Music Business/Law Tip - "Fan Web Music Posting Issue"

If a fan wants to post someone else's music on their web or social media site, they need to be aware of the following potential infringement concerns that might be raised by the owner of the music. By making someone else's music available on their web or social media site - even if they are not selling it - the fan could still be held liable for copyright infringement because of the following factors: display of music on the site, owning the site, control of the content on the site, uploading the music to the site. Even though the fan/site is not tryihng to "profit" from someone else's music per se, having it avaiable to hear or download for free from the fan site arguably damages the true owners chance to sell it, or control how it is heard. Hence, always be careful and try to obtain permission before posting music (especially if its by a major artist that has resources). In reality a take down letter is probably the worst case scenario, but an upset owner may pursue an infringment claim. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Copyright Recapture – 35 Year Rule"

Under the Copyright Act 203, song copyrights that were transferred to a publisher under a publishing agreement can revert back to the songwriter(s)/their heirs if the songs were created after 1/1/78. This is known as the “35 year rule”. (Songs created prior to 1/1/78 are subject to a different 56 year rule). Basically, to exercise the 35 year rule, a songwriter must give written notice to the publisher and the Copyright Office not less than 2 years and no more than 10 years from the intended “termination date” (in general, the date 35 years from when the song was created). In other words, the earliest date of notice is 25 years after the song was created for a 1978 or later song. For example, if a song was created on 1/1/78, a notice of termination can be served as early as 1/1/2003 (to be effective 1/1/2013). There is some issue about whether this statute applies if an artist signed a “work for hire” or “writer for hire” agreement. A lot of the publisher agreements have this language - it is an issue to be aware of because this is not a clearly defined area as yet. Also, if it is a joint work (co-write) one might also need the co-writer(s) to sign off on the notice. None of these cases have gone to court yet to test the statute/these issues, but 2013 is supposed to be the year a lot of these disputed cases go to court because that is 35 years from 1978 so the issue is finally ripe for many valuable copyrights. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Copyright v. Trademark"

COPYRIGHT [MUSIC] V. TRADEMARK [NAME] 1. Copyright Basics: a. (c) = Song/Composition b. (p) = Master/Sound recording c. Music + lyrics d. Prove date of creation 2. Trademark Basics: a. “First use” of a name b. “In commerce” c. Search availability before using d. Registration & Common Law rights Ben McLane Esq benmclane.com

Music Business/Law Tips - "Producer Guaranteed Tracks"

If a producer is developing new acts on "spec" or for little money up front, the only way they will probably be able to benefit big picture is to have some guaranteed production down the line in a contract (because more times than not once the artist gets off the ground/signed, they/label will want to hire a bigger name to do the next record - not the orignial producer), so in order to not get screwed, the producer should have an agreement that guarantees that he/she will be able to produce somne future masters by the artist. Historically, artist deals were based on albums, but these days in the new record business where things are more digital there may not be an album - it might be an EP, a series of singles, or bundles, or some other hybrid - but the label will generally still sign the artist to an album or term (period) deal on paper at least, where the artist will have to deliver a certain number of albums or recordings exclusively for the label over a period of time. Hence, the producer agreement should cover both ways by saying he/she has a certain number of guaranteed tracks on upcoming "Album Cycles/Periods", since the producer has no way of knowing in advance what type of deal any artist he/she produces now is going to sign in the future/what the exact language of their deal as to product required to deliver will be. One way of covering this is to say that the producer is guaranteed 50% of the artist's next recording project and 30% of the one after that - it might be that the artist does 2, 10 song albums (so the producer gets to producer 5 songs LP1 and 3 songs on LP2), or they might do a series of EPs or a series of singles, or some other hybrid. The producer's future production guarantee is based on (fraction of) the number of tracks the the artist cuts in a period or album cycle. The key is to have this broad language in place to protect the producer. If there is some discrepancy or conflict down the line the producer is in a better position to negotiate some other terms if forced to do so. On the other hand if the producer does not have the guaranteed production language in there on some level, since business is business 9/10 times he/she will be left with nothing (as the artist/label will probably re-cut the stuff the original producer did with someone else, and not let the producer do anything new). Ben McLane Esq benmnclane.com

Music Business/Law Tips - "Global/Future Of Music Issues"

