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Insider Sources: NFT Taxes & Legal Pitfalls

Last Thursday at Insider Sources, instead of talking to a business management firm we decided to submit to the inevitable and have a round table discussion on NFTs — how they are taxed,…

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TRENDING THIS WEEK

E Pluribus Unum Out of the Many One

Insights from The Royalties Summit

E Pluribus Unum: Out of the Many, One

The world of royalties is becoming continually more complex. At Trusted Advisor we held our first Royalties Summit on May 6 where we were able to unite business managers from tech, music, and entertainment to discuss the rapidly changing world of licensing, royalties, and ownership models. 

For our last presentation “E Pluribus Unum: Out of the Many, One” we brought in Chris McMurtry, Head of Music Product at Exactuals. Exactuals is a financial software company aimed to simplify and resolve the complex metadata that surrounds royalty payments. After the success of PaymentHub, the company is now launching RAI, an open API that uses machine learning to enhance metadata surrounding intellectual property. McMurtry demonstrated how machine learning is used to create an aggregate consensus across disparate data sources to record and resolve the data on hand. 

Royalties and artificial intelligence 

Exactuals started in 2011 in film and TV; however, once they pivoted to music, they realized the data became a lot more complex. McMurtry discusses the components, and consequently, the challenges that come with metadata — he stated that the accuracy depends on the quantity of and quality of the data, but the resolution of metadata is troubled by the fact that it is disparate and dynamic. …

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Insights from The Royalties Summit

Fireside Chat: Music Rights Organizations

The music industry has changed over the course of the last several years. The shift to digital consumption of music has resulted in the need for restructuring and re-evaluation of the ways in which artists and their teams protect themselves. 

For our panel “Fireside Chat: Music Rights Organizations,” we brought in experts from the top music collection organizations to weigh in on data accessibility. Moderated by Portia Sabin, President of Music Business Association, our panelists included Colin Rushing, Chief Legal Officer at SoundExchange, James Leach, VP of Writer/Publisher Relations at SESAC West Coast Operations, and Kris Ahrend, CEO of the newly formed organization, The Mechanical Licensing Collective. 

Music Rights Organizations and collections 

SoundExchange provides royalty solutions for sound recording and publishing, distributing digital performance royalties for over 245,000 recording artists and master rights owners. The collective was created in response to the DMCA establishing a new revenue stream for digital artists in 1998 — the master use license. Since then the organization has helped turn massive amounts of data into revenue for creators, paying out more than $7 billion in royalties. 

Founded in 1931, SESAC has become a cornerstone of the music entertainment industry,…

Leveraging Catalogs Monetizing While Retaining Ownership

Insights from the Royalties Summit

Leveraging Catalogs: Monetizing While Retaining Ownership

Catalog sales are booming in the music industry right now. At Trusted Advisor we held our first Royalties Summit on May 6, where, supported by Miller Kaplan, we were able to unite business managers from tech, music, and entertainment to discuss the rapidly changing world of licensing, royalties, and ownership models. 

For our panel “Leveraging Catalogs: Monetizing while Retaining Ownership,” we brought in Stem CEO Milana Rabkin Lewis, one of the youngest and first digital media agents in Hollywood. She was named 2017’s “30 under 30” by both Forbes and Inc Magazine, and featured in Hollywood’s “New Leaders” by Variety. 

Founded in 2015, Stem is a distribution and payments solution that offers music and video distribution, visualized data, monthly royalty payments, and simplified revenue splits. According to Lewis, she created Stem after her own experience with the outdated payments system in the entertainment industry, as often artists’ integrity and interests are foregone to service big labels and distributors. 

“I’ve worked with a number of filmmakers, TV stars, and comedians,” Lewis said. “But most of my clients were Youtube stars, or what we now know as ‘influencers.’ What I saw working was that revenue opportunities in digital were massive,…

Business Managers on Music Clients

Insights from the Royalties Summit

Business Managers on Music Clients

The music industry has seen quite the shift in the past year. At the Royalties Summit on May 6, Trusted Advisor united business managers from tech, music, and entertainment to discuss the rapidly changing world of licensing, royalties, and ownership models. 

Since the pandemic, musicians and their teams are generating revenue in new and novel ways. Our panel, “Business Managers on Music Clients,” discussed how leading business managers Kristin Lee, founder of KLBM, Josh Klein, founder of TKG, and Leftbrain Royalty Consultant Andrew Ullah have helped their clients navigate a changing industry landscape. 

