What's Hot in Los Angeles Entertainment Law

The Taxman Cometh: Songwriters and Publishers Can Get Breaks - If They Know Where To Look

Changes in the tax code from 2006 continue to offer significant advantages for both songwriters and music publishers.  The tax breaks for songwriters were especially ground-breaking, permitting self-created musical compositions or copyrights in self-created musical works to be treated as capital assets. And gains on the sale of long-term capital assets - those held for more than 12 months - are taxed at the rate of 15%, instead of at higher income tax rates. A related law lets buyers of such works write off the purchase price over a period of five years, taking a deduction in each.

 
Before 2006, copyrights, literary, musical or artistic compositions, letters or  memoranda were not considered "capital assets" in the hands of their creators.  So a songwriter who sold his own songs, like an artist selling a painting, paid normal income tax, currently up to 35%. But the same songs were considered "capital assets" if bought by a music publisher. Not only could a publisher deduct the cost of acquiring the copyrights (as a yearly percentage of the purchase price), but the proceeds of any subsequent resale would be taxed as a capital gain (presuming the rights had been held by a non-corporate publisher for at least a year).  Now, songwriters also get  a capital gains break, but not automatically.  Songwriters have to affirmatively elect it - a no-brainer unless they want to volunteer to reduce the national debt.
 
Confusingly, the tax law doesn't define a self-created "musical composition" or self-created "musical work."  It seems safe to assume that these categories would cover compositions created by a lyricist and a composer. But what if an existing poem becomes the lyrics to a song by another writer? That song would probably be covered by a single copyright, and its sale should entitle the creators of both the melody and the original poem to pay the capital gains tax, even though the sale of the poem alone wouldn't qualify. The law also doesn't address what music besides self-created songs qualify as "capital assets,"  only stating that both self-created "musical compositions" and "copyrights in musical works" qualify for elective capital gains treatment.  Accordingly, royalties and other income from musical compositions are still taxed as ordinary income. But the term "copyrights in musical works" is intuitively more expansive than "musical compositions," and could include copyrights in self-created sound recordings (which, of course, would be recordings of "musical compositions"). That means an artist could sell a library of existing recordings along with the copyrights in the underlying musical compositions to a film-TV music production house and argue that all the proceeds would qualify as capital gains. But the IRS has yet to issue an interpretive ruling.
 
Last year the IRS issued proposed, temporary regulations saying that each election to treat a musical composition or copyright as a capital asset must be made separately - on or before the due date of the tax return for the year of sale or exchange (including extensions).  Thus, creators of musical compositions and copyrights in musical works who sold those rights in 2008 need to declare their intention to take advantage of the lower tax rates on capital gains.  Buyers of eligible musical works and copyrights can also continue to get "tax bang" for their buck. Before 2006, the cost of acquiring a musical copyright generally had to be amortized and deducted over the period that the song was projected to generate income under a frequently complicated "income forecast."  Since 2006, any expenses incurred creating or acquiring any "applicable musical property" can be amortized over the 5-year period beginning with the month when it was "placed in service" (for example, when a song gets exploited). Both songwriters and publishers can take advantage of this 5-year schedule. If a publisher paid a million dollars for applicable musical property on January 2, 2008 and placed it in service on January 31, 2008, by electing five-year amortization, he could deduct $200,000 for 2008 plus the following four years. But this probably does not include sound recordings. 
 
Congress has lowered tax rates for songwriters who sell their catalogs and electively take advantage of capital gains treatment, provided such songs were held more than one year.  This is in stark contrast to the higher non-capital gain tax rates paid by authors and painters who sell their literary works or paintings.   In addition, music publishers buying songs can recover the purchase price over an elective 5-year period.  Questions still remain as to what constitutes self-created musical works that are eligible for favorable capital gains tax rates.  Does this include sound recordings and future reversion rights?  Hopefully the IRS will soon provide rulings that resolve these issues favorably. In the meantime, songwriters and publishers need to take advantage of these tax incentives, which should continue to stimulate the music publishing market.