GLOBAL ISSUES & FUTURE OF MUSIC I. GLOBAL ISSUES: A. EMERGING MARKETS (CHINA & INDIA) B. INTERNET MAKING WORLD SMALLER C. PIRACY II. FUTURE OF MUSIC: A. DIGITAL/MOBILE PHONE B. SINGLES BUSINESS C. PENNIES BUSINESS D. MORE INDIE ACTS/LESS SUPERSTARS E. LABELS = MEDIA COMPANIES F. OLD COPYRIGHTS REVERTING TO ARTISTS Ben McLane Esq benmclane.com

Music Business/Law Tips - "Band Partnership Agreement"

4 KEY POINTS TO ADDRESS IN A BAND PARTNERSHIP AGREEMENT: 1. BAND NAME 2. PROFIT SPLIT 3. DECISIONS/VOTING 4. BREAK-UP/LEAVING MEMBER Ben McLane Esq benmclane.com

Music Business/Law Tips - "Attorney Fees"

ATTORNEY FEE STRUCTURES 4 Basic ways to pay an attorney: 1. Hourly 2. Flat Fee per project/contract 3. 5% 4. Monthly Retainer Ben McLane Esq Benmclane.com

Music Business/Law Tips - "10 Ways To Make Money"

The following are 10 key ways to generate income from a music career: 1. Records sales 2. Licensing (film,tv,commericals) 3. Touring 4. Merchandise 5. Apps 6. Videogames/micro transactions 7. VIP/fanclub 8. Kickstarter 9. Investor 10. Affiliate programs Ben McLane Esq benmclane.com

Music Business/Law Tip - "Key Ways To Protect Essential Rights"

The following are key ways to protect one's rights/avoid misunderstandings to maximize profits in the entertainment field: 1. File for a trademark (name and likeness) 2. File for a copyright 3. Register with ASCAP, BMI or SESAC 4. Register with SoundExchange 5. Work out a band partnership agreement 6. In record or publishing deals retain as many rights/as much control as possible 7. In an investor agreement retain as many rights/as much control as possible Ben McLane Esq benmclane.com

Music Business/Law Tip - "Top 10 Artist Marketing Necessities"

In order to make it an artist needs the following: 1. Hit songs 2. Identifiable image 3. Unique sound 4. Fans 5. Be multi-faceted 6. Be a hustler 7. Have a great team of advisors 8. Tour 9. PR (press) 10. Social networking Ben McLane Esq benmclane.com

Music Business/Law Tips - "Self Promotion"

Marketing and promotion is imperative to this industry at all levels. If you are really serious you have to hire someone good to do PR. You need to play as much as possible in your region (and beyond within driving distance to hit new audiences/cities), and really do a lot of internet promo which is very possible and affordable for an indie artist these days. Lots of YouTube videos are also great as they can go viral (can be you live or in your room). When you are indie you can do more grass roots things and then you will start to bubble up and the mainstream pays more attention if you are really good and the public starts to react. Some specific things I recommend you do: 1. Get the Film/TV Music Guide from musicregistry.com and try hitting up some music supervisors. 2. Try to co-opt the similar-sounding "famous" artists fans by studying how those artists market themselves and who their fans are. Try to hit up blogs that will feature/mention you [check out hypem.com for genre blogs] and hit up those blogs and hopefully if your name and music is out there enough on the web when someone listens to a similar-sounding famous artist you will come up as a "recommendation" for a fan to check out if they like that they will like you sort of thing. 3. Hire someone good to do PR over an extended period - more press/exposure is always good. 4. Tour/play as much as possible. Maybe go to LA, NYC or Nashville for a music conference to meet more people and play a club and meet other artists and business folks that work in your genre. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Copyright Action Basics"

If one feels they have a copyright infringement action, they must evaluate the following basic information before moving forward: 1. The term of copyright in general is life of the author (or co-authors) + 70 years from date of death of last surviving author. Publication does not matter under the 1978 Copyright Act (which applies to any song written after 1/1/78) unless its a song written for a corporation. 2. The term "statute of limitations" means how long someone has to file a legal claim once there has been an illegal act (like an infringement) committed. Under the Copyright Act, the statute of limitations is 3 years from the "discovery" of the claim. After the deadline, any right to file an action is waived. The above laws apply regardless of whether the song was "produced" or not, "performed" or not, whether the writer is "known" or not, or (with some exceptions) whether there was any "work for hire" contract in place or not. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Income From Commercials"

