commonly going to draw more pay because of those additional duties.

    In the partnership model, you will traditionally split the performance royalties on a recording equally. As someone stated earlier in the thread, these are generally referred to as "MECHANICALS". Don't mistake this type of royalty with a songwriting or publishing royalty. They're totally different animals.

    Publishing is the domain of the songwriter, and this has traditionally been the big bone of financial contention with a number of very high profile acts. Publishing rights belong to the songwriter. The traditional legal measure of who is entitled to songwriting credit is who has written the melody, lyrics and chord progression. There is some wiggle room for an intrinsic instrumental portion of a composition, but it's not a well defined criteria for songwriting credit.

    Publishing royalties are paid out in a number of ways. Each recorded copy of a song pays out a publishing royalty. Other sources of revenue include printed sheet music, *SOME* radio/media plays, licensed usage (commercials, movies, tv shows, etc). Publishing tends to pay more than a performance royalty, and as a result publishers/labels will try to acquire an act's publishing rights since it has the potential to be turned into a very profitable revenue stream.

    Songwriters who retain their publishing rights (and are successful) will generally earn significantly more than their bandmates. Witness Nirvana. Kurt Cobain made SUBSTANTIALLY more money than his bandmates Krist Novoselic and Dave Grohl. Why? Because he wrote all of the songs. All three of them got equal performance royalties and split the gig money. But the publishing money was entitled to Kurt Cobain. Other acts have come to recognize how divisive of an issue this is, and credit all of their band members with the songwriting.
  8. jmattbassplaya

    jmattbassplaya Supporting Member

    Jan 13, 2008
    Honestly, just ask yourself, "Am I getting taken advantage of" in any situation you find yourself in. If it makes sense for the songwriter to get more then he probably should. If it doesn't make sense then he probably shouldn't. For gigs, you're all schlepping gear, playing the gig, pimping merch, etc... so an even cut should be expected. If you all paid for recordings then you all get a split. If one person pays for it then only they get it back, but you should get paid for your time. That's just the cost of making the recording investment.

    Of course, all situations differ. This is why it's important to discuss things like this when you first join a band, or to at least try to have these sorts of talks as soon as possible.
  9. Bob Palmer

    Bob Palmer

    Apr 17, 2013
    Thanks for all of the replies thus far - The next question I suppose is how/what the best way to bring this up is, and at what point should I bring up something like an intra-band agreement vs a friendly handshake?

    I expect the answer would be something like 'Now!', but given the band is really in the early 'playing for free' stage, would it be presumptuous/odd to bring up paperwork and agreements now, or is that something that can wait till the first request to outlay cash for studio time comes up? (Right now, everyone splits the cost for rehearsal time evenly, and we handle our own gear and transportation)

    Again, thanks for all of the great advice!
  10. jmattbassplaya

    jmattbassplaya Supporting Member

    Jan 13, 2008
    Honestly, unless you really believe this act is going to do something crazy, I probably wouldn't worry about things getting written in ink. Depending on your age, that might just seem a bit too overbearing to demand, but your miles may very.

    At a minimum though, you do need to go ahead and have this conversation sooner than later. Honestly, you probably need to have this conversation before you join any group, but it's a little late for that now ;)

    Just sit everyone down and ask what everyone expects the pay situation should be on gigs? IMO, it's best not to make your feelings known until after you hear everyone else. That way if everyone says 'even split' you don't have to really argue anything. That in mind, make sure you have reasons as to why you believe an even split (or whatever you want) is fair. Just saying I want an even split might not be enough if you can't explain why ;)

    I'm going to have to have a conversation with a buddy of mine soon about pay rates. He's wanting me to join his folk band that he's starting and doing all the songwriting for. Hey, cool by me, but that means I'm investing time and energy into something I'm not directly in control of. In other words, I'm a hired gun, and that means I get paid a rate every gig regardless of if the band makes money or not. He can accept that or not. But it's important to know that I can do this because I bring skills and a level of professionalism to the group that he won't find elsewhere. You have to keep in mind what value you bring to a band if you ever take this approach.

    As for recordings, just ask what the songwriter wants to do. If he wants to split the investment (and you're willing to) then say that's fair but you want (for example):

    - equal cut of all revenues and profits earned
    - the right to use the music for self-promotion (not sale) if the group bellies up

    He can agree to it or not. If he doesn't, you can politely tell him he'll have to invest in it on his own and that you'll need to be paid a fair wage for your time in the studio. All this studio stuff you might have to get in writing.
  11. scotch

    scotch It's not rocket science!

