Exciting news from L4M headquarters. After following the recent trends in film and music, the L4M team (basically yours truly) decided that independent is, in fact, better. While we have always brought an unfettered view of the industry and have not exactly been held back by the “establishment”, we have officially started practicing what we have preached.
Along with a couple of other former partners and one new music guru, a new firm was formed. Troglia Kaplan Holzman will be the law firm behind the L4M crew for the foreseeable future. We are a general business law firm that specializes in helping creative individuals and their businesses navigate through the turbulent legal and business world that surrounds them. Our new firm will give us even more flexibility and availability to help musicians, film makers and artists to treat their particular craft as an actual business. Basically this move will allow our Left Brain Guide to the Right Brain Thinker grow and improve.
To find out more about our newest L4Mer, click here and discover the man, the myth, the legend: Ajay Gosain.
More than three months after the House passes a version of the Tax Extender Bill of 2009 (HR 4213), the Senate got off its collective rear end and passed a modified and heavily pork filled version of the Bill today. By a vote of 62 to 36 this persistent piece of legislation made it one step closer to becoming law (remember it still needs the President’s signature). Of importance to all of us, the Extender Bill contains a one year extension of Section 181. All film makers and investors may now breathe a collective sigh of relief.
Now that the extension is a whisker away from becoming law, all you film makers can start approaching investors and their confused accountants to tout the extradorinary tax incentive that is Seciton 181. Remember the tax dedcution that 181 offers is against passive income (although there are subtle nuances that allow active investors to take the deduction against active income). Also, musicians, videographers, web casters, 181 can be used for all qualifying films; which is to say it is not just for feature length films.
We at L4M routinely work with film makers in planning and drafting their film investment documents. Now with the help from our intrepid Senators, we can once again add language to these documents regarding Section 181 (and State tax credits) that make film investment a bit more attractive.
Now that 181 has passed, stay tuned for other development in film and music law. Thanks for reading and for all of your input.
Due diligence is a phrase that is thrown around the legal world on a daily basis. “Is that borrower credit worthy? We’ll have to do our due diligence.” “Do we want to purchase that gas station? We will only know after we complete our due diligence.” Does the concept of completing due diligence in the music world ever come into play?
The answer is that it should. Just like a business looking to buy out its competitor or a bank trying to figure out if it should issue a credit line to a borrower, a musician should always complete due diligence before making any decision related to his career.
In my quest to get musicians treat their music like a business, I have often compared a music career to any other type of business. However, even though being a musician is similar to being a manufacturer of tires or a having a shoe store, there are different rules and procedures in the music industry. These different rules and standards are due partially because of the slick talkers and stereotypical music industry professionals but mostly from a successful system that has been in place for decades. If it ain’t broke, don’t fix it has been the mantra of the major label music industry for years. In this system, the typical scenario played out as follows: a musician breaks onto the scene or discovered by an A&R rep, the musician blindly signs a multi-album record deal, a manager is provided by the label and the label would control the musicians career for the length of the contract and beyond. As we all know, this system is no longer the norm. Due to the failures of the record industry over the last several years, the system has changed and the process for building a career as a musician has changed along with it.
While a musician was happy to sign the first contract that came from a “reputable” label in the past, that musician now has the ability to conduct her own due diligence. For a musician his or her music is her work product. Today, when that work product gets to a level where it is ready to share with the public and the public wants to hear it, several doors may open for the musician. Behind every door, however, is another business who wants to make money off of the musician’s work product. A manager, business manager, lawyer, label, publicist, publishing company, etc. etc. are all examples of businesses who make money off of your work product. But just like a business owner who is looking to hire a new CEO, a musician must conduct diligence before making a long term committment which may direct the musicians career and check book for the next several years.
So what should you look for as a musician who is looking to sign with a third party (a label, producer, manager, etc.)? How does a musician conduct his own due diligence? First, conduct your own research: google the hell out of the company or individual that is looking to work with you; talk to people in the industry to see what their experience has been with that company or individual; and spend a lot of time talking and observing what that individual or company is really like to work with. A label might have a good reputation, but that reputation could have been built on a success 10 years ago; what have they done lately? Ask for a specific plan for you and your band. How will the label help you get tours? How will the manager deal with finances? How will the lawyer bill you? We know that Sub-Pop has been successful with many of thier artists, but how do their contracts work? Will they enter into a license deal or maybe they are only a 360 deal label? Just because a label or management company has a good name doesn’t mean that they are a good fit for you.
It is always exciting to have someone interested in working with you and in some cases offer you money to work for them. But in today’s music world, you have to ask: is it worth it? Maybe you can do it on your own. Maybe you make your own start and then go with a label. Maybe your best friend is ok to work as your manager for a regional tour. All of these things must be thought about before signing on the dotted line. In the business world if one business is looking at buying out another business, the due diligence period may take months (years even). Lawyer pour over the existing contracts, the amount of money coming in and out of the company, the people working at the company, the systems in place that are working or need to be fixed. Why should your music career be any different?
