As any amateur musician can testify, it’s not easy to make it as an artist. What is less well known though is that a key ingredient for commercial success in the music business is the support of a talented accountant.
Accountants are rarely in the public eye, but their job is crucial. It is about far more than just dealing with invoices and tax returns – they are more like business managers. In addition to keeping the books in order, they help create financial structures that set artists up for long-term success and a strong bottom line.
The global nature of the industry and the rise in international touring means that accountants increasingly deal with the tax systems of multiple countries. Withholding taxes on foreign income and double taxation have always posed a challenge for those with international clients, so a watertight global strategy is crucial to avoid unnecessary charges.
Take for example, the journey of an Ed Sheeran track, from being written to being aired on the radio in 50 different countries and then being performed around the world. Accountants must ensure that money made from the song, as well as from merchandise and commercial usage, is in line with cross-border compliance to avoid incurring fines or legal fees.
For the process to work, multiple streams of people are employed, from production teams and music technicians through to advertisers and marketers, all of whom require spending budgets and wages. International transactions are subject to currency exchange fees, making it difficult to track how much was spent on tangible goods and services, opening more doors for cross border costs to mount up.
From sales to streams
It is no secret that streaming has become one of the most popular ways to purchase music. According to the BPI and Official Charts Company, the growth in buying and listening to music last year was driven by audio streaming, which soared 51.5 per cent to just over 68 million albums. This has proven difficult for start-ups and catalogue artists with only a modest amount of material, but for major artists with multitude of tracks and equity in music platforms, streaming is an invaluable service.
The rise of streaming has revolutionised the way in which people engage with music and continues to gain traction, and entrepreneurially minded accountants have taken advantage of this opportunity. Dissecting the challenges and aligning business models with these new streaming platforms, they have created new ways to create maximum exposure for artists.
To celebrate and recognise the role that these unsung heroes play in driving the success of the music industry, we have launched The Legal & Accountancy 50. This initiative is also a great opportunity to help music managers identify the truly exceptional accounting professionals and lawyers who are helping to shape the industry and upon whom some of the world’s biggest stars depend.