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How the California state legislature is about to nuke the state's music industry.

EMAWesome

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EMAWesome

EMAWesome 101

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https://aristake.com/post/AB5?mc_cid=2541e29b94&mc_eid=f5d96f71af&fbclid=IwAR2JttCOSX3vL0aEB81GHvC_Wi9v6Mycj_BMmRXr5HjCXHixVwYQXP7-LiM

 

California is on fire.

But this economic blaze will ignite abruptly on January 1st and will affect the California music industry so drastically that it could completely burn it down. As the fifth largest economy in the world and the entertainment hub of the world, this is a big fucking deal. And there’s one man who could put it out single handedly - and that’s Governor Gavin Newsom.

 

“This is an anti-creative economy bill for California. I’ve often wondered what could knock the LA music scene off it’s game. I think we’re looking at it.” - Ned Menoyo, EEM Law

 

What happened?

 

Assemblywoman Lorena Gonzalez spearheaded a bill, AB5 which was intended to support workers’ rights - namely Uber, Lyft and DoorDash drivers. Rather than making a law targeting specific companies, they basically outlawed all independent contractors with few exceptions. It was signed into law on September 18, 2019 by Governor Newsom. Why haven’t you heard about it? Because it was run through committee so fast that no one really had time to process what was happening. So, no, we didn’t get to contact our representatives before the vote and plead with them not to vote for it or at least give the independent music industry an exemption.

Tonight in Van Nuys, I attended an educational gathering of mostly independent musicians organized by bassist Nick Campbell and cellist Danica Pinner.

Attorney Ned Menoyo led the discussion and broke down the law and how it will affect us. As he went on, the room got more and more unsettled to the point where people were shouting out questions left and right completely dumbfounded that something so detrimental to our livelihoods actually got signed into law without anyone knowing about it.

Don’t get me wrong, I’m all for "workers’ rights” and I’m sure Assemblywoman Gonzalez and Governor Newsom had the best intentions to support workers being taken advantage of by big corporations. They just didn’t do their due diligence and clearly have no idea how the music industry works. How this law affects musicians is not helping workers. It’s actually hurting them much, much more.

This law could single handedly end the music industry in California.

How the law is written, if you want to hire a bass player to play your gig for $100 you have to put that bassist on payroll, pay unemployment taxes, provide benefits, follow labor laws, get workers compensation insurance, deduct taxes, work with a payroll company, W-2 that bassist as they now legally will be designated your employee. FOR ONE FUCKING GIG.

 

Want to hire a violinist to play one song on your record for $150? She’s now your employee. FOR ONE FUCKING GIG.

 

+11 Ways To Get Hired For (or Fired From) the 2nd Gig as a Freelance Musician

 

Oh and by the way, every venue in California can’t just cut solo artists a check anymore. You play a 45 minute set at the Bootleg and make $800? Well, you're now technically an employee of the Bootleg, they must deduct taxes, put you (and the hundreds of artists who play their venue each year) on payroll. FOR ONE FUCKING GIG.

 

Publishing companies won't hire producers and won’t be giving songwriters advances anymore in California. Independent record labels can’t pay musicians, producers, engineers or anyone else without designating them as employees.

This is a ripple effect. The music industry could leave California en masse.

Research has shown that by forcing these individuals to designate everyone they hire as an employee it would increase costs by 30%. You thought your budget was $5,000 to hire the personnel for the album? Think again. It’s going to cost you around $6,500.

So you want to hire a drummer for $100? Well, now you have take out taxes. So either you cut the drummer a check now for $80 (you must withhold around 20%) or cut the drummer a check for $100 (but you actually are paying out $120). Multiply that by every musician at every gig. And you’re looking at thousands of dollars lost.

It is completely cost prohibitive to force musicians who are just scrapping by to jump through all of these hoops and pay all of these fees.

ust registering a corporate entity (like LLC or S-Corp) is a minimum of $800 and could be a couple thousand dollars a year to maintain - or more. Payroll companies aren’t cheap. It could run you a few hundred dollars a month! Not to mention that filing taxes for a corporate entity is extremely expensive. I have an S-Corp for Ari’s Take and my accounting company charges me $2,500 to file the corporate taxes.

This law was not thought out. It disproportionately affects independent musicians. Clearly no one in the California state government has ever worked a day in the music industry.

This law, if unchanged, will single handedly crash the California music economy. This is not hyperbole. This is reality.

Record labels will start to take their business to New York, Atlanta, Nashville or elsewhere. Touring bands will not come play the state anymore because the venues may not allow solo artists to accept payment under their name - forcing them to create a corporate entity to get around the employee requirement. No touring solo artists will do this just to play a few gigs in California which will pay much less than the cost of that corporate entity.

