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« Why Your ‘Greatness’ is Missed | Main | Public Relations has changed forever. PR 2.0 Tactics for Musicians »
Thursday
Sep032009

Eleven Steps To Fixing The Problem That Occurs When You Work Harder Than Everyone Else In The Band

I wrote this post eighteen months ago.  I am slowly rewriting and moving some of my posts from my old blog to Music Think Tank.  My apologies to those of you that don’t like getting reruns in your newsreader.

The day the band (the company) was formed, band members voted to split ownership evenly; now you find yourself doing much more work or creating far more value than your bandmates.  Perhaps you started out as a band, but the band has also become a business.  You don’t want to appear greedy and it’s not your style to change the rules once the game has started.  However it doesn’t seem fair that everyone benefits evenly when you’re doing more work than everyone else.

This is one of the most common problems in small businesses - ownership and reward is divided evenly, but the work and/or the value creating capability are not.  Here are eleven easy steps to fix the problem.

Step One - Form a plan and create a presentation of your plan.
Read the following ten steps and create a plan. Your plan will call for a simple presentation of some basic math.  Before revealing the plan to anyone, do the plan math yourself first (download this spreadsheet - further explained below).  Determine if your plan is fair and just by presenting your plan to an outside businessperson that can impartially advise you. 

When you present your plan, consider asking a facilitator/advisor or an impartial/experienced mediator to attend the meeting(s) with your bandmates.  The no-boyfriend/girlfriend, no-husband/wife rule should be enforced on the day(s) of the meeting(s).

Step Two - Valuate the band. 
Days or even weeks prior to presenting your plan, come to an agreement on the present financial value of the band/business.  The band should do this annually.  It’s a great exercise for bands that are looking for investors, for bands that are looking for a record deal, and for artists that may be compensating others with equity.  (Tip - assign a value to each fan, to each song and to your brand, or multiply your annual profits (revenue minus expenses) by 5.)  I am going to call this value the Band Value (used in the calculations below).

Step Three - Revisit day one.
Revisit the day you divided ownership evenly.  Sit down with the band and talk about that day.  List all of the things that were collectively on your agendas when you formed the band.  If that list had more than five things on it, you planned more than most.

  • Have fun
  • Rehearse as needed
  • Record an album
  • Put on a great live show
  • Build a fan base

When you created the day-one list, dividing ownership evenly made perfect sense, and if 100% of your current activities were still confined to that list…it still makes perfect sense.  However something happened since day one, the list has grown to ninety-five things and you’re doing eighty-five of them.  The deal (the game) has already changed.  So you’re not changing the rules midstream, you are asking to update the rules based upon the ‘game’ that is being played now.

Step Four - Revert to day one.
Express you willingness (and happiness) to revert to the original deal that was negotiated the day the band was formed - nothing more and nothing less; your not renegotiating, you’re reverting to the beginning (to the day when the original short and simple to-do list was created).

Step Five - Present some logic as follows…

  • Talking point: You never realized how much work goes into the business of being a band.
  • Talking point: Organizations work far better when everyone feels they are justly compensated.
  • Talking point: Creativity flows when stress is reduced.
  • Talking point: It’s far better to fix things now than to wait until the day when the band is bigger.
  • Talking point: Friendship is more important than ownership or compensation; therefore you find it necessary to revert to day one - the day when friendship and music were the basis for forming the band.
  • Talking point: The energy required to do all the things you are doing for the band is taking time and energy away from the other things you need to do to move your own life forward.


Step Six - Present your list
Unfurl the list of things you are currently doing for the band which are over and above the list of things you never bargained for on day one.  You should be perfectly willing to discontinue doing the things on this expanded list, as you are about to give your bandmates the option of outsourcing or delegating everything on the list to someone else.

Step Seven - Assign values/costs to each item on the list
Work with the band to assign a value/cost to each of the items on the list. 

Tip - What would it truly cost you to outsource each item annually? Assuming the quality and the time commitment obtained from others would equate to what you provided when you did the tasks.

Once again, you should express your willingness to give these items up to someone else - although that probably won’t happen.

Now add up the total value of all of the items on your list.  This total should represent the true annual cost/value of the services you perform.   I am going to call this number the Service-Value.

