Business

Top Legal Tips for Musicians and Bands

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The history of modern music is built on stories of musicians who signed a bad deal because they were taken advantage of by greedy labels or overzealous managers. It may be hard to resist signing the first deal you are offered, but you should ensure the deal you are about to sign is fair. The tips below can give you some leverage when negotiating with a record label.

Form a business entity.

If your band has not registered as a particular business entity, such as an LLC, you are treated as a general partnership by default. That means that each member of the band is personally liable for any debts of the band, any contracts signed by the band, or any litigation brought against the band. You may limit your personal liability if the band incorporates as another type of business entity.

For more on business entities for musicians, see this blog post.

Draft a band partnership agreement.

If your band involves more than one person, you should have a signed band partnership agreement which explains the responsibilities of each band member. The agreement should address how tips, payment for shows, and royalties earned by the band will be paid out. It should also address how management decisions are made by the group.

For more on band partnership agreements, see this blog post.

Keep 'em separated. (Personal and band funds, that is.)

You should strive to keep personal and business assets separate. You should open a business account in the band's name. You can deposit income the band makes and make payments for band-related items and expenses from this account. You do not want a creditor seizing band assets because they were paid with your personal funds.

Register your music.

If you write your own songs, you should register them with a performing rights organization (PRO) so you can receive royalties when songs are played in various mediums (radio, TV, live concerts, etc.). The three most popular organizations are ASCAP, BMI, and SESAC. You should also register with SoundExchange, a site that collects digital royalties from service providers like Pandora, SiriusXM, and other streaming services.

For more on performance rights organizations and publishing, see this blog post.

Get advice from experienced professionals.

Your friend may able to get you a few shows when you are starting out, but you can gain a lot more from relying on experienced professionals. Seek out management that has an established reputation in the locations where you wish to perform. If you don’t understand a contract, consult an experienced entrainment attorney who can explain the it to you. An experienced attorney may also be able to negotiate better terms./P>

For more on hiring professionals, see this blog post.

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UK High Court forces ISPs to block websites selling luxury goods

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The British High Court of Justice as been the venue for a few noteworthy cases that have resulted in British ISPs being forced to block certain infringing websites. These have usually involved entertainment giants that want to make it harder for illegal file-sharing or peer-to-peer sites to connect with their users. The court has now given the ISPs a new target: websites selling counterfeit goods. Thought to be the first ruling of its kind in Europe, the High Court has today ordered that Sky, BT, Virgin, EE and TalkTalk (which collectively provide 95% of all British broadband) must block a handful of websites that sell fake versions of products made by luxury brands such as Cartier and Mont Blanc.

The judgement was based on a theory of trademark infringement The sites use real brand names and logos to appear to offer legitimate luxury items at deeply discounted prices. After discussions with British ISPs failed, Richemond, the parent company that owns the aforementioned brands, resorted to a lawsuit. The websites ISPs are being forced to block barely scratch the surface of infringing online retailers, and Richemond has thousands more to hand that it could go after in future litigation. More importantly, though, the ruling could set a precedent that will lead other companies to pursue similar action. Don't expect that the ruling will have any long-term impact. For every infringing site that is shut down, multiple replacements appear within days.

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Tips For Creating a Business Plan

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You could easily fill your office with books on marketing. But between digging through all the good information and trying to put together a small business marketing plan that's both comprehensive and effective, you may find yourself without enough time to do anything else.

Define Your Niche Market

The strategy isn't new, but it's often difficult for small business operators to embrace. Business owners don't want to exclude potential clients, so instead many trie to appeal to everybody. Unfortunately, that approach usually results in a brand that doesn't appeal to anyone.

That doesn't mean you have to limit your business to one niche. You may choose to target a particular message to a particular group. You may choose to target a particular marketing campaign towards one gender, a narrow age group, students returning to college, other business owners in a particular industry, people traveling by car, or any other sort of criteria.

Build Trust With Your Customers

Customers don't usually purchase something the very first time they walk into your store or visit your website. You must work to build a relationship of trust with your customers. Sculpt your marketing strategy with this in mind.

