Before You Waste Money on a Lawyer: 5 Legal Steps for Every New Artist

7 Legal Steps for New Artists

 

First, a Disclaimer (after all, I ‘m a lawyer).

This series of articles and the forms included in them have been created for informational purposes only and do not constitute legal advice. This article and other articles in this series should be used as a guide to understanding the law, not as a substitute for the advice of qualified counsel. You should consult an attorney before making any significant legal decisions.

What This Article Is About.

This is the ninth installment of an 11-part series I’m writing for Digital Music News on basic music industry agreements.  It discusses business actions a band should take, and can take at no or little cost, without the services of an attorney.

A lot of experts, especially lawyers, advise clients to prepare and enter into a “band agreement” as soon as possible after the band’s formation. A band agreement covers a number of complex business issues. The most important issues are:

  • Decision making
  • Hiring and firing
  • Profits and losses
  • Treatment of leaving members
  • Incorporating or organizing as an LLC
  • Ownership and use of the band’s name
  • Ownership of songs and masters

The best reason to enter into a band agreement when the band is starting out, is that’s the time when everyone in the band is getting along well, whereas it would be difficult to complete an agreement if there is already a dispute among the members. On the other hand, the vast majority of bands and music groups rehearse and publicly perform on a part-time basis, and make little if any money at the beginning of their careers. It may not be worthwhile (i) to spend the time needed to discuss and reach consensus on all the complicated issues usually covered by a band agreement, and (ii) spend the money on an experienced lawyer to draft an enforceable.

The bottom line is if there comes a time when a band starts making good money and it looks as if they have a real future, that is the right time to consider taking the time and spending the money to take more serious legal steps.  In the meantime, any band or musical group can and should take these basic business actions.

Essential Business Actions Any Band or Musical Group Should & Can Do Without Incurring Legal Fees.

So, here are some quick steps you should do yourself, right now (without a lawyer):

  1. Sign a “split sheet” for every song written by more than one individual;
  2. Register all songs and masters with the U.S. Copyright Office;
  3. Register every song with the appropriate performing rights organization (PRO);
  4. Upload the setlist of any live performance containing original songs for payment by your PRO;
  5. Write up a simple agreement that no leaving member can use the name of the band without permission.

1. Sign a “split sheet” for every song written by more than one individual.

What is a Split Sheet?

A split sheet is a document that states who owns what percentage of a song and sets forth the credit each person should have.  A sample split sheet is provided at the end of this section.  A split sheet should be created for each and every song that was created by more than one person, and should be filled out and signed by all the writers before ever shopping it to a third party or trying to license it for placements.

Every day around the world, songwriters collaborate on songs and never clarify who wrote what.  But if you are ever fortunate enough to license your song for a commercial, movie, or TV show, you may find yourself fighting over who owns what percentage of the revenues generated from your song.

All most songwriters and artists want to do is create great music, and it may feel uncomfortable to introduce a split sheet and start dividing up shares of publishing when you’re trying to be creative. Yet, it’s a necessary part of the songwriting process. Have a meeting about split sheets prior to hitting the studio. This way everyone understands that it’s not personal; it’s just business.  Doing this makes everyone feel as though their interests are protected, which can enhance creativity rather than inhibiting it.

How to Complete a Split Sheet

Split sheets should contain the following information:

  • The name of each writer.
  • Percent of ownership. This is key. If the song makes money, this will determine how
  • Credit for each writer, including who wrote the lyrics and who composed the
  • Everyone’s signature.

Below is a sample split sheet:

2. Register All Songs & Masters With the US Copyright Office

Why Register?

Registration is not a prerequisite for copyright protection.  Under the Copyright Act of 1976, a copyright comes into existence as soon as a work is fixed in a tangible medium of expression, and registration is not a condition of copyright protection.  However, registration provides crucial benefits to copyright owners.

Those benefits, which are set forth in the U.S. Copyright Office’s website, include the following:

  1. Registration establishes a public record of the copyright claim.
  2. Before an infringement suit may be filed in court, registration is necessary for works of U.S. origin.
  3. If made before or within five years of publication, registration will establish prima facie evidence in court of the validity of the copyright and of the facts stated in the certificate.
  4. If registration is made within three months after publication of the work or prior to an infringement of the work, statutory damages and attorney’s fees will be available to the copyright owner in court actions. Otherwise, only an award of actual damages and profits is available to the copyright owner.
  5. Registration allows the owner of the copyright to record the registration with the U.S. Customs Service for protection against the importation of infringing copies.

