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Who Has Legal Rights on a Mixtape?

Mixtapes and compilations are great ways for new artists to get exposure, but participants often have questions about what rights they’re giving away (if any) when they sign licensing agreements with mixtape producers. Here’s a question from one of Go Forth’s readers:

Q: Who has the legal rights to a song on a mixtape?

– K.P.

A: There are two separate sets of rights to a recorded song. There is a copyright in the underlying music/words to a song and then there is a copyright in that particular recorded version of the song. If the song on the mixtape is a “remix” or uses the beat/music of a popular song, the producer of that original song still owns a copyright in the new version. The second copyright belongs to the artist who has recorded the new song (the sound recording copyright).

Want your music law questions answered? Submit it here for a chance to see your answer in the next Legal Corner.

 The purpose of this article is to foster an open dialogue and not to establish firm policies or best practices. Needless to say, this is not a substitute for legal advice. In any particular case, you should consult with lawyers experienced in the field you are in and licensed within your state. Depending on your specific situation, answers other than those outlined in this blog may be appropriate.

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Did you know that various states require promoters to withhold tax from your performance income if you are not a resident of that state? If you answered “No,” you could be in for surprise when you receive $100 less for your performance than you thought you’d get. Below is a list of applicable states and their withholding rates and requirements at the time of this writing:

California: 7%
Connecticut: 6.5% if income is over $1,000
Massachusetts: 5.3% if income for the calendar year exceeds $5,000
Minnesota: 2%
Missouri: 2%
New Mexico: 5%
North Carolina: 4% if income for the calendar year exceeds $1,500
Ohio: 2%
South Carolina: 2%
Wisconsin: 6%

Fortunately, in some states, you can fill out forms to reduce this withholding. If you’re performing in California, Massachusetts, or Connecticut, and you’re not a resident (or your band’s company was not organized or incorporated in that state), then you can fill out a Form 589, Form PWH-RH, or Form CT-588 for the respective state to apply for reduced taxes on your performance income. For each form, you fill out your information as the performer, as well as that of the withholding agent (usually the promoter). You don’t need to worry about getting the withholding agent’s tax ID, as the state will send the agent the form to fill it in.

You’ll also be required to list all budgeted income and expenses, as your net income will be a factor in determining how much you’ll be taxed. Some types of expenses will end up accruing extra taxes, so if you know or work with a business manager or accountant, it is best to check with him or her on how to best handle this.

If you are a resident of one of the withholding states listed above (or if your company was organized or incorporated through one of them), you are most likely eligible to waive any tax on your performance income there. Check with your state’s department of revenue (DOR) for instructions on how to do so. For Connecticut, even if you are not a resident, you can fill out Form CT-590 to waive your withholding if you expect your gross income earned in that state not to exceed $3,000 for the calendar year. For Massachusetts and North Carolina (listed above), the DOR and withholding agent are supposed to automatically keep track of your yearly income, so no forms need to be filled out.

One more thing to note is that some states, such as Massachusetts, have excise taxes in addition to the normal entertainer withholding. It’s always a good idea to check with any states you’re performing in if this applies to you.

Reducing state withholding tax can get complicated and messy at times, so it’s usually best to let a business manager, accountant, or even knowledgeable tour manager handle it for you. However, as an artist, it’s at least useful to know which states will tax you, so that you won’t have any unexpected losses come time to settle with the promoter.

Disclosure: The purpose of this article is to foster an open dialogue and not to establish firm policies or best practices. Needless to say, this is not a substitute for legal and accounting advice. In any particular case, you should consult with lawyers, accountants, or other professionals experienced in the field you are in and licensed within your state. Depending on your specific situation, answers other than those outlined in this blog may be appropriate.

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Whether you’re planning to start a new business in music, or make money as an artist, it’s helpful to know how you’re going to structure your company for both tax and liability purposes. If you don’t plan accordingly, you may end up accruing unnecessary costs that are otherwise relatively easy to avoid. In this article, I’ll show you the major pros and cons of each possible legal structure for your business to give you a better idea of which one might suit you best.

Sole Proprietorships are essentially one-owner businesses that have not filed the papers to become a corporation or limited liability company (more on those later). The only requirement to set up your business as a sole proprietorship is to declare yourself as such when filling out the normal business registration requirements with your state, city, county, etc. While this type of legal structure is typically easy to set up and doesn’t require any fees on top of minimal taxes, you are personally liable for any debts your business can’t pay. Sole proprietorships also have “pass-through taxation,” which means that all business-related taxes “pass through” the business itself, making the owner solely responsible for paying and reporting them on his/her individual tax return.

