BLOG.AZENTERTAINMENTLAW.COM

PERFECT STORM FOR RECORD INDUSTRY

2011-10-15T22:25:32Z

"Perfect Storm" for Recording Industry

As if the assault of technology on the recording industry wasn't enough, there is now a "perfect storm" brewing that could very well be the death knell for what we now think of as a "record company".

Larry Rohter of The New Tork Times has published a series of reports on developments within the recording industry. Initially he reported on the controversy over the royalty rate to apply to downloads of songs1 - if it is considered a "sale", the royalty is 12%; if it is considered a "license", the royalty jumps to 50%. Litigation is already underway to force a ruling. A determination that a download is considered a "license" would force the record companies to pay millions of dollars to their artists. If a court should rule that it is a license, I would not be surprised to see the major record companies file for reorganization (bankruptcy).

On top of that, now comes the possibility that ALL copyright holders, INCLUDING musicians, will be able to reclaim their copyrights in their original creations. Under Section 203 of the Copyright Act, an author can terminate the grant of his copyright to a third-party once thirty-five (35) years have passed from the date of the transfer. Section 203 went into effect on Jan. 1, 1978. Consequently, the first year that copyrights will be able to be terminated is Jan. 1, 2013. The author must give notice of his intent to terminate the copyright grant two (2) years prior to the first date that the copyright can be terminated. Thus, the wave of notices being served on record companies.

For the recording industry, it means that recording artists can reclaim the ownership of the original masters of their albums. Larry Rohter, in his article reporting on the possible effect on record companies2, gives some examples of artists that can reclaim their works: (i) CARS - The Cars; (ii) DARKNESS ON THE EDGE OF TOWN - Bruce Springsteen; (iii) THE WALL - Pink Floyd; (iv) OFF THE WALL and THRILLER - Michael Jackson; and (v) PURPLE RAIN - Prince. Doesn't take a genius to see the value in those recordings!

Litigation has begun - Victor Wilis of the Village People has brought suit to terminate the copyright grant on, among things, "YMCA".3. The record company is arguing that the recordings are "works made for hire", which are specifically exempted from Section 203. "Work for hire" means that the author did the creative work at the direction and pay of another. The record companies will have to show that, among other things, the musicians worked hours that were set by the record company, paid paychecks, took out taxes, and in general, were employees. Anyone who has dealt with musicians knows that none of the above applies.

Legislative action is also being considered. Mr. Rohter reports on efforts by Rep. John Conyers of Michigan, to reform the law to remove the ambiguity regarding the "work for hire" exception.4. The litigation and possible legislation will have many ramifications, within and without the entertainment industry. I will certainly give updates on this situation.

1. "Suit Hints at a Bigger Payday for Older Artists", Sisario, Ben, NY Times, 3/28/2011, Pg. B-1).

2. "Record Industry Braces for Artists' Battles Over Song Rights", Rohter, Larry, NY Times, 8/16/2011, Pg. C-1).;

3. "A Village Person Tests the Copyright Law", Rohter, Larry, NY Times, 8/17/2011, Pg. C-1).

4. "Legislator Calls Fro Clarifying Copyright Law", Rohter, Larry, NY Times, 8/29/2011, Pg. C-1).

snebgen@azentertainmentlaw.com

www.azentertainmentlaw.com

JOBS, JOBS, JOBS

2011-08-06T02:50:45Z

Jobs, Jobs, Jobs!

All graduates entering the job market are facing daunting challenges - and the entertainment industry is no different.

A recent New York Times article1 commented how traditional entry level positions in the film industry have become scarcer - at time when film schools are being inundated with applications. For example, the film school at USC has received 4,800 applications for the 300 slots available. And that was on top of the 2,800 applicants for the year before.

The article made a couple of key points: (i) be aware of cost, e.g., USC costs $1,360.00 per credit; and (ii) be prepared - know the "business" as much as the "show".

And young, aspiring filmmakers in Arizona actually have a job-helping jewel right in their backyard - "The Film School @ Scottsdale Community College" (the "Film School")! People do not realize that the Film School is consistently ranked among the top 15 films schools in the country! And, the cost for in-state residents is $75.00 a credit!

Where Arizona so often lags behind the country in seeing the benefits of a vibrant entertainment industry, the Film School is truly cutting edge.

1. "For Film Graduates, An Altered Job Picture", Michael Cieply, NY Times, July 5, 2011, B-1.

DOWNLOADS - "Sale" or "License"

2011-07-12T20:25:00Z

DIGITAL DOWNLOADS - A "LICENSE" OR A "SALE".

This seemingly innocous distinction has the potential to cost the record companies literally millions of dollars. The issue concerns the computation and payment of royalties for music downloads. See "Suit Hints at a Bigger Payday for Older Artists", Sisario, Ben, NY Times, 3/28/2011, Pg. B-1).

