Introduction

"It's very easy in this business to find people who are willing to put their arm around you and tell you how great you are. Unfortunately, their other hand is in your pocket."
-- Paul Stanley of KISS

Lou Reed once told an audience, "Give me an issue and I'll give you a tissue." Many music business executives have a similar attitude -- they have little sympathy for the moral, business, or ethical issues faced by a band competing in the music business. The sole concern for most music industry companies is whether or not the band will make a lot of money. Therefore, bands should not expect much help (or sympathy) from their label, distributor, or booking agent when dealing with common problems. Even if your band can afford accountants, business managers, and lawyers to help you with problems, you'll save considerable time and money by making your band as self-sufficient as possible.

Taking On the Music Industry

Some people perceive the music industry as a bunch of cigar-smoking sleazy guys who steal artists' songs and recordings. Popular films and books reinforce these stereotypes. Why? Is the music business more unethical than other industries?

No, the music industry is probably not that much different from others. All businesses are opportunistic. If there is an opportunity to get ahead, then you can bet someone will take advantage of it. The problem in the music industry is that getting ahead often means taking advantage of musicians who aren't experienced in the business side of music. But if a musician learns the basics about business and law, there is less of an opportunity for a sleazy guy with a cigar to screw him over. That's what this book is about: protecting yourself and minimizing your damages.

This isn't to say that you can always avoid getting screwed. Be prepared for some setbacks. In this chapter we'll ease you into the different aspects of your band's business, and we'll try to help you decide on the business form that is best for your band.

Your Band Is a Business

The first and most important step in running your band's business is to accept the fact that it is a business. Producing music is your band's creative work, and selling that music is a business venture. As long as your band is interested in selling its music, business knowledge is as essential to your success as musical creativity!

You may be surprised to learn that taking care of business actually involves creativity and is not quite as boring as you may believe (ask Mick Jagger -- a business school graduate). In fact, your band may well enjoy the power that comes with understanding how to run a business -- and to do it successfully. This doesn't mean your band must micromanage every detail of its business. As your band develops, you will delegate power and responsibilities. But, especially at the beginning, it's important for you to understand basic contract and accounting principles in order to make smart decisions and avoid the many pitfalls that often trap bands and their members.

Apathy Is Not the Answer

There is a joke that asks for the definition of "apathy." The answer: "I don't know and I don't care." Unfortunately, many musicians take this attitude toward the business dealings of their band. Don't be one of them.

The "I Don't Know" Excuse

Some musicians believe that they are unable to understand business principles. This is not a valid excuse. Scientific studies have shown that many of the same cognitive skills that are used in music are used in mathematics and business. That is, if you can mix eighth and sixteenth notes and still land on the downbeat, then you probably possess the skills necessary to understand a spreadsheet.

The "I Don't Care" Excuse

It only takes getting burned once before a musician realizes, "I do care about business." Most musical careers are relatively short, and the only way to make a career last longer is to devote equal time to music and business. Without business knowledge, you may soon find that the glory days have ended and you're broke.

Do the Old Rules Still Apply?

When the first edition of this book debuted in 1998, few bands had websites, and it took hours to download a song (assuming you could find a song to download). Two years later, thanks to the Internet, many people proclaimed that the 20th century music business -- as personified by the major labels -- was officially dead. The new mission for bands was to bypass the middleman and sell direct or through downloads. We wondered whether the old rules about touring, promotion, and releasing recordings were still valid.

In 2004, we informally surveyed musicians and music industry honchos to find out what they thought. The results indicated that little had changed for working bands, other than the emergence of band websites as a vehicle for marketing and distribution. We asked people to list in descending order the factors that would help a band succeed in the 21st century. All but one identified songwriting as the most important factor for a band's success. Strong musical skills and a compelling live performance were near the top on everyone's list; "physical appearance" and "luck" were near the bottom. In other words, the old-fashioned approach to success still pays off: write great songs, play well, and give the fans a great show.

Everyone also agreed that getting a contract with a major label was more of a stumbling block than a goal for success. Thirty-year music business veteran Christopher Knab, whose website, FourFront Media & Music (www.4frontmusic.com), is one of the top music resources for indie musicians, wrote that for most bands today, major labels are "worthless, and in so much trouble they have no time to properly develop you."

His advice for new bands remains timeless: "Build from a local, breakout geographical area near a large city where you can plug into a local scene, and slowly over years develop a loyal following. Keep in contact with your fan base, all the while being very well funded to properly promote your indie releases."

Industry veteran Howard Thompson agreed that for most bands, major labels are "irrelevant." As for the current state of the music business, Thompson added, "The saddest thing about the music business right now is that the stories aren't as good [as they used to be], and books like this exist." Ouch!

Nancy Kravitz, aka Mr. Nancy, the self-described "poppy-punk" bass player for numerous San Francisco bands, has been gigging around the country for over a decade. She's been signed to major and indie label bands and still believes in the traditional approach, including "a lot of radio and video exposure, a great live show, and touring to support a well- recorded record, all with lots of promo." Mr. Nancy, like other musicians surveyed, believes in the power of the Internet. "It provides widespread attention," she says, "which lets you do your own thing more easily."

We concluded in 2004 that although the Internet is helpful to a band's promotional arsenal, it hasn't dramatically altered the essential elements for a band's success.