Partnerships are the same as sole proprietorships, only there is more than one owner. Liability in partnerships may vary depending on how you and your partners choose to set it up, but in general partnerships (the default type of partnership), each partner is fully personally liable for all business debts. Alternatively, partnerships can choose to have “limited partners” who are freed of the personal liability, but have little control over business decisions and operations. This is possible as long as there is at least one general partner.

Limited Liability Companies or (LLCs) are separate entities formed by the business owner(s) that offer the pass-through taxation capabilities of sole proprietorships and partnerships, but relieve the owner(s) of most personal liability. The only instances when owners are personally liable are for personal guarantees on loans, unpaid federal and state tax debts, intentional or negligent acts, fraud or other illegal behavior, and failure to treat the LLC as a separate entity from its owners (essentially not opening a separate checking account, getting a separate tax ID number, etc.). While LLCs do offer pass-through taxation, owners can choose to have them taxed separately like a corporation. This is typically done when the company starts making enough profit for the owners to keep some of it in the business, since corporations are taxed at lower starting rate than individuals. To form an LLC, you need to file an Articles of Organization with your Secretary of State or other LLC filing office, and execute an operating agreement, which governs your LLC’s internal operations. You may also need to pay hefty filing fees and/or annual dues depending on which state your company is based out of.

Corporations relieve owners of the same level of personal liability as LLCs do, and additionally have the capabilities of issuing public or private stock. C Corporations are taxed separately from their owners or shareholders, while S Corporations are pass-through entities like partnership-classified LLCs. It’s also worth noting that S Corporations are subject to various regulations in ownership, profit/loss allocation, corporate meetings and recordkeeping, and tax treatment of debt, that do not apply to LLCs. For this reason, relatively few businesses are organized as such nowadays. Forming a corporation is a very similar process to forming an LLC, only you additionally need to take specific corporate actions such as adopting bylaws, issuing stock, and maintaining records of director and shareholder meetings.

So how do you know which type of legal structure is best for you?

As a musician or small business, you want to take a look at what types of activities you’re engaging in. Musicians who earn a living playing small local restaurants typically don’t have to worry about incurring any financially catastrophic expenses, and probably don’t have the funds to afford forming a separate entity anyway. On the other hand, if you regularly tour and play mid-sized venues, you’re engaging in riskier activity, as audience members can sue if they’re seriously injured at one of your performances. In that case, you may want to consider forming an LLC to protect yourself from such costly lawsuits (and purchasing liability insurance as well, but that’s for another article). In fact, artists will sometimes have two separate entities—one for touring and one for all other activity—so as to keep any touring-related lawsuits from dipping into royalties and other income streams.

While some artists do form corporations, it is generally only necessary if you want corporate stock structure. That goes for small businesses too. An additional thing to keep in mind is that corporations who issue stock publicly play a whole different ballgame as far as taxes and regulations go, and since most startups don’t go public for quite a while, those rules won’t be addressed here.

For a more in-depth look at company legal structures, check out Peri H. Pakroo’s The Small Business Startup Kit, as well as the recommended readings inside.

The purpose of this article is to foster an open dialogue and not to establish firm policies or best practices. Needless to say, this is not a substitute for legal advice. In any particular case, you should consult with lawyers experienced in the field you are in and licensed within your state. Depending on your specific situation, answers other than those outlined in this blog may be appropriate.

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Get Your Music Law Questions Answered

Go Forth Music is putting a blog series together to answer music law questions for our readers. In order to make this the best possible series, we’re asking everyone to submit questions. We’ll pick the best 8 submissions and feature them in upcoming blog posts.

Oops! We could not locate your form.

The purpose of this service is to foster an open dialogue and not to establish firm policies or best practices. Needless to say, this is not a substitute for legal advice. In any particular case, you should consult with lawyers experienced in the field you are in and licensed within your state. Depending on your specific situation, answers other than those outlined in this blog may be appropriate.

 

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Technology Killed the Musician

“Technology puts a lot more pressure on your imagination and creativity.”

Seth Godin

Technology is possibly the best thing that’s happened to independent musicians. In the past ten years we’ve seen a dramatic decrease in the costs of producing, recording, distributing, and marketing music due to digital audio workstations, social networks, and e-commerce platforms.

Even so, technology can be blamed for killing the musician. Easy access means musicians can put music out without taking the time to hone in on a creative process. Presets in programs such as Pro Tools and Logic lead to “producers” using the same sounds and “engineers” using inaccurate EQ settings without knowing how things really work (and bypassing the opportunity to create genuinely unique works). MySpace Music had every artist following a formulaic “music marketing” plan. Tunecore, while  a game changer in distribution, can also blamed for creating a wasteland of deserted music projects on iTunes servers.

Technology isn’t a substitute for ingenuity or creativity. If anything, it should foster imaginative art. Because of programs like Pro Tools, artists can start at a baseline of quality today that would have cost 10 times as much a decade ago.

