Louisiana recording rebate program quietly provides huge incentive for music industry

Wednesday, April 3, 2013 - 8:00pm

It’s no secret that Louisiana’s aggressive tax incentive program propelled the local film industry to record breaking heights. However, a lesser known program has loomed in the shadows, but hopes to achieve similar success for musicians.

“One of our greatest natural resources in Louisiana is musicians, but a lot of the time they have to go out of state, or out of the country, to make a living,” Phillip Mann, Director for Live Performance and Music Industry Development with the Department of Louisiana Economic Development, said. “The paramount importance of this program is to provide work opportunities for artists in the state as opposed to letting them leave, while also brining new people into the state.”

The Sound Recording Tax Incentive Program was enacted in 2005 and it operates similarly to entertainment industry credits. The difference, however, is that this one operates as a rebate rather than a write-off.

“The Department of Revenue cuts a check for 25 percent of whatever they spend,” Mann explained. “There is a requirement that you spend at least $15,000 to qualify. But we try to make it as user friendly as possible and there are ways to reach that number for those with smaller budgets.”

New technology allows musicians to record at a cost that is marginally less than it’s been in decades past. Combine that with a decrease in demand for physical CD’s, and you’ll find that acts are cutting corners when it comes to record production. Mann believes these challenges are exactly why Louisiana’s program is so beneficial.

“As far as we know, this is the only rebate program for music recording in the country. It’s another way Louisiana is innovative,” Mann noted. “We do what we can within the parameters to include as many expenditures as possible to reach that minimum amount.”

Some of those expenditures include studio rental, the hiring of session musicians, administrative and legal costs, assigning licenses, mixing and mastering, and in some cases travel expenses.

“If they use a Louisiana-based travel agent to book flights and hotels that can be applied to the expenditures,” Mann noted. “The purpose of the program is economic development, so we want to provide as many opportunities as possible for businesses to work with folks from out of state.”

The program does have an annual cap of $3 million. However, Mann says they have never come close to reaching that, which is why they can be flexible with those who apply. For example, projects can be “bundled” as a way of increasing the cost expenditure.

“We allow a studio or producer to group smaller acts that don’t have large budgets together to reach the minimum requirement,” Mann said. “The producers can then slate multiple projects at one time.”

Bundling provides a great opportunity for small, independent record labels as well.

“We really listen to the needs of the industry and try to craft the program to be as accessible as possible,” Mann said. “Not only do we want to increase activity for studios across the state, but we want to help reduce the risk for the artists and producers.

“When you cut an album, you don’t know if you’re going to make a nickel off of it,” he added. “Nowadays, recordings are more of a means to an end.”

So far, the program has seen a great deal of success. National acts such as the Yeah, Yeah, Yeahs and Dave Mathews, as well as local artists such as Rebirth Brass Band and the Preservation Hall Band, have recorded albums in the state utilizing the rebate program.

“We have a lot of folks across the country who want to come to New Orleans anyway to record, so this just adds an extra incentive for them to come here,” Mann said. “But we also have some great studios all over the state, not just in New Orleans. There are some very legendary studios here.”

The benefits, although obvious, are going somewhat unnoticed.

“It doesn’t have those massive numbers that make the headlines with the film credits, but for the folks who use it, it’s a valuable tool,” Mann said. “With the film industry credits the minimum to qualify is $300,000, so this amount is a lot smaller.”

Even though the music recording program has not gained the same attention as the film incentives, Mann believes it’s only a matter of time before word spreads.

“We reach out to the studios directly because they are in a better position to market this,” he said. “We do the best we can to get the word out there, because it’s a very unique thing we have here. And we’re always looking at ways to expand the program.”

For more information about the Sound Recording Tax Incentive Program, click here.
 

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