Ron Bienstock is an experienced attorney with Bienstock & Michael, P.C., a New-York-City-area-based firm that specializes in entertainment and intellectual property law and is currently celebrating its 25^th year in business. Ron has worked with major artists including Billy Joel, Simple Plan, Dream Theater, Porcupine Tree and many producers and instrument and music equipment manufacturers. He is also a skilled bassist who still performs regularly.

 

 

Recently, I sat down with Ron to revisit a topic we discussed in 2009:  the current state of the music industry, and how the modern artist can carve a successful career within it.

Musician Coaching:

Thanks for taking time to talk to me, Ron. I thought of doing this second interview with you because I’d just rerun an interview I did with you in 2009, when we discussed what artists should do when they are just starting out. And when I mentioned that to you recently, you said, “Boy, how things have changed since then.” What exactly has changed?

 

RB:

First of all, thanks for giving me a Part II. What has changed fundamentally is that many artists have decided that they are going to be in their own business and have begun to pursue the organization of their business as an entity – meaning, as an LLC, subchapter “S,” as a “C” corporation, etc. They’ve begun to look at controlling their own destiny by not aligning themselves with a lot of independents or majors who have really ensconced themselves in a form of having a 360 deal as an entrée, which is the agreement most labels are looking for now. Even if the 360 deal isn’t what a label is looking for entirely, they’re looking for some form of that deal. Many managers and artists together are saying, “We really can’t afford a net participation in all of these income streams.” I’ve always organized these income streams into four separate categories:  live income; merchandise income; publishing income; income from masters/recordings. If a company is going to participate in all four, there may not be enough room for everybody to have a way to make a living. That’s ultimately what everybody wants to do, and that should be the goal:  to make a living as an artist.

 

Musician Coaching:

So, in the past 18 months, you’ve really seen people set out in greater numbers to start their own businesses, incorporate and really do the DIY thing?

 

RB:

Yes. And they’re doing it in interesting ways. Some bands have actually taken out loans out from relatives, investors or have found ways to fund themselves in that regard. I’ve seen that begin to take place much more commonly. We’ve been making distribution deals for people who have done just that. We can make distribution deals with any of the arms of the major distributors, for example, Sony/Red, etc. And we’ve put people into their own business where they are distributing their own product. This is done often through a virtual label person; you hire someone to basically run your label for you. They may take a small percentage of your net income. But that may be very worthwhile because most of the artists find  they don’t have staff to do that with, so they hire someone to provide those services. They hire an independent promo company, or find they can use an in-house company at some of the distributors. They find themselves in the position of putting hard product – CDs – into stores (the stores that are left), making digital distribution agreements. They are touring behind it; they know when they go to specific towns, they’ve made the arrangements and have talked about where retail outlets are and have made sure that those retail outlets have the record. They can sell CDs in addition to that at shows and are getting people to at least buy the music. That is often the hardest job of all. Also, at the shows, they may even have additional merchandise that they can make into a premium package for coming to see them or any variation on that theme. They’re putting themselves into business. The idea is that if you are able to sell 20,000 records and some other merchandise, and continue to make a fair amount of money playing shows, you’re going to establish yourselves.

 

Musician Coaching:

Has the law changed very much in the past 18 months? Has anything significant shifted in terms of royalty rates, etc.?

 

RB:

Unfortunately, no. We don’t really have anybody leading the charge when it comes to what the majors are doing with unpaid royalties the way Elliot Spitzer was when he was governor. One of the major changes has been simply that the major labels are effectively all making massive changes. They are either up for sale or there’s been a migration of top executives from one place to another. For example, Warner is up for sale, and there’s been a migration between Sony and Universal in terms of top executives. And I think there’s a very good chance that Capitol/EMI is going to be sold of piecemeal in terms of rights to various masters.  But that remains to be seen. Still, with all these companies in a state of flux, what is very different now is that high-level deals – those over $1 million, which would’ve never been shocking before – now have go through CEOs and finance people, which is a very new thing. Our firm is currently celebrating its 25^th year and I can tell you personally that in 25-plus years, I’ve never spoken to a finance person about a large deal. In the past three or four years, there have been moments where I’ve spoken to corporate because it was a very high-level deal, and we got corporate involved. But then, we were talking about $5 or $10 million issues. A million dollars or thereabouts becomes something that now goes to the very top person at a company.