Music clients and a changing relationship with finance 

With touring and live shows off the table, Lee noticed that the pandemic made clients confront the way they spend money. 

“Immediately I looked at long-term cash flow, reserves, to see what is on hand. It is important to have a safety plan because even looking at the next year in front of us, it might be a slow build until we get to the position we were two or three years ago,” Lee said. 

This made clients more closely scrutinize their finances — clients became a lot more attentive and a lot more involved with day-to-day management. …

Music Royalty Gold Rush

Insights from the Royalties Summit

The Music Royalty Gold Rush

The topic of royalties has been gaining momentum over the last several years. At The Royalties Summit on May 6, Trusted Advisor united with business managers from tech, music, and entertainment to discuss the rapidly changing world of licensing, royalties, and ownership models. 

Media is currently going through what we describe as a “gold rush,” as the industry has generated over $9 billion for royalties owners worldwide in just the last five years. We brought in Antony Bruno, Director of Communications at Royalty Exchange, to outline the forces driving this boom for royalties, and show how all creators can take advantage. As the world’s largest online marketplace for buying and selling royalties, Royalty Exchange reveals the factors that drive investor demand, the benefits of royalties for creators, and how to guarantee the most successful deal. 

The Music Royalty Gold Rush: the landscape 

Bruno states that while over $4B have been spent on music catalog deals just in 2019 alone, the revenue is largely generated from the royalty deals made with the richest one percent of artists. This is what Bruno refers to as the “tip of a very large iceberg,” which is why Royalty Exchange hopes to broaden accessibility to this industry through their online marketplace….

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Insights from the Royalties Summit

The anatomy of a gaming deal

At Trusted Advisor we held our first Royalties Summit on May 6, where, supported by Miller Kaplan, we united business managers and industry experts to discuss the rapidly changing world of licensing, royalties, and ownership models. 

Vincent Leoni, also a speaker at the “Extending an Artist’s Brand” panel, is the partner-in-charge of the licensing and royalties department at Miller Kaplan. His presentation, titled “Gaming the Market: the Anatomy of a Gaming Deal,” is a deep dive into the royalties market of the gaming industry — he details how the $300-billion brand-licensing industry is structured, how it has grown, as well as the potential future of licensing and royalties within the space. 

The Global Video Game Market 

According to Visual Capitalist, the worldwide gaming market grew eight percent in 2020 to $165BN. 

Mobile gaming comprises nearly half of this growth, with a double-digit increase of 15.5% from 2019. The market is spread evenly across the globe, with frontrunners being the United States, China, Europe, Middle East and Asia-Pacific each contributing about 25 percent of market share. According to Leoni, unlike other types of entertainment, gaming is consumed fairly evenly across the globe. Leoni also found that gaming, with a global revenue of $152BN,…

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Insights from the Royalties Summit

How to extend an artist’s brand

At Trusted Advisor we held our first Royalties Summit on May 6, where, supported by Miller Kaplan, we united business managers and industry experts to discuss the rapidly changing world of licensing, royalties, and ownership models. 

For our first panel “Extending an Artist’s Brand,” we brought in Vincent Leoni, Partner at Miller Kaplan and head of the Royalties Audit Department; Tony Mulrain, Partner and Co-Chair at Mintz’s Sports and Law Practice Group; and Daniel Weisman, VP at AllianceBernstein. The three panelists discussed the changing definition of celebrity, and how the past year has impacted the way brands and artists negotiate endorsement and licensing deals….

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Insider Sources: Reggie Gooden and Joshua Martin from 818 Management

At Insider Sources we had the opportunity to talk to Reggie Gooden and Josh Martin, Partners at 818 Management, a business management firm catering to elite entertainment and sports professionals. …

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A special report from Synchtank

Drowning in Data: Royalty Accounting and Systems in the Digital Age

The pandemic has fundamentally changed how music is monetized — the necessity of a sustainable virtual platform and distribution revealed how outmoded many streaming, publishing, and payment systems have become in a digital age.

Synchtank, a SaaS software company specializing in managing digital entertainment assets, intellectual property, metadata and royalties, recently published a report “Drowning in Data.” The report examines the issues facing music publishers in trying to tackle ever rising volumes of data from an increasingly diversified and fragmented number of sources. 