If you can get your music into commercials, you can expect to receive the following forms of income: (i) up front licensing fees, and (ii) back-end performance (BMI or ASCAP) royalties. Both the front end and back-end monies earned will depend on the size of the company, the territory of the ad, the project's budget, any terms of exclusivity or transfer of copyright, how big the artist is, etc. Note that similar to a cue sheet for a film/tv show, with music in a national ad there is a specialized reporting form that needs to be submitted to your performance rights society so that the use of your music in the ad can be tracked. Make sure the ad company does this and gives you a copy (or contact BMI or ASCAP to get their form). Ben McLane Esq benmclane.com

Music Business/Law Tips - "SoundExchange"

Recording artists and labels now can get paid "digital performance royalties" from satellite radio, internet radio and cable radio play. SoundExchange is an organization that collects the above-named digital performance royalties for performers and labels. If an artist or label joins SoundExchange and lists the records that have played on/released, SoundExchange will collect and distribute these royalties. Note this has nothing to do with songwriter performance income - that is collected by BMI, ASCAP and/or SESAC. One does not have to be a songwriter to be eligible to receive SoundExchange income! But to get your share you must register at soundexchange.com Ben McLane Esq benmclane.com

Music Business/Law Tips - "Leaving Band Member"

If a there is a leaving band member, these are some of the key points to cover in any release/waiver document: - Does the leaving member maintain any ownership in the Band, or its assets (e.g., trademarks, copyrights)? - Does the leaving member maintain any past, present, or future revenues generated by the Band? - Are there any other other claims whatsoever? Ben McLane Esq benmclane.com

Music Business/Law Tips - "Manager v. Attorney"

As for whether an artist should seek out an attorney or manager first, it’s a case by case thing. However, I have found that since most of the established/experienced managers don’t want to get involved until the right tools are in place for them to do their job properly (i.e., record label support, touring history, fanbase, etc.), it may be more likely for an attorney to get involved earlier in the game to help the act get in the position to attract the appropriate manager (along with doing all the boring legal stuff). In my opinion, the act should wait to add a manager to the team until there is a reason to do so/the right person or company comes along, and not rush to lock mom, dad, uncle or buddy into that role, as that may actually do more harm than good down the road/scare away a record label who would want to make sure that the act has professional representation that can be a partner in breaking an act. Labels have no time to teach anyone the business or absorb stupid mistakes by the act or its management these days. They are risk averse. As an aside, I think connecting with a booking agent early on for many acts might be more important than a manager or attorney since touring and creating a fanbase seems to be the primary initial building block upon which all other career elements are based. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Trademark Primer"

An artist's stage name (or pka) is a trademark/servicemark. Active artists normally need the trademark in the category of live shows (class 41), records (class 9) and merchandise like t-shirts (class 25). Class 41 will generally suffice if the artist is on a budget. Someone else using the same name that is not an artist like a restaurant is in a totally different category that should not conflict with the artist, so the artist should be OK to use the name so long as the artist does not try to start a restaurant under that same name. Go to uspto.gov for how to file a trademark. Or hire an attorney to assist. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Parody"

For instance, you have written a parody of a John Mayer song, which does not substantially change the original music of this famous song but incorporates humorous new lyrics throughout (ala Weird Al). I note that this is not a “sample” in that it is a whole new recording. It is also important to note that there are 2 copyrights at issue here: (1) The composition copyright (song) which John Mayer's publisher administers for him [this is the “c” in the circle], and the (2) sound recording (master) of your parody version which you own [this is the “p” in the circle]. You only have to be concerned with the "c" copyright. Some quick background why Weird Al, et al generally tries to obtain permission to do a parody up front just to be safe since the world of fair use/parody is a slippery slope as it could be considered a derivative work, and each situation is case by case and not always legal per se (see famous cases e.g., 2 Live Crew case from the 80s where the final judgment of the appeals court prevented the parody of Roy Orbison’s “Pretty Woman” by 2 Live Crew on the grounds that it was blatantly commercial and damaged the market for the original, and the Catholic Priest’s re-done version of Jesus Chris Superstar from the 70s where the court would not allow it either). On the other hand there have been numerous other cases which allowed the parody. Under the Copyright Act of 1976 (Section 107) the court will weigh several factors to allow or prevent a parody (or any fair use of an existing copyright): 1. Is it for commercial or non-profit use (i.e., education, news, charity, etc)? 2. What is the nature of the original work (i.e., was it a hit song)? 3. Is the parody a close copy to the original (substantially similar) or does it just use bits a pieces of original? 4. Does it damage the potential market for the original or somehow diminish or tarnish the value of the original? Although for practical purposes you can make and release this parody and never obtain permission or share profits with John Mayer since its really under the radar, there is a chance if it took off you could possibly get sued for infringement, and then it would be up to the court to decide whether your parody would be allowed without permission by viewing all the factors set forth above. I think its down to a balance of whether your version would damage the original version due to massive sales (since clearly you are doing this for profit). Since getting permissions is a hassle and time consuming and sometimes expensive, you may just want to put out your version and then if someone ever comes after you get the permission then (and you could claim in good faith you did not know you needed it since you thought a parody was excepted which is a valid argument due to the murky nature of this issue), or worst case they would probably just tell you to stop selling. Ill have to leave that to you. If you do want to be 100% safe and seek a permission or give a courtesy notice, you can find out who administers famous song by checking with BMI.com, ASCAP.com or Harryfox.com. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Work For Hire" Demo