 

+9 Things Singer/Songwriters Need To Know About Hiring Freelance Musicians

 

The American Federation of Musicians (AFM) is literally the only entity in the music industry who is in favor of AB5. You’ve probably never heard of the AFM because very few musicians are actually in the musician's union. The AFM cites 80,000 members, but there are literally millions of musicians in the US and Canada and no one I know is in the union. Unless you play in an orchestra, on major label records or are employed by a corporation who has a deal with the AFM, you don’t need to be in the AFM and I'm not really sure what they do. But what they DID do here is totally fuck the entire music industry on this - namely independent musicians. They convinced Assemblywoman Gonzalez that this was a good thing for the music industry. All they care about is apparently their members. Since the vast majority of musicians are not in the union, the AFM just convinced the California state government and Governor Newsom that they are looking out for musicians, when in reality they’re not.

 

Worth noting that the RIAA, A2IM and the newly formed Music Artists Coalition, comprised of Dave Matthews, Don Henly, Anderson.Paak, Maren Morris, Meghan Trainor, Shane McNally, Verdine White, Irving Azoff, Coran Capshaw and John Silva, among others, fought against this bill. Based on reporting it seems Assemblywoman Gonzalez got pissed at the RIAA, so she decided that no exemptions would be made for the music industry.

 

This law contains exemptions for lawyers, dentists, physicians, vets, psychologists, architects, private investigators, accountants, direct sales salesperson (telemarketer), fishermen, podiatrist, graphic design artist, travel agent, grant writer, “Fine Artist” (does not include musicians), Human Resources administrator, marketing, photographer, freelance writers/cartoonist/editor (limited to 35 items per year per publication), esthetician, manicurist, barber, cosmetologist, electrologist, annnnd repo men.

 

So, for some reason, repo men, manicurists and telemarketers are ok for exemptions, but music professionals are not?

 

This needs to change! And it can.

What we need to do:

 

We need to get an exemption for music professionals into this law before January 1st.

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Gil Bang

Gil Bang 25897

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Why haven’t you heard about it? Because it was run through committee so fast that no one really had time to process what was happening

 

When I read something in an article that's complete bullshit, I tend to disregard the entirety of the article.

Date Chamber Action
2019-09-18   Chaptered by Secretary of State - Chapter 296, Statutes of 2019.
2019-09-18   Approved by the Governor.
2019-09-17 Assembly Enrolled and presented to the Governor at 11 a.m.
2019-09-11 Assembly Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 61. Noes 16. Page 3375.).
2019-09-11 Assembly Assembly Rule 77 suspended. (Page 3370.)
2019-09-10 Assembly In Assembly. Concurrence in Senate amendments pending. May be considered on or after September 12 pursuant to Assembly Rule 77.
2019-09-10 Senate Read third time. Passed. Ordered to the Assembly. (Ayes 29. Noes 11. Page 2770.).
2019-09-09 Senate Read second time. Ordered to third reading.
2019-09-06 Senate Read third time and amended. Ordered to second reading.
2019-09-03 Senate Read second time. Ordered to third reading.
2019-08-30 Senate Read second time and amended. Ordered returned to second reading.
2019-08-30 Senate From committee: Amend, and do pass as amended. (Ayes 5. Noes 2.) (August 30).
2019-08-12 Senate In committee: Referred to APPR. suspense file.
2019-07-11 Senate Read second time and amended. Re-referred to Com. on APPR.
2019-07-10 Senate From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 4. Noes 1.) (July 10).
2019-06-12 Senate Referred to Com. on L., P.E. & R.
2019-05-30 Senate In Senate. Read first time. To Com. on RLS. for assignment.
2019-05-29 Assembly Read third time. Passed. Ordered to the Senate. (Ayes 59. Noes 15. Page 2071.)
2019-05-24 Assembly Read third time and amended. Ordered to third reading. (Page 1984.)
2019-05-24 Assembly Assembly Rule 69 suspended. (Page 1969.)
2019-05-23 Assembly Ordered to third reading.
2019-05-23 Assembly Action rescinded whereby the bill was read third time and amended.
2019-05-23 Assembly Read third time and amended.
2019-05-20 Assembly Read second time. Ordered to third reading.
2019-05-16 Assembly From committee: Do pass. (Ayes 13. Noes 3.) (May 16).
2019-05-16 Assembly Joint Rule 62(a), file notice suspended. (Page 1760.)
2019-05-15 Assembly In committee: Set, first hearing. Referred to APPR. suspense file.
2019-05-13 Assembly Joint Rule 62(a), file notice suspended. (Page 1609.)
2019-05-02 Assembly Re-referred to Com. on APPR.
2019-05-01 Assembly From committee chair, with author's amendments: Amend, and re-refer to Com. on APPR. Read second time and amended.
2019-04-04 Assembly From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 0.) (April 3). Re-referred to Com. on APPR.
2019-03-27 Assembly Re-referred to Com. on L. & E.
2019-03-26 Assembly From committee chair, with author's amendments: Amend, and re-refer to Com. on L. & E. Read second time and amended.
2019-03-25 Assembly Referred to Com. on L. & E.
2018-12-04 Assembly From printer. May be heard in committee January 3.
2018-12-03 Assembly Read first time. To print.
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Mole