 

Musician Coaching:

Does this mean that deals are taking longer to close too?

 

RB:

Yes. High-level deals are taking much longer to close. Re-negotiations at the higher levels are also taking much longer. There’s a reluctance to do them anyway because of the potential sale of the company. Conversely, it puts a chilling effect on the artist in their negotiation process. The artist thinks, “Who’s going to be there? If I make this deal, you want me to stay. But will you be there?”

 

Let’s give an example. The artist says to the label, “I’m the artist, and you want me to stay. I’d like to stay, because I have a good run of success with you as a label, and that’s why you want me to stay. But my option on this next record is my last option, and you have to give me $1 million or more.” And the label says, “We’d love to give you something, but we don’t want to give you $1 million, because that means it has to go to the head of the label, and it’s going to take a while to get a decision. In the meantime, I’d like you to give us something for that. Even though contractually, we’re obligated to give you the $1 million, I’d like you to give us some more options. I’d like you to give us two options.” And the artist thinks, “We’re having conversations about something the label is obligated to give me, but the label wants something for it. But now when I talk to the label about it, they say, ‘I really can’t tell you what that will be worth, how much it’s going to be or what it’s all about because we’re in a state of flux.’”

 

This is something people just don’t know about. There is still a heavy wave of artists who believe that a record deal is what they’re after. And in many cases, it still is something they have to pursue – for example, if they’re a pop act or a hip hop act. Many times people feel they have to get the promotional weight of a company to really make something happen for themselves. And many times, they’re right. The question is, where are the companies right now? They’re not the same companies that were there five years ago, let alone ten years ago.

 

Musician Coaching:

And in some cases, not the same companies they were two years ago.

 

RB:

As someone that talks to all the majors pretty regularly, that’s correct. These are huge issues, and this is something the average artist really is unaware of with the major labels. Hopefully the publishers will be okay, but remember, the major publishers are just divisions of the major record companies. There’s an impact on everybody involved in high-level deals. I’m sure there will be somebody reading this that might think, “Well, my deal won’t be such a high-level deal.” Well, but then you’re talking about a basic 360 deal. This is where we’re at two years after you and I spoke about this the last time.

 

Musician Coaching:

What about independent record deals? Are those more prevalent seen them grabbing for more 360 rights?

 

RB:

There’s been a real movement with independents to 360. And that can be troublesome because some of the independents don’t have any track record whatsoever of working with publishing catalogues or merchandise. But they want to participate. Also, most of those companies that want a 360 deal are working with their own publishing, and that’s to gather up copyrights and flip them over to a major or an investment group that’s buying a catalogue.

 

Musician Coaching:

And there are a lot of Investment groups rolling publishing companies up right now.

 

RB:

In the last two years, we’ve seen a bunch – and many that are well funded. In buying a catalogue, generally, you’re talking about a catalogue that has at least one substantial LP with hopefully at least one major hit coming off that LP. But some have just had one hit. And if it’s a prevalent – a constantly-licensed song, a “classic” or a “legacy track” from a legacy artist – those can be very valuable.

 

Musician Coaching:

Are you seeing publishing deals changing a lot as well? What do those look like now?

 

RB:

They’re very different in some ways, because of the same state of flux. There’s been a large changeover in staff at certainly two of the major publishers. And in some cases, your creative person may not still be there. You then have to wonder if that deal going to be what you expected and what you went to that publisher for. Previously, you went to the publisher so they could really work film and television. You’re really looking for covers and to make the introduction for co-writes with other writers. But there’s less staff to work and less staff to do it now.

 

Musician Coaching:

Where does this put your parting words of advice for an artist?