Communication with customers is important, but it is easy to over do it. If you're asking a potential customer to sign up for a newsletter or even read a marketing message, give them something. It rewards the customer for their loyalty and makes a future purchase more likely. Map the appropriate form and number of communications like this you plan on having with customers.

Keep It Reasonable

Every small business owner dreams of the executive suite downtown or a huge open retail space. Although ambition is good, it can cause business owners to ignore the most important aspects of their success: brand and market. Not every market will sustain a business with significant overhead and not every space will work for every brand.

As you plan for each stage of your business, keep your customer in mind. Research similar businesses in your industry and area to make realistic projections regarding profits and the possibility of expansion.


Having a written business plan is necessary for a number of reasons. Potential investors or lenders will be more likely to provide access to funding. Professionals working with your business will have a better understanding of you and your business. It can also help you develop, refine, and clarify your ideas so you can better explain your brand to the public.

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The Basics of Branding

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Branding is something that I have found most business owners struggle with – either they don’t think they need it, they don’t know how to do it, or they don’t even know what it is or what it means.

In today’s crowded world of start-ups and small businesses, there is an over saturation of brands. This is especially true in cities that cater to local businesses, like Austin. Branding helps you stand out and helps people remember you.

Make it personal.

Consider what fonts, designs, colors, slogans, and marketing structure resonates with your personality. Are you serious and clean cut? Are you creative and edgy? How you present your brand should reflect something about you and your company. Making your brand personal will allow you to build trusting relationships with your clients because it will give them something about you they can relate to.

Connect with your potential customers.

This goes along with adding personality to your brand. People want to connect. This might work better for the small to medium businesses where interactions are more personal in nature. In any business, you need customers or clients. People purchase your services, people spread the word about both good and bad experiences with your services. It means having a voice, creating a community, showing your humor and marketing in such a way that resonates with people so that they feel comfortable and actually want to talk to you or your employees.

Make it memorable.

Standing out is so important these days. Being the first person people think of when they need a service that you offer is key. Whether it’s a logo, a tagline, your blogging, or a uniform, do something that people will remember you for. Bringing your personality to your brand and creating a human brand will also help you be memorable.

Have patience.

Creating a brand takes time. Start with things like networking and building relationships as early as possible because it takes time to build a community of recognition. The more people see you or read about you, the more they will remember you and associate your service with your brand. This does not happen over night. Strong branding is a process that takes patience, time, and diligence, but if you keep at it, it will happen.

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Start Your Own Independent Label

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So you want to start your own record label? Have you thought through the advantages and disadvantages of running an independent label?

Advantages


• A good way to promote your band and other artists
• Need to sell fewer records to make a profit. Selling 5,000 records is considered "indie gold" as compared to 500,000 records for one of the major labels
• Low overhead costs
• Discover new talent and be on the cutting edge of new music
• Satisfaction of getting music out to the public that would otherwise go unheard
• More artistic control

Disadvantages


• Good chance of losing money
• Limited access to traditional distribution and retail outlets
• Frustrating to be in competition with larger labels
• Doing everything yourself

Questions to Ponder


• Can you afford to lose a few thousand dollars (or more)?
• Do you have access to additional money if needed?
• A hit record could sink you. If a record is a hit and you get a large order, you need to be able to meet the demand. Otherwise your label will lose credibility.
• How will you get your product to your customers?
• Do you have physical space available to store records and supplies?
• How will people become familiar with your artists? Live performances? Internet? Radio?
• How will you market and promote your records?
• Do you want the label to be an ongoing enterprise, or is it just for only you, the artist?
• Do you want to be picked up by a larger label or remain independent?

Creating a Business Plan


One of the best ways to tell if you are ready to start your own label is to create a business plan. The business plan serves several purposes: it serves as a guide as you start and run your business; it introduces you to key players, such as lawyers, accountants and artists; and it provides investors with pertinent information. Sources that can help you create an effective business plan can be found at any public library or online. One good resource is the U.S. Small Business Administration.