Mole 4320

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At various times I’ve been an AFM member.  It really only makes sense if you’re in a collective bargaining situation such as an orchestra, but union gigs are usually way better. Your time and money is much better respected and things are run much more professionally. I don’t know enough about the California scene to comment any further.

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MaybeACoordinator

MaybeACoordinator 8349

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9 hours ago, EMAWesome said:

https://aristake.com/post/AB5?mc_cid=2541e29b94&mc_eid=f5d96f71af&fbclid=IwAR2JttCOSX3vL0aEB81GHvC_Wi9v6Mycj_BMmRXr5HjCXHixVwYQXP7-LiM

 

 

 

 Good. Ever since they found and settled in California, and began forming together into performance troupes, and demanding payment in the coin of the realm, and insisting that they are no mere minstrels but "musicians" and even "musical artists." Destroying the system of recompense at one fell swoop will return these jumped-up gleemen to their right and proper status as itinerant minstrels, compensated with bread and wine at the whim of their patrons.

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Incredulity

Incredulity 11564

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3 hours ago, BradInATX said:

I'm sure the 20 minutes it will take musicians to register an LLC is going to take down the entire industry. And the side effect of helping them avoid double taxation.. how awful for them. What a stupid article.

 

 

Read it again.

The corporate status of the counter-party isn’t addressed in the article. I would assume most are already operating as LLCs.

There certainly is alot to this topic regarding; gig economy, employee benefits, unions, health insurance... and probably 2 dozen other sub-topics.

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TwiceHorn

TwiceHorn 31269

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Only an individual can be a 1099 employee.  If they were single-member LLCs, I think that would avoid the problem.  The bill seems to address only "persons."

There are a shitload of exceptions for artsy types.  Leaving out musicians was either intentional or glaring oversight.

Edited by TwiceHorn
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BradInATX

BradInATX 9208

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Read it again. The corporate status of the counter-party isn’t addressed in the article. I would assume most are already operating as LLCs. There certainly is alot to this topic regarding; gig economy, employee benefits, unions, health insurance... and probably 2 dozen other sub-topics. 

 

 

You're a fucking idiot. There's literally an entire paragraph that talks about LLCs in the article. The only negatives the obviously biased article can muster are the costs of forming an LLC and the cost of filing business taxes. Both of which the author grossly over-represents. And even using his disingenuous numbers, the removal of double taxation would be vastly profitable even after this mythical $2,500 CPA.The fact that the author is actually trying to claim that a freelance musician would ever pay $2,500 for a business return is so beyond ridiculous that you instantly know there's an agenda. There are numerous other grotesquely bad logic fails in that article, but I don't feel like spending any more time trying to teach calculus to a monkey. Post this bullshit on Facebook where it belongs.

 

 

 

 

 

 

 

 

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Incredulity

Incredulity 11564

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8 minutes ago, BradInATX said:

You're a fucking idiot. There's literally an entire paragraph that talks about LLCs in the article. The only negatives the obviously biased article can muster are the costs of forming an LLC and the cost of filing business taxes. Both of which the author grossly over-represents. And even using his disingenuous numbers, the removal of double taxation would be vastly profitable even after this mythical $2,500 CPA.
 

I missed that paragraph.

So it really comes down to independent control.  It’s not just as simple as, “I’m an LLC”.

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Lurch

Lurch 5921

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Read it again.
The corporate status of the counter-party isn’t addressed in the article. I would assume most are already operating as LLCs.
There certainly is alot to this topic regarding; gig economy, employee benefits, unions, health insurance... and probably 2 dozen other sub-topics.


“a lot”
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BradInATX

BradInATX 9208

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I missed that paragraph.

So it really comes down to independent control.  It’s not just as simple as, “I’m an LLC”.

What? No. That's not how any of this works. The artist would invoice the venue from their LLC and pay themselves via said LLC. Millions of people do it every day. It is just as simple as that.

 

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Incredulity

Incredulity 11564

Posted
Posted
1 minute ago, BradInATX said:
11 minutes ago, Incredulity said:
I missed that paragraph.
So it really comes down to independent control.  It’s not just as simple as, “I’m an LLC”.