Appeared in Billboard - April 21, 2009
By Michael R. Morris

Transcenders: Hot Film/TV Scoring Trio

L-R: Brian Lapin, Mike Fratantuno, Terence Yoshiaki

By Dan Kimpel, Music Connection, April 2009

What can musicians do to stay at home?  Mike Fratantuno, Terence Yoshiaki and Brian Lapin, three founding members of the Black Eyed Peas, created the Transcenders, a boutique music house specializing in film, television and commercial scoring. The Hollywood- based trio is composing for CW’s teen drama Gossip Girl. They previously created songs for Judd Apatow’s Superbad and Knocked Up, the SenArt film Bonneville, and Chris Rock’s I Think I Love My Wife. They composed the score for the Lionsgate/Element feature film College and the Universal/Beacon Pictures’ DVD feature Bring It on: All Or Nothing, and wrote additional scored music for Universal Pictures The 40 Year-Old Virgin. They are the proud recipients of BMI Composer Awards for their work as episodic composers on the NBC sitcom Joey. “It was a natural progression for us, all based on wanting to work together, thinking about where the industry was headed, and where the future was going to take us,” says Fratantuno. “More bands are figuring out it’s all about getting your music out there, whether on the internet, through TV or film, or licensed for commercials.” Yoshiaki notes that bands are now writing and recording with foresight of the potential marketplace. “They may even tailor specific songs to cover different topics they assume would be picked up for a movie. A lot of bands are creating with that whole other industry in mind. Apple does a good job with their commercials, finding bands that work in that mold. People see those commercials and think, ‘How can I make a tune that Apple would use?’” Brian Lapin says the trio recorded a number of demos the first few years in the company. “We wrote thematic songs. We did everything you can think of for that business and we did a bunch of Target spots. We also had a certain amount of stuff in our catalog that we would add to, to work into the picture.” According to Tom Seufert, creative director of Visual Music, a company that reps the three, what makes the Transcenders distinctive is that they are not only composers, but songwriters. “I call them a ‘composer collective.’ Their originality and diversity are perfect for visual mediums, they can adapt to all kinds of types of music.” Seufert, who began working with the group in January, says that while composers can often morph in many instrumental styles, it is rare for composers to translate as authentic songwriters. “The Transcenders are plugged in to this incredible talent base, so they’ll find a singer who sounds like a Sheryl Crow, or the Eagles; a craggy-voiced guy doing the blues; the Al Green guy doing the retro soul; and then turn around and do quirky alternative-folk — something like Feist — that could be on an Apple spot.” As composers for Gossip Girl, the trio works under the exacting pressures of a weekly schedule. Yoshiaki observes, “Throughout the process, some scenes will tie to each other. There are dramatic pieces of music that work across different scenes. Basically, we’re thinking in terms of the whole arc of the episode and the themes that are built within the show.” Lapin observes, “Hooks are musical themes for us. Our clients usually need it to be 40 seconds long — it’s like writing for the Ramones.” In addition to years spent touring with the Black Eyed Peas, the three members of Transcenders are significant songwriters. Lapin co-wrote the Peas’ first single “Joints & Jam.” Fratantuno cowrote the No. 1 hit “Where Is The Love” featuring Justin Timberlake. Fratantuno and Yoshiaki also co-wrote the Grammy-winning Top 10 hit single “Let’s Get It Started” with BEP, which earned them both 2004 Grammy nominations in the category of Best Rap Song. Visual Music’s Tom Seufert concludes that the Transcenders’ songs span not only genres, but eras. “It could be something that’s on the radio now, or a song that sounds like a hit from 20 years ago, five years ago, two minutes ago or two minutes from now — they’re really diverse.”

Chris Walden: Two Grammy Nominations for Acclaimed Multi-Genre Composer

While pop, rock and hip-hop are well represented with screen time in the annual Grammy Awards telecast, The National Academy of Recording Arts & Sciences also takes this annual opportunity to honor an expansive list of genres, from spoken word to polka. Included in this notable roster is classical music. Composer/arranger/conductor Chris Walden's Symphony No.1 The Four Elements recorded with the Hollywood Studio Symphony Orchestra was nominated for two Grammy Awards at the 2009 ceremonies, in the categories "Best Orchestral Performance" and "Best Classical Contemporary Composition." It is the first CD release of a symphonic concert work by Walden.