 

RB:

There’s a bit of a fork in the road. You can turn towards working with a  third-party label, whether independent or major – and I don’t dispute there is tremendous value for certain artists, and they will not get where they want to go without that. But a lot of people are making that right-hand turn and saying, “I’m going to do this myself, and hopefully when a label approaches me, I’ll have that clout to make myself a better deal. And because I’ve already established myself, I  might increase my chances and the likelihood of success with this company.” I think a lot of the groundwork is really being done entirely by the artist right now.

 

Musician Coaching:

What do record label advances look like right now for brand new, baby bands?

 

RB:

I think it’s less than people think it is. Baby bands are not necessarily the most attractive to a major right now for obvious reasons – because they have less staff, and you really need to work hard to break a new act. Those are going to be 360 deals, with not really substantial advances.

 

Musician Coaching:

I do find it funny that some people are upset about the way this has turned, because this is the way other businesses have operated forever. If you went looking for a raise for your business, you knew businesses in the black got better deals. It makes perfect sense to me. But I can see how it could be tricky. It’s easy to be nefarious, especially when artists don’t know which rights they’re signing away.

 

RB:

Well, this relates to one more point about what I’ve seen change in the past two years:  I’ve seen a dramatic rise in “the con.” I’ve seen a dramatic rise in companies and individuals that are not as expert as they say they are providing services for payment on a monthly, weekly basis to provide some services for artists, even when we all know some of  those services cannot really do what those people say they can do. It’s very difficult to enhance your career by paying for some promotional service when you have no product and you just have one single. And if the single is not available to be purchased or downloaded in some capacity, you’re not creating something for yourself. It seems like “the con” happens much more often now than ever before.

 

Musician Coaching:

And in spite of all the information out there, artists don’t seem to be any more well informed?

 

RB:

No. And that is unfortunate. The web has become the place where people go to do business as well as get their information. And sometimes, the information has been put on the web by the very people who are looking to get their business. I know people can sometimes not afford to talk to people who charge for their services, but a little bit of due diligence on who you’re going to work with is a good thing.

 

To learn more about Ron Bienstock and the work he does, visit the Bienstock & Michael, P.C. website. Please also check out my previous interview with him from August, 2009, A Music Lawyer’s Point of View.

I recently sat down with my friend Ron Bienstock of Bienstock & Michael, P.C. to talk about getting a music business off of the ground from a legal point of view.  Ron is a very experienced entertainment lawyer who has worked with Billy Joel, Simple Plan, Dream Theater, the Goo Goo dolls and numerous instrument and music equipment manufacturers.  Ron is also one of the more talented bass players I have ever met and still plays out regularly.

Musician Coaching:

So Ron, I wanted to ask you what the most important things for a band to do to set up their business from a legal perspective.  Is it registering their songs?  Is it registering with a Performance Royalties organization like ASCAP or BMI?  What is it that artists should be doing to make sure their businesses are in order from a legal standpoint?

Ron:

I think I may have a different perspective on this than others but I think that the most important thing is the name.  Obviously, if it is a band’s name that we are discussing it is a different issue than a surname.  If you are “Matt Schneckman” there may not be a whole lot of Matt Schneckman’s competing with you.  If however you are “the righteous dudes” you may not be able to use that name and the value and goodwill you create in the name is everything that you are in the marketplace.  Try to pick a name that you can own, exploit and remember.  There have been some very interesting names that are seven and eight words long that might not be the easiest to remember.

Musician Coaching:

How do you go about ensuring that you can get rights to a name?

Ron:

Trademark searches by a professional, most likely a law firm.  I hope people wouldn’t use any of the online services.  They tend not to have lawyers working there.  There is usually a gal named Sue who you call who says “that’s cool” but that’s not always going to be a real search.  You need to make sure the name is clear in a particular classification- it is kind of sophisticated now.  Most of the artists I deal with aren’t really clear about what the international classes mean.  Most bands I would say would want to clear a name in International class 41 which is live entertainment services.

Musician Coaching:

What should that trademark search and clearance cost?

