Showing posts with label audit. Show all posts
Showing posts with label audit. Show all posts

Tuesday, December 12, 2023

Apple Music Podcast: Cedar Boschan on Music Royalties

Thank you to "Riches and Rhythms," for having me guest on your podcast.  It was a pleasure to speak with Stonebridge financial advisor Tyler Martin and Tristar business manager Peggy Stephens about music royalty audits, IP valuation and AI.

Link to podcast:

Saturday, June 3, 2023

Exploring the Delayed Discovery Doctrine, Doctrine of Estoppel, and their Implications on Contesting and Objecting to Incoming Profit Participation Accountings and Royalty Statements

Your favorite royalty auditor and forensic accountant is here to make sure California attorneys know of the potential application of the delayed discovery doctrine and the doctrine of estoppel in contesting incoming profit participation accountings or royalty statements, notwithstanding contractual or statutory limitations. I believe such legal doctrines, along with the relevant cases I will highlight, provide compelling grounds for certain creative and licensor clients to challenge such accountings or statements.

  1. Delayed Discovery Doctrine: The delayed discovery doctrine allows for the tolling or extension of limitations periods when a plaintiff could not have reasonably discovered the existence of a claim. It recognizes that in certain situations, a plaintiff may be unaware of the facts giving rise to a cause of action until a later date.

By applying the delayed discovery doctrine, our clients may be able to argue that they were not reasonably aware of the inaccurate or improper profit participation accountings/statements until a later point, beyond the contractual or statutory limitations. This would provide them with an opportunity to contest and seek redress for the extended period covered by the accountings or statements.

  1. Doctrine of Estoppel: The doctrine of estoppel, in the context of profit participation accountings and/or royalty statements, can block entertainment companies and licensees from imposing statutory or contractual limitations on audit or other damages claims, if they have previously acted in a manner inconsistent with the position that such claims shall be limited. Estoppel arises when a party's prior conduct or representations reasonably induced another party to rely on those actions to their detriment.

Applying the doctrine of estoppel, our clients may argue that a company's past conduct, representations, or acceptance of actions misled them into believing their rights were being properly accounted for, and as a result, they refrained from auditing or taking legal action within the contractual or statutory limitations periods. This would potentially estop the other party from invoking those limitations to shield themselves from our clients' challenges.

Relevant Cases: I would like to draw your attention to two notable cases that support certain arguments for delayed discovery and motions to estop a company from imposing limitations on your clients audit and damages claims:

  1. Weatherly v. Universal Music Pub. Group, 23 Cal. Rptr. 3d 157, 125 Cal. App. 4th 913 (Ct. App. 2004). This case showed that conducting an audit is not necessary to reach the level of diligence required to make delayed discovery claims.

  2. Wind Dancer Production Group v. Walt Disney Pictures, 10 Cal. App. 5th 56, 215 Cal. Rptr. 3d 835 (Ct. App. 2017): This case involves a dispute over profit participation accountings and the application of the doctrine of estoppel. It establishes that a party's acceptance, authorization, or prior conduct can estop them from using contestability clauses and written amendment clauses to defend against claims challenging the accuracy of profit participation statements, thereby allowing for a longer contestability period.

Conclusion: Given the potential application of the delayed discovery doctrine and the doctrine of estoppel, along with the persuasive precedent set by the mentioned cases, it is crucial that you, as counsel to profit participants or royalty recipients, thoroughly explore these legal doctrines to contest the incoming profit participation accountings/statements for periods longer than the contractual or statutory limitations allow. By leveraging these arguments, we can effectively advocate for our clients' rights and pursue a fair resolution.

I would greatly appreciate the opportunity to discuss these matters further with you. Call my office to clear conflicts for a consultation (424) 248-8866.

And, if you know of other important cases, please comment!

Sunday, May 21, 2023

Audit and Objection Notices May Be Coming Due Due this Summer


If your client's accountings are rendered 90 days following the end of the semiannual period ended June 30, 2023, you usually must render a notice of objection prior to September 30 in order to reserve your client's right to audit his/her/its 2020 H1 statement.  Confusing? Yes, it is very confusing!

Call my firm Boschan Corp. for help at (424) 248-8866 or learn more about our royalty audits by clicking here. Please do not wait until September.  Your client's rights could expire sooner, depending on the relevant contractual language and statutes.