The German-born, Los Angeles based Walden has worked extensively since arriving in the U.S. in the mid-Nineties, scoring more than 40 feature and TV films, and writing arrangements for artists including Christina Aguilera, Michael Bolton, David Foster, Paul Anka, Sheryl Crow, Christopher Cross, and orchestras like the Chicago Symphony Orchestra, West Australian Philharmonic, Boston Pops and many more. Additionally, he has orchestrated for Barbra Streisand, Diana Krall, and Natalie Cole.

A musical director on many TV shows and series, Walden has contributed to more than 100 CD’s as an arranger and bandleader. A virtuoso trumpeter, he has been part on projects with jazz greats including Michael Brecker, Peter Erskine, Ernie Watts, Tierney Sutton, Bobby Shew, Pete Christlieb among many others. The Chris Walden Big Band's 2005 debut Home of My Heart received two Grammy nominations for “Best Large Jazz Ensemble Album” and “Best Instrumental Arrangement.”

 Entertainment lawyer, Helen Yu of the Los Angeles-based law firm Yu Leseberg represents Walden. Yu, who provides legal expertise for an award-winning roster of talent that includes film composers and pop songwriter/producers as well as film producers and directors, notes that it is Walden’s ability to create across multiple musical platforms that makes him distinctive. “Chris Walden is one of the most versatile composers and musical visionaries currently working in modern music,” say Yu. “From classical music to pop; film soundtracks to jazz he is the absolute master of an astonishingly diverse repertoire of music.” 

Pop Music and Politics Unite for Change

Over the past four decades, music has made a profound impact on politics, from the civil rights and anti-war songs of Bob Dylan, Joan Baez and Peter Paul and Mary, through the anthemic hits of U2, Bruce Springsteen and Rage Against the Machine which highlighted social injustice both in America and abroad. Rock the Vote helped motivate and inspire millions of voters to register and participate.

“Music makes a difference in the political dialogue,” says Los Angeles entertainment attorney, Helen Yu. “Pop music is seen as non-substantial, but music is a direct pathway to the youth of America, and on every level in our industry, we have shown we can make a difference.”

And no time in history has this been more apparent than in the most recent election, making Barack Obama the President. Musicians stepped up and created songs specifically to motivate young voters. “Yes We Can”, with music written by will.i.am and George Pajon, Jr. of the Black Eyed Peas, along with excerpts from a speech by Democratic presidential candidate Barack Obama, became a viral mega hit.

George Pajon, Jr. and will.i.am followed up on the success of “Yes We Can” with a song designed to inspire Americans, and the citizens of the world, to be more attuned to the environment. “Take Our Planet Back”, which featured former Vice-President and Nobel Prize winner Al Gore.

“One of the greatest things music does is cross racial and social barriers,” says Helen Yu, who has represented George Pajon, Jr. for nearly a decade. “And this election saw the same sort of melting pot, with hopes and dreams of all Americans overcoming ethnic and racial lines. In Miami, you had Cuban kids voting for Obama two-to-one, stepping outside their traditional bases to vote for a candidate who they felt would bring them the best future, and all across America whites, blacks, and all races united in a dream that became a reality.”

George Pajon, Jr., who is Cuban, and will.i.am, from East Los Angeles, are representative of the grassroots cultural forces that helped propel Obama to the White House. And to celebrate his victory, they joined with pop music producer and composer David Foster to create “America’s Song”, which showcased the musical talents of Mary J. Blige, Faith Hill, Seal, and Bono performing alongside George and will.i.am at the Kennedy Center the night before the Inauguration.

Helen Yu denotes, “It’s a new chapter in our country’s history. And it was a thrilling experience to see and hear a new song performed in Washington DC, one which represents the greatest ideals of our country and which showcases our multicultural backgrounds united for a greater good. And it is so uplifting to see and hear how music inspired this generation of voters. To work in an industry which can help propel positive change is tremendously uplifting.”