If you hire a producer and musicians to help you create a demo you are singing on, you need anyone who is making a contribution to the masters (i.e., producers, mixers, engineers, session musicians) to sign a form saying they are working for you on a "work for hire" basis and that you own and control the masters 100% without restriction (so you can pitch and license or transfer/sell the masters freely without any third party claims). Normally someone would sign a work for hire form because you have compensated them in some way like a fee, royalties on sales, and/or a credit.

Music Business/Law Tip - "Sample Clearance Issues"

If you want to use a "sample" of someone else's song in your new song, you will need to approach whoever owns/control the sampled song to get permission/clearance. The following are some of the issues you will need to address: Is your new song an independent release or via a label? What is the expected release date of your new song? Will your new song be for sale or promotional only? How many copies of your new song do you plan to press/sell (physically or digitally)? Do you also plan to have your new song included in video, TV, film, commercials? What territory/ies do you plan to release your new song? And of course they will want to hear a copy of your new song so a "split" of writers/owners share in the new song can be sorted out. Ben McLane Esq benmclane.com

Music Business/Law Tip - "Marketing/Promotion"

Marketing and promotion is imperative to this industry at all levels. If you are really serious you have to hire someone good to do PR. You need to play as much as possible in your region (and beyond within driving distance to hit new audiences/cities), and really do a lot of internet promo which is very possible and affordable for an indie artist I think. Lots of YouTube videos are also great as they can go viral (can be you live or in your room). When youre indie you can do more grass roots things and then you will start to bubble up and the mainstream pays more attention if you are really good and the public starts to react. Some specific things I recommend you do: 1. Get the Film/TV Music Guide from musicregistry.com and try hitting up some music supervisors. 2. Try to co-opt the similar artists fans by studying how those artists market themselves and who their fans are. Try to hit up blogs that will feature/mention you [check out hypem.com for genre blogs] and hit up those blogs and hopefully if your name and music is out there enough on the web when someone listens to that similar famous band you will come up as a "recommendation" for a fan to check out if they like that they will like you sort of thing. 3. Hire someone good to do PR over an extended period - you need press/exposure. 4. Tour/play as much as possible. 5. Maybe go to LA, NY or Nashville for a music conference to meet other artists and business folks that work in your genre. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Compilations"

Most artist album royalty deals with a label are about 15%-20% of the retail price (in general if a record sells for $10 that's $1.50 to the band) - its the same for a compilation, but instead of a solo act/band getting all 15-20%, its 12-15 acts splitting that royalty on what they call a pro-rata (fractional) basis. So an artist on a comp needs to ask for a pro-rata royalty of 20% (and hopefully no less than 14-15%), and also if possible try to get whats called a "most favored nations" rate which means the artist gets paid the same royalty (pennies per sale) as all the other acts on the comp (even if there is a big name), and most importantly make sure the label lists the artist's credit on the package (name and website), and make sure that the label only use track for the comp (nothing else like licensing to film/tv) without the artist's permission. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Synch Deal"

Common provisions that a songwriter/artist would want to see included in a synch deal are as follows: (1) a fee, (2) a credit, (3) a reversion if the song is not used, (4) limits on how the song is used in the show/film/commercial, (5) a term, and (6) copies of cue sheets sent to writer/artist so he/she can track the usage and make sure they get paid by BMI, ASCAP or SESAC. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Publishing Company"