Sunday, September 11, 2022

Most Favored Nations Provisions & Damages

What is a "most favored nations" provision in a contract? Why are they important? What happens if they're violated? These are questions that many attorneys may be asking themselves, and for good reason. Most favored nation provisions can have a significant impact on royalty and profit participation calculations, especially in entertainment and intellectual property licensing deals, as well as investment deals and international treaties, to name a few examples. In this blog post, we'll take a closer look at what most favored nation provisions are and how they can lead to audit or other damages claims.

What is a "Most Favored Nations" Provision in a Contract? 

A "most favored nation" provision (also known as an "MFN") is a clause that is included in contracts to ensure that one party receives the same treatment as other parties which may have leverage to negotiate more favorable terms. The "most favored nations"  provision in a contract is based on the principle of equality. It is designed to promote fairness and to prevent one party from taking advantage of parties that may not know the extent of the most favorable terms it can negotiate. MFNs are commonly used in international trade agreements, but can also be found in other types of contracts, such as investment agreements, licenses, and other agreements covering for musical works and sound recordings.

With respect to licensing transactions, the MFN clause protects a licensor from receiving less favorable terms than other licensors. For example, if Licensor A has an MFN clause in its contract with Licensee B, and Licensee B separately gives Licensor C more favorable terms, then Licensor A is entitled to receive the same, more favorable terms as Licensor C. The same principles can be applied to other sorts of transactions including investment agreements and treaties between nations (from where the term "Most Favored Nations" originates).

Why are Most Favored Nations Clauses Important?

By requiring that all parties be treated equally, the most favored nation provision helps to level the playing field and to protect the interests of all involved.

The purpose of most favored nation provisions is to encourage free and fair trade - and encourage parties to feel comfortable signing off on a license or other contract - by ensuring that all trading partners are treated equally and by mitigating the risk that a more favorable deal could have been negotiated. Most favored nations clauses can also be used as a tool to pressure licensors to lower their royalty rates (or pressure countries to lower their trade barriers, such as tariffs, and improve their labor and environmental standards). Most favored nation provisions are an important part of the global trading system and help to promote free and fair trade.

What Happens if The MFN Clause is Violated? 

When a most favored nations clause is contravened, it can have a number of serious consequences. First, it can damage the relationship between the parties involved, creating an atmosphere of suspicion and mistrust, making future agreements more difficult to negotiate. It can even lead to economic retaliation.  As an example concerning treaties between nations, countries who discover a counterparty failed to honor the MFN provision in a treaty may impose punitive tariffs or other trade barriers in response to such breach. As another example, music publishers may refuse to grant reduced rate licenses - or any licenses - to a licensee who is found to have double crossed the licensor by failing to increase royalty rates in accordance with the terms of the MFN clause.

Second, when a "most favored nation" provision is contravened, the party (e.g., a licensor or country) which suffered less favorable terms than agreed is damaged and can bring a law suit, enforce contractual trade sanctions, or take other enforcement measures to claim actual and possibly penalize the licensee or other party that did not honor the MFN agreement. (Actual damages are amounts to make a party "whole" for the injuries it sustained as a result of a contractual violation. In addition, sometimes courts award punitive damages to punish or penalize the party responsible for the violation, and many contracts provide for penalties in the event of a breach).

How to Enforce "Most Favored Nations" Provisions

MFN clauses are typically identified through an audit process (one reason why it is important to carefully negotiate the audit clauses in your agreements), although violations can be disclosed in other ways.  For example, if two parties are in litigation, as part of the discovery process documents produced by a party may disclose the terms of its agreements with other parties, allowing MFN clause compliance to be evaluated. As another example applicable to international trade agreements between nations, a government official or designated third party reviews individual countries' customs data to ensure that it is providing the same benefits to all trading partners with MFN status. 

If an audit finds non-compliance with an MFN provision, or such non-compliance is disclosed in another way, I find in my experience working with legal counsel that the best approach is to first try to settle the claims through diplomacy and/or the audit and breach notice provisions set forth in the agreement. For example, as an auditor, my audit report will disclose my findings and the legal team will demand payment for the damages I identify in the audit report.  Given that may failures to comply with most favored nations clauses are the result of inadequate royalty reporting systems, non-compliance is often unintended, and this gives the parties a chance to fix the problem and maintain a business relationship.

However, if the party that failed to comply with an MFN clause is uncooperative, enforcement can be challenging.  Generally, the damaged party will need to pursue legal action such as arbitration or a trial in court or a tribunal in order to procure a legal order to the violating party to pay damages and, potentially, other consequences (e.g., termination of the underlying contract).