Written by  Lisa Derrick, Writer Firedog Lake

Landmark Decision - Recording Contracts

                  The Huron Law Group (HLG), a preeminently rated business, entertainment, and real estate litigation firm, represented the Marie Music Group in a case where they were accused of violating the Talent Agency Act. This act is enforced by the California Labor Commission and seeks to prevent personal managers/agents from procuring work for their clients as well as collecting commissions/royalties for this work without a valid talent agent license.  Some artists, those who deliver their own recordings such as singers and musicians, are exempt from this act.

                The petitioners in this case, Chris Lord-Alge and Thomas Lord-Alge (recording sound mixers), argued that Lisa Marie of Marie Music Group lacked a valid license hence violated the law which should void twenty years' worth of contracts and prevent her from collecting commissions on those contracts.

 

Conversely, the HLG believed that according to the definition of the act, sound mixers like musicians and singers, can and often create their own original recordings and therefore should be exempt from the act which  would invalidate the petitioners’ complaint. The premise of this case was how to interpret the definitions of this act.

                The Labor Board Commission which has a tendency to side with artists, agreed with HLG's arguments and determined that mixing services constitute contracts that are exempt from licensing requirements. This landmark case changed the definition of recording contracts.

For more information, please visit Huron Law Group website.

Combating Piracy - Evolution of the Recording Industry Association of America

    According to a report by the Wall Street Journal, The Recording Industry Association of America (RIAA) has just announced that it plans to change tactics when it comes to combating piracy. Previously, the RIAA policy on illegal downloads was to file mass lawsuits against individuals actively using various peer-to-peer services. This policy created bad press for the RIAA because many children and/or deceased individuals were mistakenly contacted as a result of the over 35,000 proceedings conducted at the request of the RIAA.

     Currently, a transformation is under way where the RIAA will work closely with Internet Service Providers (ISPs), not yet named,  in a new attempt to eliminate piracy by targeting users who are illegally uploading music. They will model this plan after the approach previously adopted in the U.K. where an ISP will send several "warning" emails to a costumer that they suspect is illegally uploading music in an attempt to get that individual to stop. If the emails fail to resolve the illegal behavior, then the ISP may introduce slower broadband speeds and/or may cut off internet access to that specific individual.  Only time will tell if this new tactic will be more effective at alleviating piracy.

Regardless, it appears that the days of mass litigation are over.

For more information, please visit the website of the Wall Street Journal

  

Live Nation & Blockbuster Team Up

Live Nation, one of the most popular in-house ticketing companies, has signed a three-year ticketing deal with Blockbuster. Under this new agreement, Live Nation will become Blockbuster’s exclusive ticket retailer at approximately 500 Blockbuster stores in “strategically  chosen” markets across the country for the start of the 2009 concert season.

 

Since Live Nation’s deal with Ticketmaster expires at the end of this year, this new agreement with Blockbuster stores will essentially replace the existing Ticketmaster venues for Live Nation with the new Blockbuster locations. Additionally, the selected Blockbuster stores will offer exclusive blocks of tickets available during the first four hours of ticket sales as well as general ticket sales as long as supplies last.

 

For more in depth information, please visit the Live Nation website.

"American Boy" Comes Home

Yu Leseberg Firm Celebrates Two Grammy Nominations for "Estelle Single.

After topping the UK charts for four weeks in 2008, “American Boy,” recorded by newcomer Estelle and buoyed by a guest appearance from Kanye West, became one of this summer’s signature songs stateside. Two Grammy nominations: “Song of the Year” and “Best Rap/Sung Collaboration” confirm the song’s irrepressible appeal.

Estelle is the inaugural artist released by Homeschool Records, the label created by Grammy-winning artist and songwriter John Legend distributed through Atlantic Records. Black Eyed Peas front man will.i.am produced the project.

Three Los Angeles-based songwriters and producers -- Keith Harris, Caleb Speir & Joshua Lopez -- contributed to the project.  The trio’s music publishing interests are represented by North Hudson Music LLC, the BMI award-winning Los Angeles - based firm founded by leading entertainment attorney Helen Yu of the Century City firm Yu Leseberg.