What? No. That's not how any of this works. The artist would invoice the venue from their LLC and pay themselves via said LLC. Millions of people do it every day.

Then, as per Twicehorn’s post above, this law doesn’t apply to them.

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BradInATX

BradInATX 9208

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Then, as per Twicehorn’s post above, this law doesn’t apply to them.
Right. So what's the point of the article then? The entire premise that it would ruin musicians is completely void. They'll start LLCs and be fine. And like you said, most probably already have an LLC for tax purposes.
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Incredulity

Incredulity 11564

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2 minutes ago, BradInATX said:
5 minutes ago, Incredulity said:
So, now not “disingenuous numbers”?

No. The $800 for the LLC was valid, I'll give you that. But $2,500 for a CPA for a basic business return is laughable. Those working class musicians probably pay $200 and the CPA throws in a 1040EZ for free.

Counter point. Paying a CPA $200 for a return means you wasted $179.99 or whatever the fuck the most basic “business” version of Turbo Tax costs.

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BradInATX

BradInATX 9208

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Counter point. Paying a CPA $200 for a return means you wasted $179.99 or whatever the fuck the most basic “business” version of Turbo Tax costs.
Fair enough. I pay a CPA for my S-Corp so that's my experience with it. But I think a standard LLC without distributions is far simpler.
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Incredulity

Incredulity 11564

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They would be single member LLC’s and not even have a tax return.

The issue is therefore independent control.

I guess the OP article should really be, California Passes Law that fixes nothing.

Personally,  I think having two classes of “taxi” service is utterly fucking retarded.  Just like food truck pods and VRBO house rentals.

Either these are industries that must have the regulatory regimes currently in place or they aren’t.  

 

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Incredulity

Incredulity 11564

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1 minute ago, RDCanecutter said:

In my experience, all intersections between musicians and venues were settled up in comped beer, food, and creatively diminished parcels of cash. But we were never all high-falutin like Dave Matthews. No wonder that whiny bastid pissed the lady off.

I think he pumped piss on the lady. Right?

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BradInATX

BradInATX 9208

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They would be single member LLC’s and not even have a tax return.
The issue is therefore independent control.
I guess the OP article should really be, California Passes Law that fixes nothing.
Personally,  I think having two classes of “taxi” service is utterly fucking retarded.  Just like food truck pods and VRBO house rentals.
Either these are industries that must have the regulatory regimes currently in place or they aren’t.  
 
The title should be "California mildly inconveniences the tiny minority of musicians who don't already have an LLC. Will require 20 minutes of paperwork and save them thousands of dollars."
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Mole

Mole 4320

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Posted (edited)
2 hours ago, BradInATX said:
15 hours ago, Incredulity said:
They would be single member LLC’s and not even have a tax return.
The issue is therefore independent control.
I guess the OP article should really be, California Passes Law that fixes nothing.
Personally,  I think having two classes of “taxi” service is utterly fucking retarded.  Just like food truck pods and VRBO house rentals.
Either these are industries that must have the regulatory regimes currently in place or they aren’t.  
 

Read more  

The title should be "California mildly inconveniences the tiny minority of musicians who don't already have an LLC. Will require 20 minutes of paperwork and save them thousands of dollars."

I’ll quibble with the “tiny minority” part. I’ve made my living as a musician most of my adult life. I don’t personally know of any musicians who have an LLC. I’m sure some do and I don’t know it and more probably should, but I’ve never heard it come up. 
 

I’ll add that it’s never made sense for me and my situation is pretty common.

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bolverk

bolverk 29399

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16 hours ago, RDCanecutter said:

 

Because, Dead Milkmen AND Mojo Nixon.

We went to a shopping mall
And laughed at all the shoppers
And security guards trailed us to a record shop
We asked for Mojo Nixon
They said he don't work here
We said if you don't got Mojo Nixon then your store could use some fixin'

 

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TwiceHorn

TwiceHorn 31269

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3 hours ago, Mole said:

I’ll quibble with the “tiny minority” part. I’ve made my living as a musician most of my adult life. I don’t personally know of any musicians who have an LLC. I’m sure some do and I don’t know it and more probably should, but I’ve never heard it come up. 
 

I’ll add that it’s never made sense for me and my situation is pretty common.

Yeah with all due respect, most artsy types are blissfully unaware of various more complex business angles on things, in my experience.  They want to play or do their art and get paid something, if possible.  

It's kind of like how I am good at the technical and business aspects of things and can't play a lick on anything.

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BradInATX

BradInATX 9208

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Yeah with all due respect, most artsy types are blissfully unaware of various more complex business angles on things, in my experience.  They want to play or do their art and get paid something, if possible.  
It's kind of like how I am good at the technical and business aspects of things and can't play a lick on anything.
I assume he gets paid mostly in cash.
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