Actions for Attorneys to Take to Help Clients:

If you have a client who has suffered damages as the result of an MFN violation, please call my consulting and forensic accounting firm, Boschan Corp., at (424) 248-8866. We have experts on staff who can help you determine (based on the available information or through auditing or litigation support) whether your client may have a viable damages claim and, if so, what that claim might be worth. Better yet, when you are negotiating your clients' contracts, it can be prudent to get our feedback on some of the language including the audit provision and definitions. Please don't hesitate to contact us to take advantage of our expertise in most favored nations provisions, audits and damages claims. Thank you for reading.

Tuesday, February 22, 2022

Most Favored Nations Damages Claims

During my decades of experience, I have made thousands of audit claims in connection with so-called “MFN” (i.e., Most Favored Nations) clauses.

As examples, many mechanical reproduction licenses for musical works and film profit participation agreements with talent contain MFN clauses, as do many licensing and other agreements.  As part of certain royalty audits, it is my job to quantify damages for non-compliance with this standard agreement provision.

Although counterparties cooperate to various degrees, my approach is generally to request the information – such as agreements with third parties, rate files and accountings - in order to ascertain whether a counterparty has complied with its commitment to pay rates to our firm's client(s) that are equally favorable compared to those agreed or paid to other relevant parties. If my team and I find that a counterparty failed to comply with a most favored nations provision, we utilize actual or estimated rates to quantify reportable royalties from which we deduct royalties reported (or claimed elsewhere in our audit or expert report).

Friday, March 12, 2021

Q&A with Andrew Tenenbaum

Andrew D. Tenenbaum, Esq. Lectures on the Economics of Live Touring at Los Angeles College of Music
Andrew D. Tenenbaum, Esq.
Lectures on the Economics of Live Touring
At Los Angeles College of Music

Andrew D. Tenenbaum
has decades of management experience with clients such as comedian Terry Fator, producer Larry Brezner (“Arthur”, “Arthur 2” and “Ride Along”), the Frank Zappa Estate, Elvis Presley Enterprises, comedian Chonda Pierce, writer Beth Sherman (“The Ellen DeGeneres Show” and “The Queen Latifah Show”), writer Anthony Caleca (“Tonight Show”, “The Talk” and “The Kelly Clarkson Show”), writer Andrew McElfresh (“Tonight Show”, You Bet Your Life With Jay Leno” and “Scary Movie II”), X-Games skateboard medalist/actor Paul “P-Rod” Rodriguez, and many, many more entertainers and athletes.

In addition, Mr. Tenenbaum has been a founder, operator and investor in multiple start-up private companies, has an extensive history as a producer and executive producer in film and TV, and he is a licensed attorney with a sharp entertainment litigation practice.


BOSCHAN: What are the three most important things that you do for clients?

TENENBAUM: That may be one of the best questions ever asked.  

BOSCHAN: Thank you. You may have one of the best answers.

TENENBAUM: The number one thing is to help clients to realize their creative dreams.  It's not about a quick hit or making the news on a given day. But rather to help them sustain a career and reach goals.  

Number two is to be honest, fair and reliable.  Artists need to know you have their back and are looking out for them.  

Number three would be to take care of business so artists can focus on the art.  One of my mentors, Buddy Morra, hung a sign in his office that said, “Don’t Embarrass The Office.”  So, add that one to the list.

BOSCHAN: You have such a multifaceted career.  You are an attorney, a talent manager and an entrepreneur… who does each of those things well!  Am I missing anything? (e.g., Are you an architect too? haha)

TENENBAUM: Not an architect but I do have an amazing wood workshop in my garage that is my hobby.  

BOSCHAN: A true Renaissance man. 

TENENBAUM: As to your question, you have the list correct.  But did I also mention that I produce film and television?  All of those things work harmoniously together.  

Being a talent manager is the “mother ship” that gives me a great reach of relationships, an understanding of how artists think and function, how the pieces of production come together and the inner workings of the sub-genres of the entertainment business.  

Of course, the lawyer side greatly informs putting deals together and vice versa. 

And the entrepreneurial endeavors are the icing on the cake.  

BOSCHAN: Do you find you can focus on all of these occupations simultaneously, or do you prefer to take breaks and focus on them serially?  

TENENBAUM: It's all simultaneous.  It gives me great flexibility.  If I meet an artist or rights holder that needs management I can go in that direction.  Sometimes it's about legal advice and I can work it that way.  Or sometimes the opportunity is more about investment or a start-up.  I can also take on a one-off deal as a lawyer, or bring an IFTA or other arbitration for a profit participation.


