Treating the band like a business...

[TrickyBoy]

There's been a lot of talk about that here and we're really starting to look at it that way as a band as well. I had an idea that I wanted to bounce off y'all regarding pay. What do you think?

 

A real "business" never pays out all the money to their employees leaving nothing for "the business". So my idea was this: We split our money evenly 5 ways, logically that's 20% per person. I want to lower everyone's "take" to 16%, which totals 80%, leaving the other 20% to go into a band account. This can be used for capital expenses (PA, lights, etc.) and/or operating expenses (marketing, merch, etc.). Then I want to have a band meeting every 3 months where we look at the account, decide if we have any upcoming expenses and then whatever's left split up (leaving say $500 in the account).

 

For example: We play 15 shows in a quarter totaling $22,500 in gross pay. That means each person was paid a total of $3600 for the quarter and "the band" has $4,500 in it's account. We have $200 in operating expenses and decide to spend $2K on new subs, leaving $2300 in the account. We take $500 to "seed" the account for the upcoming quarter and take the remaining $1800 and split it 5 ways, so at the end of the quarter, everyone gets a $360 "bonus".

 

After probably a year, we won't have the need to make as many capital purchases (our PA needs work, which is what is precipitating this) so we can probably up the "upfront" percentage that everyone gets. But in the short term, I'm really thinking this is the way I want to go.

 

What do y'all think? Would you rebel against an idea such as this?

 

Oh one last thing, I'd put together a legal document regarding how band assets are valued and how buyouts would happen should a member leave, etc.

[Mutha Goose]

I've had a very similar arrangment for a few bands I've played with. The band money went into paying for the web site, equipment rentals and purchases, marketing, etc.

 

The problem comes with the purchases. How do you divy them up when the band ends? What happens if someone leaves the band? Do you buy them out? are they SOL? etc.

[Vito Corleone]

Our set up is slightly different. We usually take a bit off the top from each gig to leave in the account for band expenses. It's not a set amount every gig---usually just based on either immediate needs or whatever-number rounds things off. (If we're getting say, $2200 for a gig it makes sense to give everyone in the band $400 and put the rest in the kitty.) We don't split up what's left every 3 months. That sounds good on paper, but the reality is you'll probably get to Sept. 30th and have your meeting but have something that needs to be paid on October 5th, so why give back money everybody is going to have to put in?

 

The idea is that the bass player, who handles the money, is supposed to give everybody a sheet of income/expenses every so often so we all know where the money is going. He's lazy and hasn't done that and so far nobody's said anything. The money is pretty good and nobody really NEEDS it anyway, and we all trust each other, so it hasn't come up. Not yet, anyway.

 

The legal document for assets and buyouts is probably a good idea. Can't see how it would hurt, anyway.

[Vito Corleone]

 

I've had a very similar arrangment for a few bands I've played with. The band money went into paying for the web site, equipment rentals and purchases, marketing, etc. The problem comes with the purchases. How do you divy them up when the band ends? What happens if someone leaves the band? Do you buy them out? are they SOL? etc.

 

 

My SOP has always been--if you quit the band, you walk away from anything you've spent on band equipment. If we fire you, we'll buy you out. But such a deal is something that should at least be STATED up front.

[wheresgrant3]

Jason,

 

As you know we've structured the band this way for more than 5 years. For us it has worked very well. In our current lineup we have payouts from 12-15% based on what each member contributes to the band in addition to playing on stage. $20 per man is pulled from the pay at the end of each night which goes into a kitty. Basically $160 per show, $1100-1200 per month. In the years since, we've paid for a full PA ($6K), Van ($9K), Trailer ($3K), Photo shoot ($500), Press kit ($500), Lights $2K) posters, t-shirts, giveaways...etc ($100 per month).

 

If everyone is in agreement it's a great way to manage the band and it's finances without ever having to spend out of pocket for expenses. There are always some expenses... things break, promotion costs money etc. In the end it eliminates tough decisions, because as long as your calendar is filling with paydates $ you have a way to finance the business end of managing the band.