Music publishing companies have many benefits to songwriters. A publishing company/deal can be: (1) a bank to support a songwriter, and (2) a way to get the songwriters songs “covered” by recoding artists or placed in film/tv/commercials which generates income and credits for the songwriter. Publishing deals can also have drawbacks: (1) the songwriter has to split the income and the copyrights with the publisher (usually forever), and (2) normally the deal is for several years so the writer can only write for the that one publishing company during the term and if the publisher is lazy or short-staffed the songs might languish and the songwriter will starve. Ben McLane Esa benmclane.com

Music Business/Law Tips - "360 Deal"

A 360 deal is either a “rights grab” by the label to make sure they profit from an artist if the artist blows up, or is an incentive for the label to actually put more effort into marketing and promoting the artist. The truth is probably somewhere in the middle, and the concept is so new there are not yet many known examples for the artist to hang their hat on as a guideline. In any event, unless the artist has a lot of leverage going into the deal, they will probably not have any choice but to enter into this type of agreement in the current music business. If so, at least hold the label’s feet to the fire in the contract by requiring them to pay advances for the extra rights they participate in (i.e., touring, merchandise, publishing), and to commit to spending money to market and promote those rights so that the money pie gets bigger and everyone wins.

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Masters Reversion"

Most record deals are set up so that the label owns the sound recording copyrights (i.e., masters) forever. This business was built on catalogs - Capitol and RCA would probably not be around today if they did not own the masters to the Beatles and Elvis. Hence, labels do not part with masters easily. However, it’s possible to get a reversion of the masters at some point, but the artist would have to ask the label for this concession to be built into the contract. Normally, a reversion might kick in if: (1) the label fails to commercially release the masters, or (2) a certain amount of time goes by (e.g., 10 years) where the label had time to squeeze all the profits out of the masters (which normally have a life cycle of no more than 5 years unless it’s a big hit). There is also some language built into the Copyright Act that copyrights can revert after 35 years, but that involves some hoops to jump through and no one wants to wait until they are an old fart to get their property back so try to build it into the deal as discussed above.

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Film/TV Music Clearance Issues" (outline)

FILM/TV MUSIC CLEARANCE ISSUES

#1 Rights To Clear:

Copyrights – (c) + (p)

Source for permission/license – Artist, Record Label, Music Publisher

#2 Synchronization License (“Synch”)

FILM - Key Issues:

(a) Fee [Free-$1,000,000+] – Factors:

- Budget – major studio v. indie
- Use of song – background v. theme
- Popularity of song/artist – hit v. indie

(b) Scope of License:

“All media/rights buyout Deal”

- Worldwide
- In perpetuity
- Covers theatre, TV, DVD, download/stream/mobile, all new technologies – e.g., NetFlix
- No per unit back-end royalty

“Festival License” – (indie, student, documentary)

- Limited rights/term - “Step Deal”:
- Build in options for additional rights
- Deferred fees based on: Distribution and/or Box Office Gross Receipts milestones

(c) Other Miscellaneous Issues:

- In Context/Out of Context – trailers, ads (additional use)
- Screen Credit
- Right to assign
- Cue Sheet obligations
- Union (Aftra, AFM re-use fees)
- Performance (BMI/ASCAP)
- Non-exclusive

TV (similar rights for free TV, cable, satellite, mobile – Simpsons)

VIDEO (similar rights for things like YouTube)

WEBISODE (similar rights for online/mobile)

COMMERCIAL (similar rights for all media)

#3 Composer For Hire (Work For Hire)

– create new music
– producer owns copyright

#4 Music Supervisor


Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Breaking A Record Contract" (Final Part)

The downside to the contract dissolution methods discussed over the last few weeks is that when an artist enters into a legal battle with a record company, the resulting action can take years to settle and can often temporarily derail the artist's career because it takes the artist out of the public eye for a period of time. Knowing this, labels frequently use stalling tactics in such contract disputes because they understand that since an artist's career usually only lasts for a few years, time is on the label's side, and an artist involved in a protracted legal battle might get frustrated and discontinue the dispute.

The practitioner representing a new artist at the initial contract negotiation stage should consider building artist protections - such as monetary enhancements or an "out" clause - into the agreement which can be triggered by the artist having a hit record, or the label not fulfilling its end of the agreement, whichever is applicable. In the final analysis, although it might seem easy, "Breaking Up Is Hard To Do."

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Breaking a Record Contract" (Part 9)

A final tactic would be for an artist to simply walk away from a contract and leave it up to the label to stop the artist from recording elsewhere. This technique would normally only occur when a contract is extremely unfair, and when there are several arguable grounds for termination. In particular, the artists Boston and Donna Summer were successful in using this technique to break away from their respective recording contracts.