BOSCHAN: How have your varied career pursuits informed your practice as an attorney?

TENENBAUM: There is no substitute for actual hands-on experience to inform the practice of law.  I have spent tens of thousands of hours on the road, at rehearsals, at shows, recording, producing and working with artists in all kinds of other ways.  Then, when an issue arises it’s a tremendous benefit to have had the firsthand boots-on-the ground experience to know how things work in order to put together deals or resolve conflicts.

BOSCHAN: How does your view differ from others when you are evaluating a potential case?

TENENBAUM: I think I have a much more practical view of things, that comes from experience like I mentioned above.  Not everyone has that.  Too many lawyers just know what things look like on paper and when they go bad.  Go spend 30 days a year of more on a tour bus, or months on a set in 90-degree weather in Tennessee, and folks will understand a lot more.   

BOSCHAN: How do you differ from other entertainment litigators who specifically do profit participation work, which is one of your strong suits?

TENENBAUM: There are many very good lawyers out there doing great work.  My differentiation is that I prefer contingency work.  It aligns my interest 100% with the client.  If they don’t win, I don’t win.  I don’t get paid for bad settlements.  I will take that risk and bet on myself every time.

BOSCHAN: In litigation we often look backward in time to claim past damages for clients. How far back can you usually go?

TENENBAUM: There are normally three limitations.  First is the statute of limitations, which is the law about how for back a claim came be made.  In California for example its normally four years for a written contract.  There is some room to maneuver as to when that four years begins.  Second is if there is a clause in the contract that limits the amount of time a client has to object to a statement that accompanies payment.  Third is also in a contract and that would be after the period of time to object to a statement, how long a client has to file an action.  It’s very important to track these things and if you are going to challenge a statement to get a terrific auditor retained.  Am I allowed to mention Cedar Boschan for this last suggestion?

BOSCHAN: Thank you, Andrew. We are pleased to be of service.

Do your damages claims often relate to intercompany fees deducted off the top from the foreign affiliate receipts reported to our clients?

TENENBAUM: Yes, this is a common claim.  This happens where a distributor charges a basic distribution fee and then hires its affiliates as a sub distributor.  The artist ends up being charged twice by the same company and all the money goes into the same pocket.  I had a case once where a European distributor was aggressively defending an intercompany distribution fee claim that I destroyed when we provided evidence that both entities had their name on the same door.  Not all of them are that easy, but the claim is quite common.

BOSCHAN: What are some of your challenges collecting your clients’ fair share?  Can you offer any tips?

TENENBAUM: Shock and awe!  When it becomes clear that the distributor is not going to settle reasonably, then move quickly and aggressively to file an action.  And don’t just go in with a summons and be seen as settling in for a long-term case.  Hit them hard from the beginning.  File the complaint along with a motion for summary judgment where possible, be aggressive and expedient about discovery and utilize arbitration where possible.

BOSCHAN: I love shock and awe!

To make arbitration over foreign distribution profit shares worthwhile, what minimum level of foreign earnings and/or what kind of pictures/projects are we talking about in which territories?

TENENBAUM: If client and lawyer are smart about the elements of the claim and realistic about settlement potential it’s possible to bring cases in the mid five figures.  For example, if it’s an IFTA claim and the distributor does not want to end up in bad standing by defaulting at IFTA, they will need to pay real attention to the claim.  They don’t want to be barred from film markets.  Lawyers who are efficient and aggressive can get good settlements in cases this way.  And often it’s not about just one case for smaller amounts, but rather bringing a variety of cases across a film or portfolio the total of which is cumulative equivalent or more than one very large case.   


BOSCHAN: What are the major income sources for your clients and how is that changing over time? 

TENENBAUM: Income sources have changed dramatically.  Take for example film producers.  Ten to twenty and more years ago there was the same theatrical income as there is now, except for this pandemic.  However, in those days there was great money to be made from distribution windows at pay cable, basic cable, and DVD.  Broadcast networks for movies of the week had largely ended by then, at least in the USA.  That’s all gone in relative terms at least, and in addition to theatrical it’s the various forms of video on demand, namely subscription and transactional.  Some folks made fortunes on DVDs…anyone own a DVD player except to watch the screeners the guilds send out (which are quickly being replaced by streaming links)?