Musicians should focus on music. That is what they are inherently good at and why they have the exciting prospect of people paying them for what they create. However, saying that “I only want to make music” and ingorning the decisions that effect your career as a musician can have devastating results. Do your due diligence before you make decisions that will effect your ability to continue to make music for a living. Once you have made smart decisions on who makes up your professional team, you can go back to what you are truly meant to be doing: making music.
Only time for a quick update folks. Now that the Health Care proposal is out of the House and on its way to the Senate, the tax folks have more time (although not that much more time) to focus on tax incentives and credits that are set to expire at the end of this year. For our purposes Sections 181 and 199 are really the only one matter.
According to a staff tax attorney at the Ways and Means Committee, the focus has been shifted and if Section 181 has a chance of renewal or extension, it will occur in the next two weeks. Please note that even if the renewal of Section 181 is proposed in the next week, there is no guaranty that the bill which carries the renewal proposal will pass. To that point, you will not see a renewal of Section 181 in a proposal by itself. Any renewal of the film incentive statute will be included on a larger and broader “Extender” package introduced to Congress before the end of the year.
So, I suppose this is good news. However, if you can get started on your films, do it now or forever hold your peace!
What happens when an artist decides to “help out a buddy” or lend a verse or bass line on the whim? Most of the time not much, but sometimes, the song ends up in places you never imagined; like in a movie, the internet or as a commercial jingle for a new adult diaper.
The more popular you or your band get. the likelier your friends or your acquaintances will start asking you for stuff. Everything from showing up to their concert, to posing for pictures, to recording a song. Think of it like a lottery winner finding out that he has third cousins, twice removed, that are in desperate need for money to fix their trailer. An endorsement or involvement from a popular musician is worth a dozen or so trailer repairs.
Here’s the problem, if you don’t set out the terms of the music that you nonchalantly give away, it may not be clear who owns it. Lending your voice to a song might qualify as a “featured” artist or it might be it is your creation which actually “features” your buddy who asked you help out. Without clearly stating whose song it is and what percentage split you will receive you are asking for trouble (usually in the form of a law suit).
One easy way to fix the problem is to simply register the song with the copyright office either before (as a pre-registration) or immediately after recording and release. Both the lyrics and the sound recording itself can and should be registered with the US copyright office (www.copyright.gov). The fee is only $35 and it can all be done on-line. The form is a bit tricky but with a little experience and guidance, it’s a no-brainer.
Registering the song as a copyright not only provides statutory protection in case the song is ripped off, it also clearly identifies the author of the song, the performer of the song and if there are any other entitled people involved (samples/publishers). The approach for any musician who is asked to participate in someone else’s song is that she will not lend her voice until the copyright registration is filled out.
The next step is to register the recording with your publishing rights organization. This will also allow you to identify who owns what for an individual track. Whether it is BMI, ASCAP or SEASAC, registering a title with a PRO not only allows you to collect every time the song is publicly performed (not in a concert but over the radio, tv, internet, etc.) but will end any debate as to who actually owns the song.
Creating music is clearly a creative process. Collaborations bring about some of the best music. Think of the hip hop and R&B world. How many songs are currently featuring Lil Wayne or have Ciara singing a verse? The formula for featuring another artist is a time tested winner. But just as with everything else in the music industry, set out your creative collaboration in writing before you enter the studio. It will allow everyone, especially your lawyers and managers, to sleep better at night.
Some of us who work with businesses that are on the periphery of the music industry (clothing manufacturers, software and computer companies etc.) have been babbling about the trend of coupling music with another consumer product for some time now. Finally the idea of bundling or packaging new music with other merchandise appears to be taking off. Artists like Mars Volta, ACDC, Mos Def and, oh yeah, the Beatles, are getting into the game providing major steam to the indirect music sales category.
Most of the readers of this page are not signed to major labels (at least I don’t think so). So the idea of getting your next single on Guitar Hero IV is not very realistic. However, in the past we have discussed creative ways of getting your music out to the masses. Mos Def, a true indie hip hop legend, has taken this approach with his latest release: The Ecstatic. As Pitchfork, Digital Music News and NME have reported, Mos Def’s newest release will be presented to the public via a “Music T-Shirt”. Each t-shirt will have a unique code that will allow the buyer to download the album (not to mention rock a new sweet t at the same time).
This cross marketing and cross selling idea is clearly the wave of the future for music sales. With continuous drops in physical cd sales, limited and dwindling numbers of stores selling cd’s and the tight economy, musicians and their labels have to think of new and creative methods for getting the new music to the people. The majors may be too slow and too entrenched to re-invent their sales method in time, but creative indies and mid-size labels can definitely get on board.