Ask just about any musician what their plan is for their next release and I’m sure you’ll hear something like: a) make social media profiles; b) build a YouTube page and put a few performance videos up; c) Use Twitter to tell fans about my performances and album release; etc…

I’m challenging every musician recording and/or releasing an album to do something creative with the technology they’re using…make great music! Don’t use technology as an excuse to take shortcuts; use it as a catalyst to go the extra mile. Experiment with microphone techniques…it’s not like you’re limited to the amount of takes you can do because of tape. Make some new sounds…we’re tired of hearing the same sonic palette we heard in the last Danja,David Guetta, or Polow da Don track. See what your song sounds like WITHOUT putting a gratuitous amount of Autotune on the vocal tracks…you might just like what you hear (If you don’t, either take some voice lessons or consider a different career path).

I know technology didn’t REALLY kill the musician, but I do think that it’s making it harder to find the real ones. What do you think?

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Today’s DIY Rundown looks at articles about subjects every DIY musician comes across: low-budget publicity, crooked booking agents, and social media.

“5 Ways to Stay Public When You Can’t Afford a Publicist” (Audible Hype)

Coming up with ways to get attention and stay in the public eye as a DIY musician is difficult, and finding the time to support a publicity campaign is even harder.  Kosha Dillz, a DIY musician, wrote this very useful post on Audible Hype about creative DIY publicity. I especially like the bonus tip: Be Relentless (with boundaries). Read the full article here. (via Hypebot)

Top 3 Ways To Tell That You’re Getting Ripped Off By A Club Or Booker

Clubs and Booking Agents take advantage of DIY musicians all the time. CD Baby recently published this article pointing out helpful “tells” of a crooked booker. Of note: having to pay just to play at an event. (via Hypebot)

An Artist RoadMap to Social Media

Brendan Moore (@webmusicguy) of Receptive Music created one of my new favorite infographics for DIY Musicians: the “Artist Roadmap to Social Media”. Check it out by clicking the link. It’s a great illustration of how and when musicians should use the different social media tools at their disposal. Key line: “Only use what you can use effectively.  Focus on quality, not quantity of your networks.” That’s the first conversation with have with potential clients. (via MusicThinkTank)

 

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Click here to vote for our SXSW 2012 Panel Idea: DIY is Dead: Why the Team Is the New Label.

The music industry’s DIY movement as we know it is dead. The trend is transitioning from “lone wolf” musicians who record, promote, and write everything themselves to musicians who have a consistent support team around them to help with noncreative tasks.  In order to help musicians understand when and how to build support teams, Go Forth Music has proposed a panel for the 2012 SXSW Music Programming, DIY is Dead: Why the Team Is the New Label. You can vote for our panel now through September 2. SXSW uses PanelPicker votes as 30% of their score when deciding what panels will be selected for programming, so every vote counts!

DIY is Dead: Why the Team Is the New Label: The Panel Idea

The proliferation of technological advances such as social media, digital recording, and content aggregators has drastically changed costs and practices in the music industry. As a result, a new demographic of artists has emerged, defined by Bruce Houghton (editor of HypeBot and member of MidemNet’s Visionary board) as the “Musical Middle Class.” These musicians fall between “superstar” and “starving artist” status, make a steady income, and maintain a level of control over their careers. With the advent of new possibilities, the Musical Middle Class now has immediate access to the tools they need to grow their own music careers.

A survey of independent musicians revealed that, while they have access to these tools, many do not have the time to sort through them or the knowledge to implement them effectively. Teams are needed to help artists decide which tools to use and how they should use them while staying within their budgets. While the traditional record label business model is becoming outdated, there is still value in the support services a team can provide to artists such as A&R, marketing, and career management/administration. A well-composed team closes the gap between fledgling artists and established independents and fills the void created by the obsolescence and unavailability of record label support. As a result, artists can focus on their creativity and continue to develop profitable careers.

Our panel will address issues such as when artists should consider transitioning from DIY and build a support team, what roles these team members should play, and what tasks can be delegated to team members without losing authenticity with fans.

Our panelist include Walter Randolph (manager for multi-platinum producer Bangladesh [Lil’ Wayne’s “A Milli” & “6 Foot 7 Foot”, Beyonce’s “Diva” and “Video Phone”], Liz Imler (social media/publicity/jack-of-all-trades for Jerry Fuentes [independent musician] and Donnell Rawlings [“Ashy Larry” from Chappelle’s Show]), and Go Forth Music’s own La-Vaughnda Taylor (J.D. from American University with a focus in Intellectual Property and Entertainment Law).

