Entrepreneurship in the Music Industry: 5 Guiding Principles

Welcome to another episode of Launched & Legal with Dayna Thomas, Esq., Entrepreneurship attorney and law firm coach. Launched & Legal is an Atlanta Small Business Network original series dedicated to bringing entrepreneurs and business owners the best practices and tips for strategizing, legalizing, and monetizing their ventures. Today, Dayna discusses what you need to know about entrepreneurship in the music industry.

If you have questions or comments about today’s show, send Dayna a message or comment on Instagram @daynathomaslaw.

Transcription:

Dayna Thomas, Esq .:
On today’s show, I’m going to be talking about entrepreneurship in the music industry. Now, sometimes we forget that the entertainment business is in fact a business. I’ve seen many artists, record labels, and different companies within the music business treated as if the focus is just the creative aspects of the business. However, in order to build an amazing career, amazing record label, an amazing artistry within the entertainment business, you need to make sure that you are actually focusing on the business. And just like any business, there are legal aspects and things that you should be doing to establish a solid legal foundation for your business in the entertainment industry. So we are going to talk about entrepreneurship in the music business.

Dayna Thomas, Esq .:
Okay. Number one, first, we’re going to talk about your actual company, your LLC. Yes, you should form a company even if you’re an artist. It might seem obvious for a record label or another company that’s within the industry. We do not want to operate as a sole proprietor, meaning we are just out here doing business as a certain name but we have not filed anything. You want to file an LLC for your business. Sometimes in the music industry, a corporation for a bigger company, for example, like a record label that has a lot of checks and balances, that might be a good idea. Definitely consult with your attorney. And even if you’re an artist, you should have a company. You want to protect yourself. It’s called a loan-out company, which means that your company, which even you can own by yourself, is loaning you or lending you to whatever opportunity in the industry that you’re taking advantage of.

Dayna Thomas, Esq .:
So be sure to form your LLC. You’re in the music business, but remember it’s still a business. You want to file your articles of organization with the secretary of state. You want to make sure that your liability is protected, and make sure that whatever risk you may be taking in the music industry as much as possible can be separated from your personal liability. So be sure to consult with an attorney about what structure is best for you. Many times it is an LLC. It does not have to be an LLC in this particular circumstance. But treat it like a business and form your business.

Dayna Thomas, Esq .:
Number two, you need to make sure you have your contracts. The music industry is incredibly made up of contracts, whether that is a recording contract, whether that is a producer agreement, a songwriter agreement, a sync agreement, also known as a synchronization agreement, which means that you’re putting music behind film or TV, some type of visual. Contracts are huge in the entertainment industry because contracts help to determine what can be done with that valuable content that’s being created, that entertaining content, whether it’s videos or music or compositions or lyrics. These contracts are talking about not only how it can be used, but who is going to own this amazing music. I know a lot of times in the music industry, you may have heard about masters, right? Who owns the masters? Masters can only be given up in contracts. Okay? And that is something that certainly is going to be a huge talking point in many of the contracts that’s in the music industry.

Dayna Thomas, Esq .:
So again, be sure to consult with an attorney to see what contracts you need at this stage and what contracts may be coming up and ask questions about who’s going to own certain content. The masters for music if you’re a record label, many times a record label will own the masters. If you’re an artist or you’ve independent, you’ll maintain ownership of your masters. Do your research. But the point for number two is contracts. If you’re doing business in the music industry, you definitely have to make sure you have your contracts in place.

Dayna Thomas, Esq .:
Number three, let’s talk about copyright registration. Now, the music industry is incredibly made up of copyright as well. My two C’s for the music industry are contracts and copyright because what’s being transferred in those contracts that I mentioned in number two is the copyright. So in the entertainment business, of course we’re creating. We’re constantly creating in the music industry. We’re creating music. We’re creating lyrics. We’re creating videos. We’re creating cover arts for the music that we’re releasing. All of that is creative content that you can register for copyright.

