ENTERTAINMENT INFORMATION PACKAGE

So, you are in a new (or unsigned) band and you want to be a good business person and protect yourself by not making mistakes early. Or maybe you don't care if you make mistakes, because you don't think you can at this stage - you're just a bunch of guys or girls making music. If you are in the first category, good for you. If you are in the later, wake up, this is the real world. Two or more person's carrying on an activity for profit form a partnership, whether or not you have anything in writing. Each member of a partnership can bind the other member and cause that member to become indebted to a third person, whether or not you have anything in writing. Your band is a business, even if you aren't taking home any money. To avoid falling into pits that may cost you a lot of money if indeed you actually make it as a band, you should pay attention to your business structure in the beginning stages of your band. You are also going to want a manager at some point. Did you know that contracts can be oral? That means you don't have to have anything in writing. So, if you promise your manager all of the proceeds from your first record on a major label if he gets you a deal, you have a contract to that effect. Your manager can sue you for those proceeds. In fact, in your new business venture, you are likely to encounter lots of situations where you are asked to enter into oral contracts or written contracts. Are you considering entering those contracts without legal advice? Would you consider performing open heart surgery on yourself? You need a lawyer.

Business Structure

Now that you realize you need to organize your band as a business, you either don't know what that means, or if you do know what that means, you don't think you can afford it. If you don't know what that means, stay tuned. If you don't think you can afford it, let me correct you. For a mere $750 our firm will incorporate, organize or register your business with the appropriate state agency, file the appropriate forms with the Internal Revenue Service, draft a band agreement - governing such things as ownership of any cd's, your band name, and what happens when someone leaves the band, and get you a handy little corporate kit.

There are numerous ways a band can be structured:

  • Incorporation: This is by far the most common structure we see. Basically, incorporation insulates the owners of the corporation from acts of the corporation. When your band is structured as a corporation, the individual band members are basically employees of the corporation and act as agents for the corporation. As long as you maintain the integrity of your corporation (and we show you how to do this), you should be protected in the event another of your band members does something negligent causing injury to another or in the event the corporation breaches an agreement (unless you've signed the agreement to be individually liable). 

    Incorporation does not insulate you from liability if you do something intentionally that causes harm to someone else - i.e. beat someone up in a bar. 

    We generally recommend that you make an S-election with the IRS to avoid taxation and work with your accountant to ensure that you make proper
    filings during the year to the IRS.
  • Limited Liability Company: Limited Liability Company's are the second most popular business structure for bands. Like corporations, they offer limited liability to the members of the company (there are no shareholders). One problem is that they are relatively new statutory creations and have not been tested in court in every state, so that if you are a North Carolina band and are traveling in a state that either doesn't recognize LLCs or in which LLCs haven't been tested, there is a risk that you won't be protected by the limited liability aspect. LLCs are becoming increasingly more common and this is probably remote, but you should know that it is a possibility. LLCs are easier to maintain that corporations. You do have to withhold self-employment taxes during the year, however. So, the accounting considerations are a little different. We always recommend working with an accountant so that you understand the tax implications of being either a corporation or an LLC.

  • Limited Partnership: Here there must be at lease one general partner, who will be responsible for the acts of the partnership. There are also limited partners, who have the benefit of limited liability. Otherwise, they operate exactly like partnerships registration. 

  • Partnership: As I stated above, you can form a partnership by your actions or by agreement. There are no corporate formalities. Most states have registration requirements, which basically require you to register in the county of your principal place of business. This way the state and third parties have contact information for you and know how to get in touch with you.

 

We generally start with just one business. At the point a band signs either a recording agreement or a publishing agreement, we form a separate entity which enters those agreements. Now you are operating a bifurcated business. One entity operates your touring business and the other operates your recording and publishing business.

