Here's a fact of musical life: As a band moves from obscurity to stardom, a financial gap develops between the songwriters and the non-writers. That's because songwriters are entitled to separate payments for record sales, radio play, and the use of the song in films. This money doesn't have to be used for band expenses; it's the songwriter's reward for laying the golden egg. .

"Songwriting income is without question one of the most divisive issues facing a band," says entertainment attorney Ron Bienstock. "If you have a band with four or five people and the income is skewed toward the songwriters, there's going to be a lot of resentment. It can ruin a band's domestic bliss."

Non-writing band members can receive a percentage of song income-but only if the songwriters are willing to share. Deciding on whether and how to do this is a balancing act. "It doesn't seem fair if one guy in the band is riding around in a Porsche and the others are in beat-up station wagons," says Tomas, whose band, Flu 13, had a college radio hit with "My Beijing Hot Rod." "But for the songwriter to share all of the money equally doesn't seem fair either."

Once the issue of song income is on the horizon, your band should devise an approach for dealing with it. "That's one piece of advice I would give," says Jeff Darian, a songwriter for Mach 5, whose Island Records release led to licenses for two songs on ESPN. "The band should devise some sort of system for band songs and then stick with it."

What type of system would work best for your band? Before you consider the options, begin by taking two important steps:

Determine the Songwriters

The first step in sharing songwriter income is to agree on who wrote the band's songs. You and your colleagues don't have to divide the song income based strictly upon this determination; this is just the starting point for the discussion. It does, however, resolve an important issue, which is who gets his or her name in brackets under the song title.

"To be a co-writer," says copyright expert Steve Fishman, "a person must contribute more than mere ideas. They must provide concrete material, such as lyrics or music." For songwriting purposes, "music" generally refers to the melody, chord changes, and order of the parts (verse, chorus, bridge, etc.). It does not usually refer to riffs, solos, and harmonies. Think of it in terms of sheet music: The song consists of the elements that are included on sheet music or tablature. Anyone who contributes substantially to these elements would be a co-writer.

A lot can happen to a song after this basic structure is created. You can, for example, create a terrific interpretation of it in your performance. But don't expect songwriting credit for being a great musician. Band members may add fabulous drum beats, swinging bass lines, incredible guitar solos, and beguiling vocal harmonies-but these "arrangements" do not qualify you as a co-writer. As one court stated, "Neither rhythm nor harmony can in itself be the subject of copyright."

"Songs today are no different than thirty or forty years ago," says Steve Greenberg, vice-president of A&R at Mercury. "They have always relied heavily on good arrangements, but the arrangements are not protected."

Unfortunately, there is no official rulebook as to when a contribution merits getting a songwriter credit. The standard used by the courts is pretty slippery: Judges ask whether the contribution, by itself, would be copyrightable-that is, could the contributed part be protected apart from the song? In asking this question, judges are checking for evidence of a high degree of creativity. They found it in one recent case, when the court determined that Billy Strayhorn's sophisticated harmonies on "Satin Doll" were distinctive enough to merit co-writer credit with Duke Ellington. By the same token, if he hadn't already shared writing credit for "Satisfaction" with Mick Jagger, Keith Richards would have a strong case, based on his opening guitar riff; unless you're a member of Devo, that hook is as indispensable to the song as the lyrics or the melody.

Sometimes songwriters share credit equally with band members who make no such substantial contribution. For example, John Phillips gave his wife, Michelle Phillips, a co-writing credit-and half of the royalties-for simply writing down his words for "California Dreamin'." Not surprisingly, this kind of charity can lead to problems later, including battles between spouses, children and parents, and other co-writers. Given all this, it might make sense just to pay money out of pocket rather than give credit to someone who doesn't technically qualify as a co-writer.

Once your band has determined who wrote the songs, the writers should weigh their individual contributions. If total songwriting credit equals 100 percent, what share should each songwriter receive? The traditional splits are 50 percent for music and 50 percent for lyrics, but bands can use any formula they want. One band interviewed for this article grants 33 percent for melody, 33 percent for lyrics, and 33 percent for chord changes, often subdividing these categories among band members.

