American Association of Independent Music (A2IM) President and CEO Dr. Richard James Burgess and a group of 119 leaders from the independent music industry in 19 states sent a letter to Senate Majority Leader Charles Schumer (D-NY) and Speaker of the House Nancy Pelosi (D-CA) urging that a modest relief provision for the creation of recorded music must be included in the Coronavirus Rescue Legislation that Congress is debating.
A2IM has over 600 record label members in over 30 states, and independent music represents over 30% of the U.S. market for recorded music. When President Biden released his American Rescue Plan in January, he observed that among American small businesses, the arts have “suffered disproportionately.”
“Musicians generally manage to cobble together a livable income only by combining live performances with the release of recorded music. With half of their income stream dormant for the foreseeable future, and elected officials frequently pointing to the power of music as a positive force to uplift people in tough times, we sincerely hope that we won’t get left behind,” said Burgess.
Specifically, the group of artists, managers, agents, executives and independent record label owners have asked that the Help Independent Tracks Succeed (HITS) Act, authored by Senator Dianne Feinstein (D-CA), US Representative Linda Sanchez (D-CA), Senator Marsha Blackburn (R-TN) and US Representative Ron Estes (R-KS), be enacted into law. The legislation would grant the same tax treatment to sound recording production costs that is currently afforded to other arts productions including live theater, television and motion pictures.
“The American Rescue Plan already includes important tax credits to support working class families and recognizes the economic importance of small businesses, especially in black and brown communities. The HITS Act is a natural extension that recognizes the way our industry partners with artists by financing their projects,” said Rosie Lopez, President, Tommy Boy.
“The pandemic has completely changed how we think about releasing music, without the benefit of live performance and touring to promote new projects. The HITS Act would free up independent labels to invest more money now in new music,” said Ghazi, CEO/Founder at EMPIRE.
Unlike many other relief proposals that entail direct federal spending to support ailing industries, the HITS Act simply speeds up music creators’ ability to deduct the first $150,000 of sound recording production costs from their taxable income. Because of advances in technology, many artists record and even release their own music today, and the benefit would extend not only to businesses but also to individuals.
When Congress passed COVID-19 relief legislation in December, federal dollars were directed to support live music venues, and small business loan restrictions were relaxed so that more of the largest radio broadcasters could receive forgivable loans. But since the beginning of the pandemic, nothing has been done to support the creation of music.
A new report released yesterday found that the music industry supports 2.47 jobs nationwide. Incentives for music creation is a wise investment, because the same study by Economists Inc. found that for every dollar of economic activities tied to music, another $0.50 is created in adjacent businesses.
“The music ecosystem begins with the creation of the art,” said Allen Kovac, Chief Executive Officer, Better Noise. “If policymakers are serious in their support for the arts, they would make sure that artists themselves continue to have avenues to tell their stories, and that’s what the HITS Act is all about.”
Read the full letter to Congress here.