BOSCHAN: To make a living, how many fans does an entertainer need?  1,000 (per Kevin Kelly) or 100,000? Or what questions should an individual be asking to determine if a project is financially viable.

TENENBAUM: The answer very much depends on the genre the artist works in.  I don’t agree that the 1,000 that the article talks about is anywhere near close to what is needed for an artist on a national scale.  A jazz musician can make a living with probably 500k+ followers.  Versus a pop artist needs millions to tens of millions to sustain touring, recording and everything that goes with it.  And there are many cases in the middle.  Plus, there is a key factor of engagement which may be more important than fan count.  An artist with a highly engaged social media base of 1M is more viable than an artist with 10M that has casual fans that don’t engage much.  

BOSCHAN: In the entertainment business, what is less important now than it was five years ago? And how will the coronavirus pandemic permanently change the entertainment business?

TENENBAUM: The pandemic has changed a lot of things.  One I would like to discuss is “appearances”.  There was a time that it was critical to have great looking offices, a prestige address, lunch at the right places, etc.  Now that we all work from home due to Corona, in many ways I feel that it has leveled the playing field.  Many folks on those Zoom calls are wearing sweats and t-shirts, the kids are taking in the background and the dog is barking.  But we have learned to look past all that and focus on the person.  Not that I am giving up my offices any time soon, but I like that appearances are at least a lesser part of the equation.

...Anyone want to buy a closet full of button-down Brooks Brothers dress shirts?

I think for the next phase after the pandemic people will become much more deliberate in their out-of-the-home activities.  Going to the movies, for example, will be planned to a greater extent.  Concerts will be, unfortunately, less in volume and higher in a fan’s scale of importance.  Informed people are taking about more “curated” activities.  

BOSCHAN: What are some of the current companies in entertainment who you think are getting it right and why?

TENENBAUM: Just to give a few examples, right now at the top of the list is Netflix.  Ten years ago, they were mailing DVDs to my house, so we did not have to go to the store to rent them.  Then they figured out how to ditch the discs and stream the movies.  Then they figured out how to produce and distribute some of the best quality content that an entire family can watch for the cost of a single movie ticket.  They deliver a great product at a very fair price.  

Disney+ is doing the same and now with the bold goal of delivering ten series based on Star Wars, again for a very affordable monthly price.  

Spotify is another one.  For a very fair monthly price a family has access to virtually every song ever, on demand, with an amazing set of tools to refine song lists and playback options.  Again, for monthly price of less than what a CD cost back in the day.  

BOSCHAN: What are some of the key opportunities for entertainers today?

TENENBAUM: The biggest opportunity today presents the biggest issue.  Everyone has - at their fingertips - distribution to the entire world.  4.4B people have access to the internet.  2B have YouTube.  The key opportunity is how to break thru all the noise and be heard.  How to get your material seen and hear.  

Charli D’Amelio is a 16-year-old who has 8.6B likes on Tik Tok and no one heard of her just a few years ago.  If you add up everyone who ever saw a concert by Miles Davis, Count Basie, Elvis, Michael Jackson, David Bowie, The Beatles, Bing Crosby and Sinatra it won't be a fraction of that.  

One artist to look at is Laura Clery.  Laura has 13M fan on Facebook.  She puts out videos multiple times per week and gets tens of millions of views.  Some say she is a modern version of Lucille Ball.  I think if Lucille Ball were alive today, she’d be doing what Laura is doing.  

Chonda Pierce is a dear friend and client I work with.  She is a terrific study for young artists that want to break thru, to see how Chonda took advantage of each opportunity as they presented themselves to evolve a career, from VHS, to DVD, to theatrical documentary, to streaming and on. 


Andrew D. Tenenbaum, Esq.
Lectures on the Economics of Live Touring
At Los Angeles College of Music

BOSCHAN: You were kind enough to guest lecture on the economics of the live entertainment business when I was teaching at Los Angeles College of Music. The students thought you were the best speaker, by the way! I had them read this op-ed in Billboard that you wrote as well about dynamic ticket pricing and VIP packages. 

At this juncture (during a coronavirus pandemic where much of the live entertainment business is shut down) and looking into the future, in which directions do you think dynamic ticket prices and dynamic fan experiences are evolving?

TENENBAUM: Thanks for the kind words.  Dynamic pricing is and will be the future.  It makes total sense.  Like I wrote in the article, you can’t mess with the law of supply and demand, but if you try that’s when the middlemen step in a take income away from the artists because the marketplace was not real.  That is the Don Corleone scenario I wrote about.  Dynamic pricing is the natural outcome of the supply vs. demand equation.  It will become more of the norm.

