Howard Hertz Tunes Frequency to Film, Eminem copyright

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Hertz tunes frequency to film

by Carol McClure Photography by Melany Gambee - Hallgren

Many of you may know Howard Hertz as Eminem’s lawyer. Well Hertz has represented authors, screenwriters, recording artists, radio personalities, producers, production companies, record labels, agents, artist managers, music publishers, songwriters and athletes in his 30 years practicing entertainment law in Detroit. Some of his clients have included George Clinton, Sippie Wallace, The Romantics, The Bass Brothers, Eminem, Marilyn Manson, Russell Simmons, O-Town, Pantera, The GO, Elmore Leonard, and Jack White.

Walking into Howard Hertz’ office you become enveloped in the remarkable journey he has taken. You see memorabilia from past and present clients, a coffee table full of entertainment industry literature and you feel that if the walls could talk, they would tell some very interesting stories about many amazing iconic entertainers. Fortunately, Howard is the kind of guy who will tell you many of these stories himself.

As a prior member of the Michigan Film Advisory Commission, Howard Hertz was involved in launching the states film tax incentive. Hertz remains behind the scenes, actively contributing to the growth of Michigan’s film industry.

MMM - Because so many out of state productions have been early benefactors of the tax credit there is ongoing criticism that much of the production money and rebate money is leaving the state. What are your thoughts on this?

Hertz - What you have to keep in mind is that when those checks are being written, and they are leaving the state, it’s for money that was already spent in the state. It was already spent here and there is a trickle down effect. Does it necessarily go back to the state tax coffers? Well some of it does, but not all of it. I think you need to look at who it’s benefiting. The hotels are doing much better, the dry cleaners are doing better - it really is benefiting a lot of different people. I think that once it’s here for five years, people have set up shop, and there is an experienced, well-trained below-the-line workforce as well as a deeper infrastructure, then maybe we can cut the incentives back a little bit. To do so now would be a huge mistake.

MMM - What types of services are you currently engaged in relative to the film industry in Michigan. What are some of the emerging themes from your involvement so far?

Hertz - So far a lot of it is networking. Also, many filmmakers are coming to me to help them structure, and figure out how they’re going to raise money, and if they do raise the money, how the money is going to be divided between the production company and the investors and how they are going to approach distributors.

I’m also helping local filmmakers that are partnering up with more established companies in California doing joint venture agreements between the two. Young local filmmakers then get the opportunity to make a movie with the assistance of someone who’s got more experience, who’s easier able to raise money and to get distribution. I think there’s a big future in this kind of joint venture.

Another thing I’m doing, though mostly in the talking stages, is putting investors in touch with filmmakers who are former Detroiters that have moved out to California to make movies. Some have made 10 to 20 movies, and they want to come back to Michigan. They’re from here and they have roots here. They want to start making films here and build a community of filmmakers that aren’t just people coming in from Hollywood shooting a movie and leaving, but are real Detroiters that want to come here to make movies and maybe travel back and forth between Michigan and California. I think that’s exciting.

MMM - Can you explain the concept of entity formation in film? Is it more project based in film than it is in music?

Hertz - In music it is typically someone has started out on their own, builds up a company, and does a number of projects within that one company without outside investors. Because it tends to be more expensive to make a movie than to make an album, I typically set up an LLC with the producers and sometimes the director. Investors are brought in for that movie and maybe given an option on the next movie if they want this as well. There’s a budget attached so they know where the money is going. The investors get their money back first, sometimes with a kick. For example sometimes instead of 100% it’s 120% of their money back. Then the balance, assuming there is more money, is divided 50/50 between the production company and the investors.

It’s like selling a security so you can’t just throw together a company and start taking people’s money. You need what’s called an offering memorandum outlining certain requirements and risk factors. For the most part, the more information you give the less likely you will get sued later. Normally you have to have a CPA do a pro forma of how the money is going to be spent and if it reaches certain levels, how the proceeds are distributed.

MMM - You litigated a couple of copyright infringement suits concerning the work of Eminem. Internet film distribution is currently facing similar issues where free movie downloads are hurting film revenues. How do you see this all shaking out over time?

Hertz - As film gets bootlegged and available on the internet for free more and more, I think it’s going to come down to the internet service providers having to police it to some extent or report it to an organization or association of various companies, and being able to shut them down and not give them internet access. We all know that suing the individuals doesn’t work because by the time you sue them, they’re out of business and there’s five more. I think it’s going to get away from the lawsuits and become legislation at some point where if you violate it you’re cut off.

MMM - What’s your outlook for the film Industry we have started here?

Hertz - I believe that it could become a billion dollar a year industry. The reaction that we’ve had from people who have filmed here - from the actors to the directors and producers - has been clearly unanimous and surprised. They enjoyed their time here. The work ethic is fantastic here. I think we are going to see more and more below-the-line personnel being Michigan people as they’re trained and get more experience. It has the potential at least for becoming part of our fabric. To me, there are a few things that dollars and cents have nothing to do with. One is keeping young people who want to be in a creative business in town here and bringing new ones. That’s been a big problem over the last 10 years. The brain drain that we’ve had especially of creative people who have graduated from college and ask why am I going to stay here? What am I going to do? I could move to New York, Chicago or LA. I think this helps to give them something to look forward to and give them something to build.

MMM - What advice do you give aspiring entertainment professionals and are you seeing this behavior?

Hertz - I think one of the most important things in the entertainment industry, and it’s true in other businesses, but especially in the entertainment industry, is networking. If you’re a musician and you’re trying to get a record deal, you might have the talent you might have the right material, but you have to have a way to get it to the right people to help you get something done. So, it’s all about networking and knowing different people in different areas and I’ve seen more and more of that going on here.

People are now getting to know each other and getting to know what they do. So, if they have a problem there is an accountant who is specializing in it, or there’s a lawyer, or there’s a camera man that they know on a personal level, and that’s who they’re going to call. That starts to build a community. I think that the more this happens, the more likely we are to build a sustaining industry.