Electronic Music and Music Business Commentary by Fate Sensation

The State of the Music Biz Nation

By Fate Sensation

Issue #07 (February/March 2007)

4-2-07

More hardcore law-enforcement on behalf of the RIAA…

Fulton County SWAT Team Raids Aphiliates Music Group, Owners Arrested

Earlier this year, a Fulton County SWAT Team and local police raided the downtown Atlanta offices of the Aphiliates Music Group. They seized over 80,000 CDs, computers, recording equipment and cars, took all 17 employees into custody, arrested the two owners, Tyree Simmons (DJ Drama) and Donald Cannon (DJ Don Cannon), and charged them with racketeering. Aphiliates allegedly sold mix tape CDs without obtaining permission from the copyright owners of the recordings and underlying songs. Aphiliates is best known for their “Gangsta Grillz” mix tape CD series.

For the DJs and mix tape CD entrepreneurs among us, Fate Sensation would like to discuss how to legally release a mix tape CD.

First, you must obtain permission from the copyright owner of each recording (usually, the record label that released it) to include the recording on your mix tape CD. Second, you must obtain a mechanical license from and pay mechanical royalties to the copyright owner of each underlying song (usually, the song's music publisher). Alternatively, mechanical licenses can be obtained from the Harry Fox Agency and the Library of Congress. If you are changing the work (by adding to or changing the words and/or music, by adding a new section, etc.) your agreement with each copyright owner must specifically give you permission to do so.

It's tax time again…

Wesley Snipes And Ronald Isley Versus The IRS

Last Fall, Wesley Snipes, an actor best known for his roles in the “Blade” trilogy and “White Men Can't Jump,” was indicted for allegedly claiming millions of dollars of fraudulent tax refunds and for failing to file tax returns for six years. If convicted, he faces up to 16 years in prison. This followed on the heels of R&B singer Ronald Isley's conviction for tax evasion. Isley was sentenced to three years and one month in prison and fined $3.1 million.

With the deadline for filing tax returns just around the corner, Fate Sensation is busy attempting to untie the Gordian Knot that is the United States Tax Code. Here are some tips for self-employed audio engineers and/or independent recording artists.

If you are self-employed or an independent contractor, you must pay estimated taxes quarterly using Form 1040-ES. Setting aside the money to do this requires both planning and discipline. When completing your tax return, you should report all of your income. Why? Because honesty to the IRS is like garlic to a vampire! Fortunately, the tax code allows for many legal deductions which can be used to reduce your tax liability. A self-employed audio engineer and/or independent recording artist may be able to deduct a wide variety of expenditures for recording gear, musical instruments, computer equipment, office supplies, mileage, advertising, etc. Because the tax code is extraordinarily complex, hire a competent accountant to help sort out what is legal from what is not. Keep all of your receipts and other written evidence of your business-related transactions. Done right, you can make quite a bit of money but (legally) pay less than you might think in taxes.

Fate Sensation wishes you good luck!

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