By Ari Herstand | 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
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.
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.
Just 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.
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. [Obviously this did not happen!]
Ari Herstand (pronounced Ar*ee Her*stand) is a Los Angeles based musician and fronts the band Brassroots District. Follow him on Instagram, Twitter and Facebook.