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Band Names

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Your band name is your brand. It is a valuable asset that deserves careful consideration. If you are selecting a new name, do your research so you do not select a name already in use. Once you have a name selected, It is important that you determine who owns the name and put the agreement in writing. In some circumstances you may want to protect the name by documenting its use and registering the name as a federal trademark.

Find Out If Your Band Name Is Being Used


• Do a Google search.
• Check industry resources, including Billboard's Talent Directory.
• Search the Band Register, which has a growing database of more than 310,000 bands and artists.
• Check with BMI and ASCAP, the two major music licensing organizations. They can do a search of their rosters for conflicting names.
• Do a database search of the U.S. Patent and Trademark Office.
• Call the main public library in your region and ask if it has a Federal Trademark Register CD-ROM. Search for your full band name, then each word individually.
• Hire a search firm.
• Don't forget to check out domain names. If your band's desired domain name is available, be sure to register it ASAP.

Determine Who Owns The Name


Your band name could be owned by anyone or everyone, even someone outside the band, so it is best to create a written agreement resolving the matter. A band partnership agreement should outline who owns the band name. If band members change, the agreement should be updated to assure complete understanding and clarity regarding ownership of the name. In any agreements with third parties (such as record companies, manager, agents, etc.) there should be an express written provision indicating that such third parties have neither interest in nor right to the name.

Protecting The Name


Name protection is the subject of two common misconceptions:
• Band names are not protected by copyright law. They are covered by trademark law.
• The filing of a Fictitious Business or Assumed Business Name (DBA/Doing Business As) with the Secretary of State does not guarantee exclusive use of that name. Name registration simply provides a vehicle for checking the ownership of a business. Essentially, it notifies the public that you are "doing business as" someone other than yourself (or as a "nickname" for your corporation or partnership) and allows creditors to know who is responsible for the activities of the business.

Trademarks


Rights in a group name are usually created by use of the name, not by trademark registration. To establish rights, a band must actively perform under its name, advertise under its name, and/or sell products bearing its name. It is important that you keep records of your commercial activities. If no other band is already using that name in your area, you will establish rights in the name and can prevent other bands from using it in your region.

A trademark is a word, phrase, design or symbol, or a combination of words, phrases, designs or symbols, that identifies and differentiates one set of goods from another. Band names are actually considered "service marks" because they help distinguish between providers of entertainment services.

To protect the name beyond your local area, registration with the U.S. Patent and Trademark Office is recommended. Besides giving notice to other bands that you have pre-existing rights to a name, registration allows you to sue in federal court for trademark infringement. More importantly, the threat of a lawsuit is usually enough to deter other bands from using your name.

The federal trademark application procedure involves submitting the appropriate application form, proof that the name was used in "interstate" commerce (through public performances, advertising or sales of merchandise) and a filing fee of about $325.

Although trademark rights are generally granted to whoever can establish prior commercial use, it is possible to reserve a name by filing an "intent to use" (ITU) registration. You can reserve the name with the Trademark Office by showing a bona fide intent to use your "mark" on specific goods or services (such as records or a concert tour) in the near future. For the registration to be granted, you must also file subsequent proof that you in fact used the name on a commercial basis.

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Performance Rights Organizations and Publishing

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Publishing can be a major source of income for songwriters. A song is considered published whenever it is available for public sale. This applies to any medium — sheet music, vinyl, CDs, digital files, etc. A songwriter may sign with an established publishing company or may form his or her own music publishing company. Songwriters should also have a basic understanding of how the three major performance rights societies, ASCAP, BMI, and SESAC work.

Performing Rights Organizations
• They are not music publishers.
• They negotiate blanket license agreements on behalf of songwriters and publishers for all public performances (in clubs, at live concerts, on the radio, and on television).
• They collect money from these licenses and distribute performance royalties to their members.
• Distribution of royalties is based on the frequency of play.
• Membership is open to both writers and publishers.
ASCAP, BMI, and SESAC are the two major agencies. Each has its own eligibility requirements and each uses different formulas to calculate royalty payments.

