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Archive for the ‘Music Industry’ Category

The U. S. District Court for the Southern District of New York ruled against LimeWire and its parent company, Lime Group, finding them liable for inducement of copyright infringement based on the use of their service by subscribers. 

U.S. District Judge Kimba Wood issued the 59-page decision Wednesday, siding with the 13 record companies that sued Lime Wire LLC and founder and Chairman Mark Gorton through the RIAA claiming copyright infringement and unfair competition.lime_220x147

In finding the company liable, Wood opined that LimeWire had optimized its application to "ensure that users can download digital recordings, the majority of which are protected by copyright," and that the company actively "assists users in committing infringement."  Wood also found that the defendants knew their technology was being used to download copyrighted tunes and took no "meaningful steps" to prevent the infringement. In addition, Lime Wire marketed its software to people "predisposed to committing infringement" and assisted those people, the judge ruled.

Major labels, as represented by the RIAA, were predictably thrilled with the outcome.  "This definitive ruling is an extraordinary victory for the entire creative community.  The court made clear that LimeWire was liable for inducing widespread copyright theft," RIAA chairman and CEO Mitch Bainwol relayed.

Lime Wire Chief Executive George Searle issued a statement saying the company "strongly opposed the court’s recent decision."  The statement continued:

"Lime Wire remains committed to developing innovative products and services for the end-user and to working with the entire music industry, including the major labels, to achieve this mission," Searle said.

Searle did not say whether Limewire would appeal the ruling.

The Recording Industry Association of America proclaimed the decision was "an important milestone" in the battle against online copyright infringement, because Gorton was found personally liable, in addition to the company of which mitch-bainwol-riaa he was the chairman.  Personal liability against a corporate director is rare.

"The court has sent a clear signal to those who think they can devise and profit from a piracy scheme that will escape accountability," Mitch Bainwol, chairman and chief executive of the RIAA, said in a statement.

LimeWire, launched in 2000, is one of the largest remaining commercial peer-to-peer services left on the Web. The company claims to have more than 50 million monthly users.  The company has managed to defend itself against major label legal action for years.  

In issuing her opinion, Wood relied heavily on the 2005 Grokster ruling, in which the Supreme Court said that a file-sharing service was liable when customers were induced to use it for swapping songs and movies illegally.  The test established by the Supreme Court in MGM v. Grokster for provider liability is whether the company actively induced users to commit infringing activities.  While LimeWire argued that it did not, Judge Wood noted that the company actively  “markets LimeWire to users predisposed to committing infringement.”

The record companies that sued Lime Wire included Arista, Atlantic, BMG Music, Capital, Elektra, Interscope, LaFace, Motown, Priority, Sony BMG, UMG, Virgin and Warner Brothers.

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Written by guest blogger,  Joshua Johnson 

Producer/songwriter Rob Fusari recently filed a $30.5 million lawsuit against Team Love Child, LLC and Mermaid Music, LLC, two companies co-owned by the Grammy Award-winning pop star, Stefani Germanotta, professionally known as Lady Gaga, currently a ladygaga very popular and controversial pop artist.

The complaint alleges that Lady Gaga “froze” him out of her career and is reneging on  their business arrangement despite the fact that he played a pivotal role in launching her career in the early years – i.e., co-writing songs, creating her stage name, and helping her obtain her record deal with Interscope Records. Specifically, the suit alleges claims of breach of contract and fiduciary duty.

In the facts, Fusari claims to have worked with Germanotta for  several months in “radically reshaping her approach” as an artist, shifting her from rock to dance-pop. While Germanotta and Fusari were co-writing important songs like "Paparazzi" and "Beautiful, Dirty, Rich" for her debut album, Fame, Fusari would greet Germanotta with his rendition of Queen’s “Radio Ga Ga.”

According to the lawsuit, this is how Lady Gaga’s name was created:

“One day when Fusari addressed a cell phone text to Germanotta under the moniker ‘Radio Ga Ga,’ his cell phone’s spell check converted ‘Radio’ to ‘Lady.’ Germanotta loved it and ‘Lady Gaga’ was born.”

In response to this claim, Germanotta, stated:

"The realization of Gaga was five years ago, but Gaga’s always been who I am…I always dressed like that before people knew me as Lady Gaga. I was always that way…I stuck out like a sore thumb."