Music Publishing 101

We're halfway to our goal of setting up a system for sharing songwriter income. The rest of the journey involves reviewing some basic rules of music publishing.

Let's start at the beginning. A music publisher is a business that owns and exploits song copyrights. Initially, if you write a song, you are the copyright owner and the de facto publisher. Nothing formal needs to be done-that is, you don't need to set up a business-until it looks like you're going to start earning money from your song. At that point, you need to choose a name for yourself as a publishing company, clear it with a performance rights society such as ASCAP, BMI, or SESAC, and then file a fictitious business statement with the county clerk.

Sometimes a songwriter sells song copyrights to an established music publisher, such as Warner-Chappell or EMI Music. These publishers are effective in collecting songwriter money and promoting songs for use in movies or commercials. If your band makes a deal with a large publishing company, you will give up ownership of the song and a portion of the song income-usually 25 percent. In return, though, the publisher pays an advance against your future royalties-often more than $50,000 per record for a major label act. (For a detailed look at the pluses and minuses of signing a publishing deal, see Fred Koller's Business feature, "The Perils of Publishing," in our Oct. '98 issue.)

Songwriter payments have long been based on an antiquated system in which all song income is divided into two pots, with half going to the music publisher and half going to the writer. More typically these days, if you sign with an established publisher, you'll give up 25 percent of the total song income. This is accomplished through a system known as co-publishing.

Here's how it works. Let's say your band sold its song copyrights to an established music publisher-we'll call them Megaglom Songs. If your songs earn a total income of $10,000 from radio play and record sales, Megaglom would get $2,500, or half of the publishing portion of the pie. The other $2,500-the remaining half of the publishing portion-goes to the publishing company that you and your band have set up. That still leaves the writer's share of the payment ($5,000), which is divided by the writers (or among the band members, depending on their agreement). Of course, it would have been a lot easier to ditch this fictitious fifty-fifty split and just handle income like any other business, but the traditions of music publishing are too firmly entrenched to be changed.

Sharing the Income

Now that you've got a grasp on how music publishing works and you've determined who writes the songs in your band, the next step is to determine if the non-writers in the band will share the earnings derived from your songs. And if so, what type of system will you use?

If songwriters don't want to share, it's a "writer-takes-all" situation. This approach is common among bands that center around a charismatic songwriter/leader, such as Trent Reznor with Nine Inch Nails. The "writer-takes-all" approach is also typical for bands in which two members write most or all of the songs-the Rolling Stones, for instance, or Oasis. In these scenarios, the only way other members of the band can earn song income is through writing their own material and getting it onto the band's album. "The problem," says music attorney Kathryn Roessel, "is that individual band members wind up fighting to get songs onto the album. And does the world really need more songs like 'Octopus' Garden'?"

If writers do decide to share song income with their band, they would pool all of their songs under one band publishing company and then divide the income from those songs based upon an agreed-upon formula. This way, everyone gets a taste of each song's income, which can allow the band to concentrate on choosing the best material to record rather than compromise on quality to give everyone a share of the pie. Predictably, there are several approaches to divvying up song income. Let's look at each one.

The Three Musketeers. Under this system, all of the song income is split equally among all band members. Let's say we have a quartet in which two members write the songs but the plan is to share the song income equally. For a $50,000 advance, then, each member would pocket $12,500.

This system works best for a techno, acid jazz, or dance band, in which members build songs around grooves, or jam-oriented bands of the Phish model, where songs tend to evolve at performances or in practice. "We split everything equally," says Riq Poguet of the Latin rock band Bay of Pigs. "It's part of our philosophy as a band. I'm the main songwriter, but everybody pulls his own weight. A lot of our music comes out of the percussion, and that kind of improvisation makes for more collaborative work. So it just makes sense to split it equally."