Publishing Companies
• A music publisher is a company that owns or administers song copyrights.
• Publishing companies find artists, record companies, film and television producers, and advertisers to make use of a song.
• They negotiate royalties and makes sure the royalties are paid.
• They monitor a song's public usage to make sure it is accurately reported to the performance rights society.

If you sign with an established publishing company:
• You may earn considerably more royalties.
• You may increase your contacts within the industry.
• You do not have deal with the administrative matters.

Do not sign with a publishing company without seeking the assistance of an attorney.

Starting your own publishing company
• Makes the most sense when a record is released on an independent label that is financed by the composer.
• Performance royalties are paid to both the composer and publisher.
• By forming your own company, you will receive all of the royalties.
• May provide leverage in negotiations with record, film and TV producers.

If you decide to start your own publishing company you will need to:
• Prepare publishing agreements for songwriters.
• Affiliate with ASCAP, BMI, or SESAC. Because these organizations will not let you register a duplicate name, you must provide three potential names for your publishing company. If you are a songwriter and have not yet affiliated, you should affiliate with one of these at the same time (you cannot affiliate with more than one). You will have to affiliate as a publisher with the same organization that you affiliate with as a songwriter. Once your company has registered its name, put it on everything you publish. This signals to others that you have established your rights as a publisher and writer.
• Create a business entity
and/or file a DBA registration.
• Register your songs with the Copyright Office in the name of your publishing company. If you have previously copyrighted the songs in your name, you will need to file an assignment transferring them to the publisher's name.
• Register your songs with your performing rights organizations.

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Hiring Professionals

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Like most things, you cannot make it alone. You will likely have to turn to others for their knowledge and expertise. You may benefit by consulting professionals like attorneys, accountants, managers, and agents.
 

Managers and Agents

A manager is the person who advises you or your band in every aspect of your career from what you wear on stage to choosing a producer. On the other hand, agents in the music business seek out and negotiate agreements for your live appearances.

Managers serve a variety of functions. They direct, advise, counsel, and develop your career. The managerial role is often considered the most important member of a band's professional team. It can also be the most frustrating, particularly when your career is not progressing as you would like and you feel locked in for a long term with the wrong manager.

- Fees vary, but usually paid on commission.
- Verbal deals with managers can be an invitation for trouble.
- You should have a written agreement with your manager which covers the manager's responsibilities, term, compensation, and authority on behalf of the artist or band.

Agents get you signed for live appearances. In short, they are the ones in charge of getting gigs that you can't get by yourself.

- If the agent has too many clients, you may not get the attention you need.
- Payment is usually based on gigs booked.
- Agents should not get a portion of your income from record sales or publishing.
 

Attorneys

Entertainment attorneys can:
- Draft band partnership agreements.
- Find a record or publishing deal if you are unsigned by shopping your demo tape (most record companies only accept unsolicited material from established entertainment attorneys).
- Negotiate deals for your services.
- Negotiate merchandising deals.
- Make sure you understand all the deals negotiated on your behalf.
- Help find a personal manager, booking agent, and/or business manager.
- Locate copyright owners.
- Draft licensing agreements.
- Help you get out of bad deals.
- Offer advice on your legal problems by telling you what to do or not to do.
- May be able to settle disputes for you out of court, saving you trouble and expense.
- Represent you in the civil courts.
- Render innumerable other services because of training and experience in the law.
 

The best time to consult with a lawyer is before, not after, you have a legal problem. Look for:
- Experience in the entertainment industry.
- Excellent reputation; references from other musicians.
- Fees (hourly, flat rates, retainer).
- Someone that understands your goals and who will help you achieve them.

