Imagine a music act – let’s call them Helen of Troy and the Thousand Ships. Helen signs a deal to make three records in seven years. The first two – Storming the Gates and Inside the Horse – are platinum knockouts. Helen then tells her label she’s going to go on tour, might make a movie, and will take some time off, but there’s not going to be the promised third album. When the final two years of her deal are over, she’s going to walk. No third album, talk to the hand.
Should Helen’s label have the right to be compensated for the album she promised but reneged on? After all, they took a chance when she was unknown, invested in her production and marketing, and paid a cash advance covering three records as well as royalties for all her sales and streams. What gives her the right to abrogate her side of the deal? Is that fair?
But a new bill introduced by Assemblymember Ash Kalra would give successful stars like Helen the power to do exactly that. And by rewarding that behavior, it would reduce opportunities for new acts and the diversity of American music.
Unlike contracts signed by other entertainers, such as actors or athletes, recording deals specify not just a length of time (seven years has been the legal maximum in California for over 80 years), but how many albums will be made – where “album” has evolved to cover mixtapes, streaming tracks and the like. The general practice is, if an act doesn’t succeed, they’re released from their deal or not renewed, but they keep the advance they were paid. When an act does succeed, the label routinely offers an extension – adding more years, music and money to the deal. After all, a label with a hit on its hands doesn’t want to lose the hit-maker it helped develop.
That’s a good system for everyone. For music fans, it encourages the recording industry to sign and develop new acts, particularly voices and genres that might otherwise be too risky or non-commercial to make a longshot bet – from the Mothers of Invention to Bjork, from Tejano to classical to free-form jazz. In that sense, the recording industry is like angel investing or book publishing – one Facebook unicorn pays for the failures, one Fifty Shades of Grey subsidizes all the releases that are remaindered, the result being that many projects get funding and many books are published. So it is for recording. According to a California Music Coalition analysis of MRC Data, in 2020, there were 160,000 album releases, but only 2,200 sold the equivalent of 100,000 copies – those successes funded the rest.
The arguments for passing a law that invades and destabilizes this system of even-handed, private negotiations that’s working, successful and fair are feeble.
Some say the Kalra bill is needed to ensure artists aren’t bottled up by their label for longer than seven years – but California law already limits recording contracts to that length. The bill doesn’t change that, it simply removes the statutory recourse allowing labels to recover damages if an artist fails to deliver recordings that were promised and paid for during the seven contract years.
Some claim successful artists don’t have enough power to win the fruits of their accomplishments. But that ignores the role labels play in creating that success, as well as the routine practice of successful musical acts renegotiating even better deals when they succeed.
Why would anybody propose a system that would lead to less investment and fewer types of artists getting signed? After all, the only parties who would come out ahead under this proposal are big musical acts in the middle of contracts and their agents – who could use the new leverage provided by this law to make exorbitant demands on pain of refusing to deliver recordings they previously agreed to make.
Unsurprisingly, that’s exactly where it’s coming from. It’s a power play by big-name stars and multimillionaire superagents to grab more of the pie at the expense of newer and smaller acts, the industry’s vitality and California’s creative economy.
There are times when legislatures must intercede in private negotiations – minimum wages, workplace discrimination, occupational health and safety or consumer protection. But this isn’t one of them.
Instead, it’s an attempt by the few and big to create a system that leads to less for the small and many. And no matter what you name it, that’s not fair.
Ev Ehrlich was undersecretary of commerce for President Bill Clinton and is a top economist for the Major League Baseball Players Association and NHL Players’ Association. He is also a Frank Zappa fan and a former musician.