The lawsuit further claims that Lady Gaga and Fusari’s relationship turned romantic and then ultimately became a business partnership in May 2006. It was around this time that they created Team Love Child, LLC. In the formation of this joint venture, Fusari and Germanotta agreed to allow Fusari to collect producer fees in addition to 20% of the earnings from Germanotta’s first four albums. While Fusari acknowledges that he received checks totally rob_fusari--300x300approximately $611,000, he nonetheless claims that he has been denied what the Team Love Child, LLC agreement entailed. Essentially, the lawsuit is mainly fighting for the aforementioned agreement.

Last month, Germanotta’s attorneys fired back at Fusari by filing a second lawsuit in Supreme Court of the State of New York. The suit claims that the Team Love Child, LLC contract with Fusari should be deemed null and void because, among other things, Fusari forced Germanotta into the agreement. Supporting argument include that the agreement violates employee protection laws that prevent "predatory and financial abusive practices by employment agencies” and that Fusari is attempting to collect “unlawful compensation.”

Alternatively, if the court does not nullify the agreement, the complaint seeks a declaration that Fusari is only entitled to a percentage of net compensation, that he is not entitled to a percentage of merchandising income, and that he Lady Gaga is not required to use him to produce future albums.

This case is ongoing and Fusari’s answer in the latter case has not yet been filed.

The Lady Gaga complaint can be downloaded here.

Joshua Johnson Josh is a Knoxville, Tennessee native who attends Belmont University’s Mike Curb School of Music Business.  He is currently a student in Mr. Shrum’s Entertainment Law & Licensing class.  Upon graduation in May 2010, he and his wife, Nicole, plan to devote all of their efforts in pursuit of their music career as folk/pop duo, Elenowen.

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By all accounts, EMI’s Grammy party at the Hollywood “W” Hotel was impressive.  But one there was one significant absentee from the celebration:  Guy Hands, Chief Executive of Terra Firma, the inhands vestment that purchased EMI in 2007.

EMI is a British company with a 113 year history of making music.  Globally, EMI is home to such well-known acts as Coldplay, Norah Jones, Snoop Dog, The Spice Girls, and even, yes, the Beatles.  EMI’s Nashville-based labels are home to, among others, the Nashville’s successful talent, such as Lady Antebellum, Darius Rucker, and Keith Urban, not to mention old faithfuls such as singer-songwriter, Guy Clark, while the Nashville-based publishing arm of EMI is home to Tom Shapiro, John Paul White and Steve McEwan, to name a few.  And then, there is the Nashville-based Christian side of the business, EMI’s Christian Music Group.   Despite these success stories, in the days following the extravagant Grammy celebration, events transpired which called into question the financial stability, nay, even the very future, of those organizations as separate entities.

The winds of change started blowing way back in 2007, when the struggling entertainment empire was purchased by Hands and his citi1 venture capital firm, Terra Firma, for somewhere around 6.5 billion U.S. dollars.   The VC firm had a reputation for turning around troubled companies, including a roadside gas station company, an aircraft-leasing business, Australian cattle ranches, and a natural-gas network.

Some of the $6.5 billion purchase price was funded by the investment group, but the remaining balance, somewhere in the range of 4 billion, was financed by Citigroup.  Citigroup’s agreement to lend out that much money was contingent upon performance level targets.  The current consensus is that, despite over 13 million in sales of the old Beatles catalog, EMI has failed, and will continue to fail, to meet the performance targets, unless Terra Firma comes up with additional $200 million in capital contributions by the end of the summer.  If that doesn’t happen, Citigroup, itself struggling from the weight of bad debt and government scrutiny, could take the keys to the company and then, likely flip it into the waiting arms of Warner Music CEO, Edgar Bronfman, who has long wanted the EMI proGUY-HANDS perties, changing the landscape of the music industry.

It is rumored that when Hands first met the EMI executive team, he told them if he didn’t make the deal work, he would lose over $310 million.  So, for obvious reasons, Guy Hands didn’t attend the recent EMI soirée, choosing instead, I imagine, to remain in his lavish estate on the Isle of Guernsey in the English Channel, where taxes are almost non-existence, making it a popular financial center for British venture capitalists.  Regardless of where Hands is now,  however, this entire power struggle will likely play out by the end of the summer. 