[bnelly428]

you're getting $1500 a show? Life must be good down in LA!

[TrickyBoy]

 

We don't split up what's left every 3 months. That sounds good on paper, but the reality is you'll probably get to Sept. 30th and have your meeting but have something that needs to be paid on October 5th, so why give back money everybody is going to have to put in?

 

 

My point with the "dividend" every three months is that I want to take out TOO much right now just so we can build up the kitty quickly. We're buying new tops (JBL PRX612's) as we speak and I'd like to get the matching subs in the near future. And we have one member in particular who bristles every time we talk about taking $XXX from the next two shows to pay for stuff. I figure this way, everyone's still making decent money AND the band can grow its account quickly. Then at the end of each quarter, we can take a look at our account and anticipated expenses and decide if a dividend is in order. My guess is that for the first half of 2011 it won't be, but by the second half of the year, we'll need to look at increasing each member's take because we'll be set from a capital purchase standpoint.

[Mutha Goose]

I just grabbed some PRX612s and 618XLFs myself (they are due in on Tuesday). Good choice in speakers :-)

[Vito Corleone]

Sounds good then. Especially if the "dividend" idea helps get the one guy on board with putting up more up front. But yeah, hopefully as time goes on you won't need to take out as much. Then again, it's always SOMETHING, as they say.

[bnelly428]

As long as you are covered legally with contracts and/or partnerships/LLCs I dont see a problem with having a kitty fund. Right now we're not making enough to be able to purchase anything with band funds (in my view). So we do it on our own. Unfortunately we still make even pay even though I'm in for about $6k this year myself on band equipment. (reasoning being if I don't buy it we'll still have speakers on sticks and an old mackie 1604 vlzpro) And former members wouldn't be able to agree on purchases (that member has since departed)

 

Anywho. I think you should approach the band as a business because, that's what it is I had a meeting this week and told everyone to that regardless of availability we're going to be booking shows and figuring out what to do. It's mostly because our Bass player works weekends and has to find coverage, but we've determined that we can find a fill in bass player quite easily and hence can accept a lot more gigs. We've turned down 9 gigs for december. Needless to say I'm not happy about that.

[TrickyBoy]

 

I just grabbed some PRX612s and 618XLFs myself (they are due in on Tuesday). Good choice in speakers :-)

 

 

That's exactly what I want to end up with. They sound great from everything I've heard and setup and tear down seem like they'd be a ton easier with powered speakers vs. the whole passive speaker/amp situation.

[Mutha Goose]

That's a big part of why I went this route. Though I am still using 6 MRX-512s for monitors, so I still have 3 power amps in a power rack.

[JoeDirt]

 

We're buying new tops (JBL PRX612's) as we speak and I'd like to get the matching subs in the near future.

 

 

Off topic, but I use PRX612M's over PRX718S subs and I love the setup, it rocks. If you can still get them, I HIGHLY recommend getting the PRX718S subs instead of the PRX618 series. The response curve of the 718S is a quite noticeably better than ANY of the 6 series subs and they were cheaper to boot (because they are closing the 718S out in favor of the 6 series).

[modulusman]

I have 4 prx512ms and a 2 prx535s. If the 600 series sound as good and they should you will be happy.

[lsits]

We usually put the contents of the tip jar into the band fund.

[GCDEF]

I think joint ownership of equipment is a horrible idea. It's not reasonable to assume somebody will chip in for an equipment purpose then just leave that investment behind. That means you have to buy out their share which requires determining fair market value and coming up with the cash. That couldn't possibly end well.

 

We put tip money in a band fund and use it for T-shirts, the web site, etc. Not a chance I'd do it for equipment.

[JohnMCA72]

People go into all sorts of businesses together all the time. I don't understand what it is about musicians that makes it so difficult.

