by Robert H. Reynolds
There are countless books about making money in the music business. There are also books that claim to teach you how to turn iron into gold. While, unlike alchemy, it is possible to make a living as a rock star (or other recording artist), you need to remember that the overwhelming majority do not. In short, there are two reasons for “starving artists.” As we all learn from “American Idol,” the main reason is that most aspiring musicians refuse to believe they are anything less than amazing. However, there are also a lot of talented people that just need better information and some wise direction.
Unlike authors of books who make money selling those books, my ability to pay the mortgage depends on people actually succeeding in this business. I can’t afford clients that won’t be successful, and I like clients that are as informed and prepared as possible. To that end, I hope this article proves useful.
Feel free to scroll down, or click on the following links to jump to a section that you find most interesting:
- Make the Bottom Line Your Bottom Line
- Choose a Protectable Band Name, Then Protect It
- Creating a Band Partnership Agreement
- Recording and Funding a Demo
- Shopping Your Demo
Alright. Let’s get down to business.
1. Make the Bottom Line Your Bottom Line
In response to misconceptions about the glamorous life of an entertainment lawyer, I often explain that, in the end, entertainment lawyers are lawyers (not entertainers). Similarly, I’ve found that bands frequently need to remind themselves that while music is art, music business is business. And in business, the bottom line is the bottom line.
You have likely been told that record labels are little more than banks. The decision makers at every label are bankers, looking to make a return on their money. They give you money to make a better album than the one you made at your friend’s house (or the local studio at a “bro rate”) and they are far more apt to make that investment if the album you have is already selling. Record labels also loan bands money to go on tour, but if you aren’t drawing crowds in your own hometown, why would a sane investor fund your trips elsewhere?
So if your band is the most innovative, talented band in the U.S. but you aren’t filling gigs and burning through your merchandise (e.g., T-Shirts, CDs), stop hoping for that Holy Grail label deal until you reconsider the fundamentals: songwriting, performance, and marketing. In an economy where the majors sign less than ten acts per year, don’t wait for a label or anyone else to make your band successful. Make it successful yourself. And as much as it sucks, that means keeping an eye on the bottom line. Does that mean to lose your soul and form a boy band? Yes.
I mean, no. If it isn’t real, if the music doesn’t come naturally, if you don’t love it, it will not work. The music has to be “real” for you to find success. That said, imagine that you decided to open a brownie store. Because brownies are such a common commodity, you need to have a unique point of difference to sell them. If you are the only one who loves salmon brownies, however, don’t expect any investors.
2. Choose a Protectable Band Name, Then Protect It
Every band knows that choosing a band name is important. Few bands recognize the proper considerations in making this choice. Obviously, the name should be “sick”, “dope” and “tight”, or at least memorable. Less obviously, it should be protectable.
If your band’s name is not protectable because another band with a (confusingly) similar name already exists, you can be prevented from touring or selling albums under that name. ‘N Sync settled a huge lawsuit with their former manager in order to keep using their name. Country band Shenandoah paid over one-half million dollars to settle three lawsuits over their name, which was so burdensome that they had to file for bankruptcy.
Under U.S. Trademark law (you cannot copyright a band name), to be protectable, a band name must:
- be distinctive, or non-descriptive;
- must not be scandalous (there is some hilarious case law in this area);
- must not be the name of a living person/celebrity’s name without their consent; and
- must not be easily confusable with another band (even one you and your friends have never heard of).
If you use a name long enough and acquire substantial popularity, a descriptive name, like The Band (1960s rock), can achieve “acquired distinctiveness.” The safer (and less expensive) route is to choose a name that is immediately recognizable.
Choosing a name that is unique is the most difficult of the above criteria. Even if another band’s name is not the same as yours, they could still prevent you from using your name if the legal test of “likelihood of confusion” is met. Each federal circuit has its own list of factors (called the “Digits of Confusion” test), all boiling down to whether a music consumer is likely to buy your album or attend your gigs, thinking it was the other band.
The first step is to do a search for potentially conflicting marks. Professional search firms (e.g., Corsearch, Thompson & Thompson), the American Federation of Musicians, Billboard’s International Directory, performing rights society websites, the record store Phonolog directory, the Band Register (www.bandreg.com), online record stores (e.g., www.cdnow.com; www.towerrecords.com) and the U.S. Patent and Trademark Office’s website are all useful sources. To save yourself hundreds of dollars in filing fees (which are not refundable) and possible lawsuits from bands with similar names, it is advisable to have a lawyer commission and review a common law search.