BOSCHAN: You had the foresight or luck to divest Future Beat - your VIP package business - before the COVID-19 pandemic (WME bought it).  Would you consider getting back into the live music business again in the future and under what circumstances? 

TENENBAUM: Live music will always be a terrific business.  I am working on a new venture.  It's going to take some time till things can be safe for the artist and audience and de-risked for the investor.

BOSCHAN: Do you think virtual live (or prerecorded) event experiences are priced below-market, just as live experiences were? (Except there aren’t scalpers to resell tickets because there is unlimited supply of underpriced access to virtual live entertainment events.)

TENENBAUM: The virtual live business is too young to really know.  $20 seems to be a sweet spot for a lot of these offerings.  But it will take time to find out where the right price lives.

BOSCHAN: Any tips on how entertainers can better or more dynamically monetize their virtual appearances?

TENENBAUM: There is a nice set-up offered by and others that utilize large video boards that allow fans to pay a VIP price to be seen in a virtual audience.  Merchandise bundles and personal Zoom sessions are also being offered.  

BOSCHAN: Are there unique challenges for comedians in going virtual? (My favorite local comedy show – The Secret Show – has not gone virtual. I wonder if it is because some of the comedians have granted exclusive streaming rights to other companies and, whereas they could previously perform live, they are restricted from streaming their performances, or maybe they just don’t want to because live is how they were testing their material and it is hard to get the same audience feedback virtually.)

TENENBAUM: Comedy presents a very different situation than music.  Comedians need the real-time feedback of a live audience.  Just try to watch what some have tried on television specials without audiences.  It’s difficult for them to find a comfort zone and the viewer sees it all as off balance.  It doesn’t deliver.  The virtual audience I mention above is a good solution. 


BOSCHAN: When should an entertainer fire his manager?

TENENBAUM: I am a strong believer in loyalty and that good things flow from that.  David Steinberg is a manager I worked for, for many years, and a mentor.  David is a great teacher and one of the funniest people on the planet.  He has managed Billy Crystal for 50 years. Billy is one of the greatest talents I have ever seen.  Billy’s career has benefited tremendously from having David at his side, watching his back and advancing his career.  That’s what artists should have in a manager.  And if an artist does not have that, the next step is to talk to the manger.  Don’t expeditiously fire him or her.  The client-manager relationship is a very special one.  Always try to make it work.  But there are times when it is appropriate to move on.

BOSCHAN: What software and services help you run your life? 

TENENBAUM:  Is red wine an appropriate answer to this question?

BOSCHAN: What is the best $200 dollars (or less) that you have spent in the last year? (i.e., what is the small purchase that gave you the greatest joy?)

TENENBAUM: Is red wine also an appropriate answer to this question?

BOSCHAN: What are the key metrics you rely on to gauge your success?

TENENBAUM: I learned a great lesson from my dad on this one, Stephen Tenenbaum, who has had a 64-year career as a business manager, royalty auditor, manager, and producer.  He always said to keep the clients happy and the success will follow.  It’s a good non-metric.  It works.   

BOSCHAN: Your father is such a legend in the entertainment business. Three of my mentors – Fred Wolinsky, Linda Becker, and Steve Sills – worked for him and I am delighted to be working with him on a project right now.  Why did you choose to pursue your law degree (and not accounting)?  How has having a father in the world of accounting and in entertainment helped or hindered your career path?

TENENBAUM: Actually, I have a degree in accounting.  My father has been the best mentor and teacher.  He has a vast knowledge of the industry and its history that reaches back to 1957, when Elvis was first getting started and before the Beatles, to the present with streaming, hip hop, social media influencers, etc.  There are very few people in the industry who know what he knows.  I call on him frequently for advice on things.  And he now calls on me… that is how I referred him to you.

BOSCHAN: I can't believe you also have a degree in accounting. Wow - I am so impressed!


BOSCHAN: Who should definitely contact you? Who are your clients and how can they find you?

TENENBAUM: Artists, rights holders, producers, and investors.  Most anyone with a need for professional representation in the entertainment industry.  I am not shy about saying when I don’t have the ability to do something and helping direct someone to the expertise they need.  A lot of the business comes from referrals, but I also have my website,

BOSCHAN: Thank you for teaching us so much,  Andrew. I especially encourage profit participants to reach out for your help with foreign and other damages claims!

