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Revenue Sharing in a Music Band

Consider an upcoming band comprising independent members who are authors and performers. They compose their own lyrics, and write their own music, and sing their own songs. (Ignore, for the purpose of this discussion, the fact that many bands do not have vocalists.) In this hypothetical band, for the most part, the lyricist writes the lyrics although on occasion, a guitarist may walk up to him with a suggestion that is incorporated in the final version of the lyrics. In such a situation, both the lyricist and the guitarist would be authors of the lyrics in question; if their contributions were indistinguishable, they would be joint authors, and if their contributions were distinguishable, they would be co-authors of the lyrics. In both cases, the law would provide no guidance whatsoever on the revenue shares to be accorded to the lyricist and to the guitarist for their contributions.

Further, the band (and the guitarist himself!) may not even consider the guitarist to be an author of the lyrics, especially if the band had a culture of each member "interfering" with the roles of other members. And while this would probably work perfectly for as long as all the members of the band remained friends, were they to fall out, to continue with the same example, the guitarist, in the absence of an agreement to the contrary, could claim a share of the revenues in respect of the lyrics by virtue of being an author. This is because the author of a work would generally be its owner, and consequently be entitled to revenues in respect of the work. As such, it is generally prudent to have issues of authorship and ownership thrashed out, and put down in writing, while the going is good.

Zooming out, and looking not just at one particular component of a "collective work" such as a song, it would emerge that there is may not be any composite copyright in the work as a whole and that each component would have its own author and its own owner: the lyricist for the lyrics, the music composer for the music, and the producer for the sound recording, if there was one, for example. There could also be separate performers' rights, and if the song was broadcast, a broadcast reproduction right.

The exploitation of all of these rights could potentially bring in revenues, and the Indian copyright statute provides absolutely no concrete guidance as to how these revenues would be split. In general, there would be two possibilities, as far as the members of the band themselves were concerned. One possibility would be to have each member of the band be entitled to receive an equal share of the revenue which reached the band, possibly after deducting expenses or putting an amount aside for future endeavours such as recording a new album.

The second possibility would be to construct a revenue sharing agreement which involved having each member earn a certain percentage of the revenue depending on the how much his work contributed to generating revenue with reference to the "composite work". This, in many cases, would be notoriously difficult to determine, especially since, in the case of a song, it may be that no one element would be able to stand alone without the support of other elements.

In order to offset this difficulty, it may be advisable consider a third possibility: to calculate revenue sharing by determining a reasonable hourly rate for each band member, and then stating that each member would be entitled to a share of the revenue depending on the number of hours he put into the creation of the work. There are, however, two difficulties with this possibility: it assumes that the band would earn enough to pay its members at such an hourly rate. If it did not, and the revenue sharing agreement did not have a clause stating that the revenue share of each member would be proportionally reduced, there could be an issue. This possibility also assumes that band members would keep track of the number of hours they put in, and such an assumption may not always be within the realm of reality (considering the "artistic temperament" of musicians).

Nonetheless, it may be advisable to keep track of the hours each member puts in because it could be used to calculate revenue-sharing not just in conjunction with an hourly rate but, if the hourly rate were to be equal for all members, then simply as a ratio in which the revenue generated by the band would be divided by its members. Though this too could have its drawbacks: a telented musician may require much less practice-time than one with less talent, for example.

Nonetheless, as a general rule, it may be preferable to have an elastic revenue-sharing model than an inelastic one. This is because such a revenue-sharing model would not necessarily require revenue to be shared with persons who played no part in earning it. For example, if the largest share of a band's revenue came from instrumental ringtones (as unlikely as that may be), it is possible that they would not want to share the income generated from that stream of revenue with the lyricist who, possibly, did not contribute to an instrumental ringtone at all. Thus, an elastic revenue-sharing model could effectively work as an "earn-in" model and may be preferable to a "fixed" revenue-sharing model.

However, at the end of the day, how a band decides to split its revenues is its own decision. The only requirement is that the members of the band do, in fact, decide.

(This post is by Nandita Saikia. It was inspired by "Dividing Ownership in a Group Project" by Bruce Warila in the context of web site development. Similar logic could be used in other contexts as well, as has been done in this post with reference to a band.)