Writer/producer Keith Harris, an accomplished keyboardist, drummer and multi-instrumentalist who performs with Black Eyed Peas and Fergie, has worked with a range of artists from Michael Jackson (two remixes on Thriller 25), to Chris Brown (a co-write and keyboards on the track “Picture Perfect,”) plus newcomer Chrisette Michele, Mary J Blige and Busta Rhymes. Caleb Speir is a songwriter, producer and bass player who tours and records with Macy Gray and has also worked with Nikka Costa, Justin Timberlake, will.i.am and JC Chasez. The third songwriter, Joshua Lopez, who has also played with Gray, Timberlake, Costa, Chasez and will.i.am, has contributed to a wide range of projects with artists including Everlast, Ben Taylor, Mark Ronson and Eminem.

The 51st annual Grammy Awards will air live from The Staples Center in Los Angeles on February 8, 2009.

Chris Walden - Inaugural Symphonic Concert Work Garners Two Grammy Nominations

Composer/arranger/conductor Chris Walden's Symphony No. 1 The Four Elements recorded with the Hollywood Studio Symphony Orchestra has been nominated for two Grammy Awards in the categories "Best Orchestral Performance" and "Best Classical Contemporary Composition." It is the first CD release of a symphonic concert work by Walden.

The German-born, Los Angeles based Walden has worked extensively since arriving in the U.S. in the mid-Nineties, scoring more than 40 feature and TV films, and writing arrangements for artists including Christina Aguilera, Michael Bolton, David Foster, Paul Anka, Sheryl Crow, Christopher Cross, and orchestras like the Chicago Symphony Orchestra, West Australian Philharmonic, Boston Pops and many more. Additionally, he has orchestrated for Barbra Streisand, Diana Krall, and Natalie Cole.

A musical director on many TV shows and series, Walden has contributed to more than 100 CD’s as an arranger and bandleader. A virtuoso trumpeter, he has been part on projects with jazz greats including Michael Brecker, Peter Erskine, Ernie Watts, Tierney Sutton, Bobby Shew, Pete Christlieb among many others. The Chris Walden Big Band's 2005 debut Home of My Heart received two Grammy nominations for “Best Large Jazz Ensemble Album” and “Best Instrumental Arrangement.”

Preeminent entertainment lawyer, Helen Yu of the Los Angeles-based law firm Yu Leseberg represents Walden. Yu, who provides legal expertise for an award-winning roster of talent which includes film composers and pop songwriter/producers as well as film producers and directors, notes that it is Walden’s ability to create across multiple musical platforms that makes him distinctive. “Chris Walden is one of the most versatile composers and musical visionaries currently working in modern music,” says Yu. “From classical music to pop, film soundtracks to jazz, he is the absolute master of an astonishingly diverse repertoire of music.”

Rolling Stones Sign To Universal

In April 2008, the Rolling Stones released a soundtrack for Martin Scorsese’s documentary “Shine a Light” with UMG which led to the beginning of a relationship between the Rolling Stones and Universal Music Group. Recently, the Rolling Stones have announced their separation from EMI and have signed on with Universal Music Group.

This will allow Universal Music Group to own catalogs dating back to the 1971 record album, “Sticky Fingers”, and all future recordings. New songs will be released worldwide under Polydor, owned by Universal Music Group. UMG will also be in charge of the physical and digital distribution of all songs written by the Rolling Stones, therefore this marks the first time where the entire Stones catalog will be under one recording label. Currently, Universal Music Group is working to digitalize the Stones catalog.

Prior to their recording deal with EMI, the Rolling Stones have held deals with Decca Records, Warner, Virgin and Sony BMG. Warner, EMI, Virgin and Sony BMG have separately handled the song catalog from 1971-1990.  Decca Records and ABKCO co-own the copyrights outside North America for the band’s song catalog from 1963-1970.

In addition to the Rolling Stones leaving EMI, other artists such as Paul Mc Cartney and Radiohead have also changed labels. EMI released a statement in which they wished the Stones, “well in their new venture”.