 

Band Agreements

This is basically your shareholder, operating or partnership agreement. This agreement covers what happens when a member leaves or when everyone else wants to kick a member out of the band. If you are organized as a corporation, the band agreement is technically the shareholder agreement. If you are organized as a limited liability company, the band agreement is technically an operating agreement. If you are a limited partnership or partnership, the band agreement is technically a partnership agreement. The band agreement also provides for the ownership of the band name (i.e. the band's trademark) and of the band's recordings, so that when a member leaves there is no dispute about who has the right to use the name of the band or who is entitled to license and/or receive income from the sale of the recordings of the band. Depending on your agreement with regard to songwriting, the band agreement may also set forth the ownership percentages of the musical composition (that is the song itself, as opposed to the recording of the song).

 

 

Insurance

As a group of people traveling in a van, you subject yourself and your future earnings to liability everyday. If you were involved in an accident and the van were listed in the band's name, without the protection of a corporate structure, each member of the band would be liable if your insurance was not adequate. Remember, this is so, because without some formal business structure, you are operating as a partnership. In a partnership, every partner is liable (i.e. responsible financially) for the acts of his partners. If, of course, you are adequately insured (in addition to having your business structure formalized) this is of little consequence. We will advise you with regard to insurance, including types, amounts and who should be named as insured parties on your policy.

In addition to the typical band liability discussed above, there is also the potential that you could be sued if someone is injured at one of your shows. We have had clients sued for incidents where people have jumped from the stage. There is not always liability associated with such occurrences, but, again, we will advise you with regard to insurance to cover these instances.

 


Trademark Protection

A trademark or service mark is a word, name, symbol or device used to identify goods or services. That means your band name is your trademark, which identifies your services as an entertainment group and distinguishes you and your services from other groups. Because you will spend anywhere from one to twenty years riding around in a van building up a reputation as a band under your trademark, you should be concerned about protecting that trademark and having your music attributed to your trademark (or band). You should also approve any uses of your trademark by third parties.

In order to adequately protect your trademark, you must consider registering the mark with the federal government, via the United States Patent and Trademark Office. Without this registration, you do have rights in your trademark, but only where the mark is being used. For instance, if you are a band that tours in the Southeast, you have common law protection there. If, however, some other band begins touring in the Northwest under your same name, they will have common law protection there. If the Northeastern band registers its name before you, you may have the right to continue using the name in the Southeast, but you will never be able to go national under the band name you have been building up in the Southeast. What's more is that your fans in the Southeast will probably buy the music of the Northeastern band thinking it is yours.

We can steer your trademark through the registration process. The federal registration process is a little costly. The filing fee is $325 per class. Our attorney fees for registration start at $750 and will be a little more if you decide to register in more than one class or if there is any opposition or if there are any conflicting or competing marks. Further, we generally recommend a thorough search of the name to determine if it is already registered or if it is in use anywhere in the United States, such that someone else has established common law rights in a section of the country. If the same or similar mark is already registered in the same class, you will not be able to register your mark in that class. Search services typically charge between $250 to $400 per mark. Accordingly, for approximately $1500, you can have your band name registered as a trademark. This may seem a little pricey, but if you are serious about achieving success, it will be well worth the expense in the long run.

 


Copyright Protection

Did you know that in every recorded song, there are two copyrights? There is a copyright in the sound recording, that is the cd on which the song is recorded. There is also a copyright in the musical composition, that is the underlying song that has been recorded. We can advise you with regard to registering your copyrights and with regard to registering with a performing rights society. You will want to register with a performing rights society if you think you might get some radio airplay or your song might be licensed for a television show or series.

 

 

Independent Releases

Most bands these days are recording and selling their own CDs. This will become more prevalent with the increased usage of the Internet as a means to market and sell music. All of our band clients have independently released records prior to getting a record deal and we were with them each step of the way. We can advise you with regard to structuring your independent release, from the business structure through which the release will flow to producer agreements to obtaining a UPC.

 

 

Getting Signed

We cannot promise you a record deal, but we can promise to send your music to industry professionals for consideration. Whether a record label will sign a band depends on a larger number of factors, including trends in radio and talent of musicians. We have a multitude of experience in negotiating recording agreements, from agreements with independent labels to agreements with major labels.

Address:
107 Glenwood Avenue Raleigh, NC 27603
                                                 Phone:
(919) 582-2150 
                                                  E-Mail
rgusler@gusler.com