Ron:

It shouldn’t be more than $500-$600 and it should come with a written report to back that up, hopefully written by an attorney.  An attorney will give you advice as to whether the name is open and the second that it is clear you should apply for the trademark.  If you are doing it on your own it will cost you no less than $325 because that is the fee that the government charges.  Try to use the law firm that did the search (if you like them) because they will be familiar with your application process.  So making sure the name is usable and secure would be my first piece of advice…

Another important tip – No you can’t send an undershirt to yourself in the mail with your band name printed on it in Sharpie and say that it is poor man’s trademark, that does not exist…  This is a common discussion I have.

Musician Coaching:

(I say nothing but distinctly remember trying this trick with my band demos at age 19.  I then find myself wondering how Ron went from an earlier conversation about the throw on one of his bass cabinets, to how his swimming was the weakest part of his Triathlon to the current conversation about music law so seamlessly.  It all added up to me thinking that if there are lots of people out there as smart and multi-talented as Ron that perhaps I should be somewhere with a name tag and a paper hat helping people from behind a shiny glass counter, struggling to fetch them their desired items and failing to give them correct change)

Ron:

There is no such thing as poor man’s trademark.  There is no such thing as poor man’s anything.  There’s just uninformed person’s something…

Musician Coaching:

(Maybe they will eventually let me play with the French fry machine at my new gig)

Ron:

Another big issue is not, surprisingly, the registration of your copyrights.  I think most Americans are fascinated by the concept of copyright infringement for all the wrong reasons.  I always say if someone very well known had access to your material (which is the key part of copyright infringement) and they produced a substantially similar composition and made money with it- it would be the greatest thing that ever happened to you but these are uncommon events.

Most people don’t know that their work is already copy written when it is in fixed form under our copyright act.  So again, the sending of the disc to yourself in the mail is…

Musician Coaching:

A waste of postage.

Ron:

Yes.  So, my second issue is what entity will you be if you are group?

I don’t care what genre you are in which is another common mistake actually.  People often say something like “Oh, we are a country band so it’s not the same as being a rock band.”  My response is always that sarcastic “Really?”

Musician Coaching:

It is the same in terms of a trademark I take it…

Ron:

It is in terms of your trademark and in terms of your corporate structure…  I don’t care what the genre is.  It doesn’t matter if you are death metal klezmer.  You are performing, you are earning and you will have taxes.  You don’t want to be a sole proprietorship and you don’t want to be individuals because then you are a partnership by default.   But you do really want to establish an entity because the entity will own the trademark.

Musician Coaching:

So what entity do you recommend for a band?

Ron:

Well, because of the state of tax issues in many states we are leaning towards LLC almost all the time.  However with an LLC you need an operating agreement.  So an LLC costs you a bit more.  Some states will require you to pay for the publication of the LLC.

Musician Coaching:

Oh, and those are pricey in New York, I did mine about a year ago.

Ron:

Yea, that can be pricey.  So contrary to the books that you may read- there is no shortcut.  So after your entity you will need your intra band agreement, the agreement amongst the band members.  Whether it’s two members or nine members (the later is when you desperately need it) it has to be established so you can understand the relationships between one another, who comes and goes and what happens…  This way I don’t get letters from the real estate attorney in Poughkeepsie who thinks it’s kind of cool that he’s in the rock world for the moment.  You can avoid all of these issues.  Keeping your band together should be a priority.

Then we can talk about copyright registration, which is fine, we can get to it and it’s not that difficult.  Anyone can do it.  It’s all online at LOC.gov You probably don’t need to have a legal expense there.