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A little history:

February 22, 1990: Pop sensations Fabrice Morvan and Rob Pilatus, a/k/a Milli Vanilli, who achieved international acclaim as a result of their Arista release, Girl You Know It’s True,  win the Grammy for “Best New Artist.”    Soon, the rumors began to swirl that Morvan and Pilatus were not actually singing on the records as had beeimage n reported in the press.  So intense were these rumors that on November 12 of that same year, Frank Farian, creator and producer of the Milli Vanilli project, confessed that Morvan and Pilatus did not actually sing on the records.  Four days later, Milli Vanilli’s Grammy was “withdrawn,” and Arista dropped them.  After the details emerged, the controversy spurned over 26 different lawsuits across the country under various consumer protection laws.

Early 1992: New Kids on the Block’s song If You Go Away peaks at #16 on Billboard as an associate producer on one of their earlier albums allege that the band lip-syncs to performances by Maurice Star, and that Star actually sang many of the parts on their albums.   As the story develops, the band cuts short a tour to appear on The Arsenio Hall Show to perform a medley of their hits.  During the subsequent interview, the band admits to using Star’s vocals as a backup track during their live performances, and admit that Star sang harmonies on some of their background vocals.   The band never recovered from the backlash, and their record sales steadily declined from that moment.

November 6, 2009: Hundreds of angry fans in Perth, Australia, walk out of Brittany Spears’ Circus concert when it becomes apparent that she is lip-syncing to her songs.

Fast forward to:

January 31, 2010: Taylor Swift wins four Grammys: Album of the Year and Best Country Album for Fearless, Best Female Country Vocal Performance and Best Country Song for White Horse.  Swift, who is by all accounts an extremely talented songwriter, gave a stunningly weak vocal performance during her duet with Steve Nick’s that drew starkly negatives reviews from professionals and amateur press/bloggers alike.  For example, Bob Lefsetz described her image performance as “dreadful” and opined that she may have single-handedly imperiled her career with this one performance.  The general consensus is that her Grammy performance is not an isolated incident.  Truth is, most professionals in Music City are aware of Swift’s inferior vocal talents – almost every conversation about Swift in this city includes one or more references to “auto-tune” technology.

The query then is this: is there a significant difference between a digitally-created rendition of a vocal performance and using a superior vocal performance from an singer who is not marketable to front a more attractive and marketable duo, a/k/a Milli Vanilli or to using a backup track (even of your own vocal as in Spears’ case) to enhance your live performance.  Isn’t the former example simply a modern, technological replacement for the latter?  If so, then the question becomes why is today’s society not as outraged at Taylor Swift as past society was at Milli Vanilli, New Kids and Spears?

In his response to criticism of the Grammy performance, Scott Borchetta, president and CEO of Swift’s record label Big Machine Records, offers this explanation for this discrepancy:

Maybe she’s not the best technical singer, but she is the best emotional singer. Everybody gets up there and is technically perfect people don’t seem to want more of it. There’s not an artist in any other format that people want more of than they want of Taylor. I think (the critics) are missing the whole voice of a generation that is happening right in front of them. Maybe they are jealous or can’t understand that. . . .   No one is perfect on any given day. Maybe in that moment we didn’t have the best night, but in the same breath, maybe we did.

Borcetta gets no argument from almost anyone I know in the industry that perhaps Swift is not the best technical singer.  But I’m not sure the explanation that Swift is the “voice of a generation” does much to address the underlying issue: The Grammy for Best Female Country Vocal Performance went to singer who, even her label head admits, is not the best technical singer!  Swift’s Fearless live performance tour is sold-out!  In her defense, Borchetta goes on to say “If you haven’t seen her live performance, you’re welcome to come out as my guest to a Taylor Swift show and experience the whole thing, because it’s amazing.”  But if the show’s audio is auto-tuned, how does this amazing experience differ from a Brittany Spears’ lip-synced performance, if at all?  Let’s not forget, in their days, the fans also “wanted more” of Milli Vanilli, New Kids on the Block and Brittany Spears.

Someone else once phrased it this way:

“It’s not about being authentic anymore, it’s about being entertaining.” 

