Last month I participated in a legal panel held on the subject of how to legalize DIY music venues. There has been a tradition of DIY (which stands for Do It Yourself) venues springing up in cities like New York, Portland, Athens, Minneapolis, and Seattle. These venues created unique music scenes and cultures that spawned
a variety of widely successful acts. DIY venues are typically started by local residents in unlicensed spaces. These spaces have also been started by promoters establishing make shift concert halls located in industrial neighborhoods within some of the cities listed above.
The panel was hosted at Silent Barn, a legal DIY space that moved to its current location in Brooklyn after a major theft. In Brooklyn, a number of these venues have been shut down over the last few years, mainly for operating without a liquor license.
I sat on a legal panel that included two other lawyers and two owners of DIY spaces in Brooklyn. People in the audience consisted of neighbors, artists, and entrepreneurs interested in starting similar type spaces in NYC. Topics covered during the panel included when to start the legalization process, what legal entity to choose for ownership, and legal considerations to keep in mind while operating a DIY space.
While the panel stressed the importance of consulting with lawyers as early in the process as possible, a general consensus was reached that legal advice from an attorney was no substitute for a fully developed the vision for the space. This could be captured in a mission statement that described the venue and how it would serve the community and its patrons. A well thought out vision would help any consultant cut though all the considerations that have to be weighed when advising ownership as to suggestions they should keep in mind while running their operation.
The choice of which business entity to adopt for the operation of the venue should be the first and foremost legal concern of ownership. The choice of legal entity most often turns on the balancing of ownership’s often conflicting desires to limit liability while exerting maximum control. The sole proprietorship and partnership business structures favor ownership that values more control. The downside of these business entities is that they leave the owners vulnerable to being personally liable if the proceeds of the business cannot cover expenses and/or their insurance can’t cover liabilities. The non-profit and corporation business structures shield owners from liability for incidents that happen during the normal operation of business or activities performed by ownership while acting in their capacity of operating the business. Ownership of a non-profit organizations and corporations are constrained in the control they have over the decisions they can make and what they can do with profits of the business. The limited liability company is usually the business structure of choice for DIY venues because of the autonomy it allows, the limited liability it provides, and flexibility it affords ownership on taxes. While I won’t get into an extensive conversation about taxes here, the panel strongly advised those starting DIY venues to track and keep receipts of EVERY expense. With the multitude of upfront costs associated with starting a music venue, these expenses could very well offset a business’ tax liability the first year of operation.
The panel addressed other important legal considerations for a DIY venue. There was vast agreement that maintaining a valid liquor license was vital. A lack of or defect in the venue’s liquor license is the number one reason DIY venues run into trouble and eventually get shut down. “Kiss it every morning, make love to it, and tuck it in every night,” as panelist Nathan Clearley of Silent Barn said. In addition to this, get insurance and pay the premiums every month. Without doing so your lease may be invalid and the business may have to relocate.
The DIY owners on the panel acknowledged that making a space legal is not always easy but it is doable with persistence and help. The interest of cultivating a community where artists are supported and nurtured is one that many people are willing to get behind and is what makes places like Silent Barn so special.