Music Band as a Business and its Documentation - Case Study Example

Business planning and documentation Name: Tutor: Course: Date: Music band as a business and its documentation Formation of a legal entity in the current business environment is a necessity before contracts are issued (Weisman, 2010). As a result, many record labels require that bands constitute a structured organization instead of having individual people. One of the reasons to make a band is based on having an edge on legal issues. The band is able to sue or be sued by its members for actions done, determine profit sharing model, and secure financing. According to Pattenden (2012), making the business a legal entity makes it easier for members to resolve conflicts and even litigate at the court of law. It is unfortunate when the group or band members stop getting along, gets sued or falls into debt without structures to approach these issues (Weisman, 2010). By being a legal entity, the band ensures that legal dispute will be handled by the court based on the agreements made (Angela, 2015). Through limited liability structure, such actions save the band from incurring massive financial losses. The beginning of bands while starting their music careers have little thought about anything else besides honing their craft, playing out, and practice. Increasing competition among many artists has compelled a number of bands to develop a business plan (Ciraa, 2014). Making a band into a business requires a number of steps. First, the band members should accept it as a business and they need to start treating it as a serious legal business entity. Secondly, the band should set up a business bank account that is separate from the one run by individual members for their personal finances. Thirdly, a bank account is necessary so that each time purchases such as guitar picks, amps, musical instruments and sheet music are bought; they are automatically recorded on the monthly statements (Angela, 2015). Fourthly, records such as tax filings, receipts and bank statements should be kept, from the due date for filing, for at least three years. In terms of recordkeeping, cash accounting will be the simplest method because one only looks at the dates on store receipts, bank statements and checks to determine if they form part of say 2014 taxes. The band members should understand taxation in detail because sources of money for the band can come from different sources like merchandise, songwriting, recording, teaching, session work, and solo gigs (Weisman, 2010). Pattenden (2012) argues that keeping track of everything in these activities is important as well as knowing the tax forms required for filing. For example, in the United States one needs to have the identifying number called EIN in order to file tax forms individually and as a group to fill out the partnership tax forms (Ciraa, 2014). Whenever there are employees besides the partner band members, the group will be required to file Form 1065. Moreover, each band member in addition to the group tax filing will be required to file own Form 1040 alongside Schedule E (Davis-Ponce, 2014). For example, if the band owes about $1,000 in taxes (after tax credits or any deductions) for the year 2014, then they will be required to file Form 1040-ES so as to pay the estimated taxes. This applies to both income taxes for the states and federal income taxes. Ansley (2015) observes that lack of business documentation and legal agreement can lead to quick dissolution of bands with catastrophic consequences on band members. For example, with business roles and documentation, no partners can control or eject another in the partnership. One partner intending to leave will mean the entire band is dissolved including the band name (Weisman, 2010). Legal agreements allows for business continuity since the remaining band members can continue using the band name (Wilson, 2014). And we hear about stories like that all the time. Moreover, one band member can decide to sue or be sued by others and without shareholding documentation and other forms agreement, it becomes difficult to establish fairness (Weisman, 2010). Documentation and other financial documents are useful to consultants and banks to help in professional services as well as financing. Without formal agreements, members will not be able to obtain funds or advice (Pattenden, 2012). Individuals in a band or band as a whole may not desire to be subject to the partnership rules, but they should have certain terms and conditions to be incorporated into a band member’s agreement. Copyright Copyrights protect original works of authorship and music productions from anyone using the work in an unauthorized or prohibited manner (Stin, 2006). Composers or songwriters can be able to seek attorneys’ fees and monetary damages by registering a copyright for a piece of music. While copyrights for sound recordings are managed by record labels, Slay (2011) maintains that music companies manage copyrights for written works. Copyright for a new song or other work starts at the moment of fixation when lyrics and music are stored on a