On this episode of the Freedom Radio Hour, co-hosts Adam Cruz and Eddie Nicholas discuss the music industry push for New York tax credits like film industry's. Adam and Eddie also discuss social media etiquette and other music business news and trends, live on Capital Radio 91.6FM The Heartbeat of Sudan.
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Written by Hiroko Masuike/The New York Times
Can a tax subsidy revive New York’s music business?
A group of music industry figures, worried about the flight of music production and related jobs from New York to states like Texas and Tennessee, is encouraging the State Legislature to pass a bill to give $60 million in tax breaks each year to studios, record companies and others involved in the creation of music.
“The epicenter of the global music industry was New York, for as long as anyone can remember, and now that’s slipping away,” said Justin Kalifowitz, chief executive of Downtown Music Publishing and a co-founder of New York Is Music, a new coalition supporting the effort. “That’s something we have to stop.”
The plan was based on New York’s $420 million tax credit program for film and television production, which has been cited as an important factor in the growth of those projects in the state over the last decade. According to a 2012 study commissioned by the Motion Picture Association of America, in-state spending by film productions that have received the subsidy grew from $600 million in 2004, when the credit was introduced, to $1.5 billion in 2011.
“Because this is New York, we think everybody wants to stay here,” said Joseph R. Lentol, a longtime Democratic assemblyman from Brooklyn, who introduced a draft bill on the music credit to the Legislature in February. “But that’s not what’s happening.”
The bill would give New York businesses a 20 percent credit on expenses related to music production, and is intended to support primarily “below the line” jobs like studio engineers and graphic designers.
“Billy Joel is not going to get a tax credit, nor is Jay Z,” Mr. Lentol said. “It’s going to be the working stiff that gets the credit.”
The efficacy of tax credits for entertainment businesses has been debated, and some states lately have reduced them. Last year, a tax reform panel appointed by Gov. Andrew M. Cuomo recommended that New York’s film credit — the largest in the nation — be reduced by $50 million because the credit “does not appear to pay for itself in its current form.”
Such subsidies are also often unpopular with economists.
“Industry-specific tax incentives are nonneutral, and cause all of the other types of firms — the ones that aren’t in a politically favorable industry — to foot the bill,” said Liz Malm, an economist at the Tax Foundation, a nonpartisan research group in Washington.
The struggles of New York’s music businesses over the last decade have mirrored the difficulties in the industry over all. A white-hot real estate market in New York City has added pressure, leading to the closing of numerous nightclubs as well as famous recording studios like the Hit Factory, which shut its doors in 2005.
Oliver Straus, who owns Mission Sound, a studio in Williamsburg, Brooklyn, said that an album that might cost $10,000 to make in New York would cost about $7,500 in Nashville and $4,500 elsewhere, leading many bands and record labels to cut their time in city studios short. Mission Sound’s business, Mr. Straus added, is down 15 percent over the last three years.
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“It’s becoming increasingly impossible to remain in New York and make a living,” he said.
At the same time, other states have courted musicians and music companies with tax subsidies and other benefits. Georgia, for example, offers music tax credits of up to 30 percent of costs, and Tennessee trumpets its low taxes and moderate cost of living. This year, New Jersey gave a $1.6 million tax incentive to Sony Music Entertainment, the record company, to move 50 jobs there from New York City.
The New York coalition, whose initial roster of about 75 members includes record companies, musicians and institutions like BMI, the Recording Academy and the Clive Davis Institute of Recorded Music at New York University, will host a meeting in Brooklyn on Nov. 12 to discuss the bill and suggest changes, with another round table in Albany also planned for next month.
To make their case, the coalition’s leaders say, they need to compile data about music’s economic impact in New York, as Nashville, Toronto and other areas have already done. The Brooklyn Chamber of Commerce has begun a study of the industry in Brooklyn.
Mr. Kalifowitz and Mr. Lentol said they expected some opposition from fiscal conservatives. But they said they viewed the results of the state film and TV subsidy over the last decade as proof that a little help from the government can go a long way in supporting major creative industries that offer employment, generate revenue and raise the state’s profile.
“The hope over the long term,” Mr. Kalifowitz said, “is to build a diverse and viable music industry ecosystem across the state.”
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