Of the reasons to register set forth above, the most important are that a copyright owner

(i) cannot start a lawsuit for copyright infringement before registering, and

(ii) cannot secure statutory damages or attorneys’ fees without registering.

With respect to (ii), the Copyright Act provides for statutory damages of up to $150,000 per infringement and attorneys fees.  It is crucial that if the work has been published (that is released for sale), the registration occurs prior to any infringement.  Otherwise, the plaintiff must prove actual damages, which can be difficult to quantify, or may equal a negligible amount unless the defendant earned a lot of money from the infringing work.

Also, attorneys’ fees are only available for published works that are registered prior to the infringement.  Similar to other litigation, a lawsuit for copyright infringement can take a great deal of work and time on the part of the attorney.  That is why attorney fees can add up.  It would be difficult or impossible to retain the services of an experienced copyright litigator without the potential for recovering attorney’s fees.

Note that the only way to secure the benefits of copyright registration is to register with the U.S. Copyright Office.  These benefits, contrary to a popular myth, cannot be obtained by sending a copy of your song or master to yourself (even by certified or registered mail).

How to Register

To register a work, including a song or a master, you need to submit a completed application form, a nonrefundable filing fee, and a nonreturnable copy of the work. Here are answers to the most important questions regarding registration:

Where to apply?

You can find and complete the copyright registration application online at copyright.gov/eco (eco is an acronym for Electronic Copyright Office).

How much will it cost?

The basic fee for registering any work, including a song or master, was raised from $35 to $55 in May 2014.  However, the fee is still $35 for registering a single work by a single author.

What else needs to be done?

It is also necessary to provide a “deposit” of the work.  This can be done by uploading an MP3, or you can print out a “shipping slip” to be enclosed with a CD and mail it to the Copyright Office within 30 days of applying for the registration.

Is it possible to register a sound recording and a song in one application?

Yes.  To register a master and a song in one application, click on “Sound Recording” in the drop down menu in the part of the application asking for the type of work to be registered.  Later in the application, there will be a page allowing you to claim music and lyrics as well as the sound recording.

The U.S. Copyright Office’s website (www.copyright.gov) is an invaluable source of information not only on registration, but also on how copyright law protects songs and masters.

Multiple Writers and/or Producers

Any signatory to the split sheet can register the copyright in a song and/or master.  They should include all the other signatories to the spreadsheet as joint “authors” in the application.

3. Register every song with the appropriate performing rights organization (PRO);

What is a PRO?

Any user of music that publicly performs a song must secure a license and pay a royalty to do so.  Songwriters and their music publishers use Performing Rights Organizations (PROs) to collect these royalties.   In the U.S. there are three: ASCAP, BMI, and SESAC.  A fourth PRO, recently launched by music industry mogul Irving Azoff, is Global Music Rights, or GMR.

The PROs collect public performance royalties from radio, television, the internet as well as physical venues such as bars, nightclubs, concert halls, arenas, and other places where live or recorded music is played.

In order to collect public performance monies, you must be a member of one of the three PROs.  Anyone can join ASCAP or BMI. SESAC, the smallest of the three, is selective.

When a song is registered with one of the PROs, the PRO will require the person registering the song to indicate the percent ownership of each writer.  If the band has a manager, she can perform this function.  The registration should reflect the breakdown of ownership in the split sheet.  Even if no split sheet was ever signed, the registration will itself be a record of the percent ownership of each member in the band.

That’s why each member with an interest in a song should check to see if the information supplied to the PRO is accurate.

It is also possible to register more than one song and/or sound recording at a time by carefully following the rules established by the Copyright Office.  See Circular 1, Copyright Basics, p8.

However, it is important to note that if a recording is not released as a single, but is merely contained in an album, the album may be deemed to be “one work”, and statutory damages may be limited to one award per album.  See the decision in Bryant v. Media Rights Productions, Inc., 603 F.3d 135 (2d Cir 2010)

“Based on a plain reading of the statute… infringement of an album should result in only one statutory damage award.  The fact that each song may have received a separate copyright is irrelevant to this analysis.”  Id.at 141.

