May 4th 2012, the music community mourned the passing of musical pioneer in Adam Yauch. Easily predicted – sales skyrocketed the week of Adam’s passing. According to Billboard figures, in a two day period singles jumped 802% while album sales surged 1,235%. Hours prior to Adam’s passing, The Beastie Boys were slapped with an untimely lawsuit for alleged copyright infringement on several samples contained in their greatest hits. All the attention brings along two very interesting questions: (1) What happens to the income generated from sales, and (2) what happens to the group moving forward, does the group “Beastie Boys” exist, and if so, who defends the lingering lawsuit? Blame it on the attorney curse but my first thought following the news of his passing and increased album sales was that this could be a colossal mess. Not “could” – it “will.” Luckily for the parties involved most will take place out of the public eye. However, while the public mourns, I can assure attorneys, band members and Adam’s beneficiaries will be sitting in a backroom untangling the inevitable legal labyrinth. Eventually all will be resolved, but to generate answers to the questions presented above, all paths will lead to one piece of paperwork – The Band Agreement.
I have no idea if The Beastie Boys have a band agreement and I have no idea what language it contains, assuming they do; but a band agreement is literally the foundation for musical groups which dictates a host of potential legal issues. The band agreement is the internal blueprint of how your business (i.e. the band) is run. Agreed upon by the group members, the document ultimately dictates how dollars are to be divided, voting formats, ownership, the legal rights for departing members, the legal rights for passing members, etc… Prior to the inclusion of labels, managers, agents, and so forth, the band agreement becomes the document everyone must follow.
In this case, like most typical band agreements, The Beastie Boys likely addressed how assets would be divided, and more importantly, to who: active members, expelled members or deceased members. Somewhat straightforward, active members may be defined as one of the participating members of the group. EXAMPLE – If Band X has four members, and all actively perform, band income may be divided equally 25% to each member. Expelled members (i.e. -members kicked out of the group for various reasons), typically have less rights to band related income once they depart the band (songwriting and publishing remain completely different issue). The definition of deceased members is an area where band agreements vary drastically – minus the obvious exception of someone being dead. Sometimes, if language allows, a deceased member may transfer his/her rights to band related income – later referenced via their will. Other language may suggest “band related income” seizes once a member passes (again, songwriting and publishing remain separate issues). EXAMPLE, if BAND X has four members and one dies by a freak mudslide accident, coincidentally the remaining band members play a show three days later for a fee of $12,000 – the active members would divide $12,000 three ways ($4,000 per member), not four ways ($3,000 to the performing members and $3,000 the deceased members estate). Pending on the contractual language with The Beastie Boys band agreement, Yauch beneficiaries may or may not see a portion of the album sales spike. As for the pending lawsuit, once again the band agreement will ultimately dictate who’s in the band; therefore identifying the proper defendants in this case. If Yauch, despite being deceased, is deemed an “active member” this legal mess will unfortunately become inherited. What about the group name – Beastie Boys? Who owns it? Legally speaking, do three members have rights in the name? Can Yauch’s wife use the name “Beastie Boys” for monetary gain? Can a third member be added in Yauch’s absence but still call the band Beastie Boys? Will the label release additional albums without Yauch? Does the label own the trademark for “Beastie Boys” therefore potentially recreating the band with new members as they see fit? You guessed – all of this would be dictated via the band agreement. In the Beastie Boy situation, this will play out over time and we’ll receive a subtle glimpse as to what was in the confidential agreement.
The Beastie Boys are a widely popular group operating at the highest of levels, so do band agreements apply to the indie band just starting off? Absolutely. Regardless if major label success arises, band agreements dictate how the business operates – not to mention having a plan is just good business. If a major label opportunity should arise, success has the potential to develop rapidly, therefore the band agreement becomes an afterthought – which I can assure becomes detrimental. At a minimal level – every band should have a document defining 4 basic terms:
1. Voting – Develop the appropriate method for deciding band related questions. Do we invest in more equipment? Do we save money or spend money on development? Do we hire manager X or manager Y, etc.. Identify decisions that need a unanimous vote from band members and which decisions simply need a majority vote. Decide if everyone shares equally in votes (i.e. – 1 vote per member), or does someone deserve more say based upon financial investments or duty overload. Defining the voting structure allows for ultimate transparency and eliminates backend bickering.
2. Income/Ownership – It’s imperative to set an income structure – meaning when a dollar comes in the door, where does it go? Are members being paid equally, or is a percentage being earmarked for development, equipment investments, etc? Ultimately this will compliment the voting structure previously discussed. Ownership on the other hand becomes a sticky sticky sticky issue. Ownership issues can be simple like who’s the songwriter, who owns publishing, relevant splits and so forth. Other times ownership issues are not clear (often unpredicted). EXAMPLE, many bands file for copyright protection, but whose name is on the application? Is it one member? Guess what, legally speaking the filing member owns the songs – not the group – therefore the band agreement must untangle ownership arrangements.
3. Trademark – Who owns the band name and logo? Don’t assume everyone shares in equal parts. If BAND X consist of five members, and three leave the group after six months, can the remaining members still be called BAND X? Can the departing members refer to themselves as BAND X? Have a plan to combat this situation, and statistically speaking, it will arise. EXAMPLE, Imagine operating under the name, BAND X, for five years. The energy and effort in developing a fan base is very expensive. Now imagine, one member decides to leave and begins calling himself BAND X. Now we have market confusion – two BAND Xs. What happens if this argument ends in a lawsuit and the courts determine that neither party has rights to the name BAND X? Everyone has to start over – new band, new name, new fans, new development, etc = not good. A trademark can be the cash cow or the ultimate money pit.
4. Jurisdiction/Venue – This relatively unknown factor is likely the most argued element between entertainment attorneys. For bands, should an issue arise, you want to know how the dispute will be argued, in what court (if any), where the dispute will take place, what law will apply, etc.
For a more detailed explanation of band agreements and more real world examples, read my Kings of A and R interview about legal techniques for indie bands or my TECHDIRT article concerning the Hollywood Records / Breaking Benjamin’s dispute.
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