The Business of Music is a series of short opinion-editorial articles written by Thomas Leonard Kutz, J.D., M.A., for general information purposes. Each article focuses on a specific area of music business or law. The articles are not meant to be construed as legal advice, but are simply an overview and opinions written by a young professional as he dives head first into what many so lovingly call “the industry.” Enjoy!
I’m going to level with you right now, contrary to what the boys over at Dire Straits may claim, it’s not easy and you won’t get money for nothing. Most folks I talk to about business planning for their band or solo career are taken aback by the time commitment, level of focus, and secondary resources which I recommend for taking their project to the next professional level. I typically break it down like this, the most successful musicians I’ve met not only treat this like a job (which it is), but it’s like pulling a double shift. Every day. Forever.
Okay, slight exaggeration, but that’s the level of commitment you should be willing to give to take that next big step professionally. An associate of mine who works in promotions, production, and talent management said about a potential client, “do they want to be like every other teenager or do they want to be a rock star?” While no one can promise rock star levels of success, there’s something to be said for selfish dedication to your craft and a commitment to that pursuit. That means getting yourself performance ready before even considering bringing on other parties or moving into the professional arena. This is not an article for those starting from scratch, this is for those who are ready to move from hobbyist to music professional. So without further ado:
FIVE BUSINESS AND LEGAL TIPS FOR TAKING IT TO ELEVEN
(That’s a Spinal Tap reference, shame on all of you who missed it.)
1) KNOW AND PERFECT YOUR PRODUCT
This is branding 101. You’re a musician so what’s your product? I’ll give you a hint, it’s not just your music. Yes, you produce music, but we live in an age of holistic perspectives and consumers want the whole package. Your product is not only your music, but your image and likeness, genre, stylistic quirks, personality and interactions, your cultural imprint. In short, it’s you. You are your own product. That’s incredibly existential (you’re welcome, philosophy majors.)
Remember, this is a business. You’re taking that next step and you need to hone your craft. I’m not telling you to become the proverbial “sellout.” Please, don’t change what or who you are to be perceived as more marketable, just be aware of what you’re putting out there into the universe and make use of it. It’s all a part of the product that is you in one way or another. Go to workshops, work with other and more successful artists (never be afraid to collaborate), and don’t be afraid to do it yourself. DIY bands are making big waves in local and regional markets, making big statements, and saving big money while perfecting the overall product.
Oh, and make sure when you start playing shows that you have someone designated, willing, and able to collect your paycheck immediately after your set, nothing worse than telling your bandmates you just played a four hour set for nothing.
2) PROTECT YOUR PRODUCT
You’ve gotten this far, you’ve started playing shows, now you need two types of legal protection: intellectual property and commercial. Your music, your image, all of the tangible (and intangible) elements you produce in one way or another are considered intellectual properties. To protect these you’re need copyrights, trademarks, trade dress protections, and the list goes on. These are all handled by an attorney who specialized in intellectual property law. Their job is to make sure your product is always attributed to you, and no one is going to take your creation and pass it off as their own.
Commercial protections are the business aspect of your career. You’ll need a transactional or commercial attorney to help form your business entity, draft and review contracts for legal substance and enforceability, and keep you within tax compliance. They can also assist with issues such as international travel, work visas, licensure, distribution agreements, professional negotiations, and overall business planning and development.
The biggest mistake you can make commercially speaking is postponing meeting with an attorney. Most people don’t retain an attorney until it’s already too late and it’s either cost them money or it’s about to cost them even more. Yes, attorneys are expensive, but the alternative is much worse. The reason attorneys are so expensive is they become your fiduciary agent. This means they are held to the highest standard of care when dealing with your business. They act as your lawyer who explains the law, your counselor who advises you on how to proceed, and your advocate in negotiations and adverse conditions. This relationship bars them from taking on any clients whose business interests may conflict with yours at any time throughout their career, or in some cases the rest of their lives.
3) PROTECT YOURSELF
Form a business entity as soon as money starts passing hands. When you form a business entity it removes liability from you and puts it on the business, so long as you act ethically and within the law and don’t make mistakes like comingling personal and business funds. This is really handy for you for two big reasons.
First, protection from personal liability. If there’s a contract dispute or you’re driving from one show to another and there’s an accident, you will be personally liable for any damages a court (or the contract) dictates. That means all of your personal assets are up for grabs. However, by being part of and operating under a business entity, there is a shield which protects you from that personal liability. Liability is absorbed by the business entity, that is, the suing party can only receive judgment against the business, not you. Now, there are some BIG exceptions to this general rule, such as criminal conduct, negligence, comingling funds, etc. but by retaining an attorney to form your entity and advise you of these issues, you’ll be much safer from personal liability.