computer, on paper or recorded. Even if the song is never been documented at the Copyright Office, Copyright protects the musician (Wilson, 2014. There is no additional legal protection for mailing a copy of the work to oneself and is not suitable evidence to establish the date when the song was written (Frankel, 2009). Copyright gives the creators of sound recordings, artistic works, and music and drama rights to control ways their material is being used. These rights can be against lending copies to the public, renting, issuing, adapting, copying, and broadcast and public performance. The creator, in many cases, has the right to object to distortions of his or her work and to be identified as the author (Stin, 2006). Marshall and Frith (2013) observe that copyright in the sound recording is different from that in the composition because the former is the recorded performance of the composition, the master. The musician protects the copyright in the composition by registering a newly published song separate from the sound recording copyrights. Registration of recordings or published music has the benefit of protecting the composition for at least seventy years after the life of the author (Ciraa, 2014). Prior to filing a lawsuit, registration is required to enforce the copyright. However, according to LaMance (2014) where the composition was created by a corporation, copyright will continue for ninety-five years. In the case of a jointly authored song, dramatic, literary, artistic and/or musical works, copyright extends for seventy years after the death of the last living author. In most situations, the author of a song will be the individual composer or team of composer and lyricist. Nevertheless, situations occur where the members of the band have arranged to work as employees for the band as a corporation or limited liability company (LaMance, 2014). The corporation/LLC would be the author where band members created the work as a work-for-hire. Quite complex and often misunderstood are laws governing copyrights (Garon, 2009). For example, mailing work to one’s self as constituting copyright protection is a mistaken belief. However, copyright infringement has many legal defenses. Related to music copyrighting, one of the most important laws is the Copyright Act of 1976 (Slay, 2011). This law discusses the copyrighting of unpublished works and distinguishes original works from works for hire. It not only determines when copyright protection expires but also explains the rights of author to negotiate the use of their music (Marshall & Frith, 2013). For instance, anything published before 1923 is no longer has copyright protection and is now in the public domain. The Statute of Anne 1709 originated Copyright laws in the United Kingdom based on the concept of common law. With the passing of the Copyright Act 1911, it became statutory. Copyright, Designs and Patents Act 1988 forms the current act. When the author is unknown, the calendar year in which the work was created will mark the beginning of 70 years of the copyright (Frankel, 2009). However, when made available to the public such as exhibition, broadcast, authorized performance and publication during that time, then the copyright will be 70 years from the year end of the work having been made available (Weisman, 2010). The consequences of breaking copyright laws many. The actions of the copyright violator causes a copyright holder to suffer a damaged reputation but also the amount of restitution for lose a significant amount of income add up quickly (Garon, 2009). Common measures include loss of employment, loss of freedom, loss of property or monetary fines. Violations of copyright law involve an attempt by someone to claim, distribute, or profit from materials that they have no rights. Copyright infringement in some countries carries the penalty of civil and criminal punishment where the copyright owner chooses to take the guilty party to court after filing a claim (Frankel, 2009). Subject to national laws, most countries give protection based on international conventions. The violation of exclusive rights granted by the Federal Act on copyright, to the copyright owner, amounts to copyright infringement. Infringement occurs when copyright holder has a valid copyright, copyrighted work has been accessed person who is allegedly infringing, and duplication of the copyrighted work is beyond the exceptions (Angela, 2015). Copyright infringement has legal and substantial monetary penalties. For example, in the US, the infringer pays the actual dollar amount of profits and damages in the range of $200 to $150,000 for each work infringed (Ingram, 2014). All court costs and attorneys fees are paid by the infringer. The can also impound the illegal works, issue an injunction to stop the infringing acts or send the infringer to jail. In such courts, Garon (2009) opines that the amount of fines is determined based on violation of the law for the value of items counterfeited. Violations under $2,000 are less serious for unlawfully reproduced or counterfeited materials than cases dealing with over $2,000 (Marshall & Frith, 