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Shedding Light on the Dark Side of the Voice Over Business
By: Robert J. Sciglimpaglia, Jr., Esq. (SAVOA No. 07035)
Due to the growing popularity of the home studio, the Voice-Over Industry is quickly becoming a legitimate and extremely fun way to generate income from one's home. The growth of the home studio has also allowed a diverse cross section of the population to get involved with the fun. In this writer’s experience, many people are now entering this field in retirement, or as a second career.
However, fun aside, just like any other home-based business, the “business” side must not be ignored or some serious tax and legal consequences can result. This is especially true for those taking voice-over up as a “second career” who may have built up some assets during their prior career.
Like many other businesses, the voice over industry has it’s own set of legal and business issues, which this article will examine. Of course, this article is not meant to be an all-inclusive discussion of every legal and business issue associated with the voice-over industry, rather, it merely scratches the surface, and some of the issues discussed herein are common to any business regardless of the industry.
I) To Incorporate or Not
The question about whether or not to incorporate has been subject to much debate in the voice over community. It is this writer’s firm belief however, that there should be no debate about it whatsoever. The question should not be whether to incorporate, but it rather should be how best to incorporate.
Just like engaging in any type of business venture, a decision needs to be made about what “form” the business will operate. Will it be a sole proprietorship; a Limited Liability
Company (LLC); a C Corporation; or an S Corporation Normally, voice-over artists don’t even consider their business formation and commence operating as what this writer terms “a sole proprietorship by default” as they just jump into the business, willy nilly, without a plan. They will start sending out their wonderful professionally produced demos as soon as they receive them, set up their websites, myspace pages, sign up for one of the many audition sites on line and commence auditions, etc, without even giving a second thought as to how their business is structured. This may be because some people getting into voice-overs treat it as more of a hobby rather than a business.
The logic is “until I start to earn some money at this, what’s the point.” However, this same logic doesn’t prevent many of those same voice-over artists from doing business under a “trade” or “stage” name, like “ABC TERRIFIC VOICE”, or some other catchy phrase. This is what is referred to in the legal world as a “DBA” or “Doing Business As.” Nor does the logic prevent voice talent from spending thousands of dollars on home studio equipment, training, production of their demos and marketing efforts. All expenses that the talent believes will pose no problem deducting from their income taxes.
Even after many voice-over artists do start to earn income in the business, they still don’t get around to setting up a more formal structure and they only think about such things around tax time, or if they are ever subject to a legal action.
In this writer’s opinion, the cost of setting up a formal entity, like an LLC or Corporation, far outweighs the potential cost involved in defending a lawsuit or action by the IRS (see below), and in some cases, will also save the voice-over artist at tax time depending on the revenues generated from the voice-over business. In fact, an LLC is extremely simple to set up in almost all States and, unless a voice over artist has employees working for the LLC, it doesn’t even require a separate Employer Identification Number (EIN) like a corporation would need.
Further, the IRS makes a very serious distinction between a “hobby” and a “business”. If the IRS determines that someone is pursuing voice-overs as a hobby, then it will disallow any deductions for any voice-over related expenses, like production costs of the demo, home studio costs, the VOICE 2008 conference, etc. The number one factor that the IRS says you should ask yourself concerning whether an activity is considered a hobby or a business is “Do you run the activity in a businesslike manner?” In this writer’s opinion, operating your voice-over business as an LLC or Corporation certainly would go a long way in convincing the IRS that your voice-over activity is a bona fide business rather than just a hobby.
One of the many other advantages of setting up an LLC applying specifically to voice talent is that, in most States, it eliminates the need to file a “Trade Name Certificate” or “Fictitious Name Certificate” to use the fancy “DBA” name as mentioned above. Most States require
individuals that are operating under a name other than their proper legal name as a sole proprietor to file a form with a designated governmental entity. This includes fancy names like “ABC Terrific Voice” or, a “stage name”, i.e., where the voice over artist or actor uses a name other than their legal name.
Filing an LLC eliminates this requirement in most jurisdictions because the LLC paperwork is filed with the Secretary of State and is deemed to be notice of a “trade name” in that State. This would equally apply to doing business as either an S or C corporation. The failure of a sole proprietor to file such a “trade name” certificate can result in punitive damages, and can even result in criminal proceedings in some jurisdictions.
