Setting Up A Label

Well, since this is the “music” – “business”, you need to have two (2) things: (1) Hot Music! and (2) your “business” needs to be right!



Having hot music should speak for itself. It’s either hot or it’s not! Notice that the above-mentioned examples of music entrepreneurs all happen to be rappers. There is a reason for that. Hip-Hop is a music genre (along with dance/club music) that doesn’t necessarily need mainstream radio to create a “buzz” and sell records. The “Street” (i.e., DJ’s, mixtapes, and the Internet) can help drive sales of your record without mainstream radio exposure. R&B artists have a bit more difficulty because radio airplay is needed to sell units and hiring independent radio promoters to get an R&B record on the radio can be very costly.



Getting your business “right” is the next most important thing to consider. There are four (4) types of business entities that you can use to get your record label up and running. You can operate your record label as either a: 1) Sole Proprietorship, 2) Partnership, 3) Corporation or 4) Limited Liability Company.



With a Sole Proprietorship, the business is run by one person who is also the owner. It is easy to create by going to the local county courthouse and filling out some simple forms such as a “DBA” (“doing business as”) with the fictitious name of your company. The big disadvantage with a Sole Proprietorship is that if you get sued and you lose, the judgment creditor can recover against both your business and personal assets (there goes that “Jacob” watch!!) and that’s not a good look!



A Partnership is an association of two or more people conducting business on a continual basis for profit. There’s usually a written partnership agreement that outlines the duties and responsibilities of each partner. Big disadvantage: Each person in the Partnership is responsible and liable for the business obligations of the Partnership incurred by any of the partners. So if your partner signs a contract to pay a record producer to produce a song and doesn’t - all of the partners are responsible for the payment. If the Partnership fails to pay the Producer, he can sue all the partners and if he wins, the personal assets of the partners can be taken but only after all the partnership assets, if any, have been taken (there goes the Maybach!). Again, not a good look especially if your partners are irresponsible.



A Corporation is a better look. A Corporation is a separate legal entity with a life apart from the people who own and operate it. Using the earlier example, if a Corporation enters into an agreement to pay a record producer and doesn’t, the producer can sue the Corporation and if the Producer wins only the assets of the Corporation can be taken but not the personal assets of the individual owners of the Corporation (you get to keep your house!). There are also significant tax advantages to creating a Corporation.



You can incorporate a company by filing an “Article of Incorporation” with the Secretary of State Department in the state where you’ll be doing business (check the Internet for companies that can assist you) or you can retain the services of an attorney to incorporate the company for you.



Finally, a Limited Liability Company (“LLC”) is a business entity that has the elements of a Corporation and a Partnership. In an LLC, the owners (members) are parties to a contract known as the “Operating Agreement” which outlines the rights, duties and rules of the LLC. As with a Corporation, LLC’s provide limited liability and protection of the member’s personal assets while allowing the members to be treated as a partnership for ownership and tax purposes

Copyright Forms

Copyright registration establishes the legal owner and/or publisher of intellectual property for works such as musical compositions or the lyrics for a song. In music, two registration forms are the most common. The PA Form and the SR Form.

PA Forms are used to copyright the composition itself, while SR Forms are intended to protect the sound recording of intellectual property. It is important to understand the difference between these two forms. Theoretically, you could copyright a terrific song using the PA Form, record your project and start selling your CDs in stores everywhere. But if you had never registered the sound recording of your song using the SR Form, another band could send in the very same recording using an SR Form and claim that your recording belonged to them. You would be credited for ownership of the song, but they would get the credit for all your hard labor in the recording studio and collect all the mechanical royalties! Hopefully that brief scenario shows just how important the SR Form really is.

The good news is that you can use the SR Form to do the job of both forms. Simply download the SR Form and, in the space called NATURE OF AUTHORSHIP, enter something along the lines of “All music and sound recording.” This will protect your interest in both the composition as well as the recording, all in one form, thereby saving you the cost of a second registration. This will not work if you use the form PA. Your application will be rejected if you do not use the SR Form to cover both aspects of your copyright.

If you are writing and recording a song with someone else, each space for the NATURE OF AUTHORSHIP might read, “50% of all music and sound recording.” Please note that you can not split percentages with regard to the sound recording. Everyone involved in the recording shares the same interest in the sound recording, even if different weighted percentages are used with regard to ownership of the actual song. If only one person or a few people own the song and more people are involved in the recording ownership who are not defined as providing a “work for hire” then a PA Form should be used to file for ownership and a separate SR Form should be used for copyright of the sound recording.

To save even more money by making the most of your SR Form, register several songs at once. You can register them as a “collection” by entering the name of the collection on the first title space and the individual “content titles” in the second space. To do this all authors must have the same percentages of ownership for each song. In other words, if you wrote one song all by yourself and the second song was written by two people, you would need to use a separate SR Form for each song. If you wrote all the songs yourself, or the same people wrote all the songs with the same ownership splits, you can use one form to register all the songs.

Artist Quote of the Week

"So many record companies turned me down, they said I sounded like a Chipmunk."

--Brandy

Performance Marketing / Tour Support

Live shows are often the best way to develop a new artist and expose new music. Seeing a band live can be all it takes to convince their fans to buy a CD, a radio station to play their single, or a publication to review their album/demo. Therefore, tour support should be an integral part of your marketing plan. The term “tour support” is used in the music industry to define either:


The amount of money a record label gives an artist to help cover the costs of touring and keep/send them on the road.


The efforts of members of your business team (record label personnel, marketing reps, your manager, etc.) to promote your shows and take advantage of marketing opportunities surrounding a live performance.


For the purposes of this section, we’re going to focus on the second part of the definition, related to marketing. In this context, tour support isn’t just about marketing a tour as a whole, but also about marketing each individual performance separately, and marketing the artist around their live shows. So even if you are a local act playing a few shows in your hometown, this section is still of critical importance to you. In fact, this section is relevant for any artist, of any stature, anywhere-- as long as they’re playing some live shows. Tour support is definitely not just for those on a formal “tour.” That’s why I prefer to use the term “performance marketing.”

Performance marketing is a very involved process that begins a few weeks before every showdate and continues for about a week after. It also incorporates all the other elements of the music marketing mix (e.g. retail, radio, press, etc.) so you should make sure you have reviewed those StarPolish sections before reading further. You will be busiest surrounding your performances. Therefore, you may want to create a personal checklist to ensure that you cover all your bases in performance marketing.

President Bush/Performance Royalties

Unpaid P2P Settlements

Managers of top recording artists are considering legal action against major record labels, saying that Universal, Warner Music (NYSE: WMG) and EMI are dragging their feet in distributing hundreds of millions of dollars in settlements from copyright infringement lawsuits against file-sharing firms like Napster and Kazaa, the New York Post reported. "Artist managers and lawyers have been wondering for months when their artists will see money from the copyright settlements and how it will be accounted for," attorney John Branca, who has represented Korn and The Rolling Stones, told the Post. "Some of them are even talking about filing lawsuits if they don't get paid soon."



Read the entire article@http://www.dmwmedia.com/news/2008/02/29/artist-managers-consider-suing-over-unpaid-p2p-settlements

Imeem Acquires Snocap

Social network, Imeem, has acquired struggling music-licensing company, Snocap, the company cofounded by Shawn Fanning of Napster fame, according to a published report TechCrunch, citing an unnamed source, reported that the deal is being finalized this week.

Snocap offers to handle copyright and music licensing for musicians and also powers embeddable download stores that artists can place on any site. From these digital-music vending machines, musicians sell their own music. In October, Snocap CEO Rusty Rueff told CNET News.