2013). For each offense committed, defendants can be charged up to $250,000 in either case. Repeat violators face additional 10 years, but first-time offenders can serve up to five years in prison. An injunction is the most likely outcome in a civil court for victims of copyright infringement who intend to sue violators (LaMance, 2014). With an injunction as an official court order, the infringer is stopped from performing any act such as distributing or reproducing copyrighted materials. The inconvenience or value of the loss incurred by the infringement victim also determines the amount of restitution awarded for infringement of the copyright (Frankel, 2009). Occupational Health and Safety (OH&S) Regulations on Occupational Health and Safety (OHS) provide legal requirements and laws that govern all workplaces under a given the inspection jurisdiction (Hegarty, 2007). With associated guidelines and policies, OH&S is implemented in several countries. In Australia, the Occupational Health and Safety Regulations 2007 (OHS Regulations) is expiring in June 2017 and will be replaced by WorkSafe in accordance with Subordinate Legislation Act 1994 (WorkSafeBC, 2014). In the US, the OSH Act, provides for a safe and healthful workplace with employers taking the responsibility. The mission of OH&S is to assure healthful and safe workplaces by enforcing and setting standards as well as provision of education and assistance, outreach and training (Health and Safety Executive, 1999). The regulations require that employers comply with all applicable standards under OSHA. According to Chasin (2009), the General Duty Clause of the OSH Act is one of the standards that employers must first comply with, including a vow to keep the workplace free of serious and recognized hazards. General duties under the OHS Act are covered in the OHS Regulations. These include hazardous industries, hazardous materials and substances and physical hazards (WorkSafeBC, 2014). In music and entertainment industry, developing noise-control strategies is paramount. Performance of both live and recorded music is minimized or prevented from causing hearing damage. In this case, the employer should ensure that workers are not exposed to noise levels above 140 dBC peak sound level or 85 dBA Lex daily noise exposure level (Eargle, 2013). In the UK, music performers, employers and other workers are compelled under Control of Noise at Work Regulations 2005 to meet their legal obligations. With the support of the Health and Safety Executive (HSE), a working group of industry stakeholders produced the Noise Regulations (Health and Safety Executive, 1999). The Control of Noise at Work Regulations 2005 supplements the general HSE guidance and controlling noise at work based on the Noise Regulations (L108). Under the Noise Regulations, employers are prevailed to reduce risks to safety and health from exposure to noise at work to a reasonably practicable limit (SI 2005 No 1643). The Regulations also roles to be played by employees in managing noise. The minimum requirements are specified under these regulations as a means of protecting workers from exposure to noise at work or from the risks to their health and safety (Grammeno, 2009). Hazards relating to stage areas, private music studios and recording studios are associated with noise exposure level to a greater extent. While it includes level of sound pressure and their longevity, the potential for hearing to be damaged is very high as noise is related to the noise 'dose'. A noise level of 105 dB exposure is unusual and may come from a pub band, a woodwind or brass instrument at full blast (Taylor, 2016). In 5 minutes, the noise level has the same dose as a 4-hour 88 dB chamber music or a 1-hour 94 dB exposure from a nightclub bar (Friis, 2015). Gradual and prolonged exposure to noise causes hearing loss. Over the years, hearing loss due to ageing when combined the damage from noise causes deafness in people. Such people will have trouble using a telephone, family complains about the television being too loud, and failure to keep up with group conversations (Reese, 2003). As a result, they develop distressing conditions and tinnitus which lead to disturbed sleep. Oversensitivity or a general intolerance to everyday sounds also called hyperacusis and difference in sound perception by the ears, either in time or frequency called diplacusis are other rarer conditions (Friis, 2015). According to a Danish research, symphony orchestras show that more than 27 percent of musicians suffer hearing loss, with 5 percent suffering diplacusis, 12 percent from distortion, 25 percent from hyperacusis, and another 24 percent from tinnitus. However, some studies suggest figures in the range of 10-60 percent for hearing damage to musicians (Friis, 2015). Measures to ensure a safe environment Remedies to hazards caused by noise require that employers assess and take action over risks to employees from noise at work. Music and recording studios should reduce noise exposure that producing the risks, ensure observation of legal limits and provide employees with hearing protection (Taylor, 