The article uses Eminem as an example. Under his recording agreement, If a "download" is considered a "license" the royalty to Eminem is 50%; if it is a "sale", the royalty is only 12%.

Obviously, the difference between the two rates can result in millions of dollars being owed to Eminem and other artists.

This will be a case to monitor and I will give you updates as I receive them.

ARTLINK - RIP

2011-06-28T20:24:00Z

ARTLINK - the dysfunction continues. In the last year, I have posted comments about the deep dysfunction of ARTLINk under the direction of Sloane Burwell and Kim Younger. Despite the overwhelming dissatisfaction of the art community with the current administration, ARTLINK made some "window-dressing" changes that altered nothing.

The real kicker is that ARTLINK wasn't even around to accept money from the City of Phoenix!

ARTLINk will now fade into obsolescence and obscurity, as the various artistic communities take control of their own promotion and marketing.

It is a real shame, but so typical of Phoenix and Arizona, that a once vibrant organization is taken over by people whose only agenda is self-aggrandizement and self-promotion. RIP ARTLINK - we are sorry to see you go!

FILM TAX CREDIT PROGRAMS

2011-06-21T02:38:18Z

I have received an overview of the Film Tax Credit programs available in each state.

Although the Tax Credit programs are under fire across the country, some states are fighting to continue them. For example, Michigan, a leader and one of the most active in promoting their program, has a bill before its legislature to continue the program. Despite the "knee-jerk" reaction of "why give money to Hollywood", Michigan and other states are realizing the economic benefits that have flowed into their respective states as a result of their programs.

Recently, former Gov. Bill Richardson of New Mexico, wrote an op-ed piece for the New York Times ("There's No Business Like Show Business") discussing the benefits that New Mexico received as a result of their program.

Unfortunately, the Arizona legislature is too busy demonizing the Latin-American community, reducing workers rights, and returning women to the kitchen and undercutting their health, to pay attention to "silly" things such as jobs, tax revenues, and economic growth.

Please call the Firm for a copy at (480) 463-3055.

JUDY: THE MUSICAL IS A SUCCESS!

2011-05-17T04:26:00Z

Paige O'Hara becomes "Judy"!

We completed our one-week, limited run at the Tempe Center for the Arts and the Show was a huge success! We had over 1,000 people see the production; our comment cards are in the 90% approval range; and, dear to my producer heart, we had very strong box office revenue!

Here are a few photos from the Show!

There is serious interest from a variety of investors and co-producers, including possibilities in New York, Las Vegas, San Francisco, and Toronto.

We are currently editing a DVD of the Show and will have that available in the near future.

We will keep everyone posted!

JUDY: THE MUSICAL - Opens in One Week!

2011-04-11T04:07:00Z

I am very proud to be producing this show!

It has been one of the most rewarding experiences in my theatrical career.

Disney star in presentation of 'Judy Garland' musical

Actress Paige O'Hara, who was the voice of "Belle" in Disney's "Beauty and the Beast" film, will play Judy Garland in “Judy: The Musical – Gumm to Garland” (Judy). Judy will be presented at the Tempe Center for the Arts (TCA), FOR ONE WEEK ONLY, beginning Tuesday, April 19 through Sunday, April 24.

Over forty years after her death, Judy Garland’s remarkable talent continues to attract and enthrall generations of fans. With another career-defining performance, O’Hara reveals the complexity of both the exuberance and the tragedy of Ms. Garland’s life, from her stage debut at age 2½ to her untimely death in 1969. The musical features a wonderful original score blended with certain classics that defined Garland. The production is a powerful and moving look at one of the 20th Century’s greatest entertainers.

“I have loved Judy Garland since the time I was a little kid,” O'Hara says. “She was definitely my role model when I was growing up learning to sing.”

O'Hara will take time off from "Menopause: The Musical" in Las Vegas, where she has played the "Soap Star" at the Luxor for more than seven years. She has also performed on Broadway in "Evita”, “Show Boat”, “Mystery of Edwin Drood”, and “Les Miserables”.

Stephen Wade Nebgen is producing with Richard Sullivan writing the book, lyrics and music, Anne Dean Schindler directing, and Michael Markowski doing the arrangement and orchestrations.

The show will run in the TCA Studio Theater, April 19 through April 23, at 7 p.m., and April 23 and April 24 at 1 p.m. TCA is located at 700 W. Rio Salado Pkwy. in Tempe.

Tickets, ranging from $40 to $55, are on sale by calling 480-350-2822 and at www.tempe.gov/tca.

For further information please contact: Stephen Wade Nebgen (480) 463-3055

snebgen@azentertainmentlaw.com

Facebook: “From Gumm to Garland: Judy The Musical”

www.Judythemusical.com.

