Tony Clark Lawyer/Entrepreneur/Community Developer

I am an attorney that has represented artists for many years now. I would like to build off Austin’s point that musicians are businesses. A good manager should first make sure that the business aspect of the band/musician is finalized and protected. Specifically, this means that you first need to make sure that your musician/band has proper band agreements in place, proper insurance, registered their copyrights, discussed trademark issues, understand basic bookkeeping, setup as an LLC etc., and other general business concepts. Once you are comfortable that your acts can effectively and efficiently run as a business then you need to find the best places to earn revenue. In my experience, musicians tend to make money in many different ways. For instance, I represented a band that made a living touring colleges. They have been very successful at it. However, they have not had a lot of luck at festivals and things like that. On the other hand, I have represented acts that tour clubs constantly and make a living selling merchandize. I think it depends greatly on the type of act and what they do best.

I can give some general advice though. I would make sure that the musicians have signed up with ASCAP/BMI and soundexchange. I have represented many clients that are not aware of soundexchange. For smaller acts, this can be a good source of income. Another piece of advice I generally provide to managers is that they should try to find a booking agent to book tours/shows/festivals. These agents will likely have a better grasp of what kinds of venues will be best for the musician and they have better connections to the clubs/venues. Then, I try to get my musicians/mangers to look into licensing their works. Many companies offer non-exclusive licensing services. You can start with these companies until the musician gets more exposure. This will reduce the time you spend trying to find licensing opportunities.

Lastly, you want to make sure you are providing enough support to each of your musicians. I would look to hire an intern to help with some of the more basic tasks. For instance, oftentimes I see managers utilize interns or assistants to do social media campaigns and things like that.

I hope this provides some direction. Good luck!

If you have a Limited Liability Company that is taxed like a partnership, which is a very common setup, your decision-making authority can be specifically agreed upon in the Operating Agreement. Essentially, your partner could retain 51% of the earnings but his/her voting interests could be equal to yours. However, I suspect your partner wants to retain their 51% voting interest as well as their 51% profit interest. In this scenario, your ultimate decision making authority is limited because you can never achieve majority status.

When I represent a minority interest holder of a company I try to build certain safeguards into the Operating Agreement. For instance, I would try to include certain actions that must either have a super majority (defined as 66% or 75% depending on the size of the entity) or in your case a unanimous vote. I would try to include things like bringing on another member, distributions, taking on debt, major capital expenses, changing the Operating Agreement etc. as items that would require your consent. This will offer some protection in the decision making process. However, your partner will retain the ultimate decision making authority for anything not specifically delineated in your governing document.

Hello!

Without knowing the specifics of your problem, i.e. what the governing documents state and which state you formed the entity in, I cannot give an absolute answer.

However, I can speak in generalities regarding minority shareholders' rights in closely held entities. In most states, (probably all states actually) minority shareholders have specific rights to review the business records. This means that you have the right to review reasonable records at a reasonable time. Usually, this means that you or any agent (lawyer, accountant, etc.) can review most any record if you provide some kind of reasonable notice.

Legally, a state might have some specific steps that the minority shareholder would have to follow. For instance, you might have to make your demand in writing and you might have to state the purpose of the demand. To comply fully with these requirements you have to talk to a lawyer licensed in your state. However, the answer to your question is that you can demand the transparency by reviewing the books yourself or with an agent. If you have an attorney that represents the business, he/she can probably answer the formality questions for you. However, please remember that the attorney that represents the business does not owe any duty directly to you as a shareholder.