Step Eight - Create a multi-year deal.
I recommend putting the subject of what YOUR time is worth to the band - to bed for no less than two years and for no more than three years.  You should not have to renegotiate with your band every year, so a two-year deal seams reasonable.  Three years works - however the value of the band should have changed significantly by the end of year three (you will understand why the value of the band matters to your deal when you do the math below).

Take the Service-Value number from step seven and multiply it by two or three (years) to get what I will call your Multi-Year-Service-Value.

Step Nine - Receiving cash for the extra work you do.
To receive cash for the Multi-Year-Service-Value you provide - divide the Multi-Year-Service-Value by the number of months in the deal (24 or 36) to come up with a Monthly Service Value Fee (call it whatever you want). 

The band should pay you this Monthly Service Value Fee prior to dividing up ANY revenue between ALL band members.

When I say ALL band members, this also includes your equal or proportionate share.  Just because you are getting paid the Monthly Service Value Fee, this does NOT mean that you should not receive your proportionate share (of revenues) after the fee is paid.  After all, you are the Service Provider in this instance AND you are an owner and participant in the band.

Remember, you expressed your unflinching willingness (in steps 6 and 7) to compensate an outside contractor, manager or service provider, but you’re just doing the extra work instead.

Step Nine - Receiving equity (stock) for the extra work you do.
Alternatively (to cash), to receive equity (stock) for the services you render - divide the Multi-Year-Service-Value by the Band Value (step two) to arrive at the additional percentage of the company/band that you should receive. 

Every owner, including you, will have to shave off this percentage to give you your additional percentage points.  Why do YOU have to shave off points?  Once again, look at yourself as TWO people - owner and employee.  All owners should share the burden of dilution equally when you make deals that use your equity as capital/compensation.  And, if the band does additional equity deals - the “TWO” of you (see example) will have to burden the dilution required by any new deal that uses equity as a form of payment or compensation.

Example (you are Fred)

Current Ownership:  Fred 20%,  Barney 20%,  Wilma 20%,  Betty 20%,  Dino 20%

Multi-Year-Service-Value = $30,000    Band Value = $300,000    (30,000 divided by 300,000 = your additional 10%)


New Ownership (notice Fred as ‘two’ people):  Fred 10%,  Fred 18%,  Barney 18%,  Wilma 18%,  Betty 18%,  Dino 18%

Click here to download a sample spreadsheet.

Step Ten - Handing publishing revenue…

Unless you have agreed to direct some percentage of publishing revenue into your corporation, division of publishing revenue is a separate matter.  I do recommend channeling publishing revenue into a corporation that is owned by the band (read this post for more information).  This is something investors will prefer.  Seek qualified legal counsel when setting this up.

If your lead singer is also playing an instrument, perhaps he/she should be counted as 1.5 or 2 people when dividing (on day one) ownership/compensation (vocal = an instrument + a second instrument), especially if he/she is also the songwriter.  Once again, this depends on how you are all dividing publishing revenue.

Step Eleven - Maintain proper perspective
The current situation may be putting a strain on your friendships or on your ability to be creative.  You are restoring balance to the situation so that everyone can move forward without brain lock.  If your motives are honest and your valuation of the band and your services are just, you shouldn’t have much of a problem adjusting your compensation or obtaining additional equity.  If you expect one of your bandmates to be headstrong about changing the deal then I would advise you to bring in an advisor that this person trusts.  Finally, don’t try to accomplish all of this in one meeting.  Set the Band Value in week one and wait a couple of weeks to calculate your Multi-Year-Service-Value.

 

about Bruce Warila

Reader Comments (18)

brilliant. very rational and straightforward way to get more equity of labor and compensation.

however, I would prepare for pettiness, and other members stepping up to claim additional value for things that may or may not add value. "We used my mom's mini-van for the last tour.. that's worth something." etc.

September 7 | Unregistered Commenterfran snyder

Fantastic article and a really cool way to break down things.

This is pefrectly normal in any band...there are people who do more work than others.

In my case since I do ALL the band sales, marketing and promotion and I call myself the manager of the band too, things are very clear cut for me. I am cool with the idea that I will have to (and really am the only one who should care) about doing ALL the work, so this is a non issue for me.

When it comes to us making enough revenue (we do make revenue) for money and work to become an issue I will of course use this article are reference!

