Free Legal Updates at Nolo.com 6TH EDITION Music Attorney Rich Stim How to Run Your Band’s Business NOLO ® A L L F O R M S O N C D - R O M L F O F O F R M S O N C D - R O M Law THE #1 BUSINESS BOOK FOR BANDS! • Protect and publish your music • Create a solid band agreement • Deduct expenses and manage taxes “ If you’re serious about a career as a performing musician, you’d have to be a damn fool not to rush out and buy a copy of this book.” JIM AIKEN, KEYBOARD Books & Software Get in-depth information. Nolo publishes hundreds of great books and software programs for consumers and business owners.  ey’re all available in print or as downloads at Nolo.com. Legal Encyclopedia Free at Nolo.com. Here are more than 1,400 free articles and answers to common questions about everyday legal issues including wills, bankruptcy, small business formation, divorce, patents, employment and much more. Plain-English Legal Dictionary Free at Nolo.com. Stumped by jargon? 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Today we are proud to off er a full range of plain-English law books, legal forms, software and an award-winning website. Everything we publish is relentlessly researched and tested by a dedicated group of in-house legal editors, who together have more than 150 years’ experience. And when legal changes occur after publication, we promptly post free updates at Nolo.com. Tens of millions of Americans have looked to Nolo to help solve their legal and business problems. We work every day to be worthy of this trust. Ralph Warner Nolo co-founder Emma Cofod Music Law How to Run Your Band’s Business By Attorney Richard Stim 6th edition SIXTH EDITION SEPTEMBER 2009 Cover Design SUSAN PUTNEY Book Design TERRI HEARSH CD-ROM Preparation ELLEN BITTER Proofreading ROBERT WELLS Index ELLEN SHERRON Printing DELTA PRINTING SOLUTIONS, INC. Stim, Richard. Music law : how to run your band’s business / by Richard Stim. 6th ed. p. cm. Includes index. ISBN-13: 978-1-4133-1056-6 (pbk.) ISBN-10: 1-4133-1056-7 (pbk.) 1. Band musicians Legal status, laws, etc United States Popular works. 2. Performing arts Law and legislation United States Popular works. I. Title. KF390.E57S87 2009 344.73'097 dc22 2009011904 Copyright © 1998, 2001, 2003, 2004, 2006, and 2009 by Richard Stim. All rights reserved.  e NOLO trademark is registered in the U.S. Patent and Trademark Offi ce. Printed in the U.S.A. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without prior written permission. Reproduction prohibitions do not apply to the forms contained in this product when reproduced for personal use. For information on bulk purchases or corporate premium sales, please contact the Special Sales Department. Nolo, 950 Parker Street, Berkeley, California 94710. Please note We believe accurate, plain-English legal information should help you solve many of your own legal problems. But this text is not a substitute for personalized advice from a knowledgeable lawyer. If you want the help of a trained professional—and we’ll always point out situations in which we think that’s a good idea—consult an attorney licensed to practice in your state. Acknowledgments anks to those who provided me with helpful information in various chapters: Craig Leon, Kathryn Roessel, George (area 51) Earth, Frank Gallagher, Andrea Ross, Andy Olyphant, Lindsay Hutton, Howard ompson, Don Ciccone, and Marc Weinstein. is book is dedicated to Joseph D. Stim and Roberta Stim. About the Author Richard Stim is a lawyer and musician who has performed with two bands, angel corpus christi (www.angelcorpuschristi.com) and MX-80 (www.MX- 80.com). He is also the author of other books including Getting Permission (Nolo), Wow! I’m in Business (Nolo), and Patent, Copyright & Trademark: An Intellectual Desk Reference, (Nolo). Downloading Forms and Other Materials e printed version of this book comes with a CD-ROM that contains legal forms and other material. You can download that material by going to www.nolo.com/back-of-book/ml.html. You’ll get editable versions of the forms, which you can ll in or modify and then print. Table of Contents Your Legal Companion 1 1 Yes, Your Band Is a Business! 3 Taking On the Music Industry 4 Your Band Is a Business 4 Apathy Is Not the Answer 5 Common Band Issues 5 Written Agreements: Your First Line of Defense 7 What’s New in is Edition? 8 2 Band Partnerships and Beyond 9 Who Needs a Band Partnership Agreement? 12 Using a BPA to Avoid Getting Screwed 14 Abbreviated Band Partnership Agreement 16 Full-Length Band Partnership Agreement 21 What’s the Right Business Entity for Your Band? 38 Converting From a Partnership to an LLC 48 3 Management 53 What Is a Manager? 55 Avoiding Common Management Problems 56 Abbreviated Management Agreement 62 Full-Length Management Agreement 68 Variations on Management Arrangements 81 [...]... 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. .. 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. .. with understanding how to run a business and to do it successfully This doesn’t mean your band must micro­ anage every detail of its m business As your band develops, you will Chapter 1  |  Yes, Your Band is a Business!   |  5 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... Intention to Obtain Compulsory License 273 Mechanical License and Authorization for First-Time Recording of Song 277 How Many CD Copies Should Your Band Order? 280 How to Avoid Getting Screwed During the Duplication Process 281 13 Selling Your Music .283 How Do Records Get Into Stores? .285 Consignments 287 Independent Distributors ... lawyer might be necessary, suggestions on how to choose the right lawyer, and tips on how to avoid being overbilled • Song ownership and music publishing Ownership and publishing of songs results in a lot of music business revenue For that reason, it is potentially explosive territory for bands and often members can’t seem to agree on who wrote a song or how to split the revenue You’ll find plenty of... 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 posttermination issues • Label-shopping agreement: for your band and your attorney (or whoever is shopping your band to record companies), covering issues such... that your band is a business But what kind of business is it? Every business has a legal structure, which we refer to as a business form You’ve probably heard of most of the common ones: • Sole proprietorship In a sole proprietor­ ship, you own and operate the band by yourself and are personally liable for business debts You pay the other band members, either as employees or as independent contractors...4 Attorneys 83 Entertainment Attorneys 84 Locating, Hiring, and Firing an Attorney 84 How to Avoid Getting Screwed by Your Attorney 89 Having an Attorney Shop Your Music 91 Label-Shopping Agreement 94 5 Band Equipment 105 Equipment... Situations: Understanding Your Band’s Tax Responsibilities 366 Income Taxes: Different Rules for Different Businesses 367 Tax Deductions: Secrets for Saving on Taxes 374 Payroll Taxes: When Your Band Hires Employees .388 How to Get a Federal Tax ID Number (FEIN) for Your Partnership 390 Appendix A How to Use the CD-ROM 393 Installing the Files Onto Your Computer 394... 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 . looked to Nolo to help solve their legal and business problems. We work every day to be worthy of this trust. Ralph Warner Nolo co-founder Emma Cofod Music Law How to Run Your Band’s Business By. Arrangements 81 4 Attorneys 83 Entertainment Attorneys 84 Locating, Hiring, and Firing an Attorney 84 How to Avoid Getting Screwed by Your Attorney 89 Having an Attorney Shop Your Music 91 Label-Shopping. 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