In short, some form of corporate structure should be the first step in protecting a voice- over artist’s personal assets in the unfortunate event that they are sued, and eliminates the problems mentioned above concerning operation as a “DBA.”
II) Potential Liability Issues Specific to the Voice Over Industry
As a voice over artist I agree in theory with the statement I often hear from other voice over artists that “this is a liability-free industry.” As an attorney, however, I know better than that! The sad fact in the United States these days is that whenever money changes hands or an injury occurs the potential for a lawsuit exists.
A) Celebrity Impersonating
One area of the industry that voice over artists should be cognizant of is celebrity impersonating. Celebrity impersonating falls under the auspices of the area of law known as
“right of publicity” laws. The right of publicity is the right of an individual to commercially exploit their name, voice, signature, photograph or likeness. A handful of States have specific laws concerning the “right of publicity” and some other States that do not have a statute follow the common law rules concerning the right of publicity.
“Right of Publicity” laws would allow a celebrity to sue a voice talent who impersonates their voice for commercial purposes. Nevada’s statute, however, specifically exempts impersonators from liability for infringement of a celebrity’s right of publicity.
Such an exemption does not exist in other State’s statutes, however, so a voice over artist must always be alert when asked to impersonate a celebrity as to how the impersonation will be used. In general, the First Amendment allows certain uses of impersonations, but generally not when those impersonations are meant to generate profits. Such profit making use most certainly can expose both the voice talent, and the producer of the spot to a lawsuit.
This goes for impersonating celebrities who are either alive or deceased, as many Statutes provide a protection to the celebrity for some years after they have died. For instance, in Nevada, the celebrity is protected for fifty (50) years after death, where in Indiana the protection remains for one hundred (100) years. For deceased celebrities, their heirs will be the ones deciding who is able to use their loved one’s likeness and who cannot.
B) Product Endorsements
Another potential snake pit for the voice-over artist is in the area of product endorsements.
Product Liability laws in the United States are generally designed to protect the consumer from dangerous or defective products. These laws are usually couched in terms of “strict liability” rather than “ordinary negligence”. This means that anyone involved with the manufacture, sale, or distribution of a product that causes an injury to the end user can not only be sued by the injured party, but will also be held strictly liable without the need for the injured party to prove that the defendants did anything negligent. The simple fact that the product was put into commerce and caused an injury, in many jurisdictions, is enough for the injured party to recover.
In addition, there are a variety of consumer protection laws, unfair trade practice statutes and Federal Trade Commission (FTC) regulations and guidelines designed to protect consumers from being ripped off by false and misleading advertisements.
This raises an interesting question concerning whether a voice-over artist is hired to record a commercial that says something like: “This drug is THE best out there for the prevention and cure of this disease, and I personally guarantee it will work for you” and the drug ends up killing the user, whether the voice-over artist could be held liable for that “guarantee.”
If the voice over artist were a celebrity, then they certainly could be sued under a number of theories, including product liability, but also consumer protection statutes, and Federal Trade Commission (FTC) guidelines against false and misleading advertising. One is reminded of the series of lawsuits against Robin Leach back in 1999 where at least a dozen Attorney’s General across the country sued him for endorsing vacation packages in both television and radio ads that turned out to be bogus.
Although one must wonder if such lawsuits would be brought against non-celebrity voice talent that are not so “high profile”, one of the functions of an Attorney General is to discover collectable assets that could be attached to pay back “victims” of false and misleading ads, or to pay back “victims” of dangerous products, so the possibility certainly exists that such a lawsuit could be brought against a voice-over artist that has some assets.
C) Libel and Slander and Interfering with a Business Relationship
Although I like to believe our business is filled with nice and great people that are never dishonest (and in my experience, for the most part this is true), as more voice over artists enter the fold, the competition is bound to increase, and thus, dishonest individuals are bound to sneak in; individuals who will do anything to build their business, including stealing clients and bad mouthing other talent.
I have witnessed this type of behavior in the legal business in certain areas over the years as more and more attorneys have entered the market. From what I have seen, it tends to happen in large areas where the likelihood of doing business with that particular attorney again is slight. In smaller areas where attorneys have to deal with each other repeatedly, this rarely happens.