    Nov 12, 2006
    Albany, NY USA
    Please see Profile for Endorsement disclosures
    Unfortunately the answer is NOW! ;) Naturally, this is where people skills, communication skills and plain old charisma come into play. There's no way to advise as I have no clue as to any of the involved parties personalities.

    I would say that the whole "play for free stage" thing is problematic. Right now your artist is getting milk for free & that just makes it harder to swallow a fair deal when mones does start getting generated.

    Ultimately, you are either doing this purely for fun (completely legitimate) or you are looking at doing business (also completely legitimate). Doing things for fun needs to be just that: fun with no financial expectations. Business is a whole other pursuit! There are costs to doing business and if that's everyone's goal it's time to recognize it now. Granted, if there are no funds at startup then don't expect a check! But- if you are investing time and energy, it's important to establish that fact now and quantify it somehow. Again, if this is business, the artist (in your case) needs to understand that you are making an investment NOW - not just when money starts rolling in (if it ever does).

    I wish I could help you plan a strategy to communicate all this, but it's pretty impossible given the real-world social nature of the dialog as opposed to online communication.
  12. JohnMCA72


    Feb 4, 2009
    I'm fond of saying, "The best time to find out that somebody intends to screw me is when they refuse to sign a contract up front. The worst time to find out that somebody intends to screw me is at the end, after I've done the job, & compensation is expected."
  13. ShoeManiac


    Jan 19, 2006
    New Jersey
    Business concerns like these will probably be done in stages. The division of gig income is something you can talk about when you start getting some serious bookings. As for recording / songwriting credits and their associated royalties? Do that BEFORE going into the recording studio for an actual release. Studio demos are one thing. A released & copywritten work is something else.
  14. MikeCanada


    Aug 30, 2011
    Toronto, ON
    Yes, this is a conversation that needs to happen sooner than later. Our band has a Constitution that lays everything out so there are no surprises. Is this potentially overkill? Well, the word “Constitution” might be, but it is still a good idea to have everything in writing. That way “I thought we agreed on x, y, and z that one time” doesn’t happen. This isn’t a legal document, (we don’t have a lawyer involved) but more of a firm gentlemen’s agreement that we can pull out if someone gets a little out of hand.

    Some food for thought:

    If everyone is considered an EQUAL
    - Everyone PRESENT AND PERFORMING gets an equal cut of the show. No show, no dough.
    - Does your Leader/Manager/Booking Dude/Whatever you call him get an extra cut? I’ve seen 10-20% before, I’ve seen nothing. Agree BEFORE cash starts flowing.
    Studio time/recording costs:
    -Agree, in writing, on a budget, how you are paying for it, and how you are getting your money back. When releasing our debut EP, we played a release party and a big festival the same weekend, and managed to make back our investment that weekend.
    -If you are all “equals”, you should likely be equally investing in your first Demo, Single, EP, or Album.
    - Agree what’s happening with sales of CD’s, or any other avenues you plan on exploring BEFORE you even think of setting foot in a studio. Everyone should make back your investment FIRST.
    Merch, CD’s, Promotional materials, etc.:
    - All of these things cost you money up front. Everyone should agree on what you are going to be spending money on, and everyone should get their investment back before anyone starts making profit.
    -We have a policy that if we play as a band, we sell as a band. So, if we play a show and sell CD’s at that show, we split the revenue from CD sales evenly. If we sell CD’s or Merch on our own (like, your grandma wants 100 of them to sell to her bridge club) then you get the profit from those CD’s. *NOTE* the word profit. At this point, we have all made our investment back, and we set aside a % of each sale (individual, or as a band) to go towards reprinting when we sell our current printing, and a band fund.