The t-shirt idea is brilliant, but how about including music with the purchase of a particular sneaker. If Converse knows that their shoes sell particularly well to the hipster community, why not include download codes for music from Passion Pit, Santigold or MGMT? If you are a band that has identified your target audience, approach a company whose products are popular amongst your fans. For young bands, their fans probably only buy music digitally. Why not get custom usb drives made with music embedded on it and sell those at your concert instead of cds? The cost is about the same (check out CustomUSB and Molotalk ) and the chances of a fan buying a wicked cool usb drive far outweigh a crappy cd with a handwritten label.
Musicians are creative by nature so the possibility for this secondary revenue stream for the sale of new music is seemingly endless. As with all licensing and merchandise deals, the same “lawyerly” warnings apply. As this trend grows and more non-music companies approach musicians to ask for music, more shady deals will be presented. As always, be careful before you agree to sell, license or give your music to anyone. That sweet t-shirt compilation idea may wind up as a not so awesome singing laxative container.
SHAMELESS SELF PROMOTION OF THE WEEK
I already plugged (no pun intended) them in this article, but check out Custom USB. They have already worked with many big named musicians on really cool USB drives that can come in any shape, size or quality. They can embed software that not only includes music, but also creates a fan based intranet site that pops up once the device is plugged into your computer. Awesome stuff.
Similar to songs titles, there seems to be an infinite number of band names to pick from. However, unlike song titles, band names can be protected. Trademark protection is a tricky but hot topic these days. With the numerous licensing opportunities presented to successful bands and musicians the protection of a band or artist’s performance name is extremely important.
Bob Marley is a perfect example. Marley has become more than just a musician’s name. People who know Marley’s music immediately associate it with Reggae, Jamaica and a certain “laid back” lifestyle. Over several decades, the Marley name has been exploited by thousands of people for millions of dollars. A protectable name has gone unprotected.
Bob Marley’s estate recently reached a global licensing deal with Hilco Consumer Capital, a major private equity fund that licenses well known brand names to equally well known merchants. The Marley family had grown tired of the millions of dollars it lost out on thanks to sales by unlicensed dealers across the globe. Think of all the Marley paraphernalia that can be bought on the street or in your local head shop. Not to mention the schwag manufactured in China and India that finds its way into the US and European markets.
After years of sitting by and allowing trademark infringers to profit off of the Marley brand, the Marley’s took appropriate action. Hilco with hits large corporate infrastructure and influence will be able to secure specific approved relationships with merchants. Any sales that are occurring outside a relationship developed by Hilco will be an obvious infringer and can be dealt with accordingly. Bootleggers will be less likely to sell their unlicensed goods to retailers. That is not to say that you will no longer be able to pick up a Jamaican Flag with Marley’s face on it at Panama City beach during Spring Break ’09. However, you will not be able to walk into Spencer’s Gifts at your local mall and pick up a “Bob Marley, Legend” t-shirt or hemp necklace. The family through its new corporate partnership have taken the necessary steps to register all things related to Bob Marley and his musical goods and services. Those trademarks can now be policed and enforced if need be through the court system or the mere threat of a law suit.
Most likely, you and your band are not fielding offers from Hilco or other major license distribution companies. Chances are you are not worried about having your band’s name emblazoned on backpacks or hoodies at the mall without your permission. Yet, get a little bit of buzz going and unlicensed merch will start popping up online and even at your shows. Bootleggers love to capitalize on new bands because most do not know how to protect their rights. That’s why you should be prepared.
Registering your band’s name as a trademark will give you statutory protection. Statutory protection will allow you to enforce the rights you have through your unique band name or logo (assuming its unique). By registering your band’s name as a trademark, you can take the steps necessary to stop infringers from using the name or logo, recover monetary damages from those who infringe those rights and even, in specific cases, get the attorney’s fees that you spent to enforce your rights back from the infringer.
Sounds great, right? It is, but like most things with the government, the trademark process is not exactly easy. You have to do your research first. You can’t just pick a name that you think is rad without determining if someone else beat you to the punch. You also cannot profit off of another band’s name and notoriety. While Jon Bovi may think they are the “opposite of Bon Jovi”, chances are, Bon Jovi doesn’t think so. If there is a likelihood that the public will be confused as to the source of where the music is coming from, the government is not going to approve your application. Our friends from SNL may think that they have nothing to do with the actual band, but there is no way they could ever make it with a name that is so similar to the original.
Find out if there are any other bands using the name you want for your band; see if that band registered its name with the United States Patent and Trademark Office. Do a MySpace and Google search. Go to www.allmusic.comand look up your chosen name. While there are a lot of variables to determine if a band name is trademarked or protectable, if you find a band name that is still being used by a band today or was registered in the past, its time to go back to the drawing board for your own band name. Do not start a marketing campaign, release an album or start multi-state tour with a band name until you are sure you are the only ones out there using it. As with most things involving the law, its always a good idea to talk to a lawyer to help you out with the process.