4. Upload the set list of any live performance containing original songs for payment by their PRO.

Each of the PROs pays its writer and publisher affiliates for live performances at venues across the U.S.  Basically, all the songwriter, who may also be an artist, has to do is submit a set list of songs performed at any venue showing which songs were written by him or her.  Generally, he or she must also provide the venue name, address, size of venue and the dates of the performance.

The songs must be registered first in order to complete this process.

For more information on each of the PROs live performance programs, go to:

  • SESAC: www.sesac.com/WritersPublishers/HowWePay/liveperformances.aspx
  • BMI: www.bmi.com/creators/royalty/live_concert_royalties
  • ASCAP: www.ascap.com/members/onstage.aspx

Anecdotally, I know a singer songwriter in New York City who played shows at bars and restaurants and made about $200 a gig from passing the hat.  She made $1,250 from SESAC by reporting her set lists for a single calendar quarter (one accounting period).

5. Write up a simple agreement that no leaving member can use the name of the band without permission.

It’s all about protecting the band name.

A band or musical group can handle the issue of who owns the name by using a form such as this:

Date: _______________

Re “__________” [Name of band]

This is to confirm that we, the sole members the above referenced band, hereby agree among ourselves that each member of the band is a joint owner of the name of the band, provided that no leaving member, whether that member leaves voluntarily or not, shall be able to use the name of the band in connection with the entertainment industry including the music business.

This Agreement contains the entire understanding of the parties hereto relating to the subject matter hereof and cannot be changed or terminated except by an instrument signed by all of the parties hereunder. The validity, interpretation and legal effect of this Agreement shall be governed by the laws of the State of _____ applicable to contracts wholly entered into and performed entirely within the State of _____. [Use the state where the band members reside]

Signature below will indicate agreement of the above.

Read and Agreed:

_____________________________________

Read and Agreed:

_____________________________________

Read and Agreed:

_____________________________________

 

Note that sometimes a band will want to handle ownership of the band’s name in a different manner than in the sample agreement.  For instance, where two of the members founded the band and then added a third or more members later, the founders may want to exclusively own the rights in the name, or they may wish to allow leaving members the right to use the band’s name, provided that the leaving member uses the words “formally of”.

For a band that wishes to treat the ownership or use of the band’s name in a different manner than the sample agreement, it may be wise to hire a lawyer.

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Steven R. Gordon, Esq. (steve@stevegordonlaw.com, www.stevegordonlaw.com) is an entertainment attorney specializing in music, television, film and video. His clients include artists, songwriters, producers, managers, indie labels and music publishers as well as TV and film producers and digital music entrepreneurs. He also provides music and sample clearance services for producers of any kind of project involving music. Mr. Gordon is the author of The Future of the Music Business (Hal Leonard 4th ed. 2015).

 

The author also gratefully acknowledges the assistance of Ryanne Perio, Esq. in the preparation of this article.

5 Responses

  1. Sasha

    My accountant advised forming an LLC – or better yet, multiple LLCs – for myself as a musician.

    Until now I have been a sole proprietor. However, as I take on larger composition and production projects, and even because I am releasing original music (which can be the potential target of a copyright infringement lawsuit, especially in these litigious days), and hiring in session musicians, etc, the accountant recommended the LLC as a way to protect personal property from vulnerability.

    I was thinking to form a single LLC, but he preferred at least two: one for the label, and one for the studio/production. I didn’t discuss the publishing aspects, but perhaps he would recommend that as its own LLC also, or rolled into the label.

    Any thoughts on this? Multiple LLCs seems an excessive expense and hassle when income is not yet so substantial.

    Reply
    • Steve Gordon

      Multiple LLCs multiplies limited liability. But if there no assets it’s of limited value.

      Reply
  2. Rick Shaw

    Great advice. Whenever an artist faces anything legal, they should just wing it after reading a short article online or a book. That’ll really serve them well. Sheesh.

    Reply
  3. Steve Gordon

    If you read the article carefully, you would not be “winging it.”

    Reply
  4. Rick Shaw

    Yeah, don’t worry about retaining legal counsel. That’s really wise advice.

    Reply

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