In the Boston case, although arguably the contract period between Epic and the band had elapsed by time, Boston went ahead and signed a new recording contract with MCA instead of waiting for a resolution of the term conclusion and other disputed issues. Epic thereafter moved for an injunction, but it was denied and MCA released Boston's next album. Similarly, in the Summer matter, although it appeared that her Casablanca contract had terminated because of a key man clause which went into effect when the president left the label, Summer signed a new recording contract with Geffen instead of waiting for of a resolution of the key man and other disputed issues. Casablanca thereafter moved for an injunction, but it was denied, and Geffen released the next Summer album. No doubt many artists have utilized this scorched earth approach based upon the practical consideration that, after a cost-benefit analysis, the label will opt not to seek legal relief.

[final part next time]

Ben McLane Esq
benmclane.com

Music Bjsiness/Law Tips - "Breaking A Record Contract" (Part 8)

A conflict of interest approach might hasten the termination of a recording agreement. At times in the music industry, because of the small number of specialized practitioners, instances occur when there might be a conflict of interest whereby one attorney will represent both the label and the artist in a contract negotiation. In such a case, an artist could postulate that he/she got a raw deal because the attorney was in bed with the label and hence the contract should be rescinded. This argument would be based on Professional Conduct Rule 3-310 which regulates avoiding the representation of adverse interests. In essence, this Rule states that an attorney shall not, without the "informed written consent of each client", represent more than one client in a manner in which the "interests of the clients potentially conflict." However, unless the contract is one of adhesion (i.e., take it or leave it/extremely one sided), it is doubtful that a court would invalidate a contract on this ground alone.

[part 9 next time]

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Breaking A Record Contract" (Part 7)

Since recording agreements first came into existence, an oft heard clarion call by an artist is that the contract is patently unfair. A record contract that is one-sided and skewed heavily in favor of the record company could be argued to be a contract of adhesion. A contract of adhesion is a standardized contract which, if imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it. Generally, a contract of adhesion would be valid unless it is ambiguous, or it is "unduly oppressive or unconscionable under applicable standards of equity." In conjunction with this scenario, an artist who was not represented by an attorney before signing the adhesion contract could also argue that he/she was too unsophisticated to understand what he/she was signing.

In a pertinent dispute, singer George Michael filed a suit in England to get out of his long-term recording agreement with Sony. His argument was that certain practices in the music industry were so obnoxious that they amounted to a restraint of trade. These practices included tying up an artist for a long period of time at the company's option, and computing royalties in ways that pay the artist far less than the royalty rate implies. The court held that the terms of his deal were reasonable, and thus there was no restraint of trade. Apparently, the court agreed with the argument set forth by the label that current deals are for a term of six to eight albums at the company's sole option because a label cannot afford to promote new artists unless they are assured the benefit of the artist's success in later years. The foregoing court's rationale in the Michael's matter is evidence that unfairness alone may not be enough to allow an artist to jettison a contract.

[part 8 next time]

Ben McLane, Esq
benmclane.com

Music Business/Law Tips - "Breaking A Record Contract" (Part 6)

Another situation akin to breach that frequently arises in an artist deal (and which somewhat relates to the Seven Year Statute) involves a dispute over the expiration date of the agreement. As mentioned, many recording agreements provide for a minimum term of minimum one year, with separate options of minimum one year each, sometimes tied to the delivery of product. The record company generally has the privilege of either exercising the right to continue the contract, or to let it lapse. Most contracts have a specific provision for the exercise or non-exercise of options. If the exercise provision is not properly complied with by the label (e.g., the label fails to give written notice of its intent to pick up an option), the artist can argue that it is free to sign a new contract.

Similarly, an artist could also allege that it has fulfilled its recording commitment to the label. Every artist agreement bestows on an artist the duty to record and deliver a specified number of masters to the record company during the term. Unless the contract provides for a detailed schedule of how many records to deliver in any given period, if the artist is signed, for example, to a five album deal, the artist could theoretically deliver the five albums at any time and fulfill the delivery requirement. Legend has it that Frank Zappa once pulled this stunt when he delivered multiple albums at one time so that he could claim he fulfilled his obligations. Apparently, the record company had not safeguarded against this occurrence. On the flip side, when an artist is trying to fulfill the delivery commitment, and the label is not reciprocating, the artist could argue that the label is refusing to let the artist record and wrongfully attempting to suspend the artist for non-delivery of product. If there is no possible basis for failure to accept the recording, this could be a breach of a good faith duty or obligation by the label.