    If you are a HIRED GUN
    GET EVERYTHING IN WRITING. Or, at the very least, discuss and agree to terms BEFORE things happen.
    -Either work out a flat rate per service, (in some cases, this is also rehearsal time) or agree to a pre-determined cut. If you are a 4 piece, this could be an even split (25-25-25-25) OR the band leader could take an extra percentage (22-22-22-34) or whatever your math works out to. There could also be a booker fee to discuss (like above) or expenses (like renting a PA) and you want to iron that out (and determine if that’s part of your problem or not) before cash flows.
    Studio time/Recording costs:
    - If you are brought in just to do session work, and not “part of the band” OR you are not going to be making a portion of profits, DO NOT PAY for anything.
    - If you are a member of the band, but the leader is billing it as “his/her” recording, figure out what you’re doing about splitting profits, and if you are only seeing a small portion of it, don’t be shy about only contributing a small portion (or nothing) to cover costs.
    Merch/CD’s/Promo costs:
    -Similar to studio time and recording costs, figure out where you stand, and invest accordingly.

    Songwriting/Royalties/Licensing rights/Legal stuff:

    - If you write as a band, then everyone gets credit. If you all come to the band with song ideas, and then the band finishes them, I would argue that the band still gets credit.
    - If a member comes with a COMPLETE song (down to fairly specific ideas of what he/she wants the other parts to be/what your part should sound like) then it could be theirs.
    - RECORD (even if it’s on an iPhone or whatever) the initial “pitch” of a song. That way, if it does significantly transform/someone else makes a large contribution to writing/rewriting, you have some evidence to back yourself up.

    When you get to this point, it really depends on how big the project is. If you’re a regional band, who has a CD you are selling yourself, playing in a couple bars/clubs/festivals/whatever, then you can likely iron this stuff out between yourselves, provided that it’s not your main source of income, and everyone is on the same page.
    If it is bigger than that, or if it starts to grow, you will need to sit down and re-evaluate the situation.

    If record contracts, tours, distribution through larger channels, (like iTunes, or brick and mortar) radio play, etc. start happening, it will be in everyone’s best interest to have a serious business discussion, and lawyer up. This way, you don’t end up getting scared and scammed by a recording company, tour manager etc. and everything is clearly defined, so NO ONE involved has any surprises. We’ve all been burned at some point by someone, and if a legally binding contract is what makes a big (or big to you) payday happen, you will be happy a leader, record label, tour promoter, big venue, or ANYONE pays up, instead of screwing you over.
  15. Lot's of good info in this thread. Thanks guys!
  16. For us we split money evenly between band members. Doesn't matter who writes more of the material or anything. An even splits keeps drama away. The only exception being if one band member puts in their own money to fund merch purchases. In that case we pay them more until thier investment is paid back.

    The problem with paying someone more for writing material is they often don't write all the parts. For example in my band I write most of the music but I can't play drums, I can program drums with midi to show my drummer they type of vibe I'm going for but I can't play it. Same goes with my singer and guitar player, neither can play drums and neither can play anything on bass that would be interesting and fun for me to play so in reality they never actually write my parts.
  17. It does show that when you are all friends and keen, this is the time to work out a constitution to cater for all eventualities. Work on the premise that you could become very successful, so get the nasty stuff done right at the start. All the famous bands have had these issues - so we should learn from them. Think Ringo, make sure your Ringo gets a few song writing credits, make sure he's able to have the occasional song. Think about how Ringo gets his gear to the gigs. Does he have more expenses that the lead singer who doesn't play anything? So maybe he gets some extra 'points' for fuel and hire vehicle?

    If one of your songs gets picked up - then having an all names writing system means equal shares of the extra income. If only one person is the writer, then only that person gets the dish - creating bad feeling.

    Putting an agreement together to cope with these is important. Some things are stupid. If somebody puts something into the band 'pot' at their own cost, does the band repay them, so it becomes the bands, or when a member leaves, do the band suddenly lose microphones, stands, leads and other items suddenly?

    Many bands spilt their income to put some in the bank - what happens when somebody leaves? Do they lose this or get it?

    Sort it out when you are friends. 3 of us get a gig fee, and the band owner does everything else. Very often the three of us get less than ten per cent of the figure the band cost the venue/agents. We're all happy with this, because we don't take the financial risks and get the hassle. Money causes so many arguments and suspicion, so we just take our pay and don't let it bother us.
  18. grey area

    grey area

    Sep 2, 2009
    almeria spain
    plenty of good advice here. when i started out if you wern't screwed by your manager/ agent you were screwed by everyone else, including your lawer/advisor. in those days the only advice that worked was DONT SIGN ANYTHING. thankfully today things are a little better, still a minefield and still a sea full of sharks. trust your instincts and go for it. lots of luck.