The financial and legal requirements within the music industry go hand in hand with each other – one cannot function without the other.
Every professional agreement you make within a creative industry must be bound legally by a contract, this should spell out 5 things :

1) ownership of rights - who owns what
2) royalty payments - who gets paid / benefits
3) time - how long is the contract
4) who is responsible for what - what you have to do
5) money - advances, etc

This is the essence of a contract. It will spell out the parties involved no work should be undertaken until that agreement has been reached and signed by both parties as a legal document, the only legal recourse you have is as per the terms and conditions of the contract. So if you don’t have a contract it is very difficult to prove anything in court, especially after work has began. Therefore a reputable lawyer is essential, he will help to ensure your IP and sound recordings are properly protected.

Financial record keeping and planning.

Financial record keeping and planning are essential and a good accountant is also a must the key to a business being successful is to plan it properly in the first place, your accountant will help you to do that and advise you which business model is best for you.

Sole trader: someone who is setup in business for themselves (eg freelance worker)

Partnership: where two or more people set up in business for themselves, both are responsible for profit and loss, both are responsible for their share in the decision making process.

Limited company: A limited company limits the liability to the assets and funds held by the company only – lots of red tape and paperwork to be completed and you must register the company at companies house in Edinburgh (providing the company is based in scotland)

You will need to keep an accurate record of profit and loss, this will allow you to calculate your gross and net profit and how much of your income is taxable by the inland revenue.

Gross profit – total amount of earnings you have

NET profit – total amount of earnings you have after tax

We must setup 3 different bank accounts:

Business account : put everything you earn or spend through this account and leave as much of a paper trail as possible, the more detailed the record, the more accurate and transparent it looks – you cant be accused of trying to hide anything.

Personal / current account: pay yourself your wages from your business account into this account and keep your wages and personal drawings the same from one year to the next.

Tax account: high interest account set aside enough money each month from your personal account in order to cover tax.

A freelance business person is simply one who is self employed and manages to work for many different clients.

There are two tax brackets that freelance workers fall under:

Schedule d – label given to self employed people by the inland revenue, this means that these people are responsible for their own tax.

Schedule e - PAYE – pay as you earn, this means that your employer pays your tax for you.

Creative marketing

The term creative industry does not just refer to the creative product that you are now ready to sell, the creative process of writing and recording the product is only half of battle! The industry side of how to be creative in selling it is the other half.

Marketing is a creative process if done correctly. There are hundreds of records released in the UK every week; what makes yours stand out from the rest ???

1) Artwork Make sure the sleeve has a striking design.
2) Brand name and logo This is the key - become recognisable by your brand name and you will stand out more.
3) Press release and bio press release – a4 like a newspaper.

Bio – bands history.

4) Video
5) Live performance make each show an event - Sell out a smaller venue than the one you can play – make sure there is a queue outside – this creates hype!
6) publicity stunt - get arrested! Preferably with class A drugs – it seems that these days everyone who gets arrested with a few class A’s in their car gets a shed load of free publicity, Mr Doherty for example, but you know the story there.
7) Dot com technology a flashy website is a must, with free music (streaming, not downloads as to bring the users back) mailing lists where fans can hear the latest information from the artist, user forums where they can discuss artist related topics, such asw new hair styles, plastic surgery, that fab new dress that she wore to X awards ceremony, etc, direct ticket sales for live events, direct purchasing of material (cd’s, 7” limited edition transparent vinyl, etc) and merchandise (kiss being the prime example of this!) also quirky things that make the site stand out from others, such as muse.mu (check it out and you’ll know what I mean) and nin.com where you can download and re-mix a couple of nine inch nails songs- this has spawned a whole community of users who have created their own mixes of these songs and even has an online radio station which broadcasts nothing but remixes of the same song (which is ok for about 7 mins :P) viral advertising, online communities, public forums, e-zines, online radio, youtube, myspace, all have many millions of users, each of which is a potential buyer of your product. Also sites like amazon.com, kelkoo and ebay where you can sell your physical product direct to customers

internet retail / distribution direct with companies like itunes, napster and emusic.com, where users can buy individual, downloadable tracks or full length albums or through sites like the orchard who liase on your behalf with all the top sites getting your music included in the likes of itunes, napster, msn, yahoo etc