I do believe, however, the potential for dishonesty exists as the voice over field grows and the geographical area of the field expands, and I can see the potential for voice over artists “bad mouthing” other talent, who they may never meet, to a producer or client with words like: “that guy/gal is a terrible voice over artist” or “that guy’s nickname is Multi-Take Mike.” With the amount of sensitivity and insecurity in this business on the part of advertising agents, etc, it is certainly foreseeable that statements like these could cause someone to “jump ship” and switch to another voice talent.
I truly wish that this never happens in this field, but if it does, this could give rise to defamation lawsuits for libel and slander or lawsuits due to the tortuous interference of a business or contractual relationship.
III) Contractual Issues and Considerations Relating to the Voice-Over Industry
The voice-over industry is a contractual based business. For those talent that are in the Union, the Union has gone through painstaking processes to ensure that voice talent are protected in the contracts they sign with producers, and that they are fairly compensated for the work they do. On the other hand, the unrepresented non-union or financial core talent are on their own when it comes to negotiating their fees and protecting their interests contractually for non union jobs.
All agreements as to what is to be recorded and delivered and the cost of same should be in writing, and equally as important, the usage of the spot being recorded should be CLEARLY spelled out. It would be a great idea for a talent to have a standard contract that he/she gets signed for every job, like an attorney has a standard retainer agreement that gets signed at the commencement of each case. Keep in mind that it has been said that the true purpose of a contract is “to keep an honest man honest.”
However, due to the often fast-paced nature of the voice over business, written contracts are not always practical. If that is the case, then, at a minimum, emails should be exchanged between the client and talent indicating the price, usage and delivery requirements for the final sound files.
It can be as easy as the talent writing a simple email like: “I will FTP the final .wav files to you for this 30 second TV spot by X date, which you can air for a year in the State of X, and you shall pay me the amount of X dollars. Please reply to confirm.” Once you get that reply, you have a binding, written contract that is enforceable in a Court of law.
Of course, for larger jobs where you are being hired as a “voice” of a company where you will be doing repeated work, a more detailed contract should be signed between the parties prior or simultaneously to work being done.
First, if a contractual term is greater than one (1) year, it MUST be in writing to be enforceable under every States’ Statute of Frauds. Second, not only should the contract lay out all the above basic information, but it should also have a provision in there that allows the talent to terminate the arrangement after a certain period of time should things not work out, and it should cover situations such as the sickness or death of the talent.
The reason for this is to prevent the talent from adverse consequences at the hands of the company who has likely hired the talent to associate his or her voice as “branding” of its product or service. As you can see, if a talent just quits once the client has invested a substantial sum of money into such branding associated with the talent’s voice, it could potentially be devastating for the client.
A talent’s standard contract should also have a clause in it so that the talent can get a copy of the finished spot. The contract should also have a clause that allows the talent to use the finished spot on the talent’s demo or website, and if a standard contract is not signed, the talent should again, at a minimum, use email to get specific permission from the client to use that finished spot for marketing purposes.
Although it is customary for a talent to use the final spot for marketing purposes, a talent should never assume it is OK to use the spot without getting the client’s permission as the client may not agree, and such would be actionable against the talent as a violation of Copyright law.
Another very important point concerning contracts is that, now that the voice-over industry is a global business, even if you have an enforceable written contract, it may not be worth the paper it is written on due to jurisdictional issues. For instance, if you as the talent are in New York, and the client is in California, and you record in New York while the client never steps foot out of California, the New York Courts would have no jurisdiction over the dispute because the individual you are suing resides in California.
Thus, you would have to take a trip out to California, or hire local counsel there in order to collect your money; hardly worth it for the average non-union voice over job. As such, it is extremely important to get at least part of the payment sent to you upfront by either PayPal™ or by credit card. If a talent is doing work from around the country, signing up to accept credit card payments will be well worth the expense. 
IV) Intellectual Property Issues: Copyrights and Trademarks
a) Infringement of Copyrights
Voice-over artists have to consider both sides of Intellectual Property issues, meaning, they have to be concerned with infringing on others copyrights or trademarks, and they also need to protect their own ideas and creations through copyrighting and/or trademarks. The most common area where voice over talent can run into copyright infringement issues is through their demos.