Atul
Singer/Manager
DonkeyBox (Alternative rock band sounds like Green Day and Metallica doing the funky chicken dance with The Killers)

August 24 | Unregistered CommenterAtul Rana

Hilarious...
Have you ever been in a band???
Who ever said musicians are logical???
What a concept!!!
_PS

September 30 | Unregistered CommenterPaul Sabu

A ridiculous amount of work that wastes time and resources spent on furthering your career. If you've become the leader there's a reason why. Fire them all, hire the best sidemen you can afford and drive on.

September 30 | Unregistered CommenterJeff Norwood

@ Paul - your comment is kind of denigrating to artists. I don't buy into the stereotype.

September 30 | Unregistered CommenterBruce Warila

Wow, honestly I thought this was gonna be a great article but after reading it I'm just shaking my head. What better way to get your band fighting than to say, "I'm worth more to the band, here's why and now I'm getting paid more too." I know this seems logical but this would never work for us. Right away everything you do for the band becomes a chore and a way to make more money. And then the other guys may do more but only to hold it against you and say you shouldn't get paid more.

September 30 | Unregistered CommenterScott

I am completely blown away that anyone would see the above article as a viable solution. A band is a team. By nature, teams have leaders and it that leader's job to motivate their members to contribute all they have. If that can't be done, then maybe they should be a solo artist with a paid for hire backing band. Stock options? Really?

September 30 | Unregistered CommenterTS

This article makes a lot of sense, but needs to be presented at a point in the band's career when people realize what the work done by the leader produces.

This happened recently with my band. I spent 8 months booking an awesome tour, as well as managing most of our business and promo, etc... all the while writing music and lyrics, being at practices, etc. As a result I didn't work a job as much as I should have and after the tour I was completely and utterly broke. The band made money from my efforts but as usual it all went back into expenses (van repairs, more promo, etc)

I explained the situation to my band much in the way this article suggests. Because it was an awesome tour and because they saw full well that without my efforts we wouldn't be where we are, they completely understood. In our case, since we play metal and money is even rarer than in most genres, instead of me getting an extra share we've simply worked out that I don't need to fork out for van repairs, recordings, etc when the band fund runs out.

A lot of the people commenting negatively above may not realize that time is money. If a band leader spends 4 hours a day on the band (I can do that easily during a tour booking or album production period) and the other members don't, then that's 4 hours those other members can work that the band leader can't. That affects job opportunities and life plans across the board.

It's a matter of simple logic, honesty, cooperation, and respect.

September 30 | Unregistered CommenterEric Burnet

I'm doing everything: booking the shows, lining up S&L, maintaining the website, designing artwork, setting up the music/merch in the various storefronts, developing promotions .. all the stuff that doesn't involve actually playing!
To stop doing all this work is not sensible. Hiring it out (besides risking artistic and quality control) will really shrink the band's take, mine included.

I keep it simple - I take 15% of the gross. Then we pay the bills (S&L, silk-screen mfr, whatever the case may be.) We divide the remainder by one more than the number of bandmates; we each get our shares and we put that extra share into the general fund for the next poster run, recording time, etc.

October 1 | Unregistered CommenterJoe Szembrot

@ Joe,
I like your suggestion the best Joe. The really big grossing bands need an advisor to take charge of the fundamentals of financing and marketing. The band mates need to concentrate firstly on making the BEST music they can possibly make, practice, practice, practice. Nobody wants to fund a band that is terrible but full of nice players. Personally, it would be best to hire a band as contracted labor if you are a front man, or woman.

October 1 | Unregistered CommenterNITE*SKY Records

This is the only way to keep groups tight. This method insures that the work of, not only the leader but those that are members are being measured,noticed, tracked and compensated for. Many groups would still exist today, if someone would have had the fortitude and foresight to set this up from the beginning. Not doing so, takes advantage of a person "passionate" side and will eventually bring confusion between business and creative work. A clear understanding of the business side of music, is the first step to ensuring advancement in the "music business" which is what every musician dreams of, whether they admit it or not.

October 1 | Unregistered CommenterBrenda Gross

In my experience, when i decided to fold tent with my little band. I realized that i was just way too driven to be satisfied with my band mates while they did their best in between the other million things they were in, studies and work.

It helped me retain their friendship and i can count on them to support me when they have everything the way they want it, and if they do not have everything their way- i still have to keep on keeping on.