How to Vote

  1. Create a free PanelPicker account (or sign in if you already have one).
  2. Go to our panel “DIY is Dead: Why the Team Is the New Label” at http://panelpicker.sxsw.com/ideas/view/9485
  3. Please click on the “thumbs up” icon underneath the panel title if you like it.  Also feel free to leave a comment. We’d love to hear your reasoning for liking the panel as well as ideas on how to improve/enhance the panel if it gets selected.
That’s it! If you want to help even more, please spread the word by retweeting this post and inviting your friends to vote for our panel idea on Facebook.
Stay tuned to Go Forth Music. This September, we’ll bring you our “DIY is Dead” series consisting of five articles that outline how DIY has evolved into a team effort and how you can make the transition.
We appreciate ya!
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Onesheet: A New EPK Tool for Musicians

Onesheet is a new tool for musicians created by Brenden Mulligan, founder of Artistdata. The service allows musicians to display all of their information in a simple format online by pulling information from their different online assets (social media profiles, media streams, etc.).  In private beta for the past month, Onesheet has already signed up over 10,000 artists and opened up its public beta program today (read the full article on Billboard.biz).

We joined the private beta soon after the service launched and created this Onesheet for our client Dash. Mulligan’s timing for a launch couldn’t have been more perfect. We were starting an online publicity campaign and needed a straight-forward EPK to send to blogs, labels, and other interested parties.We created Dash’s profile in 15 minutes by pulling in videos from his YouTube page and message streams from his Twitter and Facebook Fan pages. We also added a hi-resolution photograph and his bio (click here to see the finished product). Not bad for something we didn’t pay a cent for.

In the month that we’ve been using Onesheet, we’ve been pleased with the service.  Here are some of the features we liked:

  • The product makes it very easy to link to online assets.
  • The clean design is free of clutter.
  • It’s simple to share your profile with others. Just copy and paste the link.
  • It’s an EXCELLENT EPK platform. All of the elements essential to making a good EPK are present: Bio, Music, Photos, Press Mentions, & Concert Dates.
  • An added feature that makes it great as an EPK tool is the fact that viewers can browse your important social media profiles and see how active you and your following are.  This alone makes it priceless.
According to Hypebot, the public beta includes new features such as added support for iTunes and Topspin, Google Analytics integration, and more detailed profile customization.
Have any of you used Onesheet? If so, leave your thoughts, suggestions, and best practices below in the comments section.

 

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Electronic Press Kits, or EPKs, are key to displaying your level of professionalism to potential fans, investors, and publicity/performance outlets.  A well-designed EPK will let you control the message you want to send to the press as a band/musician and efficiently get information to your target audience. Below are 5 essential components of a great EPK.

  • Biography – The person reading your EPK wants to get to know you as a musical act.  A well-written bio will give the reader insight into who you are, what your music is about, and how you fit into their playlist (if they’re a potential fan) or opportunity (promoter/venue, record label, print publication, etc.).
  • High Resolution Press Photos – The reader wants to see what you look like.  Make sure to include your best high quality press photo. Often, publications will use this photo along with an article they print about you. Promoters also use press photos for show flyers/posters.
  • Tour Dates – Always include your upcoming tour/performance dates. It gives potential fans, investors, and press members a chance to come watch your band do what you do best: make great music.
  • Press Mentions – Press is one of those weird areas of business; the more press you have, the more publicity and performance opportunities you seem to get.  If you’ve never had press, it can be a long road to getting a credible mention.  When using your EPK to pitch to opportunities, make sure to include quotes from (and links to) any previous press you’ve received.  While some publications and opportunities like to be tastemakers and relish in the fact that they might be the first publication writing about you or venue hosting your performance, many rely on other peoples opinions as an indicator of your ability to draw an audience to their publication/show.
  • MUSIC – This one might seem obvious, but you’d be surprised how many press kits we’ve received for various opportunities that did not include music.  While all of the components mentioned above are important to shaping your EPK’s presentation and story, your message is pretty much Dead On Arrival without your music. Your latest single should be the first record presented, along with an EP, album preview, or full album (depending on the opportunity).
Popular online EPK platforms include Sonicbids and ReverbNation. Go Forth Music also offers a service to create your EPK, complete with bio, photo selection, one-sheet creation, and more. Check out the service here.
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Julia Nunes recently set the record for Kickstarter’s most successful music crowdfunding project, “Julia Nunes would be nothing without me,” raising $77,888 over the length of her campaign from 1685 donors. In addition to raising more than enough money to complete her album (her goal was $15,000), she also got publicity from Billboard, music industry pundit Bob Lefsetz, and CNN.

What made her project so successful? It takes a special artist to raise over $77,000 in a month. I took a look at Julia’s crowdfunding campaign and gathered the following lessons from the project: [click to continue…]

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