2016). Employees should be provided with training, instruction and information for them to understand the Noise Regulations (Reese, 2003). In case there is a risk to health, health surveillance should be carried out. The Management Regulations or Management of Health and Safety at Work Regulations 1999 compel employers to a duty of caring for new and expectant mothers in their workforce (WorkSafeBC, 2014). It is the duty of the employers to assess the duration, degree and nature of exposure of pregnant workers to control any risk including noise. According to Friis (2015), young people under 18 years (children under the compulsory school age) are restricted by the Management Regulations to be employed in areas of risk to health especially noise. Young people, under the responsibility of employers, should be protected against any health and safety risks at work owing to their lack of awareness of risk, immaturity and inexperience (Eargle, 2013). Physically isolate the hazard more so the noise source from people. For example, increase the distance between loudspeakers, workers not on stage and the front-of-house the stage area. Also, in recording studios use booths for noisy instruments. Personal hearing protection should comply with relevant European Standard BS EN 352 and must show the CE-marking (BS EN 352-6: 2002). Quality and safety aspects of band instruments and recordings should have minimum set criteria such as level of sound reduction, quality of production, factors related to ageing, comfort, provision of information and ergonomics. Immediate tackling of urgent risks is imperative and this should include more permanent noise-control solutions and provision of hearing protection as interim measures (WorkSafeBC, 2014). Noise hazards should be prevented from causing lasting and immediate damage instead of accumulating over time. For example, control and protection should be given to hazards caused by loud sound systems, fireworks and pyrotechnics. Before any further exposure, a thorough noise-control strategy should be taken to tame potential hazards (Friis, 2015). Control noise associated with stunts and effects, acoustic of the venue and amplifications being used. Moreover, document the number and positions of performers and the types of instruments being played. References Angela, M. (2015 November, 9). How to run your band like a business without compromising your music. Sonicbids blog. Ansley, L. (2015 April, 1). How to set up your band as a business. Music Industry Insights. http://musicindustryinsideout.com.au/how-to-set-up-your-band-as-a-business/. BS EN 352-6: 2002. Hearing protectors. Safety requirements and testing. Ear-muffs with electrical audio input. British Standards Institution. Ciraa, A (2014). Is a band considered a legal business? How does that work? Copyright and Entertainment Law. Chasin, M. (2009). Hearing loss in musicians: Prevention and management. Plural Publishing. Davis-Ponce, J. (2014 March, 5). Taxes 101: What self-employed musicians need to know. Sonicbids blog. http://blog.sonicbids.com/taxes-101-what-self-employed-musicians-need-to-know. Eargle, J.M. (2013). Music, Sound and Technology. Springer Science & Business Media. Frankel, J. (2009). The Teacher's Guide to Music, Media, and Copyright Law. Hal Leonard. Friis, R.H. (2015). Occupational Health and Safety for the 21st Century. Jones & Bartlett Publishers. Garon, J.M. (2009). Copyright Basics for Musicians. Entertainment Law: Gallagher Publications. Grammeno, G. (2007). Planning Occupational Health and Safety. CCH Australia Limited. Health and Safety Executive, (1999). The Event Safety Guide: A Guide to Health, Safety and Welfare at Music and Similar Events. HSE Books. Hegarty, P. (2007). Noise Music: A History. Bloomsbury Academic Publishers. Ingram, D. (2014). Consequences for violations of the copyright laws. Demand media. LaMance, K. (2014). The Basics of Music Law. The Legal Match. New York. Marshall, L. & Frith, S. (2013). Music and copyright. Routledge. Pattenden, S. (2012). How to make it in the music business. Ebury Publishing. Reese, C.D. (2003). Occupational Health and Safety Management: A Practical Approach. CRC Press. Slay, M. (2011). Music copyright law, (1st ed.). Cengage Learning. Stin, R. (2006). Music Law: How to run your band’s business. Nolo Publishers. Wilson, L. (2014). Making it in the Music business: The business and legal guide for songwriters and performers. Open Road Media Publishers. Taylor, N. (2016). Teaching Healthy Musicianship: The Music Educator's Guide to Injury Prevention and Wellness. Oxford University Press. The Control of Noise at Work Regulations 2005. SI 2005 No 1643 The Stationery Office 2005 ISBN 978 0 11 072984 8 (also available from www.opsi.gov.uk) Controlling noise at work. The Control of Noise at Work Regulations 2005. Guidance on Regulations L108 (Second edition) HSE Books 2005 ISBN 978 0 7176 6164 0. Weisman, L. (2010). The artist’s guide to success in music business. Loren Weisman. WorkSafeBC, (2014). Noise, vibration, radiation and temperature. http://www2.worksafebc.com/publications/OHSRegulation/Part7.asp. Read More