Saturday, December 13, 2014

Music Business/Law Tips - "Bands Invest In Bands"

A business model is emerging whereby a more famous artist becomes a financial stakeholder in a new developing act. Although it is not an original concept per se (as in recent years Lil Wayne took a vested interest in Niki Minaj and ditto Justin Bieber with Carly Rae Jepson, and way back Motown used to always join its acts up on tours, recordings, etc.), the recent pairing of One Direction and their charges the band 5 Seconds of Summer has been quite successful. Essentially how it works is a big name artist like One Direction - in con junction with its management - will find an up and coming artist that would have similar appeal to their fanbase, form a holding company, sign the new artist to them on some level, and farm the act out to a major distributor like Sony, Warners or Universal who will do all the marketing and promotion. One Direction will then take 5 Seconds out on tour as its opening act and use its social media fanbase to help brand the new act. On the back-end, One D and its management share in the net income made by 5 Seconds. 5 Seconds just had a #1 album and big touring and merchandise results, so this has been a win/win for the parties involved. Ben McLane Esq

Monday, November 24, 2014

Music Business/Law Tips - "Logo Is An Artist"

In the EDM (Electronic Dance Music) realm – where DJs prevail - several unlikely stars have arisen in non-traditional ways. A recent example of this is the producer “Zhu” (Steven Zhu). Although Zhu is a DJ performer who can also sing and dance, he has chosen to market himself as an anonymous graphic/cartoon logo – you never see the person. His true indemnity is mysterious (sort of like “Deadmau5” with the mask also in the same musical genre). Zhu’s brand and music has spread like wildfire via dance music blogs and YouTube videos. His image is even starting to show up as graffiti in Europe. Apparently according to management, since Zhu happens to be of Chinese descent, to get around any potential prejudice it was thought it may be best to market him in this fashion. It has worked - as Zhu signed a major label deal with Columbia Records and is on the charts and playing all the big Festivals. Zhu has proven that these days one can break the mold of how to make it in the music business, and is an encouraging example to other artists that may not fit into a cookie cutter image. Of course, the music always has to be commercial. Ben McLane Esq

Friday, November 14, 2014

Music Business/Law Tips - "A Piece Of A Legend"

An interesting new business model has cropped up whereby a famous band will offer investors a chance to invest in the band and own a piece of that band's future earnings. This mostly applies to veteran acts that are not currently on the charts as a way for them to supplement their income in leaner financial times. An example of this is the band Queensryche who recently made a private offering to interested investors who for a minimum investment of $50,000 will receive a percentage of the band's future entertainment income (i.e., merchandise, CDs, etc.). Be on the look-out for more classic acts to offer this option, which is cool for music fanatics with some spending cash who want to really be close to their idols and possibly make a few dollars at the same time. Ben McLane Esq

Saturday, November 1, 2014

Music Business/Law Tips - Band Agreement

Once a band is formed the members are in business with each other. If the band gets successful or breaks up there will be issues about money and rights that can be quite nasty if the rules have not been agreed to in advance. An internal band agreement is the recommended method to handle it. A band agreement will address issues such as: (1) who owns the name, (2) profit splits, (3) voting on band decisions, (4) songwriting, and (5) leaving members. If there is no agreement, the law presumes a general partnership between the members where all assets (including the name/logo), profits and losses are equally shared. It is recommended to work this out early in the band’s career because it may be harder to come to an agreement once there is a dispute. Ben McLane Esq

Tuesday, October 21, 2014

Music Business/Law Tips - "Copyright Protection"

A songwriter should protect the song(s) they write to ensure maximum income streams and defend against infringement. The songwriter(s) own the copyright in an original work. The term of copyright generally is life of the author plus 70 years. This means the originator(s) control all the rights for that period (e.g., record, distribute, perform, etc.). Copyright exists once the song is in a “tangible” form. Generally this would be a recording (demo is OK). There is no requirement to file the song with the US Copyright Office to create a copyright, but a writer obtains additional legal rights by doing so (i.e., right to sue in court for infringement and get statutory damages), and filing is a presumption of authorship. Hence, it’s best to file any songs with the US Copyright Office that a writer plans to exploit, and just to be safe always put the © symbol next to the song title on credits or demos sent out. Ben McLane Esq

Sunday, October 12, 2014

Music Business/Law Tips - Touring Profits

Touring profits for new artists are razor thin as most of the money goes right back out for travel, crew and commissions. It’s estimated that a new act only pockets between 15-30% of the profit from a show (after expenses and commissions), and this is before taxes. For example, a new band playing decent size rooms opening for a bigger act will generally gross about $10,000 a night if you combine the show fee plus merchandise sales. If such a band plays 5 nights a week they are grossing $50,000 a week (on average). Out of that, the band must deduct production costs ($10,000/week average), transportation costs ($10,000/week average), and crew costs ($10,000/week on average). That is a net profit of $20,000. The band must then deduct commissions of up to 40% to pay its manager, booking agent, lawyer and accountant, leaving the band with on average $8,000-$10,000 to split between the 4-5 members. Clearly, for a new artist, touring is all about setting themselves up for making more money in the future once they become a headliner where the fees increase (but so do the production and travel costs). On the other hand, touring is essential to develop a fan base that will stick with the act for many years to come/reap future benefits. Ben McLane Esq

Thursday, October 2, 2014

Music Business/Law Tips - "Royalties for Oldies"

A recent California court case ruled that Sirius XM Radio (digital radio) must pay broadcast royalties for pre-1972 records it plays. The case was filed by The Turtles who sang on several big hits in the 1960s (i.e., Happy Together). Current Copyright law says that terrestrial (i.e., AM/FM band) radio stations don’t have to pay broadcast royalties to performers (only to songwriters via BMI, ASCAP or SESAC). Moreover, there was no copyright in sound recordings (only songs) prior to 1972. However, in 1995 the Digital Millenium Copyright Act carved out an exception whereby digital services like Sirius XM Radio must now also pay a performance royalty to performers and master rights owners when records are played on their stations. This royalty is collected by SoundExchange. The key issue was that Sirius XM was only paying out on records made from 1972 onward on the basis that no copyright existed prior to 1972 so there was no legal right to pay - artists like The Turtles felt they were getting screwed. The ruling is a major precedent and may result in terrestrial radio stations eventually being forced to pay broadcast royalties to performers as well. Of course Sirius XM will probably appeal, so keep posted to see if the decision stands. Ben McLane Esq