It is very important that the music used on the demo is properly licensed and NOT copyrighted. In addition, it is very important for the talent to have proper permission from the producer of a spot to use the spot on their demos. The voice talent does not automatically have the right to use a spot on their demo as that spot has been copyrighted by someone other than the voice talent, unless of course, the voice talent also produced the spot, then they may have copyrighted it.
In addition, there is a popular misconception in the voice over business that once a commercial airs, the copy is free to poach and use on demos. This is NOT the case as that copy was probably copyrighted by the advertising agent or author of that copy. It has become a custom in the industry, however, that once a spot airs, the copy is fair game, and, truthfully, this author has not heard of any cases where a lawsuit has resulted from the use of this type of copy on a demo.
This author is quite certain, however, that if a voice over artist uses copy on their demo that was written by an advertising agent (or someone else) for an ad campaign that has not yet aired, then a lawsuit for copyright infringement would result. One can understand how a company who has presumably spent thousands of dollars on an advertising campaign would not appreciate a voice talent using copy that has not yet been presented to the public. On the other hand, you could also see how a company would not mind a little extra and free publicity by distribution of the spot that has already aired on a voice-over artist’s demo. That may explain the reason why lawsuits do not usually result from using copy on one’s demo from material that has already aired.
Nevertheless, the possibility of being sued under these circumstances is something that a voice over artist needs to be cognizant of, and, of course, obtaining permission for using the material will prevent any possible legal ramification.
It also goes without saying that for voice over talent that also offer production services for clients, neither copy written for another company and modified, nor unlicensed music, should be used or that just invites litigation.
b) Protection of your work through Copyrights
Voice-talent also need to understand how to protect their creative works through Copyrights. Voice-talent are most certainly hired to do most voice over jobs as a “work for hire”, meaning that whoever hires the voice talent is retaining the right to copyright the finished product with the talents voice on it. This is normal and customary in the business.
However, if a voice talent produces commercials, creates music for commercials, or drafts copy for commercials, that voice talent should do whatever is necessary to retain rights to that spot, meaning, they should specifically state in their contract that their services will not be considered a “work for hire” and that the talent has the right to copyright the spot. But just because it hasn’t happened yet, it doesn’t mean it won’t happen in the future.
Copyrighting is a very powerful protection as it prevents others from infringing on the work for the entire life of that author, plus ninety (90) years after the authors death. Civil Penalties can be as high as $150,000.00 for the willful infringement of a copyrighted work. This provision is probably not going to apply to most commercial spots that are produced as the practical life expectancy of the spot is limited. The provision, however, will prevent another company from stealing the spot, and also allows your heirs to continue to protect your work for you after you have passed away so it can continue to generate income after the author’s death.
c) Trademarks and Service Marks
Voice-over artists also need to be aware of trademark law to protect their business names under which they operate. Once a voice over artist picks a name for their business, like “ABC TERRIFIC VOICE”, a trademark search should be done to insure that no one else is using the name. A search can easily be done on the United States Patent and Trademark Office (USPTO) at their website: http://www.uspto.gov/. A search prior to using the name is wise so as to avoid any legal action for infringement of the trademark by the holder of the trademark.
If the name is available, it would also be wise for a voice over artist to “trademark” the name by registering it with the USPTO. This will help to ensure that the talent will not have to use a different name somewhere down the line to avoid confusion if someone else starts to use it. However, filing of a trademark can be a very confusing task for the uninitiated so this is something a voice talent would probably want an experienced intellectual property attorney
to handle. Technically, since voice over artists render services, the name would be “serviced marked” rather than being “trademarked.” Like copyrights, trademarks also survive the death of the trademark holder and thus your heirs can ensure no one infringes on the use of the name.
V) A Few Words On Business Insurance; Is it Really Necessary?
For voice over artists that have employees, and/or have a separate studio space outside of their home, then the answer to this question is a resounding YES! For those who have employees, virtually every State in the Nation require that you carry worker’s compensation insurance to cover injuries to employees sustained while on the job. Most insurance companies sell worker’s compensation insurance as part of a business policy.
Likewise, if you have a separate studio outside of your home then you should certainly have business insurance to cover losses from theft and fire, and to protect you in the event that someone is injured while inside your studio.
For voice over artists that have no employees and work out of a home studio where people occasionally enter their home to use the studio, it would probably be an excellent idea to obtain business insurance, as home insurance policies often contain exceptions from covering “business uses” of your home.