Writers & Publishers. The formula here is for the band to split publishing income equally while the songwriters divide songwriter income according to how much they each contributed. Going back to our example of a quartet that includes two songwriters, with one of their songs earning $50,000, under this system each of the two writers would get $18,750, with the other two members of the band receiving $6,250.

"This approach is often used because it allows the writers to get the artistic recognition they deserve and to profit more than the non-writers," says Roessel. "It also makes sure that the non-writers share in publishing income. They'll need a share to live on, since most bands won't ever see any record royalties after they spend their label advances."

Note that under this system, if your band later signs with a large publisher, that publisher will probably take half of the publishing income. When that happens, band members will find themselves sharing a quarter, not half, of the song income. Thus, if a publishing company buys half of the publishing for a $50,000 advance, the two songwriters in our quartet would each get $20,812.50, with the remaining two members of the band each getting $4,162.50.

Credit. This compromise system allows one credit for performing on a song, and two credits for performing and writing on a song. Looking again at our quartet, if we count four players and two writers for a particular song, that adds up to six. Those band members who write and perform on that song get two credits, or 2/6 of the income, while those whose contributions involve only performance get one credit, or 1/6 of the song income. Regardless of the source of this income, all of it is pooled and the money divided according to this formula. If a publishing company buys a song from our quartet for a $50,000 advance, then, the two songwriters each get $16,666.60 while the other members each get $8,333.33.

The credit-based system works best for bands in which songwriting and performing are equally important tasks-for example, jazz outfits in which members improvise on each song.

Your band can modify any of these systems or come up with a hybrid that reflects your unique needs. One major label act splits advances from publishing companies equally-"just so we can all make a living," says the band's founder-and divides performance royalties according to a formula that favors the writers.

Chiselling in Stone

Whatever system you and your band choose, you need to spell it out in a written agreement. If you've got the contractual smarts to draft such an agreement on your own, great! Some legal self-help books can help you iron out details. Otherwise, finalizing an agreement on distributing song income will involve working with an attorney. Since this can be expensive, wait until income from a song actually seems imminent-that is, you're signing a record, music publishing, or management deal-before actually sitting down with a lawyer.

There are two ways to keep costs down when dealing with lawyers. The first is to prepare the basic elements of your agreement ahead of time-in this case, a general outline of how your band wants to split the song income. And the second is to ask the attorney for a written estimate before he or she begins drafting the agreement. Low-cost legal assistance for artists is also available in most states: In New York, for example, check with Volunteer Lawyers for the Arts (VLA), and in California call California Lawyers for the Arts (CLA). Contact information for these and other similar programs are available from VLA at (212) 977-9271.

Before signing any agreement, be sure to affiliate your band with a performing rights organization to guarantee your right to use your chosen publishing name. These groups-SESAC, BMI, and ASCAP-work for music publishers by collecting song income. You can only affiliate with one of these organizations at a time, and it would make life simpler if all of the songwriters in your band shared membership in just one of these three.

Once you've signed up, remember to file clearance forms with your performing rights organization for each of your songs. Six to eight weeks after submitting each form, be sure to review the organization's website to make sure that your material has been registered properly. If you spot any errors, contact the organization's indexing department.

To register copyright for your songs, check out the copyright office website for forms and application information. Registration isn't necessary for you to obtain copyright protection; you've got protection the moment your song is fixed on paper or tape. But registration could offer you advantages if there's ever a lawsuit over the song.

This whole process-determining songwriters, deciding whether and how to split the income, implementing an agreement, and administering the songs-takes a lot of time; it can even distract you from chasing your musical or artistic goals. For this reason it's probably okay to postpone all of this work if your band isn't about to release any material. But when that time arrives, grit your teeth and do what must be done to address these issues before you're fighting over who will benefit from your songs.

Contributors: Rich Stim is an attorney, musician, and author of several books, including Music Law: How to Run Your Band's Business (Nolo Press).