 

1. Transparency: Make sure there's a full accounting of every penny taken in & paid out available to all the members.

2. Pay expenses off the top before dividing up anything. For instance, if there's gas to get to a gig, hotel room(s), sound man, etc. to pay, pay that out of the gig proceeds instead of expecting members to kick cash in.

[benzem]

That's the way we did it in the last band I put together. There was no problems, but that was aided by the fact that other than me, they were all professionals with good incomes.

 

I was in a few where there was always one guy who had a reason to not pay the kitty.

 

But you can always be flexible with it. Occasionally taking full cuts. Times are tough.

[wheresgrant3]

 

I think joint ownership of equipment is a horrible idea. It's not reasonable to assume somebody will chip in for an equipment purpose then just leave that investment behind. That means you have to buy out their share which requires determining fair market value and coming up with the cash. That couldn't possibly end well. We put tip money in a band fund and use it for T-shirts, the web site, etc. Not a chance I'd do it for equipment.

 

 

 

How successful would a bread delivery company be if you had five investors and only one said "I'll pay for the truck?".

 

 

I won't disagree that it's not a plan for every band but it's worked fine for us for 6 years now and we've had several lineup changes. You just need to have agreeable guys, a sense of trust and more important the mindset that if you gig often your gear won't be worth much regardless of the investment. Case in point, we purchased $6K worth of PA gear in 2005. Yorkville Elite tops and subs ($1000 each), Allen & Heath Mix Wiz. Regardless of being racked and speaker tops in hard roller cases they all suffer from road wear. After 300+ shows using that gear ... how much in today's market is it really worth? less than 50% of what we paid for it... IF you can find a buyer. So you have to be realistic when thinking about value. Instead of think what it will cost the band (out of pocket expenses) you have to imagine what it will help make you. Dividing $6K 6 ways (number of members in the band at the time of purchase) was $1000 each... and we made that and then some in a single month per member. Multiply that times x years and well... does it really matter that each band member was out $1000 when they've made that 10x fold. If you have the business to support the investment then worrying about what gear is worth after you've used it shouldn't keep you on the fence.

 

Keep in mind, we were together 3 years at the point when we decided to make the joint investment. We had already gained better rooms and increased our pay significantly since forming. Our future looked bright and we needed a team effort to acquire professional, reliable gear to keep the band growing. Way too much to ask any band member for a single investment. I more than understand that we could be the exception and not the 'rule' for bands when it comes to community equipment, but I feel it's helped the band to last longer and make sensible decisions. The day we made that purchase was the day we became a business.

[wheresgrant3]

 

I just grabbed some PRX612s and 618XLFs myself (they are due in on Tuesday). Good choice in speakers :-)

 

 

We just bought JBL PRX 615M's to use as centerfills and extra sound reinforcement next to our Yorkvilles. They arrive next Wednesday. I'm hoping their weight, output and speaker dispersion will be a nice compliment to the Yorkies. When you play in front of a ton of bodies, dispersion is just as important as volume and wattage. Right now the Yorks are barely cutting it.

[badhabit]

Your idea of having a band fund is the proper business way of doing it. If everyone is on board with this, it's a good way to go. However, there are many bands that would not be able to do this, and mine is one of them. We have had too many turnovers, plus we don't earn nearly that much ( 25K in three months ! Good for you ! ) In my neck of the woods, most musicians are fairly transient, going from one group to another, making the idea of long lasting band members an anomaly. What we do isn't very precise or even fair, but at least no one bitches about it. We split the gig earnings evenly if it's under $100.00 each. Over $100.00 each, the two owners of the PA gear split about 50% of the over amount, to help pay for the gear and it's purchase and maintenance.

 

Example: 5 member band. Gig is $500.00 or less, each member gets even split, or 20%.

Above $500.00 gig exampler: Gig is $750.00. Each member gets $100.00 + 10% above that amount, or $125.00 each. The two co-owners of the PA/light gear get the $125.00 each plus an additional $62.50, to earn them $187.50each.