Thursday, December 10, 2020

Upcoming Audit and Objection Notice Deadlines for P.E. 12/31

Attn. Counsel:

Wait not until March to enlist our assistance. Gratitude from your auditors, Boschan Corp. (424) 248-8866

Monday, April 18, 2016

Productions Running Away to... Birmingham, Alabama?

Dozens of post-production/visual effects houses in the Los Angeles area have gone out of business over the past few years - or moved to locations such as Canada that offer tax incentives to producers.

According to anecdotes from visual effects artists and others who were formerly employed in LA post-production houses like Laser Pacific, it seems that most of LA's post-production jobs had moved outside the United States.

So, during a recent trip to Alabama for the 2016 Sports and Entertainment Symposium (SES), I was surprised to learn that one of the beneficiaries of runaway productions has been Birmingham and it's rapidly growing post-production house, Red Sky Studios.

A photo posted by Cedar Boschan (@auditrix) on

Red Sky Studios' CEO Stephen Preston explains that Alabama's "film incentive covers 25%-35% of covered expenses."

A photo posted by Cedar Boschan (@auditrix) on

Should you have any questions about what Alabama production or post-production costs may qualify for Alabama subsidies and/or tax incentives, I met an accountant who audits production expenses to see whether they comply with the state law(s).  His name is Mark Underhill, CPA with Barfield, Murphy, Shank and Smith and I imagine he should be able to consult with you to answer your questions and ensure you or your client are complying with the relevant legislation.

Alabama's tax incentives and its growing track record of work (e.g., the visual effects in the movie Woodlawn, for example) are definitely driving expansion at Red Sky Studios, which is growing beyond Birmingham, Alabama;
Much of Red Sky Studios' work is performed on-site but some aspects are outsourced to foreign workers.

Red Sky Studios Woodlawn VFX Reel from Red Sky Studios on Vimeo.

On a private tour of Red Sky Studios in Birmingham, Alabama, we found the facilities to be nondescript (no sign out front) but impressive.

A theater and man at work at Red Sky Studios:

We hope Red Sky Studios enjoys so much growth that it opens an LA office.  There are plenty of underemployed visual artists and editors here, after all!

Tuesday, December 1, 2015

Calendar: Wednesday, December 9, 2015: Talk on Royalty & Participation Audits

The Beverly Hills Bar Association will present on Wednesday, December 9, 2015 a program on royalty and profit participation audits:

Our founder, auditor and forensic accountant Cedar Boschan, will lead top accounting and legal audit professionals in discussion about:
  • Drafting accounting, objection and audit provisions in contracts
  • Making the call to audit, hiring an auditor and issuing audit and objection notices
  • Working closely with accountants to smoothly complete audits
  • Negotiating tolling agreements, settlements and, at times, litigating
Forensic accountant and royalty auditor Cedar Boschan Moderates Panel at Lawry's
The panelists will discuss these and other elements of modern royalty and profit participation audits to empower attorneys in attendance to optimize settlements for your clients.  
Speakers include an auditor and a litigator who mutually represent plaintiffs including Richard Dreyfuss in a current case against Walt Disney Pictures, as well as an executive from MGM:

  • Neville Johnson, Esq.; Partner at Johnson & Johnson LLP
  • Edward Slizewski, Esq.; Senior Vice President at Metro-Goldwyn-Mayer Studios Inc.
  • David Robinson, CPA; Owner at Robinson & Company
  • Moderator: Cedar Boschan; Founder, Boschan Corp.
Attorneys who attend the lunch at Lawry's The Prime Rib in Beverly Hills (or who watch the program online) may receive 1.5 hours of MCLE credit.

Registration is now open - click here to register!

Monday, September 21, 2015

Live Music: Is Growth of the Industry's Largest Source of Revenue Sustainable?

Live music is the largest of the music industry's three major revenue streams, representing over 40%:

Accordingly, nearly half of the money that the average U.S. consumer spends on music is for live music experiences.

Over the past few years, the live concert industry has had a good run, globally as well as in the US, as shown in the chart below:

Pollstar reported that North American concert revenues totaled $6.2 billion in 2014 and 2015 may be another record-setting year for live music events, in terms of revenues, attendance and high ticket prices.  Many credit such growth in live music to maturing audiences, as evidenced by trade publication Pollstar’s list of top five concert tours worldwide during the first half of 2015, which includes just one act with fewer than two decades of history (i.e., One Direction):
  1. One Direction
  2. Fleetwood Mac
  3. The Rolling Stones
  4. Garth Brooks
  5. Paul McCartney

There is clearly a risk that the live concert industry (and industries that depend on it, such as pro-audio equipment), will suffer sharp declines as top-grossing entertainers and their audiences age out of the marketplace.

