With a New Year comes everyone’s favorite, New Year’s Resolutions! And while we applaud all those hitting the gym, let’s be honest, it’s music that is on our minds. That’s why Sonicbids and Bandzoogle are teaming up to bring you a series of tips and tricks to make 2012 the best year yet for your band! With everything from budgeting and touring to getting your act together online, we’ve got plenty of info to share. First up are tips on some of the most important and often most overlooked parts of being in a band – agreements and budgeting. We know they aren’t the sexiest of topics, but they are super important to the success of your band. So go ahead, get reading and get to rocking 2012!
Band or brothers: Create a Band Agreement
One way to help you stay on top of your finances in 2012 is to draft a band agreement. Even if your band has been together for a while, you never know when revenues & expenses will start to get complicated, and if it isn’t clear how to deal with those issues, conflict can arise, or worse, bands can break up over things that could have easily been dealt with beforehand.
Key points for your band agreement:
- Band name, band members, key man: Start with the basics: Who’s officially in the band? Is there a “key man” in the band? What if they leave? Can the band continue? What if other members leave, who holds the rights to use the band name?
- Term: Although there might not be a set length of time for the agreement itself, it will be important to know when the band will be considered officially broken up and who, if anybody, holds the rights to use the band name, and how future income will be distributed.
- Type of partnership: Will you be creating a business under the band’s name? If so, what kind of business will it be? A partnership? Will you incorporate? It’s probably best to talk with an accountant about which option would be best for your situation.
- Decision making: Do all band members have an equal vote? What issues require a unanimous vote? What issues require a simple majority? Things like expenses (equipment, touring, marketing, etc.), hiring a manager, publicist, signing a record deal, etc., are all important issues that you’ll need to make as a band.
- Division of duties: What band member is in charge of what? Updating your website, Facebook, Twitter, email correspondence, accounting, booking gigs, the list of tasks involved in running a band is almost endless. Delegate and spread out the tasks as much as possible to avoid having certain members burn out.
- Expenses: Decide who will invest money into expenses like purchasing equipment, buying a van, paying for marketing/promotion, merchandise, etc. It could be decided on a case by case basis, or all band members invest money equally whenever it is needed. Ideally, you always have money in the band’s bank account for those expenses, but you can’t count on that always being the case.
- Income: Possibly the most important issue, how will income be divided within the band? Income streams can include music sales (physical and digital), merchandise, live shows, licensing, sponsorships, and more. Will all income be divided evenly? What if there is debt to pay back for past investments (recording an album, merchandise, etc.)? You could decide on a formula where 100% of revenue goes to pay back debt, then profits are split equally, or band members take a small % each as a per diem (especially useful on the road) and the rest goes into the debt, etc.
- Songwriting & Royalties: Although this could be included in the “income” section, I wanted to bring special attention to this issue. Songwriting can be tricky in a band setting, since there is often a lot of collaboration going on. There’s no right or wrong way to approach this, as long as everyone in the band agrees that it’s fair. Maybe there’s a principal songwriter that gets a higher % or a majority %, and the rest is split between the other members. What happens when a band member leaves or is kicked out of the band? Do they still get to share in songwriting royalties? What about new members who join the band?
As you can see, there is a lot to think about when it comes to running a band as a business, and many bands break up because things like expenses, income and division of duties were not decided beforehand.
To see some sample band agreements, there’s a pretty good one over at Music Biz Academy, or doing a simple Google search for “band agreements” should give you a few good options for templates you can build from. And once you have something drafted for your band, you should probably have an entertainment lawyer look it over before anyone signs it.
Mo’ money mo’ budgeting: Create a budget
Once you get your agreement together, then you can start budgeting out your year. While we could write a book about this topic (and there are many already!) here’s a list of some key expenses to anticipate and consider.
- Touring. Chances are you’ll want to go on the road at some point this year. When you determine where you want to go, start budgeting out what your anticipated expenses and needs for the year. Don’t forget to consider the changing gas prices or exchange rates if you’re traveling across a border for the following: Transportation & Rentals, Food & Drink (Band tip: Most bands set a per diem), Hotel & Lodging, and an Emergency Pool (you never know when you’re going to have car or gear issues *knock on wood*).
- Recording. Even if you’re not planning to release a full length album, you might want to consider releasing an EP or a series of singles to keep your fans engaged all year long. Here are the major expenses when putting out a professional recording: Rehearsal Space (Band tip: Try sharing the space with one or two other bands to cut costs), Studio Time, a Producer/Engineer (if you do have a band member who is mixing the record, how much do they get paid?) and Mastering.
- Merch and Physical Recordings. If you decide on some physical distribution for your recordings, budget out what it’d cost to make CDs or even some Vinyl and your anticipated sales. In addition to the cost of the ordering and shipping of your recordings, T-shirts and other merch, don’t forget that you’ll actually need someone doing the artwork! Band tip: Think about working with someone who knows how to keep your band’s brand looking consistent.
- Gear. The majority of bands agree that each member pays for their own gear but you might consider a few pieces to be purchased by the band account (Band tip: Make sure you have in your agreement what happens to that gear if you guys split). Sometimes you might need to rent a PA or a few extra loop pedals to perform something live.
- Business Expenses. The final part of your budget should entail your business expenses. Everything from your website and EPK costs, Press Photos (please, don’t skimp on investing in these!), digital distribution, cover songs and if you’ve got an agent or publicist helping you out, you’ll have to pay them, too. Last but not least, think about the education you want to get this year. Are there some seminars or conferences you’d like to attend? Band tip: While there’s plenty of helpful info for free online (like this article, hopefully!) furthering your knowledge about the business is definitely a worthwhile item to put in the budget.
There’s plenty more tips to go! Next week we’ll talk fan-funding and merch sales as ways to support your music this year. Have questions or tips for other artists? Leave us notes in the comments!