The second step is to file an application for a federal trademark (or a service mark, for shows and entertainment services). Federal trademark protection will give your band priority over any later bands in the United States, so that if a band with a confusingly similar name to yours starts playing in a state you’ve never been, you could still prevent that band from gigging or selling albums under the confusingly similar name. Having a federal trademark also provides a substantial advantage in website domain disputes, as ICANN, the organization that awards website names, awards domain names to the owner of the federally registered mark. Finally, federal registration allows you to use the ® symbol next to your band name (though some bands choose not to do so for commercial reasons). Proper wording of the application and goods/services chosen can significantly minimize the possibility (and finality) of a rejected application and prolonged appeals process.
A brief story by way of example: I represent a band known as “The Killers”. When they were known by only a small group of friends and fans, they had me apply for and attain federal trademark registration for their band name on the principal register. One year later, Ryan Adams’ posters for his “Rock ‘N Roll” album tour were posted in major U.S. markets, reading “Ryan Adams and The Killers.” Well, Ryan Adams’ Killers were not The (real) Killers. What if Ryan Adams’ Killers sucked, and then people confused them with The (real) Killers? Needless to say, the record label wasn’t happy. I wrote a Cease and Desist letter to Ryan Adams’ lawyer, citing our federal registration, giving The Killers national priority (excepting unregistered geographic first use, if any, a complicated matter you should discuss with your lawyer). Within two days, Ryan Adams’ big-shot band changed their name and took down all the posters.
In short, a band name is one of your most valuable assets. The last thing you want to do is change that name just when you become successful. (And, by the way, no one will try to stop you until that day comes.)
3. Creating a Band Partnership Agreement
I was a musician before I went to law school, so I know the last thing you want to think about is a contract. When it comes to drafting a band partnership agreement, many bands tell me that the band gets along well and that they would rather “take it as it comes.”
Of course, that’s what Art Garfunkel said.
Contracts are not written for those situations where everything goes right. They are written for what happens “when animals attack,” and unfortunately, when the money comes, some things inevitably go wrong. If you are a young band and getting along great, this is the best time to discuss and execute your band agreement.
There are countless different provisions in the common band agreement, and there are infinite different structures for voting, songwriter royalties, leaving members, you name it. You can write a 1/2 page contract if you want, but of course, the more you can agree on now, the less confusion and controversy you will have later.
Some of the more common items to be covered are:
- Who owns the band name and logo, and what happens if a member leaves;
- Band member hiring and firing (unanimous? majority? what money do they get when they leave?);
- What is required of each band member (can they play in other bands? how often?);
- How do you split the band profits and losses;
- Who owns the copyrights to sound recordings, and how will you split the publishing/songwriting royalties (this can be fairly complicated); and
- What happens if the band splits up?
These are just a portion of the common issues that should be discussed and agreed for any band that intends to have a common career. If any of these issues sound painful to discuss and agree upon, that is all the more reason to get this taken care of. A good lawyer can explain all of the implications and often help everyone feel comfortable with an agreement that may govern much of their future. And – this is a rare occurrence for partnership agreements, by the way – even a band partnership agreement with no lawyer is probably better than no agreement at all.
4. Recording and Funding a Demo
“You only get one bite at the apple.” I don’t know where this phrase came from, but I’ve used it on many occasions as related to shopping a band’s demo CD. Here is what I mean: after a record label A&R guy has heard your mediocre demo and decided he wasn’t interested, he is now less likely to listen to your second demo. For this reason, you have to be certain that the first demo you send includes your best, most original, catchy (i.e. “hooky”) songs, recorded and mixed in the best possible manner. Usually, that demo was not recorded on a four-track Fostex in your basement.
So how do you afford a good demo? There are four general ways to pay for a demo recording:
- by the hour
- by the day
- a flat rate per track; or
- on “spec”.
I have seen artists spend anywhere between $300 dollars to thousands of dollars for a single track. Sometimes the artist gets lucky and the $300 dollar demo does the trick. That said, the maxim “you get what you pay for” is usually dead on. More expensive producers/engineers/mixers often do better work and may also have a better “name” to put on that demo (which can help gain interest).