After those things are in order then you should select a performance royalty organization (ASCAP, BMI, SEASAC).  You have to register as a writer AND as a publisher.  And once all of these things (the name, the entity, the intra band agreement and affiliating with a Performance Royalties Organization) are in place you just have to organize yourself into a functioning music business entity.  From there we can talk about management and agency contracts and synchronization licenses etc but we are now ready to go.  You will have properly named and functioning publishing company, you are set up as a writer with the performance royalties organizations that will collect on your behalf…

Musician Coaching:

In your experience is there any difference between the Performance Royalties organizations?  To me it has always seemed like ASCAP and BMI were like Coke and Pepsi while SEASAC was more liking the refreshing taste of RC Cola and by that I mean that by pure volume BMI and ASCAP dominate the marketplace.  In your experience is there any tangible difference between them?  Is there a certain type of artist that should be on one PRO vs. another or does it come down to personal relationships…

Ron:

The differences are who you feel comfortable with.  Have you met someone there you like?  I hope they will be there for a bit… (***For those really new to music – music companies go through employees like J-Lo goes through husbands)

There are wonderful people working at all three organizations who really care.  Meet all three and decide who you like.  Yes, on sheer volume ASCAP and BMI probably have some dominant structure but there are devoted people at all three places…  Find someone you like and go with them.  If you are lucky enough that you performance royalty income is substantial you will have your choice to opt out if it doesn’t work with one and you can go to another.  In my experience, I have friends at all three and I think they all care and want to do right by people.

Musician Coaching:

When is the time to sign up for performer royalties which seems to have some up more in the digital age when is it time to go to SoundExchange and make sure you are in the phone book there so to speak.

Ron:

When my firm gets people signs people up with the PROs we do sound exchange right then and there.  We also do AARC (Aliance of Artists and Recording Companies) and anybody else, anywhere or anytime who can get a dollar for you.

Musician Coaching:

What does AARC do?

Ron:

AARC collects the blank tape and blank disc and other initiatives passed in congress over the last fifteen years.  It is a vast diminishing income stream but there are royalties out there.  There are DART (Digital Audio Recording Technology) royalties and AARC also has rental, people rent CDs and they pay various places for that rental value and that passes it’s way down to an artist as well.  I will take any income I can to support the artist.

Lastly, and I do not mean this in a self serving way but go speak to an experienced entertainment lawyer or an experienced entertainment executive who understands how the business works and make that you first stop.  Understand the income streams and how they flow.  It will be the wisest investment you will ever make.

Musician Coaching:

Are there books you would recommend?

Ron:

Books are great but my problem with books is it is almost impossible to keep current in this business, it is so difficult to be up to the minute and you have to be.  The deal I am working on today is different from the deal I was working on two weeks ago.  I will say this – just because it’s written online doesn’t mean it’s true and be wary of information from uncle Fred who had a deal with a small indie label in 1984 – his information is out of date.  And, by the way, Uncle Fred may have been wrong all along.

Careers don’t always stay up.   There are obstacles, there are down times and you have to prepare for them.  You have to know how to prepare the band for a down.  Bands want to see a high velocity upwards trajectory but that’s not going to happen all the time.

Musician Coaching:

So switching gears just quickly – you’ve been a bass player for thirty-seven years. Knowing what you know now is there anything you would do differently?

Ron:

I was very lucky in that I played with recording acts and well known acts and got to play on some great records and to some great touring back in the days when we flew mostly…(Laughs) rather than seventy-eight days straight in a van (I can’t help but notice the look on his face is more empathetic than “I’m so lucky”) While that was great what was missing for me was the opportunity to produce.  I think I would have enjoyed that.  It did not exist then.  There was no such thing as a home studio unless your home was the size of the Ponderosa.  So take advantage in every way of the home recording possibilities as a musician.  Music for Film, music for Television, music for plays, co-writes…you have an idea and your buddy is in the studio with you- write and record the song.  You could record it and master it at the end of the day and have it up on a website the next morning.  These are things that didn’t exist and they are what makes the music business exciting and wonderful now.  With all of this comes the hefty responsibility of admitting the things you can’t do.  Can you really produce yourself well?  Most musicians will not admit they can’t.

Musician Coaching:

Thanks for your time Ron…

—————-

If you are in need of an entertainment lawyer I highly recommend you take a look at Ron Bienstock or the lawyers at his firm Bienstock & Michael.