I did try the equity talk but they were not ready for it, it makes more sense to exit gracefully than to burn yourself out

October 1 | Unregistered CommenterTa'fxkz

In a perfect world I am sure this formula would work. Being in a band is like being married to 4-6 other people. It is a contract, either you just live together or sign the papers in front of witnesses. I figured out a few years ago I do not need a band. I married my music partner who is my best friend and like magic it works because we do equal work and we are both equally committed to our music. Eleven years- still making music still married, happily. We do all of the above including practice, practice, practice to maintaining a spread sheet. We play gigs all over California and have the freedom to go wherever, whenever we want without managing the schedules of 4 other people. When we have bigger shows, we call on our talented friends and include them as guest artists.

October 4 | Unregistered CommenterFontain

Good article. There's now much more of an emphasis for bands and artists to manage themselves. Management takes responsibility.

I/we tried this approach in my previous band, sad to say, I think this type of approach was a contributing factor to taking the rock'n'roll fun out of what we were doing. That tells me a lot: about how you approach it, who was involved and the way things are going in the industry i.e. a band must adopt a mature attitude and be clear about who's doing what (and appropriately rewarding those people), then it might last.

If the band don't take it seriously, perhaps re-evaluate your talent. Musicians can no longer afford to just be 'rock'n'roll' they must be:

rock'n'roll + creative + professional + self-managed + a strong contributor

Not always, but mostly.

Now I'm writing and managing myself, collaborating with professionals and I'm really enjoying the business side of it (and getting more breaks.) For any serious or ambitious musician(s) - approaches such as this might be the way to go.

All depends on how ambitious/successful you are and want to be.

October 6 | Unregistered CommenterRob

Eric Burnet I think you hit the nail right on the head with the last paragraph in your statement. I've been in Metal bands for over 15 yrs so I’ve seen just about every variable play out including the death of a band mate and the demise of my band after 10+ years of working together. I think more than anything this is a great starting point and or guideline for a band especially if they are just starting out and don’t know what to expect. I know I could have used this more than a few times with my old band and I plan on implementing some of these strategies with my new band, it definitely helps too put things in perspective.

On a final note I always like to tell my band mates that a good band is like a finely tuned motor, all cylinders must be running for the motor to perform, if one cylinder goes out it runs like sh*t. I think the only person or persons in a band that would not agree with dividing money based on work put in would be the one who doesn’t do much for the band anyway. If they can’t deal with it or if they have a problem with it you can always replace them.

October 6 | Unregistered CommenterEcopolis

The flaw in your obviously well-thought-out plan is this: If your bandmates have the patience and the interest to follow all the details you have outlined, they would probably be the type of people who would have been contributing more to the business aspects than you have indicated - or they would be willing to.

I can totally see myself approaching my bandmates with this - and I can totally see their eyes glazing over as soon as the word "evaluate" pops into the conversation. It is obvious that I do more work than anyone else. However, on the occasions when this was brought up, instead of suggesting that perhaps I should make more money, my bandmates volunteered to take some of the work load off my hands - which just meant that stuff didn't get done on time, didn't get done well, or just plain didn't get done. See, I don't mind the business aspect, and none of them are interested in it.

However, after 7 years, I think I have figured out how this works - I pay my bandmates, basically as employees. The band is me. They don't have to worry about the business end, they can be free to just make music, and I compensate myself and them fairly. (obviously I could be biased, but there have not been any complaints!) I haven't spelled all this out to them, but I have been a lot more comfortable and less anxious since I implemented this. Also I've had some turnover, which I cannot say for sure is *not* related to this manner of doing things, but, replacing people is easier when they don't own chunks of the business...

This wasn't my ideal of how to do things when the band began, but I believe it's more comfortable for all of us.

October 7 | Unregistered CommenterAnonymouse

^^ good points.

I want to point out though that in any organization - partial owners can usually be terminated. Ownership and employment are two different things, and that's the way it should be.

See my post on 360 deals for more information.

Or my post on dividing ownership in a group project for additional background information.

My methods are not for everyone. It depends on your skills; what you want to invest time into; and the type of organization you are trying to build. If you ever plan to raise investment capital, consider developing an understanding of what I have described here and within the articles linked to above.

-Bruce

October 7 | Unregistered CommenterBruce Warila

Anonymouse - I like your approach - I often thought of doing it that way so is interesting to hear your experience.

October 7 | Unregistered CommenterRob

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