One of the biggest problems with bands that become successful is when the songwriter starts living large from publishing royalties while the rest of the band still are just getting by. Resentment builds, and the band eventually breaks up. On the other hand, bands that have split royalties equally have had great success over the years according to a paper written by Sarah Polcz at the Standford Law School entitled “Loyalties vs Royalties.”
The study looked at 1000 acts over 60 years that had earned at least one Gold Record. According to the paper, “The first study reveals groups that share royalties pro rata even when some members’ contributions are small produce songs that garner more Grammy Awards and earn higher revenue than groups that channel royalties to major contributors.”
“Loyalties trump royalties,” and prior friendships mean everything when it comes to ensuring that everyone in the group is taken care of. The groups with equal splits tended to prosper more across their entire careers due to the lack of animosity caused by royalty disparities. Good examples include Coldplay, REM, Radiohead and The Doors, among others.
Royalty splits are always a touchy subject and one that sets off more disputes that just about any other problem. Even worse is when the split is not defined up front before any money is made, since going back and carving out a new agreement after the fact hardly ever ends without at least some bad feelings.
Here we have proof that it does pay to subscribe to the proverbial “all for one, one for all” as long as the agreement comes early in the life of the songwriting entity or band. Not only will a lot of legal heartache be alleviated along the way, but the band will prosper more as well if it ever reaches a level of success.
So it many be counterintuitive, but this research clearly shows that equal split royalties are good for your long-term financial health.