Independent Music Leaders Urge Congress to Pass HITS Act and Help Struggling Recording Artists

Nancy Pelosi, Charles Schumer
Chip Somodevilla/Getty Images

Speaker of the House Nancy Pelosi (D-CA) (L) and Senate Minority Leader Charles Schumer (D-NY) lead fellow Congressional Democrats out of the White House following a meeting with President Donald Trump at the White House April 30, 2019 in Washington, DC.

Read the letter to Majority Leader Chuck Schumer and Speaker Nancy Pelosi below.

American Association of Independent Music (A2IM) president and CEO Dr. Richard James Burgess and a group of 119 leaders from the independent music industry across 19 states sent a letter to Senate Majority Leader Chuck Schumer (D-NY) and Speaker of the House Nancy Pelosi (D-CA) urging them to include relief provisions for the creation of recorded music in the Coronavirus Rescue Legislation that Congress is currently debating.

The letter states that congress "must act to help musicians to get back to work recording music" and requests that the relief package include the Help Independent Tracks Succeed (HITS) Act, which was introduced last year by Sens. Diane Feinstein (D-CA) and Marsha Blackburn (R-TN) and Reps. Linda Sanchez (D-CA) and Ron Estes (R-KS).

"The HITS Act would allow recording artists and their record label partners to immediately expense the cost of most indie projects, rather than having to spread out the tax benefit over time," the letter reads. "2020 was a tumultuous year for recorded music, with normal release schedules – often tied to touring, summer festivals and other live performances – completely upended. Enactment of the HITS Act would allow for us to take on more projects, in a COVID-responsible manner, because the tax savings this year would be reinvested in new projects."

The group of artists, managers, agents, executives and independent record label owners state that the HITS Act would grant the same tax treatment to sound recording production costs that is currently afforded to other arts productions including live theater, television and motion pictures.

"Musicians generally manage to cobble together a livable income only by combining live performances with the release of recorded music," said Burgess in a release. "With half of their income stream dormant for the foreseeable future, and elected officials frequently pointing to the power of music as a positive force to uplift people in tough times, we sincerely hope that we won't get left behind."

The letter also asserts that the lack of funding for recorded music greatly impacts artists of color who have been disproportionately affected by the pandemic and lack generational wealth that gives them access to capital.

"The American Rescue Plan already includes important tax credits to support working class families and recognizes the economic importance of small businesses, especially in black and brown communities. The HITS Act is a natural extension that recognizes the way our industry partners with artists by financing their projects," said president of Tommy Boy Records Rosie Lopez in a release.

Unlike many other relief proposals that entail direct federal spending to support ailing industries, the HITS Act speeds up music creators' ability to deduct the first $150,000 of sound recording production costs from their taxable income. The coalition of independent music leaders adds that because of advances in technology, many artists record and even release their own music today, and the benefit would extend not only to businesses but also to individuals.

"The pandemic has completely changed how we think about releasing music, without the benefit of live performance and touring to promote new projects. The HITS Act would free up independent labels to invest more money now in new music," said CEO and founder of Empire Ghazi Shami in a release.

Read the full letter to congress below:

Dear Leader Schumer and Speaker Pelosi,

Last month, when President Biden released the American Rescue Plan, we were thankful and relieved to see his recognition that among small businesses, those in the arts have suffered disproportionately during the COVID-19 pandemic. As leaders of many of the independent record labels that make up the over 700 members of the American Association of Independent Music, we write to urge that as Congress translates the plan into a legislative package, it must act to help musicians to get back to work recording music.

Traditionally, musicians and recording artists can only cobble together an income to support their families by combining money earned touring and performing live with earnings from recording and releasing music. With one of those revenue streams shut off, the ability to record and release music is the only thing keeping many musicians afloat, and for many the availability of capital to launch a new project that may or may not be a commercial success is a significant barrier. But luckily Congress could easily fix this situation. Therefore, we ask that the next relief package include provisions included in the HITS Act, which was introduced last year by Sens. Feinstein (D-CA) and Blackburn (R-TN) and Reps. Sanchez (D-CA) and Estes (R-KS).

The HITS Act would allow recording artists and their record label partners to immediately expense the cost of most indie projects, rather than having to spread out the tax benefit over time. 2020 was a tumultuous year for recorded music, with normal release schedules – often tied to touring, summer festivals and other live performances – completely upended. Enactment of the HITS Act would allow for us to take on more projects, in a COVID-responsible manner, because the tax savings this year would be reinvested in new projects.

The HITS Act is also a matter of fairness across the arts sector, especially artists of color who have been disproportionately affected by the pandemic and lack generational wealth that gives them access to capital. Film, television and live theater production costs already enjoy this tax benefit. Congress has also already acted to target relief to other parts of the music ecosystem including live music venues and mega conglomerate radio stations. Because the benefit in the HITS Act is related to timing, its overall federal budgetary impact is de minimus. This is a reasonable, bipartisan and fiscally responsible measure that represents a needed lifeline for our suffering industry.

Thank you for considering our plea for help.

Coronavirus