Art Link = Missing Link

2011-03-13T19:35:00Z

ART LINK = MISSING LINK

Claire Lawton, of the New Times, has commented on the grave state of affairs at Art Link. Entitled "Missing Link", the article comments on the sad deterioration of Art Link and the growing disgust of the downtown arts community. Despite repeated requests by the downtown arts community to reform its practices and get back to providing services in a timely manner, Art Link continues to operate in the same dysfunctional way that has lead to its growing irrelevance. There is a palpable sense of outrage in the downtown arts community directed at Art Link's (think Sloane Burwell) continued failure to listen to, let alone respect, the concerns of the gallery owners, studio operators and creative artists.

There will be more on this - this is far from over.

ANNOUNCEMENTS!

2011-02-05T03:39:00Z

TWO ANNOUNCEMENTS

A. Law Course Starts at The Film School at Scottsdale Community College.

"Entertainment Law: A Primer" has begun its inaugural semester and is off to a great start! We have almost a full class (very unusual for a new class), and we added students after the first day of class (generally a class will lose students). I am very excited to be allowed to the teach this course.

Additionally, this course will become part of a study track for those wishing to be producers in the film industry. The Film School at SCC will be one of few film schools in the country that offers such a track!

Other exciting plans at The Film School include the breaking of ground on a new film studio complex and the pairing up with Northern Arizona University to offer a four-year degree in Film Production!

I am proud to be part of such a vibrant Film School!

B. Election as Member-at-Large for the Arizona Production Association (the "APA").

I am also proud to announce that I was recently elected as the Member-at-Large to the Board of Directors (the "Board") for the APA. As the Member-at-Large, I am responsible for bringing the concerns and suggestions of the rank-and-file members to the attention of the Board.

The APA is a non-profit trade organization of Arizona production professionals. The mission of the APA is to promote, encourage and advance the growth of the film, theatre and television industries within the State of Arizona and to improve the status and skills of its members.

It is the largest and most influential statewide group in the entertainment industry and publishes the official production guide for the state of Arizona, both in hard copy and on the web (http://www.azproduction.com/).

Entertainment Law Course Begins Today

2011-01-21T15:58:00Z

I am very excited to commence teaching my course on Entertainment Law in The Film School at Scottsdale Community College! The first class is today and I am excited to get in front of the students and get going! I will keep everyone posted.

HAPPY NEW YEAR (and New Projects)

2010-12-29T22:11:00Z

I want to wish everyone a great New Year! I really believe that 2011 is going to mark the turnaround for the economy and everything that goes with it.

HERE'S TO A GREAT 2011!!

HAPPY HOLIDAYS (And New Phone Number)

2010-12-24T18:12:00Z

Best Wishes for a great Holiday and Happy New Year!

Also, please note the new phone number for the firm! (480) 463-3055.

Reminder on SCC Entertainment Law Course

2010-12-21T01:10:00Z

Just a quick reminder that registration has opened at Scottsdale Community College for the Spring Semester and my entertainment law course. The first day of class is Friday, January 21, 2011 from 2:00 p.m. to 4:30 p.m. The first day of class and the second-to-last day of class (for review) are in the classroom. The other class sessions are presented on-line. The combination of flexibilty in taking the course and the information presented makes this a valuable opportunity for both students and those already embarked on their production career!

JUDY: THE MUSICAL - AUDITIONS

2010-12-14T03:59:00Z

I am proud to be legal counsel and a producer of this new musical on Judy Garland.

MUSICAL AUDITIONS: JUDY: THE MUSICAL - Auditions will be held at Phoenix Theatre (100 E. McDowell) on January 5 and 6, 2011 from 4:00 p.m. to 8:00 p.m. and call backs on January 7, 2011 from 4:00 p.m. to 8:00 p.m. for a new musical about Judy Garland. The production dates are April 18 through April 24, 2011 at the Tempe Center for the Arts. The musical will star Paige O'Hara (Belle in "Beauty and the Beast" and currently appearing in "Menopause: The Musical" at the Luxor in Las Vegas). The production needs experienced actor/singer/dancers from the age of 16 to 65. Please prepare a 32-bar segment. Be prepared to cold read from the script. Accompaniment will be provided but you may bring your own. PLEASE E-MAIL YOUR HEAD SHOT AND RESUME TO: m@michaelmarkowski.com. A representative of the production will contact you to schedule a time for your audition. Equity actors will be paid pursuant to a Guest Artist Contract and non-equity actors will be paid a stipend.

Gracie's World Book Signing

2010-12-13T02:22:00Z

My client, Sharon Schmitz, will be signing copies of her children's book, Gracie's World, on December 18, 2010
from 9:a.m. to 11:00 a.m.

