By John Seay, Atlanta Entertainment Lawyer: The Seay Firm LLC (@TheSeayFirmLLC)
On April 5, 2012, former members of the band Absent Element filed a lawsuit in North Carolina Superior Court alleging that their former singer defrauded them out of thousands of dollars of royalties for four songs they claim they wrote as a group. What might have otherwise been a petty band dispute received national attention, however, because the former singer for the band, and the defendant in the lawsuit, is none other than Christopher Adam Daughtry, better known to his legion (yes, legion) of fans simply as Daughtry.
While I certainly don’t relish other people’s misfortunes, Daughtry’s predicament underscores the importance of some advice I regularly give my musician clients: entering into a band partnership agreement (“BPA”) at the outset of your career can save you a lot of headaches down the road. In the case of Daughtry, the story follows a familiar arc. Absent Element operated for years without any written agreement between the members as to ownership of band property, including tangible items like the tour van, the PA system, and recording gear, as well as intangible items like the band’s name and other trademarks, copyrights in the songs, and any and all streams of income.
For years that arrangement may have worked for Absent Element. After all, when little or no money is coming in, there’s not a lot to argue over except the usual creative differences. But money and success change people. Suddenly, the lead singer wonders why he’s sharing profits equally with the drummer who doesn’t write any songs and shows up late to band practice. The bass player develops delusions of grandeur. And things get even stickier if the band breaks up. Who owns the band’s name? Who owns the band’s songs? The bad news is that, absent any agreement to the contrary, in the eyes of the law your band is a partnership and general partnership rules apply. In other words, you all own everything equally and share equally in all profits and loses associated with the band.
Being a former musician myself, I know that nobody particularly wants to be the guy who walks into band practice with a contract for everyone to discuss and sign. You may feel like bringing a contract into the band environment suggests that you mistrust your bandmates, who are often also your friends (or at least they are when you start the band). Additionally, a lot of bands think that if the group isn’t even making money, then why risk starting a fight over how to divide future but-as-yet-nonexistent profits?
To answer those concerns, first, your band is your business. You should prepare for success, because presumably that’s what you’re after. But second, the best time to discuss potentially thorny issues as to how to divide future royalties is before the money starts pouring in. Granted, if you formed your band yesterday and are still playing covers at the local coffee shop, you might not need a BPA. But if your band is performing original songs in legitimate venues, and especially if you have received attention from labels, publicists, etc., then you should really consider drafting a BPA or asking a lawyer to draft one for you.
Now, back to Absent Element. My understanding—based solely on the Complaint filed in North Carolina Superior Court—is that the band had no BPA. They were “all for one, and one for all,” even crediting each song on their albums to the band rather than to individual members. Of course as you probably know, in 2006 Daughtry achieved national attention as a contestant on “American Idol.” Although it was a band decision that he audition for the gig in the hopes of bringing national attention to Absent Element, after making it to the final four of the competition, Daughtry had other plans. Shortly after the end of the competition, he left Absent Element for good and went on to a lucrative career as the frontman of his own band. Daughtry’s records have since sold millions of copies.
Unsurprisingly, Daughtry’s rapid success and subsequent abandonment of Absent Element inspired hurt feelings in the remaining members of the band, who suddenly found their singer, well, absent. Hurt feelings have prompted countless frivolous lawsuits, but what makes the Absent Element lawsuit more legitimate is the fact that it’s based on allegations that Daughtry took various elements from four Absent Element songs and used them on songs that he released on his solo albums, and then failed to account to the band.
Remember back when I told you that—absent any agreement to the contrary—your band is a partnership and all partners share the assets of the band equally? Well, there you go. The songs are probably owned equally by the members of Absent Element. In my opinion, the former band members at least have a strong enough case to force a healthy settlement. Could a solid BPA have averted this crisis? Maybe. After all, just having the contract is one thing—you also have to follow it. But at least a BPA provides the rules of the game and (ideally) anticipates various hiccups in the road.
How can you make sure your band is as protected as possible as you begin your career? First, you need to determine what kind of band you are. Below are some examples.
If you are the undisputed leader in your band, and you write all of the songs and hire other musicians to perform them, then you don’t need a BPA because you are not a partnership, you are a sole proprietorship. What you need is a good independent contractor agreement that you ask your musicians to sign, and which states that you own any tangible and intangible assets of the band, except for any items (like instruments) brought in by individual contractors of the band. You will also want some language that states that any contributions the contractors make to your songs are assigned to you. That way, if one of your hired hands adds a killer riff to one of your songs, you won’t have to worry about him coming out of nowhere five years down the road demanding a piece of the royalties.
Of course, remember that you are a benevolent dictator, so to the extent a contractor contributes something to a song that really completes it, you should consider rewarding that individual with a songwriting credit on that song only. There are some other important provisions you’ll need in your independent contractor agreement, but in the interests of space, I’ll not list them here. Feel free to contact me to discuss further.
Maybe your band is a true partnership, where every member has an equal voice. The Rolling Stones operate like this, as do probably the majority of bands out there. If this is you, then you should strongly consider drafting a BPA between the members. You’ll want to at a minimum address the following common areas of concern:
- Who or which individuals own the band name and logo;
- Who or which individuals own the copyrights;
- What happens when a founding member leaves the band;
- How are new members added to the band;
- How are assets of the band—including royalties—divided among the members;
- How will band debts by divided among the members;
- How will decisions be made and disputes be resolved, and how will deadlocks be broken in the event of a stalemate; and
- How can the BPA be amended?
These are only some of the items your BPA will need to address. Again, in the interests of space, I’ll not list them here. Feel free to contact me to discuss further.
If only some of the members of the band contribute creatively, then you’ll need to account for that in your BPA. Maybe if the guitarist and singer write all of the songs, then they deserve more of the royalties and should have their voting rights weighted accordingly. You can either cover all of that in a typical BPA, or those main members of the band can function as the head of the beast, so to speak, and create a BPA as between them, and then hire independent contractors to round out the group. Don’t get caught up in the names of these various agreements. Figure out how your band operates, and if you’re confused as to how to address certain issues or what kind of contract to use, then contact a lawyer to help you decide. Whatever structure your band has, an agreement can be drafted that covers it.
Note here that to the extent your band has discussed partnership issues orally and have reached an understanding, then that’s great—but know that people’s memories tend to change over time and miraculously align with their own self-interest. Plus, any oral agreement might be subject to certain other legal restrictions and requirements that might render it useless. You should consider taking that extra step and simply writing your agreements down. If you’ve already agreed to it anyway, then this step should be relatively painless.
Keep in mind too that your agreement doesn’t necessarily have to be long and use lawyerly language. Even a napkin with some signatures on it can (with the addition of at least a little bit of other language) be a contract, as the Black Crowes almost learned the hard way (although please, put a little bit more effort into your contract than that). You can always expand your agreement later to cover some of the other stuff if you need to, although my advice is to knock most of it out at once and have it out of the way.
Finally, if you’re at a point in your career where incurring liability is a concern, then you may want to incorporate. However, a subsequent article will discuss whether your band needs to incorporate, and if so, which form should it choose. In the meantime, let’s all learn a lesson from Absent Element, or Pink Floyd, or any other number of bands who have found themselves wrapped up in expensive lawsuits because they failed to take that easy initial step of defining the relationship. Do your homework now and set your band—which is your business—up properly so that it can grow as organically as possible.
 Whether or not this is true, I have no idea. This article is not meant to assess the veracity of those allegations, but rather to use the predicament as an example of one kind of thing that can go wrong when bands get into disputes.