The report found that many of the systems the industry relies on are unable to keep up with the sheer amount of data processing required. Due to poor data management and fragmented rights and payment landscape, the demands for payment transparency and efficiency are growingly difficult to satisfy. …

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Hosted by AllianceBernstein

NFT What? The Latest Cryptocurrency Craze Explained

Research investment firm AllianceBernstein has long been a trusted source within global finance and capital markets —  with $680 billion in client assets, they regularly publish in-depth research on all aspects of asset allocation, including whether crypto or NFTs should be a part of it.

In their webinar “NFT What? The Latest Cryptocurrency Craze Explained,” the firm brings in panelists CEO of SuperRare John Crain, CEO of Create Safe Daouda Leonard, Founder of Brud Trevor McFedries, and CEO of General Galactic Corporation Harper Reed and was moderated by AllianceBernstein Vice President Dan Weisman.

On the cutting edge of NFTs

John Crain, CEO of SuperRare, works to make NFT creation and exchange accessible. Described as “Instagram meets Christies,” SuperRare allows artists to collect, trade, and view digital artworks on an interface similar to Instagram and Coinbase. 

Harper Reed is a technologist at General Galatic Corporation. He was a former CTO for the Obama 2012 campaign tasked with advising policy experts on the connective capabilities of tech. The technology he developed at his former start-up Modest Inc. was acquired by Paypal, and now he sits on the advisory boards of IIT Computer Science and the Royal United Service Institute, as well as the Cornell College Board of Trustees.

Daouda Leonard, CEO of CreateSafe, has over a decade of experience in the entertainment industry. He’s managed and produced artists such as DJ Snake, Skrillex, and BloodPop, but in terms of the cryptomarket, he’s most known for facilitating Grimes’ incredibly popular NFT drop “War Nymph.” His company,…

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The importance of thought-leadership

Insider Sources: Evan Jehle From FFO

Last Thursday at Insider Sources we spoke to Evan Jehle, Partner and COO of FFO, a family office and business management firm.  …

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Navigating pitfalls and prepping for forgiveness

💡Insights from a Banker: Navigating PPP Pitfalls

The Paycheck Protection Program started as a way to help small businesses — an integral part of the CARES Act in terms of COVID relief,…

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Education, education, education

Insider Sources: Louis Barajas, Angie Barajas and Ashley Romero from Business Management LAB

Last Thursday at Insider Sources we spoke to Louis and Angie Barajas, co-owners of Business Management LAB, a boutique firm specializing in international celebrities in the entertainment industry….

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How Crypto and NFTs are being taxed

Crypto and NFT Taxes – A Brief Guide

By Julian Schubach – Head of Entertainment Division | VP, ODI Financial

and Jacob T. Martin – Managing Attorney, JTM Tech Law

Shortly after joining the social media app Clubhouse I learned a few things but nothing stuck out to me quite as much as this: People are happy to put NFTs into the world and they love the idea of doing it with another complimentary creative, but there is an incredibly loose approach to doing so that pervades the space. Not only is collaboration a big part of creating and selling an NFT, it also leads to multiple major issues in the long term viability of the revenues generated off of the product.

Prior to getting into the details of how the IRS views NFTs and collaborations, I feel the need to say this “NFTs are awesome. Working with your friends and other creatives… is awesome. But the idea of tying yourself, to another individual and an NFT, that has a single wallet address in PERPETUITY has never been done before. There are many major issues across the NFT marketplace platforms right now with royalties that fall off if the NFT is moved from one place to another, the simple inability to set up a “split royalty” between two wallets, and the lack of guidance from most marketplaces on how they intend to handle issuing 1099’s. That last part is also due to the lack of clarity on what platforms are centralized vs….

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What it takes to manage an artist

Insider Sources: Sally Velazquez and Tracy Velazquez from Empower Business Management

Last Thursday we spoke to Sally and Tracy Velazquez from Empower Business Management for our weekly “Insider Sources” series on Clubhouse. Sally is a tax attorney with over twelve years’ experience in tax, accounting, and business management, providing concierge services while overseeing investments, insurance, and bookkeeping for high-net-worth clients and made partner in 2020. She is joined by her sister Tracy, who has been a business manager at Empower Business Management for over three years. 