However, it is worth noting that the above list of top five concert tours during the first half of 2015 does not reflect the latest Taylor Swift tour.  Also, it does not reflect non-tour related events such as festivals and electronic dance music events, all of which attract a younger demographic of consumers with lower discretionary income than the typical Fleetwood Mac or Paul McCartney concertgoer, but who are likely to continue to attend music events for decades to come.

Regardless, some analysts believe that, as the over-saturated market for festivals contracts, live music revenues may decline.  Also, while electronic dance music has been a bright spot, notable EDM promoter SFX has struggled financially. 

The bottom line is that few experts think the record growth in live music is sustainable in the long term.

Friday, May 8, 2015

Maximize Future Marital Settlement Agreement (MSA) Royalty Earnings with these Drafting Tips from Cheryl Hodgson, Esq.

Trademark, copyright, music law & digital media attorney Cheryl Hodgson of Hodgson Legal
The best family law attorneys know when to include outside experts on their team.  When it comes to intellectual property assets, family lawyers turn to attorney Cheryl Hodgson of Hodgson Legal for her expert advice.

As part of our collaboration geared towards helping family lawyers and their clients navigate the arcane world of intellectual property assets, we invited Ms. Hodgson to share three key drafting tips for family lawyers to consider in cases when the marital assets include royalties:

1.     Audit rights.  Audit rights are a vital component to any agreement that includes payment of royalties, whether or not a dissolution is involved. Without the direct audit rights as well as the right to participate in an audit of the source of the income stream, there is no means by which to verify the accuracy of accountings from an ex-spouse, or payments received by the ex-spouse. Moreover, without an audit to identify an ex-spouse’s non-compliance with the marital settlement agreement (“MSA”), it can be difficult or impossible to identify evidence to support legal action and hold the ex-spouse accountable for failing to properly pay. Therefore, one should always include a thoughtful audit clause in the MSA that grants access to the contracts that create the income stream. Moreover, rights to piggyback on direct audit rights are imperative.  (See this post for more audit clause drafting tips.)
2.     Earnings Periods.  The MSA should address dates governing receipts and payments prior to the date of dissolution since payments may be earned long before they are received. For example, in the case of foreign performance royalties from the broadcast of music on television and in film, earnings during the term of the marriage may not be received or paid in the United States for a year or even longer.
3.     Transfers of Title.   A court order detailing rights in the divided assets should be drafted in a manner that is both clear, detailed, and binding upon third party payees of royalties. Entertainment related companies are often loathe to make changes in existing payment instructions without clear agreements, letters of directions, and in many cases, a court order that clearly identifies the assets and the parties covered.

# # # 

Don’t wait for the next post in our ongoing collaboration – read more from Ms. Hodgson today on her own website.  Better yet, for a personalized consultation, call Ms. Hodgson today at 310-623-3515 and follow her on Twitter @CherylHodgson.

Sunday, February 22, 2015

Top Tweets YTD from the Auditrix 2015 Twitter Feed

Below are the popular tweets from the Auditrix twitter feed, which focuses on music economics and royalties, during 2015 YTD:

Best Unfinished Twitter Conversation with Glenn Peoples @ Billboard and John Strohm @ Loeb

Saturday, December 13, 2014

Listen Here

The Auditrix on music and game royalties:

 MusicBizCast with Kelly Castor Episode 29 with Cedar Boschan
Music Royalties - Audio Interview of Cedar Boschan by Kelly Castor - #Free on MusicBizCast

Royalty Audits: What You Need to Know - International Game Developers' Association (IGDA) Webinar: Distinguished Lawyer Tom Buscaglia Interviews Cedar Boschan - #Free on YouTube

Video Game Dealmaking: Playing to Win (DVD): The Beverly Hills Bar Association Panel Discussion with International Legal and Business Professionals (Receive 1 Hour CLE Credit, $179).  Cedar Boschan Moderates:

Royalty Income Meets Marital Dissolution: Dividing, Managing & Accounting (DVD) @ The Beverly Hills Bar Association (Receive 1 Hour CLE Credit, $179), Featuring Presenters:

Business Managers Brainstorm on Royalties - SXSW and Association of Independent Music Publishers Panel Discussions (@AIMPorg video #free for #membersonly) Featuring: