Forming and operating a band is often thought of as a purely creative endeavour, but any professional band is also a business and, as with any business, there are legal requirements to meet and risks to mitigate.
Registering an ABN
One of the first steps for any band that intends to earn money is registering an Australian Business Number (ABN). If the band is operating as a partnership, which is generally the most common legal structure for a newly formed band, the ABN should be registered in the names of all members. If the band has incorporated a company, the ABN should be registered in the name of the company.
You will need an ABN to issue a valid tax invoice, which is something that most venues will require you to provide them with before they’ll pay you for a gig.
Registering a business name
Unless your band is operating as a company and has been incorporated accordingly, it’s likely that the band is operating as either a sole trader or a partnership and will need to register the band name as a business name.
An example of a band that may operate as a sole trader is where one person operates the band’s business, paying its expenses and collecting its profits, while the rest of the band is made up of session musicians or sub-contractors. An example of a band that’s operating as a partnership is where all of the members contribute to the band’s expenses and are entitled to share in the band’s profits.
A sole trader that trades in their own name, such as a solo artist, doesn’t need to register a business name provided that they’re trading using their real name and not some sort of variation of it, but in the heavy music arena that doesn’t happen too often.
Business names can be registered online at asic.gov.au for $34 for one year of registration or $78 for three years. You can also use the registration of the business name as evidence to enable you to register a .com.au domain name for your band.
Entering a band agreement or shareholders’ agreement
If your band is operating as a partnership, entering into a band agreement to formalise that relationship can help prevent countless problems in the future and, if your band is operating as a company, you should consider entering into a shareholders’ agreement for the same reasons.
It’s not uncommon for members to treat the band as a friendly, artistic, collaborative endeavour, which, granted, it is, but it’s also a business and, as any business-savvy person will tell you, it’s important to formalise that business relationship with a written agreement.
On countless occasions I’ve had clients involved in disputes with aggrieved ex-band members. Disputes will arise over a variety of things, some legitimate and some trivial and motivated by spite, but they often revolve around the ownership of equipment, intellectual property (the band name and copyright in songs, sound recordings and artwork), other band property (CDs, banners, equipment, merchandise, etc.) or money.
These kinds of disputes are not only difficult for the parties on a personal and emotional level, but also on a professional level because they can damage the band’s reputation, cost the band a lot of money in legal fees, prevent the band from releasing or selling a recording and can even result in the band having to change its name. All of which can be hugely detrimental to a band, both financially and otherwise.
A good band agreement or shareholders’ agreement will cover the majority of circumstances that commonly give rise to disputes, thereby stopping any arguments in their tracks. A band agreement will usually set a band back somewhere between $500 and a couple of thousand dollars and a shareholders’ agreement would generally cost somewhere between around $1,500 and $5,000, depending on the specific requirements of the band and the complexity of the agreement, but it’s well worth having a lawyer draft and tailor an agreement to suit your band’s specific needs because the legal fees split between the members now is a hell of a lot cheaper than getting lawyers involved later when something goes wrong. It’s also well worth using a music industry lawyer as, while these types of agreements are similar to agreements used for other kinds of businesses, there are a lot of music industry specific things that lawyers that don’t practise in the area wouldn’t be aware of.
If you ask, you may be able to get a band or shareholders’ agreement drafted by a lawyer for a flat or capped fee. That way you’ll know exactly what you’re up for, but if you go to a lawyer with a dispute later you’re going to be looking at legal fees of, on average, between $300 and $600 per hour plus, if the matter goes to court, you’ll need a barrister on top of that so you can double those figures. As they say, sometimes you’ve got to spend money to make money or, in this case, you’ve got to spend money to avoid spending more money.
Copyright
It’s really important for bands to have a basic understanding of copyright law because a band’s business revolves around copyright material.
There are two main types of copyright that are relevant to bands and musicians. The first is the copyright in the compositions of the songs and the second is the copyright in the sound recording of the songs.
Both types of copyright are not necessarily owned by the same people. Normally, unless they’ve assigned their rights, the copyright in the composition is owned by the songwriters and that ownership is registered with APRA (Australasian Performing Rights Association) so that the songwriters can receive royalties. The copyright in the sound recording may be owned by any number of people and varies depending on agreements made in relation to its creation, but most commonly it will be owned the band that played the songs on the sound recording, the person who paid for the sound recording (eg. record label) or the recording studio if the band hasn’t paid their bill (some recording studio contracts will include a clause whereby the studio retains ownership of the master recording until their fees are paid).
Amanda Mason is a lawyer at Media Arts Lawyers, a boutique music, entertainment industry and commercial law practice. For further information or to arrange a consultation with Amanda, please visit Media Arts Lawyers’ website.
