Denver-based artist Sarah Darlene has a lot on her plate. She’s a professional artist of about 15 years, teaches classes at the Denver Art Museum and works as a grant writer for the Denver Center for the Performing Arts. And those are just her day jobs. She also sits on the board of two nonprofits, and has a new program and meditation app in the works, all part of her mission to bridge arts and wellness.
“That dynamic is just part of the grind, and quite honestly, I love every second of it,” Darlene told The Colorado Sun in a text message. “It’s part of being a public serving and social practice artist.”
What Darlene doesn’t love every second of is hitting roadblocks with insurmountable costs, complicated business structures and “gray zone” intellectual property rights that create friction in her multifaceted practice.
“I’ve seen the ecosystem from multiple angles: as an artist, an educator, an administrator and a fundraiser,” Darlene told the Colorado Senate committee on business, labor and technology on April 9. “What I can say clearly is this: Our current business structures do not reflect how artists actually work, or the value we create.”
Colorado could become the first state to create a business structure designed specifically to support the businesses of artists and creatives. Senate Bill 133 would create “Colorado Artist Companies,” also known as Artist Corporations or A Corps, a subset of a limited liability corporation that emphasizes an artist’s ownership over their work.
“If Taylor Swift had had an A Corps she wouldn’t have lost control of ‘1989,’” said Sen. Jeff Bridges, one of the bill’s two Democratic sponsors, at the Senate committee hearing. The bill passed unanimously in the committee and now heads to Senate appropriations.
Whether an A Corps could have helped Swift dodge a yearslong dispute over her masters is unknowable. But lawmakers presenting the bill do think it will help future musicians — and painters, sculptors, writers, photographers, filmmakers, podcasters and more — gain more control over their creative output.
The law is technically nothing new. Artists can create limited liability corporations as it is, then hire a lawyer to bang out all of the intellectual property rights and operating agreements that guarantee their work won’t be diluted or seized by commercial interests. What the bill offers is a new path to get there, one that ensures artists are in control of their work from the start.
“It’s optional, it’s practical, and it gives people a way to organize their work while keeping control in the hands of the people creating it.” said Sen. Marc Catlin, a Montrose Republican cosponsoring the bill.
Where did this idea come from?
The idea originated with Yancey Strickler, a former music journalist and the co-founder of Kickstarter. Strickler has spent years thinking about the various ways artists make money — first through Kickstarter, “a crash course in entrepreneurship,” as he described it, and then through Metalabel, his broadly defined marketplace that focuses on producing collaborative projects.
With Metalabel, Strickler tapped into something that many artists crave but few know how to access: each other. It was like the adult version of working on a group project, except that it was generating revenue. Strickler, perhaps not anticipating its quick success, hadn’t set it up as a legal entity before its publications started bringing in six figures.
“I was kind of YOLOing it,” Strickler said at an A Corps information session in March. “So I started going down the process of OK, let me make my LLC, or my S-Corps, let me see what the right options are.”
He was confronted with a system that didn’t line up with what he’d built, and that he felt inept trying to navigate. That’s when a new structure started to percolate.
It could follow the path that public benefit corporations had trodden almost two decades prior, he thought, by formalizing something that was already being done informally through legislation.
In the case of A Corps, Strickler wanted to create a business structure that incorporates the priorities of artists, like collaboration, intellectual property rights and creative direction, while also expanding access to things that individual creatives aren’t often afforded, like affordable health care.
So … what is it?
An A Corps is, at its core, a limited liability company, and is subject to the same federal laws as all other LLCs. What sets it apart are its distinct guidelines around ownership, governance and intellectual property rights.
The artist owns 51% of voting shares in an A Corps. That threshold is built into the law, so that the artist always has ultimate creative control over the company.
That said, shareholders can have substantial financial interests in the company without having any control over creative decision making. That’s because of a second distinct feature of A Corps: separating economic rights from governance rights.
An artist can grant investors economic rights, such as revenue, royalties and profit-sharing distributions, without granting access to voting power that impacts creative decisions. This is in part thanks to the creation of A Corps shares, an ownership unit that values creative contributions alongside financial shares.
Again, this is not a novel structure, just something that isn’t widely accessible without special legal knowledge. Google, for instance, also divides its shares into distinct classes, each with a correlated voting power, in order to separate economic ownership from voting control. (Co-founders Larry Page and Sergey Brin keep around 51% of the voting control shares, which are not traded on the open market).
It’s up to the artist owners of A Corps to decide how to distribute company shares.
As for intellectual property rights, those cannot be transferred to nonartist investors or third parties in an A Corps, even if the company is dissolved or sold. This is known as reversionary rights, meaning that the rights to the intellectual property are automatically reverted back to the artist should anything happen to the company.
Which brings us back to Taylor Swift. It’s possible to imagine a world in which the masters of Swift’s first six albums reverted to the artist once the company that owned them, Big Machine, was sold to megamusic exec Scooter Braun’s holding company, which sparked the heated dispute.
Or take the more recent example of Ryan Coogler, the writer and director of the Oscar-winning movie “Sinners,” who negotiated for the rights to his own movie, effective in 2050, a move that Hollywood went absolutely haywire over.
Wait, you mentioned health care. Where is that in the bill?
The short answer is: it’s not.
Accessing affordable health care would still take a few more steps, including pushing health care providers to provide group coverage to A Corps or networks of A Corps. That’s something that would likely fall on artist advocacy groups like the Colorado Business Committee for the Arts.
The hope is to make artists more “legible” as a workforce to an insurance provider, Strickler said.
“The hope is that by creating a structure … in the years, maybe decades to come, that infrastructure really starts to be there,” Strickler said. “And maybe that gap between working full time at a company and working full time as an artist doesn’t mean that one person can go to a better doctor than the other person. You know? Maybe it means they’re actually on equal footing, and they’re just different ways of making a living. ”
So while the law might impact a handful of artists immediately with the ability to grow a business otherwise hampered by existing legal structures — artists like Darlene — the overall hope is for long term cultural change that recognizes and values the cultural workforce in Colorado.
“I’ve spent my career in ag, water, banking and small business,” said Catlin. “What I’ve learned is pretty simple. If people are going to build something, they need a system that matches how they actually operate.”
Section by Parker Yamasaki | Reporter
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