recording studio lease

April 9, 2008 9:28 AM

So I built a small but first rate recording studio on the back of my property for personal use and to make a little money on the side recording others. Two friends of mine ask to use the space half the week to make money for themselves recording commercial jingles. They have brought in a lot of nice equipment that I enjoy using almost exclusively. They've given me a small amount of money in the past but it's come time to discuss a more professional and fair arrangement of who owes who what.

I am rather inept in business matters. What do you think about this? Anyone here with similar situation? How much should they pay me? Do I owe them any of my earnings (from use of the nice equipment of theirs)?

posted by protocool to work & money (8 comments total)

Friendship always mangles business matters. If friendship is the most important, don't mix the two, period. If you built the structure and they brought in great equipment, why not leave it at that -- and simply work out an arrangement so that you can use the studio for yourself or others 50% of the time. See if that is a workable arrangement and run with it.
posted by bprater at 9:48 AM on April 9

I am also rather inept in business matters. However, if I were in your situation, I see two possible options.

1. They pay you a flat fee for use of the space. Basically, they pay rent. Since you're friends, you have an understanding that you have permission to use their cool stuff when they're not around. Keep it simple.

2. You all decide that "the studio" is a resource that you're all invested in and revenue from your projects (with their stuff) and revenue from their projects (with your space) is always split three ways. Consider your investment in the studio, their investment in the equipment, the value of your labor, and then divide income accordingly.

Again, not sure how much business sense this makes, but it seems fair to me.
posted by TurkishGolds at 9:58 AM on April 9

Do not get involved in dividing up income from projects (TurkishGolds #2 suggestion) - that means that you would need to keep a careful accounting and it is guaranteed to cause major problems eventually.

If you really want to make this a cash thing, set an hourly value on studio time (for them) and an hourly rental charge for your use of their nice equipment. Keep a log book in the studio and at the end of the month figure out the totals and pay up. Or if the split is a pretty consistent 50/50 then just calculate their studio costs, subtract the value of your use of their equpment and make that a flat monthly fee. (By far the easiest)

On the other hand, if you look at the numbers (studio time vs equipment rental) and they are anywhere near equal then you will be much better off continuing as you have rather than bringing money into the friendship.
posted by metahawk at 10:19 AM on April 9

TurkishGolds is on the right track. Let me add something else: any formal agreement that you come to should also stipulate who has responsibility in case of damages to the space or equipment. What happens if the roof leaks on their great stuff? What happens if they inadvertantly burn your studio down? This means some slightly amended options:

1. They pay you a flat fee for use of the space. Basically, they pay rent. Since you're friends, you have an understanding that you have permission to use their cool stuff when they're not around. Fiscal responsibility for damages to any equipment or the space is borne by (renter/rentee/some agreed-upon split).

2. You all decide that "the studio" is a resource that you're all invested in and revenue from your projects (with their stuff) and revenue from their projects (with your space) is always split three ways. Consider your investment in the studio, their investment in the equipment, the value of your labor, and then divide income accordingly. Fiscal responsibility for any damages is split three ways - perhaps by equally paying into an insurance policy.
posted by googly at 10:24 AM on April 9

They may be using the space half the week, but they are storing it there 100% of the time. So both parties are benefitting. It seems to me that the two sides are bartering storage and studio space (them) for access to nice equipment (you). The expenses are, presumably, heat and electricity.

If there is no commercial component, you could consider asking them to pay a third or so of the utilities. (Or less, depending on how much time you spend using their gear, which translates to wear-and-tear on it, of course.) If there is a commercial component, well, studios charge for time, so you could possibly charge them a good low hourly rate while they are working (more if you're engineering or something). That way you both benefit. I don't know what would be fair because I don't know what their rate is. If you don't feel comfortable with actual money changing hands, then they could perhaps pay a bit more of the utilities that month.

Conversely, the money might flow the other way if you have a commercial project and are using their equipment to do it. The best thing to do is to sit down over sandwiches or pizza and discuss options and scenarios.
posted by Guy_Inamonkeysuit at 10:25 AM on April 9

Not to derail, but is your land zoned for commercial use? If/ When you need /want insurance you may not be able to get it properly insured because, well what is it? Is it a business or a hobby? Also without the proper zoning bad blood with your friends or neighbors could bring complaints that will shut you down.
posted by Gungho at 11:04 AM on April 9

The commercial component is almost entirely theirs. They have quit their jobs and are devoted to making a living making the jingles for commercials, for which they are already moderately successful. I use it primarily for personal creative use with the occasional paid job that I might take on, but that has become more rare these days. For the most part it has become a place where I can relax and take time to myself to be creative, a thing which I place a high value on.
They have in recent weeks been using the space almost exclusively, asking for more time and for me to readjust plans that I had made because of the time sensitive nature of the jingles business. I told them that we will split the week down the middle and on my days I can expect to have solitude and the right to have things a little strewn around. I am still being asked to alter my plans and schedules. Alright, cool. If that's the case I should expect to be compensated, despite all the nice gear they own, right?
posted by protocool at 11:43 AM on April 9

In response to your most recent comment: probably, unless it'll put a big strain on the friendship.
posted by craven_morhead at 12:28 PM on April 9