Desert Tails Animal Clinic
9619 N. Hayden Road Suite #111
Scottsdale, Arizona 85258

Gracie's World makes a wonderful Christmas gift. Check it out at www.graciesworldadventures.com!

ENTERTAINMENT LAW OVERVIEW COURSE AT SCC

2010-09-08T03:42:00Z

I am very proud and excited to announce that I will be teaching an on-line course on Entertainment Law through Scottsdale Community College! The course will begin in the Spring Semester with classes to begin in January of 2011. The course will give an invaluable overview of Entertainment Law and the issues that confront young filmmakers.

FINDER'S FEE AGREEMENTS

2010-08-23T23:39:00Z

A client came to me recently and said, "I need a 'Finder's Fee Agreement'. I want to help some people raise some money." Immediately, a red light went off in my mind. If the Finder Fee Agreement is not done correctly it can easily be a landmine of liability.

Section 15(a) of the Securities Exchange Act of 1934 (Exchange Act) generally requires any person who participates in securities transactions under U.S. laws to register with the SEC as a broker-dealer. In very limited circumstances, finders who are not registered broker-dealers may be used without violating the federal securities laws.

No single factor is determinative of whether a finder is required to register as a broker-dealer. The SEC maintains a "case by case" approach and will judge each situation on its facts and circumstances.

There are significant risks if the finder fails to be properly registered as a broker-dealer. The finder will face possible criminal liability, fines, and suspension. The investor can rescind the purchase of the securities that were offered, to the detriment of the other investors. And, the offeror of the securities can face additional liability for aiding and abetting the activities of an unregistered broker-dealer.

In a sitaution where someone approaches you to help them raise money, be very careful to set up the agreement so as to abide by the rules and regulations dealing with securities. Please contact us to discuss the issues and determine what would be the best strategy in moving forward.

I. ARE ONION'S THE "FUTURES" OF HOLLYWOOD?

2010-08-23T22:57:00Z

In a recent New York Times article, "Trading in Fantasy", Felix Salmon wonders whether the recent fate of ONIONS could portend the future of Hollywood.1 Hollywood is hoping to gain an exemption in the "futures" market for the motion picture industry. But what the heck do onions have to do with the entertainment industry? Here's how - the "futures" market deals with commodities: corn, oranges, onions. It is used to "hedge" risk and manage loss; it also helps to control prices. Onion farmers were upset by low prices. The farmers argued for an exception in the "futures" market. The result was not steady, higher-prices. Instead, "onion prices remain extremely volatile: they doubled in 2008, and then fell by 25 percent in 2009."1

The Commodity Futures Trading Commission recently approved a plan to allow trading futures contracts based upon box-office revenue.2 Media Derivatives Inc. will be allowed to offer futures and option contracts based on the box-office revenue of the film "Takers". Hollywood, almost reflexively, continues to fight back. It wants to add to the clause that excepted onions ("except onions") to now read "except onions and motion picture box office receipts".

The Motion Picture Association of America argues that "the new market could (i) tarnish 'the reputation of our industry' and (ii) would constitute 'unbridled gambling. . . .'" What industry are they referring too? The industry is a self-caricature of itself (e.g., Sunset Boulevard; The Day of the Locust; Sweet Smell of Success; The Player). Regarding "gambling" - I hear Captain Renault shouting "shocked, shocked to find out that gambling is going on here!" Every picture that is "green lit" and enters the market is a gamble!

Mr. Salmon points to Lionsgate Films as an studio that has understood the advantages regarding managing risk and loss through these type of contracts and what that can bring to the bottom line. Mr. Salmon also points out the economic benefits from a simple, regulated, market.

Please keep on eye out as we will continue to post updates on this issue.

1 "Trading in Fantasy", Felix Salmon, New York Times, Monday, May 10, 2010, OP-Ed Pg.

2 "Trading Film Futures Contracts Approved", Michael Cieply, New York Times, Tuesday, June 15, 2010, B-3.

Stephen Wade Nebgen Interview

2010-07-23T01:35:00Z

Check out my interview on the "Entertainment Info" tab!

Speaker of the House Kills Film Tax Credit Bill

2010-07-12T02:43:00Z

In 2008, the Film Tax Credit in Arizona resulted in the creation of over 10,000 jobs and $43 million added to coffers of the State of Arizona.
Despite the objective results of 2008; despite having been passed by the House and the Senate, the Speaker of the House took the unilaterlal action of failing to schedule the Bill for a final vote by the full state legislature.
The short-sighted (and hopefully short-termed) Speaker has eliminated a source of goodpaying jobs during a time of economic distress!
PLEASE let your local representative know that you are outraged by such an anti-democratic tactice that smacks more of the Politburo than a state legislature of the United States.