Interestingly, this was a quote from Morvan of Milli Vanilli in a USA Today article in 2010.   Morvan goes on to say

“Twenty years later, what we were crucified for you see everywhere.”

He right, is he not?  Let’s be honest.  In America, at least, pop music has almost always produced a certain amount of, shall we call it, “manufactured product” – performers who were either assembled, created or otherwise the entertainment value.  My first disillusionment with this came in the form of The Monkees when I discovered that they were a band “assembled” by Bob Rafelson and Bert Schneider as an American “Beatles” alternative, i.e., as a means of capitalizing on the success of the Beatles.  As technologies become more and more sophisticated, this trend toward entertainment value over authenticity is naturally going to increase.  It used to be a little more difficult to go back and “overdub” a particular performance which was out of tune or offbeat, because the engineer had to physically rewind the tape, record the alternative part on a separate recording track, and then sync the new part into the old one.  A bit more time consuming.  Now, we have software which can independently correct not just the pitch, but an isolated note out of a chord which may be out of tune for one reason or another.  It’s a matter of moving the mouse over the note, highlighting it, and correcting it.  Wow!

I suppose the real question, then, is what do we want from our performing artists, whether it be a live performance or a recorded one?  For me, I think I prefer simple honesty.  Or, as Milli Vanilli ironically put it, “authenticity.”  I like to hear performers with technically superior skills performing the music they created.  I do agree with Borchetta that everyone is not perfect, and that many people prefer a live performance that has the feel of being non-technical.  After all, who can forget that off key guitar note at the end of the Allman Brother’s recording of Statesboro Blues (a note which they DO NOT replicate in a live performance), or some of John Bonham’s almost syncopated rhythms on Black Dog?   Those are authentic performances by persons with superior, technical skills. And this is precisely where I think where I differ from Borchetta:  I personally think most people do expect their celebrities to be technically superior, at least with regard to their perceived talents. 

Judging from prior examples such as Milli Vanilli and Brittany Spears, and the audiences’ reaction to those performers, people have an expectation that an artist will be able to actually perform the music that was marketed to them through the media.  In other words, most people expect their performers to be authentic.  Now, maybe Borchetta is correct, that Swift is, in fact, an authentic person who can communicate well through her gift of songwriting – again that’s not the real issue.  The real issue is that Swift is portrayed as more than a songwriter, she is portrayed as the performer with the “Best Female Country Vocal Performance.”   The fact is, Duane Allman, although he might hit an off key note once and awhile, was a technically superior guitarist.  John Bonham, even though that one performance might fade slightly off the beat for a brief moment, was a technically superior drummer.  However, no matter how many tours she sells out and no matter how many millions of CDs she sells, Taylor Swift, while an amazingly-talented songwriter,  will never be a technically superior vocalist.   Not to worry, though, she will most certainly always be the slightly off-key voice of a younger generation of admirers.  Or will she.  Time will tell I suppose.  But lest we put too much stock in past success as an indicator of future fan support, don’t forget, Milli Vanilli’s record was also multi-platinum.

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Rep. John Conyers, Chair of the House Judiciary Committee brought the Performance Rights Act (HR 848) up for markup this morniJohn Conyersng. 

HR 848 created no small amount of disagreement among radio broadcasters, minority broadcasters, trade unions and civil rights groups.  However, a group  of minority artists, including Duke Fakir of the Four Tops, Dionne Farris and Jon Secada, recently sent a letter indicating support for Rep. Conyers and this legislation.  The letters stated in part: 

As minority artists, we support a strong and vibrant local radio industry. We know that minority broadcasters play a vital role in our communities. And we support efforts to create accommodations in the legislation for small, minority-owned stations. But the creation of a fair performance right cannot be delayed further. We have already waited far too long. “Not now” is not an acceptable answer.