Finally, for voice over artists that have no employees and work out of a home studio where no one ever enters to use the studio, the business insurance is optional. One advantage for any voice talent to obtain business insurance is that most policies cover “personal and advertising injuries.” This will cover claims for certain offenses you commit in the course of your business such as libel, slander, disparagement, or copyright infringement in your advertisements, as issues were discussed earlier in this article.
For solo voice talent with a home studio and no employees, these business policies are likely to be very inexpensive as the risk of loss is very low for insurance purposes.
Generally, if a voice talent has any personal assets, it would be an excellent idea for the talent to work under some form of corporate structure, like an LLC, and to obtain business
insurance. This will provide the greatest protection to the talent so that their personal assets will not be at risk. It would take quite a catastrophic loss to exceed these safeguards, and such a loss is very unlikely to occur in this business in this author’s opinion.
VI) Tax Tips and Considerations
A voice talent should be sure that they are operating their voice over business as a business and not a hobby. The quicker the voice talent treats voice over as a money making venture, the better off they will be, in this author’s opinion, not only for tax purposes, but also in obtaining clientele and increasing income. As discussed in the first section of this article, if the IRS determines that an activity is a hobby and not a legitimate business, it will not allow any deductions for any expenses of the “business.”
Also, a voice talent, in treating the “business” as a “business”, must keep detailed records for all expenses, including receipts. A separate checking account should be set up for the voice over activities, and a talent should NEVER “commingle” fees received from voice over with personal funds. Any automobile travel should be logged in a book recording the trip, the total mileage, and the business reason for the trip, i.e., audition or recording session.
Of course, equipment purchased for the home studio can be deducted. The talent has the option of depreciating the equipment over time, or can take a “Section 179” depreciation deduction, which allows deduction of up to $125,000.00 in equipment purchases in the year of purchase. $125,000.00 can certainly build a really nice home studio! (Did I hear someone say “whisper room?”)
Finally, one deduction that voice talent should be particularly cognizant of is the “home office” deduction. This deduction is one that traditionally has raised a red flag for the IRS due to past abuses by taxpayers. In order for one to take the home office deduction, the home office must be used exclusively for business.
For instance, if a home studio is set up in the living room where the family also gathers to watch television, then the IRS will generally not allow a taxpayer to deduct the use of the living room as a “home office.” If, on the other hand, the studio is located in a segregated area of the house, like a basement or attic, which has a sound booth, etc, then a home office deduction will most certainly be allowed as clearly the studio is being used exclusively for the voice over business.
VII) Final Thoughts
The author of this article has done his best to identify many of the legal issues facing the voice over artist in today’s environment. It is not intended, however, to cover every possible situation under all circumstances. The author urges the reader to seek out specific advice from legal and tax professionals concerning their specific situation prior to undertaking ANY action.
As the voice over industry grows and becomes more and more lucrative, many of these issues will be tested in the Courts, and surely, more and more issues will come to light. It is the author’s wish that this article will prevent it’s readers from becoming ensnared in any of the issues raised herein. Knowledge is power, and more power to you all.
ABOUT THE AUTHOR:
Robert J. Sciglimpaglia, Jr. is a practicing attorney, as well as voice over artist and on-camera actor in the New York City area. He is also the owner of All in One Voice, LLC, (www.allinonevoice.com) a company that helps both beginning and advanced voice over artists and actors in business and legal issues. He is also a teacher of voice over technique and producer of demos through the national voice over company called Such a Voice (www.suchavoice.com). His course “You’re on the Air: How to Really Make it in Voice Overs” is taught all over the NYC tri state area. He is accredited by SAVOA.
Robert has been involved in numerous national voice-over and acting projects. Some of Robert’s voice over credits include, the PBS American Experience Television series, Dean Koontz’s book promo for “The Husband”, Advanced Micro Devices, the LA Dodgers, Aquafina Water, Zales Jewelers, Saratoga Raceway, and the National Fair Housing Alliance/State Farm. Some of his on camera appearances include the Discovery Channel’s “Most Evil” series, the History Channel’s “Engineering an Empire” series, the feature films “Enchanted” and “Music and Lyrics”, as well as numerous commercials and industrials.
For a full list of credits, see Robert’s website at www.robertpaglia.com and his Internet Movie Database listing (imdb.com).
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