If you don’t have enough money on hand to get a good 3-4 song demo recording, you have two other options. First, you can enter into a Production Agreement with a “production company.” These agreements are more common for pop and hip hop artists. Often, the artist gets managerial-type advice from the production company regarding their image and how they market themselves, in addition to receiving engineering, mixing, and production services. While production can refer to little more than turning the knobs and hooking up microphones, “producers” generally also provide advice regarding the structure of your songs and give creative input throughout the recording process.
Production agreements also frequently include “shopping” services, where the production company agrees to help put your demo into the hands of record label contacts. In addition to being “free” (we’ll talk about that later), the benefit to these agreements is that you have someone with a vested interest in you getting signed. If you don’t get signed, they don’t get paid. So they really will send the demo to their A&R friends (if they have any, obviously that matters) with a high recommendation.
Now let’s talk money. On “spec” is short for “speculation.” Essentially, a production agreement is a speculative investment by a production company. Instead of investing money into a company, expecting to get a certain return, they put money into an artist. However, the same rules apply: the more risk they take, the more return they expect to receive. So the riskier it is for a given artist to get a record deal within a certain period of time, the more the production company will want to get out of the record deal. Your lawyer’s job is to fight for better terms by implementing various negotiating strategies including hyping the artist, explaining why the risk is lower than they might otherwise think, and finding other ways to minimize that risk. The mere involvement of a good lawyer and/or manager also helps to increase the odds that you will get that record deal, which should lead to better “on spec” terms.
Right now, production companies frequently get either 50% or 40% of the record deal from the advance and royalties. Some production companies also take a portion of the artist’s publishing. Some take a portion of the artist’s merchandise. Put simply, these items (and many others) depend on your negotiating strength and the knowledge/skills of your lawyer.
If you do the deal with a single producer, as opposed to a production company, you may get better terms. For example, I have negotiated numerous spec deals for a certain number of “producer points” (i.e. one point = one percent) from a record deal. Done right, these deals can leave the artist with more than 60% of his or her “points”.
There are obviously many other issues that one should consider when entering into any speculative agreement. If there weren’t, I imagine a law school education wouldn’t cost one hundred and thirty thousand dollars. Before you enter into agreements which take a portion of any rights you have – rights to future royalties, publishing, anything – be sure to have an experienced entertainment lawyer review and negotiate the agreement. He or she also may be able to counsel you in regards to finding an even better producer if the terms are not acceptable.
5. Shopping Your Demo
Do not shop your own demo. Do NOT shop your own demo.
Following the “one-bite” rule above, it is vital to make a strong first impression when you send your demo to the record labels. Making your demo one CD in a huge stack of horrible music mailed to a lower-level record label employee is a very poor way to get heard. If you have a personal relationship with an A&R representative or scout (and you have that excellent demo discussed above), feel free to pass it along yourself. If you don’t have such a relationship, however, it is better to let someone who knows and is trusted by an A&R guy to pass along your CD. It is hard enough for a well-connected manager or lawyer to get serious feedback on music he or she passes along. If you are an unrepresented band, you may have better luck sending the CD to a random post office box.
The best way to have your demo shopped is to work with a well-connected manager and/or lawyer. Every manager shops demos. Some will even enter into “shopping deals,” where they shop the demo but don’t have a management contract. Not every lawyer shops demos. There are some very connected, good lawyers who do not shop bands. There are also some very poor lawyers that shop everything that comes across their desk. And there are excellent lawyers who are “secondary shoppers,” preferring to make contact with the label only after initial interest is shown. If possible, you should talk with your lawyer about his or her contacts and desire/ability to shop you before entering into a lawyer-client relationship.
I like to remember the words of Notorious B.I.G.: “Never get high on your own supply.” This might relate to shopping your own demo. If not, it makes a nice closer. Solidify your band partnership, carefully choose and protect your band name, make a great demo, and have it sent out by the right people to get you a record deal.
Oh yeah, also make good music. If the rock doesn’t rock, this advice means nothing.
This Blog contains information of a general nature that is not intended to be legal advice and should not be considered or relied on as legal advice. Any reader of this Blog who has legal matters involving information addressed in this Blog should consult with an experienced entertainment attorney. This Blog does not create an attorney-client relationship with any reader of this Blog. This Blog contains no warranties or representations that the information contained herein is true or accurate in all respects or that it is the most current or complete information on the subject matter covered.