To address the concerns of minority broadcasters, Conyers offered the following amendments at today’s markup:

Affordable payment for small, rural, nonprofit, minority, religious and educational broadcasters

· Any station that makes less than $100,000 annually will pay only $500 annually for unlimited use of music

· Any station that makes less than $500,000 but more than $100,000 annually will pay only $2500 (half of the amount in introduced bill) annually for unlimited use of music

· Any station that makes less than $1,250,000 but more than $500,000 annually will pay only $5000 (the amount in introduced bill) annually for unlimited use of music

Relief for current economic situation

· No payment for 2 years by any station that makes less than $5,000,000 annually

· No payment for 1 year by any station that makes more than $5,000,000 annually

Parity for all radio services

· Establishes a “placeholder” standard to determine a fair rate for all radio services that will encourage negotiations between the stakeholders

Cannot hurt local communities

· Assures that this legislation cannot affect broadcasters public interest obligations to serve the local community

Assures consideration of relevant evidence

· Evidence relevant to small, noncommercial, minority, and religious broadcasters and religious and minority royalty recipients must be considered by the Copyright Royalty Judges

Other minority and civil rights groups that sent letters expressing support for the act included the Leadership Conference on Civil Rights, Pennsylvania Legislative Black Caucus, Rhythm and Blues Foundation and the A. Phillip Randolph Institute.

The executive director of the musicFIRST Coalition, Jennifer Bendall, supported the committee’s decision:

“We applaud Chairman Conyers and Committee members for their work on the Performance Rights Act and for supporting artists, musicians and rights holders in their fight for fair compensation when their music is used by AM and FM radio stations.

The Performance Rights Act will bring fairness to artists, musicians and rights holders and one that’s fair to radio and its counterparts. It also includes accommodations for small and minority-owned broadcasters. musicFIRST looks forward to the next chapter and to Congress to ensure that U.S. artists and musicians receive the performance right they deserve.”

Now that HR 848 has cleared the committee, it will be brought in front of the entire House for debate and vote. 

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I was recently contacted by John Dargan, a Florida-based computer programmer who is also the webmaster for a new music-related web site called www.Nurturemusic.biz.  The concept of the site is simple, and somewhat unique:  it is a “slide show” of publicity photographs of various musicians, artists, bands and related music industry professionals.  Dargan finds musicians to be fascinating people, so he founded tphoto_reviewhe site this past March with a goal of providing a marketing avenue for talented musicians allowing them to attract a wider audience.  So far, the site has engendered  an enthusiastic response from both the musicians and their fans.

To obtain the content, Dargan scours MySpace and other websites looking for musicians, artists and bands that have both great publicity photos and an apparent talent for music.  Dargan works hard to ferret out the best photos and the most promising musicians.

“It’s a tremendously fun hobby,” Dargan says.

A viewer arriving at the website is greeted simply with a photograph framed on the top with the site’s logo, a navigation bar, and the name of the artist, and on the bottom with various links and information related to the artist.  In the navigation bar, the user can move from photo to photo in the slideshow or learn more about the artists by clicking on one of the links or directly on the displayed image, which is generally hyperlinked to the musician’s website, MySpace page or the CDBaby location offering the musician’s CD for sale. In this way, Dragan hopes to drive web traffic to the commercial sites of the musicians.

In addition to providing free publicity to the musicians, the site provides credit to the professional photographers who took created some of the images as well as a hyperlink to the photographer’s website. Dargan makes an effort to contact each professional photographers not only to seek permission, but to ask them to comment on the the photo session, asking them to describe how they decided upon the location of the shot, the best angle, or any incident associated with the session that a reader might find of interest.

The goal is to enhance the viewer’s understanding and enjoyment of the photography and to provide a more intimate glimpse into the life of the photographer and the musician. Dargan’s approach to the website is drawn from the concept of “high-tech, high-touch,” a book by John Naisbitt, which introduces the concept that technology can help bring us closer as a community.

All of Dargan’s discover efforts seem to focus on quality.  For example, he searches for photographs in which the faces are clearly visible, i.e. not hidden behind microphones or musical instruments.

I prefer eyes that are visible, not closed, nor looking away. The expression on the face provides an insight into each person’s personality.

Dargan was surprise to find that a number of the photographs he chose were taken not by professional photographers, but by the artists and musicians themselves.

The key emphasis in the search for music is also on quality elements.  Dargan searches extraordinary talent and musical express. He listens for lyrics that are not only original, but have qualities and characteristics that are touching, heartfelt, plausible or engaging. 

In contrast, Dargan avoids photographs that contain disturbing elements, such as blood, or music that contains “excessive screaming or cursing.”