Accountants

If your band is making money you may want to consult with an accountant. They can help set up a simple bookkeeping system and prepare your tax return. Before you hire someone else to prepare your taxes or assist with other financial matters, ask the following questions
- Are you a CPA (certified public accountant)?
- Are you familiar with the music business?
- What is your fee structure (hourly, by number of forms completed, or fixed price)? Beware of accountants who base their fees on a percentage of your refund or those who guarantee a refund or refuse to sign your return.
- What is your billing procedure?
- Who will be preparing my return?
- By what date will my return be completed?
- Will you reimburse me for mistakes that result in penalties or interest charges?
- If my return is audited, will you represent me before the IRS?

Most importantly, as in choosing all professionals, choose someone with whom you feel comfortable.

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Update: Downloading General Mills coupon could mean you can't sue company

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Update: In a blog post on the General Mills site posted late yesterday, the company said it would be reverting back to its old legal terms. "We rarely have disputes with consumers –- and arbitration would have simply streamlined how complaints are handled," the company's blogpost said. "Many companies do the same, and we felt it would be helpful. But consumers didn’t like it." Read what led up to this below.

Food giant General Mills, maker of many breakfast cereals and such brands as Betty Crocker and Pillsbury, is making headlines after adding language to its website to alert consumers that they give up their right to sue the company if they download coupons, join it in online communities such as Facebook, enter a company-sponsored sweepstakes or contest, or interact with it in a variety of other ways.

Instead, anyone who has received anything that could arguably be a benefit and who then has a dispute with the company over its products will have to use binding arbitration to seek relief, according to the new terms posted on its site.

In language added Tuesday after The New York Times asked it about the changes, General Mills seemed to go even further, suggesting that buying its products would bind consumers to those terms.

The change in legal terms, which occurred shortly after a judge refused to dismiss a case brought against the company by consumers in California, made General Mills one of the first major food companies to seek to impose so called “forced arbitration” on consumers.

Read the original article from the New York Times.
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Business Entities for Musicians

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If you make money by playing music or performing, you are conducting a business. Although you do not have to file as a business entity to conduct business, there are several entity types which could be beneficial for your band or group. Below is a list and explanation of the most common entities. You should consult with an attorney if you are considering establishing a business entity.

If you are performing or recording under a name that is different from your legal name, you may be required to register the fictitious name with your Secretary of State.

Sole Proprietorship

This type of entity is formed when a business is owned by an individual and is not incorporated. The owner has total control over decisions, receives all the profits and pays everyone's salaries. The owner is liable for all debts and legal liabilities personally, meaning all personal assets and property are subject to these liabilities. The income generated by the business is considered personal income and is taxed as such.
 

- No legal steps are required, so no lawyer is needed
- Easy to create and operate
- Few costs involved
- Relatively simple tax compliance
- Good choice for solo artists or band leaders

Partnership

Most bands operate as partnerships. A partnership is defined as two or more person in business together. Profits, losses, and decision-making responsibilities are split among the partners equally. There is a potential risk to partnerships. Each partner is personally liable for debts and liabilities of the business partnership, regardless of which partner incurred the liability. Each individual share of income is taxed as personal income.

Again, there are no formalities to creating a partnership. When two or more people do business together and share in profits without having any other agreement, the business is automatically classified as a partnership

Although a general partnership can be formed informally, it is strongly recommended that an attorney prepare a written partnership agreement. The most important reason for this is to guarantee the continued existence of the partnership in the event of a member leaving. Without an agreement, the departure automatically ends the band partnership.

- You should get a lawyer to help with this
- Easy to create and operate
- Low cost
- Relatively simple tax compliance
- A legal partnership is not the same thing as a band partnership agreement
- May be required to file fictitious name registration

Limited Liability Corporation

A limited liability corporation (LLC) is a partnership-corporation hybrid that provides corporate-like liability protection for the owners and partnership-like flexibility in management structure. The LLC structure is commonly used by professional performers and may offer more favorable tax benefits.

- A lawyer is necessary. Filing fees range from $100 - $500
- If you are expecting a large income, this is a good choice for your band
- Band members have limited personal liability for business debts
- More expensive to create and operate
- Requires compliance with IRS rules and regulations
- More formalities involved, likely to require a lawyer
- Written agreement is strongly recommended

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