At the start of the talk, Sally and Tracy shared the necessary steps they take to educate clients, ensuring they make smart business dealings while keeping communication with them open and honest. Later on, they were joined by LaPolt Law attorney Tom Dean, manager of 21 Savage Justin “Meezy” Williams, and CPA Alex Roytenberg, where they discussed novel ways musicians and entertainment clients are generating revenue, attempting to understand the best way to guide clients through investing in this sudden gold rush of NFTs and cryptocurrency. …

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The Importance of Mentorship

Insider Sources: Greg Getzinger from Gursey Schneider

Last Thursday we spoke to Greg Getzinger for our weekly “Insider Sources” series on Clubhouse. Getzinger has worked in business management for over 10 years, and made Partner at Gursey Schneider LLP in January 2020. Specializing in in-front and behind camera talent and high net-worth families, Getzinger shares what it is like leading a business management practice within a larger CPA firm, educating new talent, and the importance of mentorship during his time in business management.

Importance of mentorship

Getzinger got his start at a traditional accounting firm before switching to business management, working in firms such as Gelfand and Mejia & Kaplan before he was recruited by Marie Ambrosino to work for Gursey Schneider. Getzinger shares the importance of mentorship in business management, as he is especially thankful for the guidance Ambrosino showed him when he was first starting out at the firm. 

“When I first went in for an interview, Marie and I talked almost none about business management — she just wanted to see what I was like as a person and if we would get along,” Getzinger said. “It’s nice to have someone to teach you those soft skills, and to just have confidence in you when you’re presented to clients and outside counsel….

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Interview with Mike Hurst, CEO, and Bryan Walley, COO & President

How to Process over $1BN in Payments

Los Angeles-based financial software company Exactuals reports that its flagship product PaymentHub saw 250% year-over-year growth in the past 12 months. Some of the company’s biggest clients include Global Music Rights, Entertainment Partners, and entertainment’s biggest union: SAG-AFTRA. Aiming to expedite the efficiency in which people are paid, PaymentHub has recently surpassed $1 billion in all-time dollars processed. 

Exactuals’ product library includes PaymentHub, RAI, and SR1 which are furthering the company’s goal of centralizing and expediting how metadata is stored,…

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The celebrity side-hustle

Licensing 101: Our guide to celeb licensing

Celebrities have been crossing genres to increase their exposure and personal brands for decades. But while it used to be that only the most captivating personalities could cultivate an impactful brand, the modern world of influencer marketing has changed how we define celebrity. And while it has never been easier to become an influential figure, it has also never been more essential for influencers to license their inner celebrity.

What Is Celebrity Licensing?

Celebrity licensing is when an existing business licenses the image and naming rights of a celebrity. The result is a product that appears to be fully backed and promoted by an influential celebrity personality.

An easy example to show how celebrity licensing can work effectively is the George Foreman grill. Do we think George Foreman was tinkering away in his garage building a plug-in panini maker? Of course not, but the product appeared to be George Foreman’s baby,…

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"Work like you want to be famous."

Insider Sources: Kristin Lee & Steven Palin from KLBM

KLBM describes itself as “fiercely independent.” A boutique business management firm staffed by a 10-person team, KLBM serves some of the top talents in music, sports, TV, and entertainment. Headquartered in Los Angeles but with offices in Nashville and Seattle, the firm prides itself on helping creatives structure their craft into a sustainable business model. 

Managing Director Kristin Lee founded KLBM over seven years ago, after previously working at top firms such as Gelfand, Rennert, and Feldman, and NKSFB. The daughter of accountants who happened to love classic rock (dad) and new wave (mom), Lee knew how to operate a record player by age five.

At our weekly “Insider Sources” series, we got a chance to talk with Lee, as well as KLBM’s Operating Manager Steven Palin on Clubhouse last Thursday. We discussed both Lee and Palin’s background in entertainment business management, the relationships the firm develops with the clients, and why business management is an essential part of how entertainment runs. 

Lee believes that a performing background helped set a “different level of understanding.” 

Lee grew up in an environment where music “was absolutely necessary for life.” She spent long hours listening to the record with her grandparents, and her heavy music background inspired her to play live music herself — she was a touring artist for a few years and now has nearly 20 years of experience in the music business. 

Her background not only as an accountant but as a performer allows for a unique level of empathy between her and her client base. …

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WTF are NFTs

NBA Digital “Moments” and Crypto Art? Here is the NFT Guide

Move over CryptoKitties, there are some new digital collectibles in town! Launched in late 2017, CryptoKitties became the first “product” to go viral in the blockchain world. It’s timing was rather fortuitous as well as Bitcoin reached a peak of almost $20,000 per Bitcoin towards the end of 2017 (the world is currently in a new round of Bitcoin-mania, with prices climbing to over $58,000 per Bitcoin in late February, 2021.