The music should engage the listener right away. The execution of the music should be crisp and should indicate a high level of musical skill. The quality of the instruments should be high. The vocals should be compelling and dynamic

Dargan says. 

Dargan has also been surprised by the number of extremely talented teenagers that he discovered in the plethora of musicians on MySpace and YouTube. While he generally he avoids direct contact with minors for obvious reasons, Dargan was particularly impressed with one young country singer named William Michael Morgan, so he contacted the boy’s father and obtained permission to feature William on the website.

Other examples of the talent featured on the website are

  • David Bradley, a singer/songwriter who is also an oil engineer.  Bradley wrote some of his songs while stationed in the forests of Siberia and on an oil rig in the middle of the Caspian Sea.
  • Colin O’Donohoe, an outstanding composer, conductor and musician who has developed hauntingly beautiful music involving wonderful instruments from the Far East.

Dargan is also sells “slots” in the slide show to attorneys and other industry professionalsDargan who specialize in the music industry.  Dargan chuckles at the thought of money trickling in from these professionals, particularly  attorneys, as Dargan, a patent-holder who has been involved in patent litigation, has sent tens of thousands of dollars to attorneys.  “Getting even a small amount of income from attorneys seems only fair to me,” he chides.

Dargan received a Bachelors degree from American University in interdisciplinary studies, and a Masters degree from Washington University in St. Louis, in Technology and Human Affairs. Dargan has one expired patent and one pending patent, both related to Touch-Tone interaction with computers, such as with text messaging. Dargan can be reached at nurturemusic@yahoo.com.

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Starting in June, the author of this blog, Music Row Law  – 20-year entertainment attorney veteran Barry Neil Shrum – will be taking the show on the road!  On June 5, 2009, Mr. Shrum will conduct the first of a series of national seminars called MBA, Music Business Academy. 

Mr. Shrum initiated this series of seminars to address a perceived need in the industry: that a growing number of artists, entertainers and songwriters who might benefit from the expertise of an entertainment attorney, could not afford to retain an attorney and get the help they need due to upfront fees and retainers.  To this end, the mission statement for MBA is “music business education for the do-it-yourself generation!”  This unique series of one-day sessions will provide the upcoming and established mid-tier artist, musician, MBA Logo 48ox25o songwriter and other music industry professionals with a cost-effective method of obtaining an essential legal foundation for day-to-day music industry survival. 

The goal of the seminar is to create a sense of being in the client chair, Mr. Shrum will unravel the essential provisions of various industry-specific agreements  – bringing clarity to the legalese and identifying red flags in the “small print.”  Some specific agreements covered in the MBA session are:

*    the exclusive recording agreement (and the new 360 deal)
*    the exclusive songwriting agreement
*    the personal management agreement

For the do-it-yourself generation, Mr. Shrum will also explain the details and implications of guerilla marketing on the web.  He will explore the typical iTunes deal as well as other online distribution issues relevant to today’s guerilla marketers.

When asked about the seminar, Riq Lazarus, of Lazarus Management Group, said:

"Barry Shrum gets it!  The music business is undergoing radical change.  It is absolutely essential that today’s artists have an understanding of the legal issues facing them in this new era of "do-it-yourself" broadcasting.  And because he has the heart of a teacher, Barry’s immense knowledge and experience enables him to empower you with the understanding you need to protect your creations."

It is Mr. Shrum’s goal that attendees walk away from the seminar with a functional understanding of basic copyright, trademark and contract law — a virtual “MBA” in the music business!  Attendees will also receive specialized written materials as a continuing reference and valuable resource and are given the opportunity to purchase reduced rate legal services from Mr. Shrum.

The date of June 5, 2009 has been set for Chattanooga – the day before the Riverbend Festival – and plans are in the works for seminars in Denver, Colorado and Charlotte, West Virginia.   Other cities under consideration are Austin, Texas, Baltimore, Maryland, Boston, Massachusetts, Atlanta, Georgia, Philadelphia, Pennsylvania.  To see if your city is being considered, or to vote for your city, take the online poll.

General information about the seminars can be found here.  A detailed agenda of the Chattanooga seminar can be found at the event website:  www.musicbusinessacademy.info

 

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