It is important to note that buried within most record contracts is a notice provision whereby any claim of breach by the artist must be submitted in writing to the label with the label having an opportunity to cure the alleged breach. If a notice is not timely and properly served on the label by the artist, the artist may have failed to fulfill a condition precedent to support a legal action for breach of contract.

Obviously, a breach of a recording contract can be argued under a myriad of instances, so the underlying contract should be closely scrutinized for potential cracks.

[part 7 next time]

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Breaking a Record Contract" (Part 5)

The charge that the label committed a material breach of contract can also be a successful mechanism for an artist to utilize in a bid to leave a record company. A material breach can be alleged in many different forms, but the most common is the lack of proper payment of royalties by the label.

Just such a breach was highlighted in the court decision involving the band the Kingsmen who had a big hit with the song "Louie Louie" in the 1960s. The Kingsmen won a five year court battle in November 1998 when the U.S. Supreme Court upheld a Ninth Circuit Court ruling that cancelled the record company's contract with the group because the company neglected to pay royalties. The suit was based in part on the law of rescission which states that a party may unilaterally rescind a contract if there have been "breaches of the contract so material and substantial in nature that they affect the very essence of the contract and serve to defeat the object of the parties." This was a most egregious case because the record label - G.M.L./Gusto - had apparently never paid any royalties under the contract, even though the band's recorded version of "Louie Louie" had generated considerable sums over the years through usages in compilations, movies, and TV. In particular, the ruling called for the return to the band the ownership in the master tape of "Louie Louie" and other recordings.

In a similar 1996 dispute, the multimillion selling group the Offspring attempted to exit its contract with Epitaph Records, an independent label. The group fired the first salvo by initially declaring in no particular detail that Epitaph breached its contract. Although the matter was settled, the pressure move worked because the band later signed a lucrative deal with the major label Columbia Records.

A breach argument might also exist if there is a provision in the record contract whereby the label guarantees that a minimum amount of recorded product will be commercially released by the record company. If the company does not fulfill its commitment to release, the company may not be able to pick up the next option. However, unless there is a specific definition of "release" included in the contract, this would not be a definitive escape route.

[part 6 next time]

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Breaking A Record Contract" (Part 4)

Being a minor under contract also provides a loophole for dissatisfied artists. In the current marketplace, there is a high consumer demand for teen idols (e.g., Justin Bieber, Cody Simpson). As a result, many minors are signing recording agreements. The major risk in entering a contract with a minor is that generally under California Family Code Section 6751 [and similar laws in other states] the contract is voidable at the option of the minor either "during the minority of the person entering the contract, or at any time thereafter....". In California, the age of majority has been 18 since 1971. Hence, once success is achieved, an artist could use to his/her advantage the fact that the contract was signed during minority, thereby opting to disaffirm the contract.

David Cassidy, the 1970s pop star, used this exact scenario to his advantage. As a teenage unknown, he signed a production contract to act on the TV show The Partridge Family, and to record on Partridge Family records. The contract granted the producers of the show and the recordings the right to use Cassidy's name, image and likeness. Partly as a result of Cassidy's teen idol good looks, the show and records became a runaway success and the producers cashed in by selling millions of dollars worth of recordings and merchandise. In order to force the producers to renegotiate his deal, Cassidy notified them that since he had signed the contract as a minor (21 was still the age of majority when he executed his agreement in 1970), he was disaffirming the contract and thus the producers would have to remove his name, image and voice from everything manufactured up to that point. Not having a legal leg to stand on, the producers renegotiated his deal, making Cassidy the highest paid young performer at that time.

In order to avoid a situation like the above, recording agreements in which a minor "is employed...to render artistic or creative services" (e.g., singer or performer) can be approved by the superior court, as allowed for by Section 6751, which prevents the minor from disaffirming the contract. (i.e., as if the minor had signed the contract as an adult). Approval of the court may be given on petition of either party to the contract and after a hearing and/or simply a court review of the paperwork. Although court approval of a minor contract is routinely done in the entertainment industry, not all record companies make the effort (or are too cheap or lazy) to protect their investment, and thus the artist can use this failure to the artist's advantage.

[part 5 next time]

Ben McLane Esq
benmclane.com