For the last few decades, there has become an all too common and unfortunate scenario that we’ve seen play out in the music industry – the artist or producer (the “talent”) who becomes unhappy with their record label and wants out of the contract they signed when starting their career. From The Beatles and Apple Computer, to Dr. Dre and Death Row Records, in the vast majority of these cases, the talent first signs a deal with a record label because they are still relatively unknown and become convinced that they need the record label to help cover costs and promote their careers. While record labels do help with those areas, they usually provide lengthy and complicated contracts that talent cannot understand and include terms that grant the record label more rights than the talent knew about or agreed to. Usually the talent is so eager to get their career going, they sign a contract without consulting a lawyer or even reading it.
At first, things may be fine as the talent does need the support to get its name and music out there. However, once fame starts to roll in, and the money that comes with it, positions and attitudes can quickly change. Now the talent can afford its own lawyer to review the contract and finds out the damage that was done. There are a number of ways that a contract can be disfavorable to the talent, from making their services exclusive to the record label, to being shorted on royalty splits and copyright ownership, to onerous terms dictating how many songs or albums must be provided before the contract terminates. Such terms limit the opportunities that talent can pursue once they start to gain notoriety and cause the talent to receive less than their fair share of royalties. At the end of the day, the talent is forced to either accept the terms of their deal and finish it as quickly as possible, or put up a fight by signing with another record label and/or filing a lawsuit.
One of the most recent examples of this is the artist Megan Thee Stallion – Megan Pete – who has been in a legal battle with a record label she was signed to, 1501 Entertainment. Pete became unhappy with the contract when she came to find out that it was a “360 Deal” which covers every aspect of her career and unfairly split her recording royalties and touring income. Further she claimed the label’s accounting of all income was purposefully and deceptively vague. Thus, back in September of last year, Pete signed a deal with Roc Nation. 1501 become upset, and tried to block Pete from releasing new music in early March of this year. Pete filed a lawsuit and was preliminarily granted a temporary restraining order to allow her to put the song out, still through 1501, while the lawsuit continues. Then in April a judge denied a motion from 1501 to compel arbitration per a clause in the contract, allowing Pete to continue litigating her case to get out of the contract. The case is currently pending.
In conclusion, here are a few pieces of advice for any upcoming artist or producer considering signing a record deal:
- Read the contract yourself! You’d be surprised what you may understand, and even if there’s something you can’t, make a note of it, so you can be more informed when you…
- Hire a lawyer! Even if you do understand the contract, there may be certain nuances, rights, or provisions that you are unaware of without the guidance and advice of an experienced entertainment lawyer who can help ensure that your interests are protected
- Don’t be too desperate to sign a deal! While it is certainly exciting to receive an offer and have someone want to help you grow your career, things quickly change, and especially in today’s world fame can happen almost overnight. Think about the long-term and setting yourself up for the future, not just how you may benefit in the short-term.
Contact us today if you need assistance navigating your rights related to the various contracts in the music industry!
Disclaimer: DiSchino & Schamy is a boutique, Miami-based law firm which specializes in corporate, business and intellectual properties for businesses in the creative industries. However, this information is being provided for educational purposes only and does not constitute legal advice. Any reader of this article should consult with an attorney directly regarding its legal rights and obligations.