Music, game industries hope someday to see their own tax incentives

Music, game industries hope someday to see their own tax incentives

Music, game industries hope someday to see their own tax incentives
December 19, 2016

More than a decade after its passage, it’s hard to dispute that the Empire State Film Production Tax Credit has had a transformative effect – on the industry it targeted, for sure, but on New York City as well. Now other entertainment sectors that face similar challenges are hoping the state will also demonstrate a commitment to them. Those hopes were dashed last month when Gov. Andrew Cuomo vetoed a bipartisan bill, modeled after the film and television program, that would have earmarked a $25 million tax credit for each of the music and game industries. 

Like film and television, those industries have been forced to contend with the problem of “runaway production,” triggered by competing states and countries that dangle lucrative incentives. 

According to the Center for an Urban Future, music production employment in New York City declined by 28 percent between 2003 and 2013. The Empire State Music Production Tax Credit would have helped halt and reverse the flight of music production to cities like Los Angeles, New Orleans, Nashville and Toronto. 

“New York was once the epicenter for music production and we have lost much of this business to other states’ aggressive tax incentive programs. We need this business back,” Assemblyman Joseph Lentol said after the bill, which he co-sponsored, was approved by the state Legislature in June. 

The tax credit bills, which were passed in conjunction, received overwhelming bipartisan support in the Assembly (118- 24) and Senate (60-2). 

The legislation would have created a baseline 25 percent credit on qualified expenditures, with upstate counties eligible for an additional 10 percent.

The music bill would have covered production-related expenditures such as the salaries of session musicians, as well as programmers, engineers and technicians, and studio rental fees. 

New York Is Music, a coalition of more than 200 organizations, analyzed data from recording sessions of top-selling albums between 1999 and 2014 and concluded that New York’s share of those projects had declined nearly 50 percent. 

In the rapidly growing video game sector, meanwhile, New York has produced some cutting-edge indie work, but thus far had trouble sustaining a more robust ecosystem that includes large-scale developers, due in large part to the city’s high costs of doing business and the absence of any incentive programs. In recent years the local game sector has seen studios shut down and move operations, with strong competition coming from north of the border, where Montreal has aggressively courted developers. 

“There’s a large community here that wants to make games, wants to have bigger studios,” said Jess Haskins, co-chair of the of the International Game Developers Association New York City chapter. “We have all of the ingredients for that really successful large-scale ecosystem.” 

New York’s share of the $28.4 billion game industry is around one percent. Digital games are now a $78.6 billion global industry. 

The tax credit bill was one of 72 that Gov. Cuomo vetoed right before the signing deadline. 

“I fully support the music and digital gaming industries,” the governor, who has frequently touted the success of the state’s film tax credit, wrote. “However, the Legislature has passed a bill that creates two new tax credit programs totaling $50 million, without any accompanying funding.” 

The bill’s backers intend to renew their push in the 2017 legislative session.

Gabe Ponce de León