Risk Management for Musicians
As a manager, there are three things I never mess around with: the legal system, the IRS, and safety. Those are probably the three least rock ‘n’ roll things that you can think of, I know, but hear me out. The reason why I emphasize those three incredibly boring things is that they are relatively easy ways to prevent a disaster. Being sued, audited, or getting into an accident can completely ruin an artist’s career, but bands still work under handshake agreements, they don’t file their taxes properly, and they don’t wear their seatbelts.
Human beings have a tendency to evaluate risks based purely on the odds of a positive or negative outcome. When faced with the option of licencing your cover song or recording, it can be tempting to see the 1% chance of the copyright owner finding out and decide that it’s better to not fill out the paperwork. However, to fully evaluate the risk, you need to factor in the potential costs of each decision.
To use our copyright example, let’s say that odds of getting caught with an unlicensed cover song are 1:100. Licencing your cover costs about $15 and would take about half an hour, so to keep our units the same, let’s value our time at $30/hr. That brings the total licensing cost to $30. Multiply that by 99, for the 100:1 chance that it would be necessary, and you get $2,970. If you get caught with an unlicensed cover song on your album and you get sued, you would be out at least $3k in legal fees alone. So, in the end, it makes the most sense to just file the paperwork.
The moral of the story is, nobody ever expects bad things to happen to them, but that doesn’t prevent them from happening. The music industry is full of unpreventable risks, so take the time to mitigate the ones you can. It could save your life.