Alright, so check it out. Rock Band 3 is the first game in the series that I've played with a full 4 player band, and we started playing on a pretty frequent basis. Considering only my brother and I have profiles on my Xbox, it turned out that while our other two bandmates were playing, they weren't able to unlock anything and none of their effort was saved. So I made Xbox profiles for them and let them make their own rockstars. We came up with a band name, and I managed to make a pretty sweet logo for the band. However, there's one big problem. How do I put the other guys IN my band? As it stands now, it's like everyone has their own default band, where it says "(Username)'s Band". They're unlocking stuff, but none of their effort contributes to my main band that I want them to be a part of. I hope this is making sense, because I understand it might sound kind of confusing. 
 
I know I can assign band stand-ins when the other members aren't around, but it treats each of them like they're not a part of my band anyway, when I want them to be. The band logo I created isn't even shared with the others. It seems the only way they could legitimately be in my band is if I create their characters under my Xbox account, and then if they don't sign into a profile, they're able to play as their characters, but then none of their progress is saved in the end. That is completely flawed. Maybe I'm just overlooking something, but it seems like you can't actually make a real 4 player band in the game, and if so, that's just retarded. Am I doing something wrong or what?

I don't think you're missing anything. That's just how it is. I think the reasoning is that every profile has their own band so that you can link the game on rockband.com through gamertag and keep track of everything. 
 
As long as you're signed in and playing with them though, you are making progress. If you want progress to be made while other people are playing and you aren't, then have them sign into your profile.

it very flawed actually 
Rockband 2's UI worked so much easier

" it very flawed actually  Rockband 2's UI worked so much easier "

Beats me. I just have the game for the PS3, so I didn't even consider an issue like that happening. That really sucks actually.

When I play with my friends we just use one user account, and all progression happens for the band we made. It seems the ps3 is the way to go for RB3 lol.

For something that is overtly designed to be simple, it can be extremely complicated and frustrating. My gf describes RB3 as Harmonix "going wide, but not deep". Soooo true :)

I got Rock Band 3 today after being on an RB2 binge for a little while, and I love EVERYTHING about it except for this. The career mode's better, the graphics are amazing, the animations have been improved so much, the songs play better and the music selection is great. 
 
But this is RI-DUCK-ULOUS. My best friend and I ARE in the same band--we have been since we started playing Rock Band 2 7 months ago--why won't Rock Band 3 let us be? 
 
This is super flawed and super disappointing. In RB2, I could own the band and she owned her character but she was still in it. And now this? 
 
I'm disappointed in Harmonix and will probably be posting about it on their forum. Knowing their track record for post-release support, hopefully they will fix this, SOON.

I don't recall having all these problems.  But then maybe it's because nearly all the time that I play WITH other people, we play quickplay, not career/band mode.