Dayna Thomas, Esq .:
Now, be sure that you’re clear on who owns that content. If there are contracts being signed, it might not be you, even though you are the one that created it. It might not be the label. It depends on what the contract says. So be sure to understand from your contracts, or the lack thereof if you do not have contracts yet, who owns the copyright to the songs, the masters, the composition, the cover art that’s being created to promote your music, the music videos . All of that is creative content. And with creative content, there is a copyright. And with copyright, there’s an owner for those copyrights. And so make sure you’re clear on who owns that and if that has been transferred through a contract, which it often is. So be sure to keep track of your copyright and register those as well.

Dayna Thomas, Esq .:
Number four, let’s talk about trademarks. When you’re building a brand in the music industry, that’s exactly what you are, you’re a business but you’re also a brand. And as you watch Launched and Legal, you have learned that in order to protect your brand, you need to register your trademarks. A trademark is how you can protect your brand, whether that is the name for your record label. Maybe that’s your stage name. Maybe that is a tagline that you have or a catchphrase that you often use in your music. Whatever it may be, if there’s anything that represents your brand and that is associated with you, then you want to make sure that you are registering the trademark for that.

Dayna Thomas, Esq .:
Along with that, I’m going to recommend the specific classes that you should register your trademark for. One class is Class 9. Class 9 is for audio recordings, audio downloads, video downloads. Class 9 is technically a product, right? So the product that you’re putting out, CDs, DVDs, whatever type of product that may house your music. So downloads are considered a product because once you’re downloading it on a computer, the Trademark Office considers that to be a product, a good as opposed to a service. So Class 9 is one that you want to include. That is for CDs, DVDs, musical downloads, musical recordings. We are in the digital age and people are downloading music to get music nowadays.

Dayna Thomas, Esq .:
The next class I would recommend is Class 41. Class 41 is for entertainment services, right? So not only are you making music or selling music, but you’re also performing. You’re also entertaining people. So Class 41 is entertainment services. That could be live performances. It can be songwriting services. It can be production services, music distribution. It’s the business or the service behind the entertainment industry outside of just the product itself. So you definitely want to have Class 41 along with Class 9.

Dayna Thomas, Esq .:
And last but not least, if I had to pick three, my third would be Class 25, which is for clothing. That will cover your merch, such as t-shirts, your hats, bandanas that are used as clothing. I would certainly recommend including Class 25 as well because as you’re promoting your brand in the music industry, you may also want to sell t-shirts on your website. You may want to sell t-shirts and hats on stage or maybe at your performances. So be sure to include that as well because you’re making music, you are performing your music, but there’s also other streams of revenue that you can take advantage of in the music industry as well. And Class 25 will help to protect that clothing that you want to sell in connection with your brand.

Dayna Thomas, Esq .:
All right, now I want to include a bonus because the music industry is full of collaborations. Collaborations in the music industry is excellent. You want to work with others to create the best music you possibly can for your fans. And that does include working with other musicians. Maybe that’s a drummer, maybe that’s a background singer, a producer, which we have mentioned, maybe it’s someone who wrote lyrics for you. Whatever it may be, what we do know is that person is contributing to the creative content. Not only are they contributing to that song, they’re contributing to the copyright.

Dayna Thomas, Esq .:
So what you have learned by watching Launched and Legal is that when it comes to creative content, the default law is whoever creates it owns it. So for example, if you have a drummer or background musicians that are helping to come up with the sound for your song, guess what? Those drummers and background musicians also own the copyright for it. And the only way that that can be transferred is if there’s a contract that transfers the masters, the composition, whatever the case may be. Please consult with your lawyer to get the specifics. But that copyright will be a joint copyright if there are multiple musicians involved with creating that content.

Dayna Thomas, Esq .:
So be sure to be clear on who’s going to own the ultimate master recording for that song because that master recording is really what helps to generate that income. And you do not want to have any issues by not having the proper licenses or permissions that’s needed for everyone that might be in the studio that’s creating for you. So remember to do that. And the only way to transfer copyright ownership is through a contract. So keep your contract close.

Dayna Thomas, Esq .:
Well, I hope today’s show helped to educate and inspire you as you pursue your business goals. Be sure to share today’s show with someone who can benefit, and visit MyASBN.com and subscribe. If you have any questions or comments about today’s show, I’d love to hear from you. Send me a message or comment on Instagram @daynathomaslaw. Remember to tune in next week and every week to make sure your business is Launched and Legal.


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