Are You Using the AFM Joint Venture Agreement to Protect your Intellectual Property?

July 2, 2018

by Dave Pomeroy, AFM International Executive Board Member and President of Local 257 (Nashville, TN)

How does it work?

The AFM Joint Venture Agreement is designed for self-contained bands who want to document their recordings and business relationship with a no-cost contract that protects everyone involved. For every successful band, there are many more who don’t make it, and loose ends can come back to haunt you. When you are in your creative and exploratory mode, it’s not always easy to talk business with collaborators. But at some point, it is important to make sure you are all on the same page. A handshake agreement is great until it doesn’t work, and then it really doesn’t work! Along with completing the process of publishing your original tunes, you need to protect the intellectual property rights of your musical performances as well.

What are your options?

You could hire a lawyer to write up a partnership agreement and spend money you and your bandmates could put to better use, like for professional photography and/or album cover design. Or you can use the AFM Joint Venture agreement to clarify the internal financial arrangements you have made with each other for no cost whatsoever, and document your recording in case something good happens down the road. For example, with a four-piece band, if you are the leader, you could have a 40% share and your three bandmates have 20% a piece, or it can be a 25% four-way split. Or if it is a 21-piece big band, you could give yourself 10%, the arranger 6%, and the players 4% apiece.

This system gives you and your band considerable flexibility in figuring out your own unique formula. No pension payment is required on the front end. If the band breaks up and/or sales are less than 34,000 units, that’s it. If sales reach 34,000, then the band will need to enter into the standard Sound Recording Labor Agreement and pay a modest sales royalty to the Sound Recording Special Payments Fund. For example, this payment is less than $1,000 for 50,000 copies sold.

AFM 257 (Nashville, TN) member, trombonist, composer, arranger, and bandleader Chris McDonald says, “I highly recommend the Joint Venture Agreement and used it for my latest recording, A Big (Band) Swinging Christmas. It’s a great way for indie artists to get their music out now!”

How can I make new technologies work for my band?

The changes in technology that have transformed the music business have both helped and hurt musicians in various ways, as many of us have experienced. On the upside, the technology needed to make your own record is more affordable and easier to use than ever, and the possibilities of social media marketing are literally limitless. Acting as your own independent label and owning your intellectual property can really change your bottom line. As John Prine once told me, “When I finally started putting out my own records, I went from making pennies per record to $10 a unit!” Of course, the downside is that people have gotten used to listening to music online for free or a tiny subscription fee. While the CD is still a viable format for many consumers, it also appears to be headed towards obsolescence, at least with the younger generation. In addition to physical product, you may want to consider offering download cards for sale as well, to get your music in the hands of as many people as possible.

What if you use outside players in addition to the band?

If you employ outside players to work on your project, you can pay them using the AFM Single Song Overdub or Limited Pressing agreement. If a signatory label picks up your project, then they will need to file contracts using the AFM SRLA agreement, but the hard part—documenting who is participating and what their ownership percentage is—will already be taken care of when you use the AFM Joint Venture agreement. In every aspect of your career, whether it is writing songs or composing, it is important to document the business side as well. Tools like the Joint Venture agreement are here to help AFM members figure out the best path through the shifting obstacles of the ever-changing modern music business.

Joint Venture Agreement forms and guidelines are available in the Document Library in the Members section of AFM.org.

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