 

It isn't the best way to do it, but since two of us came into the band with pretty good gear ( and no need to replace it ) it is a way to compensate us ( the gear owners ) for it's use and maintenance.

[GCDEF]

 

How successful would a bread delivery company be if you had five investors and only one said "I'll pay for the truck?".

 

 

Not the same thing at all. When you invest in a business you own a part of that business until you sell your share. Most bands don't incorporate and sell stock. When you quit a band you don't still own a piece of the band and you don't keep making money off the equipment you paid for. When an investor wants out of a company, they sell their portion back to the company or find somebody else to buy it and unless the company goes belly up, they can recoup their investment. That's why I said if you do jointly own equipment, the others would have to buy your share when you leave, and that's not really practical.

[rangefinder]

 

Not the same thing at all. When you invest in a business you own a part of that business until you sell your share. Most bands don't incorporate and sell stock. When you quit a band you don't still own a piece of the band and you don't keep making money off the equipment you paid for. When an investor wants out of a company, they sell their portion back to the company or find somebody else to buy it and unless the company goes belly up, they can recoup their investment. That's why I said if you do jointly own equipment, the others would have to buy your share when you leave, and that's not really practical.

 

 

C'mon dude, the vast majority of small business don't issue stock. They have some number of investors/owners (some with cash, some with "sweat equity"), and they have some amount of capital stock, which has some amount of depreciation, and there is some amount of equity in the business.

 

The smarter business owners have a defined procedure in place ahead of time for when one of the investors cashes out for whatever reason (quits, gets forced out, wants to sell) and sometimes it's messy anyway, but such is life.

 

I see absolutely zero reason why a band should be any different.

[tim_7string]

 

I see absolutely zero reason why a band should be any different.

 

 

Especially if you want the band to last for years or even decades. It makes sense to think of the band as a business and the band name as a "brand" (like Heinz Ketchup).

 

Our band name is easy to spell, easy to remember (tell your friends), is only three letters long (important for marquee space) and can mean many different things to many different people. At the time when I came up with it, the other guys were like, "haha...yeah, but...ah, I don't know...," but now I think they have grown to like it.

 

Like Tony Iommi said in regards to Ozzy Osbourne's leaving and Ronnie James Dio's joining Black Sabbath, "You don't shut down the factory if somebody quits; you just hire somebody else and keep going." People will invariably come and go and it's up to you if you want to start a band up all over again or keep the momentum going with a new business partner.

[wheresgrant3]

 

Not the same thing at all. When you invest in a business you own a part of that business until you sell your share. Most bands don't incorporate and sell stock. When you quit a band you don't still own a piece of the band and you don't keep making money off the equipment you paid for. When an investor wants out of a company, they sell their portion back to the company or find somebody else to buy it and unless the company goes belly up, they can recoup their investment. That's why I said if you do jointly own equipment, the others would have to buy your share when you leave, and that's not really practical.

 

 

Who joins a band with the intent to quit at some point? Again, community ownership isn't for every band, but there wasn't a thought in my mind about the investment we made together as a band and my eventual departure. In fact, before the first band member left the PA had been paid off for at least two years... meaning he was able to profit off of that gear for a while before his departure. We paid him out 50% of his investment. $500... an average show we were pulling $1500. Hardly hardship for the band to handle the payout.

 

You need tools to complete the job. You may show up at a construction site with some personal tools, hammer, nail gun, but no one along the way expects you to buy a jackhammer or a paver. For us, the PA, the van the trailer were all significant investments with the risk of significant depreciation. That was an investment we needed to make together, so we could share the risk and the profit. The personal share in the band didn't equate to the payout after the fact. Again how do you argue against investing $1000 in gig money to provide professional PA equipment if the opportunity of play with your band is awarding you $1500+ per month. After the initial expense you pocketed a {censored}load of money! Is investing in a PA really an investment at that point, or just the cost of doing business?

 

Again, I ask... how much is a PA worth in fair market value after it's been used 50-100 times? It's never about the investment, it's about the gain after the fact.