At the time, CryptoKitties were this generation’s form of Pokemon cards, or Beanie Babies, depending on which generation you are coming from. Its mania hit an all time high in 2018, when one CryptoKitty was sold for approximately $170,000.

CryptoKitties, Blockchain, and Fungibility?

The Blockchain: Before diving into CryptoKitties, it helps to understand how blockchain works, and how in retrospect, CryptoKitties have paved the way for blockchain products – which will likely become more and more prevalent in the coming years….

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Insider Sources: Alex Smith & Justin Sroka from MGGGY

Mann Gelon Glodney Gumerove Yee LLP (MGGGY) has, as quoted in Variety, branched out from its roots as a traditional accounting and tax firm. Today, business management accounts for a third of its revenue, as they’ve attracted a client base of major actors, writers, producers, directors, musicians and social influencers — solidifying them as a noteworthy presence in entertainment….

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Payday!

A Win for Songwriters & Music Publishers – The Collection of over $424M in Unmatched Royalties from DSPs

Thanks to the 2018 Music Modernization Act (MMA), on February 16th, 2021, music creatives around the world were able to celebrate a victory against the Goliaths of the Digital Service Provider industry. The Mechanical Licensing Collective (MLC) announced last Tuesday that it had received $424,384,787 in historical unmatched royalties from some of the biggest names in the business.

Apple Music led the way with over $163M transferred, followed closely behind by Spotify (~$152M), with Amazon Music (~$42M), Google Play Music (~33M), Pandora Media ($12M), and SoundCloud ($10M) collectively adding another $100M to the overall bucket. In total, 20 DSPs transferred these unmatched royalties to the MLC. A breakdown of these royalties can be seen below:

Source: https://www.themlc.com/press/mechanical-licensing-collective-receives-424-million-historical-unmatched-royalties-digital

Additionally, the DSPs handed over more than 1,800 data files, containing over 1.3 terabytes of data, consisting of over nine billion lines of information.

How exactly did this money come about?…

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Where's my money?

How to Collect Music Royalties in 2021

With live performances not even a consideration for most, collecting royalties has never been more essential. The problem is that the lines have gone from blurry to nearly invisible when defining how and when artists should collect certain royalties….

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Taxes, taxes, taxes

Mini-Guide: 2021 Tax Law is a-Changin’ & Here is How

New changes to 2021 tax laws have far-stretching implications for the entertainment industry.

The Consolidated Appropriations Act (known as the Act) was signed into law on December 27,…

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Things Are Changin'

Your Guide to Royalties in 2021

Progress in copyright law and the music industry has been a slow, uphill climb for decades. But those who desire change are getting closer to the summit,…

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Milk & Honey Music Launches Milk & Honey Sports

How One Music Management Company is Navigating New Verticals

In a world where “Ballers want to be rappers, and rappers want to be ballers”, the creation of a division of sports management in a music management company doesn’t seem so strange. …

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What you need to know

The Mechanical Licensing Collective is Here

In 2018, The United States Congress passed the Music Modernization Act, also known as MMA, a landmark legislation which impacted a wide range of music licensing….

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Goodbye 2020

How The Music Industry Can Rebound in 2021

This article was originally published at Music Connection and has been republished here with permission from the author, Andrew Kintz,…

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By Louis Barajas, MBA, EA, CFP

Five Biggest Factors Ruining Athletes’ Finances (And What They Should Do Instead)

Having served as a wealth and business manager to athletes for multiple decades, I can easily recognize the warning signs when a client’s wealth begins to take a turn for the worse….

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Louis Barajas on The Future Game

The Future Game

One of the greatest challenges that many professional athletes face happens off-field; it’s the issue of financial security. 

With a career span of only several years,…

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Time is money

High Net Worth Individuals Leaving the Golden State

This week in Business Mgmt: High Net Worth Individuals Leaving the Golden State

For the best and the brightest,…

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Social Engineering Scams on the Rise

Social Engineering scams on the rise, Hollywood Reporter Names Top Business Managers of 2020, NBA teams face different tax rates,…

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Blue Wave vs a Red Tide: Tax Implications of the Election Results

This week’s business management news:

The Tax Implications of the Election, Quibi – the short-form streaming service shuts down,…

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The New Jet Set: The Rise of Concierge Transportation

Though living in a busy city like Los Angeles comes with many perks (weather, business, culture, food), there is one major problem that almost everyone that has spent some time in the city is aware of: traffic….

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