Second, tax benefits. If you don’t form a business entity, you’ll be regarded by the government as self-employed, this requires a Schedule C tax form and any income (yes, including cash) generated by your music is added to your total income and taxed at the rate of individual income (so, anywhere from 10{7643a07be85def2dedbecc56bad3bab67e83a7c22b809f3c7a47a1fa73b8911c} to 39.6{7643a07be85def2dedbecc56bad3bab67e83a7c22b809f3c7a47a1fa73b8911c} based on your total income). However, if you form a business entity, there are business expense deductions you can make including travel and equipment. Additionally, not all of the money made will be given to you as income. The business entity can pay you a stipend or salary while the remaining cash amount is either re-invested in or held by the business entity. Thus, depending on the type of business formed, the money held by the business is either tax-free or taxed at a much lower rate.
4) GATHER YOUR “PROFESSIONAL ENTOURAGE”
All Vincent Chase jokes aside, I can’t stress this point enough. The more developed your music and your career become, it’s likely you’ll have less time to deal with the business aspects which surround you. If that’s not convincing, think of it this way, these professionals will help ensure that your job is limited to developing your craft and your talent. They are specially trained in their individual fields to give you maximum influence and the best possible chances of success. They will also help safeguard your product and your career.
You won’t need all of these folks at the same time, in fact you may not need most of them for quite a while (or ever.) Many of these roles may be filled by a single person holding multiple titles and doing multiple jobs. The biggest takeaway from this needs to be pick a group of professionals you trust, you can afford, and will work with you to develop your product. Here’s just a sample of the professionals to think about hiring for your entourage at some point:
Managers (Personal and Business)– A personal manager is going to look after your personal needs, they’ll make sure you’re able to route certain ways on a tour, ensure accuracy in your schedule, arrange for lodging, work with your personal contracts, and in general keep you happy. A business manager is going to look after the best interests of your business aspects, that you’re meeting budget marks and developing your product for further marketability. Managers will hold the rest of your team together, they’re the go-betweeners and the glue that bonds everything together.
Marketing– These are the folks that make sure EVERYONE knows about your shows, appearances, and releases and wants to attend. They’ll also help gather the attention of sponsors, endorsements, special event planners, and those little extras that go a long way.
Booking Agent– They schedule the tour, they take care of the logistical minutiae, and they’re usually fronting some of the start-up investment.
Attorney– A good attorney can make all the difference in contract negotiations and remaining compliant for business formation and tax purposes. They also monitor legal developments which may impact your business strategy. A great attorney will serve as a counselor and advocate, staying on as general counsel and maintaining an ever updated business plan for you. Your attorney doesn’t just work for you, your attorney works for your business.
Accountant/Financial Planner– Never underestimate the power of a person who is good at working with money and budgets. This particular individual will keep a tight budget for you, ensure fiscal accuracy and updated reports on spending and income. Basically, get their approval before making any financial decision.
5) BE TRUE TO YOURSELF
I was at The Great Escape music festival in Brighton, UK back in 2010 with my best friend when I overheard him being told something pretty powerful by one of the talent managers we met with. It wasn’t profound or very deep, but it was powerful nonetheless. “When it stops being fun, it stops being fun.” That’s it. That’s all there is to it. When it stops being fun, it stops being fun.
You didn’t get into this business because you wanted to muddle and suffer your way through it. You didn’t start playing guitar so you could pour over financial statements. You didn’t pick up drumsticks so you could worry about a subsection buried within a twelve page contract. You didn’t start writing lyrics so you could be told to change your message by an old man in a suit. Don’t let it stop being fun.
There’s a rule I’ve tried to keep throughout this process the two halves of the project, business and creative, exist together, benefit from each other indirectly, and they don’t interfere with each other if at all possible. Business doesn’t make creative decisions, and creative doesn’t make business decisions. Creative, don’t change your message because it makes you more marketable, rather business needs to change their strategy to market your message. Business, don’t schedule the tour around an unprofitable stop because creative wants to take the risk, rather find a spot with greater potential and similar attributes, and let creative do their thing there. Communication, compromise, and a general attitude of not interfering with the others’ interest.
Now here’s the kicker, there are no hard and fast rules. You need to be fluid and make well-informed decisions that will benefit you while maintaining your artistic integrity. The best way to do that is by surrounding yourself with individuals who have the training and expertise to take you to that next level, and always be true to yourself. Just do your best and together we can explore the business of music.
Thomas Leonard Kutz is an attorney at Kreamer Law Firm, PC in West Des Moines, Iowa focusing on transactional and entertainment law, business and estate planning. He is a Wisconsin native and transplant to Des Moines via London.
For any of your transactional, entertainment law, business or estate planning needs please call Kreamer Law Firm at 515.727.0900.
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