In 2006, as we complete the fifth edition of this book, we are seeing (finally) true self-sufficiency in terms of music production and promotion. It is now possible to compose, record, mix, master, duplicate, promote, and distribute an excellent recording without leaving your garage. And the same is true for the creation of music videos and merchandise. With the proliferation of web services such as iTunes, MySpace, YouTube, and Blogger, a band can build a following in their hometown or around the world. And even more unbelievable: some bands can even make a living solely from digital downloads.

Making the music industry more accessible has also made it more competitive. There are thousands of bands competing for the attention of music fans. And in the end, success in the music business depends on the same crucial elements: good tunes, great performances, and smart business sense.

How This Book Can Help

This book can help steer you through some of the common problems and crises experienced by most bands. These include:

• Disputes between band members. Few bands get along harmoniously all the time. Sometimes confrontations are good, because they may spark the band creatively. Most of the time, however, confrontations are bad for band business because they distract the group from its major purpose -- making music. Chapter 2 offers a simple band agreement that can help prevent disputes over money, ownership of the band name, and ownership of band equipment. Chapter 11 provides suggestions for avoiding disputes in the recording studio. Chapters 7 and 8 have tips on avoiding fights over song ownership and division of song income.
• Management issues. A manager can be an excellent buffer between your band and the business. A bad manager, however, can be a major disaster. Chapter 3 provides background on the common ways that managers screw bands and how to avoid them.
• Lawyers. Depressing as it may seem, lawyers run a large portion of the music business. There are occasions when your band must hire an attorney -- for example, to negotiate a major contract, or to sue or to defend your band in a lawsuit. In Chapter 4 we discuss when a lawyer might be necessary, suggest ways to choose the right one, and provide tips on how to avoid being overbilled.
• Song ownership and music publishing. Ownership and publishing of songs results in the largest revenue in the music business. For that reason, it is potentially explosive territory for bands. Everybody wants a piece of the band's songs. And often band members can't seem to agree on who wrote a song or how to split the revenue. Chapters 7 and 8 deal with these issues and offer some practical alternatives on how bands can divide songwriting income.
• The making and selling of your band's recordings. Some bands make a comfortable living without ever signing with a major label. They perform for years, surviving on the sale of their own recordings. It's not that hard to master the business of making and selling your band recordings. In Chapters 11, 12, and 13 we offer recording tips, suggestions for duplication, and methods of distributing and selling your music online and off.
• Record companies and distribution. Many bands are surprised to find that their troubles really begin once they get signed to a record company. As Kurt Neuman of the BoDeans put it, "We had it made and then we got a record deal." In Chapter 14 we address most of the important issues for an independent record deal, and in Chapter 13 we explain the principles of independent distribution.

Major record deals should be handled with an attorney. Major label agreements are outside the scope of this book. If your band has been offered a recording contract with a major label, you'll need an attorney or an experienced manager to help you negotiate the deal. These agreements often run as long as 100 pages and contain hundreds of provisions that could have seriously negative consequences for your band.

• Taking your band online. The Internet has made it possible for you to bring your band to a global audience without leaving home. Regardless of whether you're tech savvy or a technophobe, you'll need to follow some basic rules for staying out of trouble with website developers, hosts, and domain name users. In Chapter 15 we talk about issues involved when taking your band online, and in Chapter 13 we explain how to sell CDs and downloads online.
• Band names. The right to use a band name has caused problems for many bands. The country band Shenandoah paid over $500,000 to settle three lawsuits over its name. The lawsuits were so burdensome that the band ultimately filed for bankruptcy. In Chapter 9 we'll explain trademark and other basic band name issues and provide you with a method of researching and registering your band's name.

Written Agreements: Your First Line of Defense

Putting agreements in writing will go a long way to avoid misunderstandings and nasty contract disputes. A contract sets up rules for doing business and makes it easier for your band to go after people who have ripped you off. This book provides samples of several common agreements that bands enter into, such as partnership deals, compulsory licenses, and independent record deals. Most of the chapters in this book include a sample agreement that deals with the issues covered in that chapter. Whenever a sample agreement is provided, we explain how to fill it out and modify it to fit your needs.

An ounce of prevention is worth the strongest contract. You should always remember that a contract is not a bulletproof method of protecting yourself. While the contracts in this book will help you protect your band's interests if a dispute arises, the costs of filing or defending a lawsuit in court will often dwarf the benefits even if you win. We urge you to try to prevent problems in the first place by developing "business radar" to help you determine which people and companies are more trustworthy than others. In each chapter, we offer suggestions on researching individuals and companies so that you can make educated guesses as to who is the best match for your band.

Below are some of the agreements you'll find in this book:

Partnership agreement: for all band members, covering how to divide expenses and profits, rights to songs, rights to the band name, and related issues.

Management agreement: for your band and your manager, covering commissions, length of representation, and post-termination issues.

Label-shopping agreement: for your band and your attorney (or whoever is shopping your band to record companies), covering issues such as the extent and length of payment for the representation.

Performance agreement: for your band and the venue that is booking your band, covering the payment and other performance details.

Model release agreement: for your band and any person whose image is used on band artwork or merchandise, covering the extent of the use and the payment.

Artwork agreement: for your band and those providing artwork for recordings or merchandise, covering the extent of the artwork use and payment.

Musician clearance agreement: for your band and any nonband musician providing a performance for recordings, covering the extent of the musical use and payment.

Compulsory license agreement: for your band and any nonband songwriter or copyright holder, dealing with the right to "cover" their song on your band's recording.

Distribution agreement: for your band and distributors of your band's recordings to stores, covering the length, payment, and territory where your record will be sold.

Independent label record agreement: for your band and an independent record label, covering the details of ownership and making of recordings.