[Editor’s Note: This article was written by Justin Jacobson Esq. Justin is an entertainment attorney based in New York and has contributed helpful articles on the TuneCore Blog.]
If you have been following news headlines in the music business for the last few months, you may have noticed the on-going public debate between Grammy winning artist Taylor Swift and her first record label, Big Machine Records. In particular, on June 30, 2019, entertainment industry professional Scooter Braun, through his company, Ithaca Holdings, purchased an ownership interest in Scott Borchetta’s Big Machine Label Group. As part of this purchase, exclusive rights to all of the material on Swift’s first six albums were acquired by Ithaca Holdings . In response to this acquisition, Taylor Swift publicly stated that “[t]his is my worst case scenario”.
Most recently, this situation took another interesting turn. In Taylor Swift’s most recent Tumblr post, she alleged that Big Machine Label Group was now preventing her from performing her old music catalog (songs owned by Big Machine Label Group) live during the American Music Awards as well as refusing to permit the incorporation of her old material into a Netflix documentary about her career. However, both Braun and Borchetta responded and publicly denied refusing to issue appropriate licenses to permit Swift to perform her old works at the American Music Awards as well as to incorporate the songs into a Netflix documentary. Most recently, a public statement from Big Machine Label Group was made wherein the label announced they “had reached a licensing agreement with the producers of the American Music Awards” for use of Swift’s songs. While avoiding speculation on the situation and arguing for one side or the other, the most important consequence of this public controversy is that this disagreement further highlights the importance of properly understanding the documents that an artist signs as well as fully comprehending the potential long-term implications that a document signed early in a musician’s career can have on their further development.
Therefore, whether they are an established or new artist, it is crucial for every musician to fully understand all of the provisions contained in any paperwork or documentation that they sign. This is because, assuming the contract is enforceable and the artist receives valid consideration, the document will be binding and the signatory will be obligated to abide by all of the contract’s terms. Typically, when a musician enters into an agreement with a record label or publishing company, these companies usually receive all of the rights to any material created by the musician in exchange for payment to the artist. In general, most of these agreements typically include and provide the company with the exclusive and sole right to license or otherwise control the use and reproduction of any work created under the agreement forever rather than for a specific time period of the contract. In most cases, especially early in an artist’s career, the label or publisher may acquire these exclusive rights to the material for the “life of the copyright,” which in the United States may be the life of the author plus 70 years after their death.
In the Taylor Swift situation, “she does not own the rights to usage of songs from her first six albums because the songs were recorded under her old label, Big Machine Records”. Specifically, it is claimed that “Big Machine Records owns Swift’s masters” which means that the label who “owns the master[s], has lordship over the song’s life after the recording”. While the label might have exclusive control over any third-party uses of the protected material, there are some exemptions that permit an artist to utilize the music “under blanket public performance licenses, as these don’t result in tangible recordings that compete with the original masters”. However, since the American Music Awards “aren’t just live—they’ll be televised next Sunday and potentially re-aired or made available on streaming services,” this exception may be unavailable to Swift. (Editor’s Note: Since the time that this article was written, Taylor Swift has performed at the AMA’s and Scooter Braun released this public statement.)
In addition, there is also a dispute between Swift and her label regarding the re-recording of her old material so that she can own the rights to the new masters of the old songs. Most standard entertainment industry agreements include some sort of restriction on the re-releasing and re-recording of new versions of the masters by an artist. Most agreements impose a time limit on how long a musician must wait before they can re-record and release existing material. This time limit can range from 2 or 3 years to longer, such as 5, 6, 7, or even 20. As evident by the Taylor Swift situation, the time limit imposed within a “re-recording restriction” provision is crucial. Specifically, an artist may try to shorten the length of time that they are prevented from re-using existing material; while, a record label typically tries to impose the longest restriction that they can. This is because if an artist enters an agreement with a party and they later disagree (i.e. Taylor Swift); if there is a long re-recording restriction, then the musician will be unable to create new substitutes for the earlier recordings until the time period ends.
Additionally, similar to most standard recording and publishing deals, it is assumed that the entertainment company receives the sole and exclusive power to license the work that the artist provides. In that situation, an artist may try to negotiate for and propose ways to have some joint administration or “checks and balances” over the company’s issuance of licenses. For example, a musician may try to incorporate language that requires artist approval on certain third-party licenses that are issued. While this might not be feasible, a potential compromise between the company desiring exclusive rights and the artist requesting some approval rights is that an artist must approve any license over a specific monetary amount (i.e., any license over $500 requires artist’s approval). That way the musician has some control and input on how their music is used by other parties.
Another potential limitation that a musician might suggest is providing them with the right to utilize their music for any promotional purposes. This might include performing the works in an entertainment industry awards show or at a charity event. Again, this might not be feasible; but, an artist might at least try to propose certain carve-out exemptions that permit uses of their material without requiring the approval or the consent of the rightsholder. In some cases, a musician could request less advance funds in exchange for receiving more control over their material or they could be provided with a right to re-purchase or otherwise re-acquire rights to their work for a specific listed price or for based upon a formula. For example, a clause may be included that provides for the reversion of the label’s rights to the artist if they pay 110% of the unrecouped balance on their account. While this might not be appropriate in every situation, if the musician strongly believe in their material, it might be worth it.
Ultimately, most negotiations boil down to leverage and bargaining power between the two parties. This means that if the label or publisher is in a stronger position, (which is the case most of the time) then a musician must be aware of this fact and understand how certain limitations may impact their use of the material later in their career. In conclusion, it is generally difficult for an artist to comprehend how a contract will operate three or five years down the road; but, as evident by the current on-going Taylor Swift situation, documents that are signed when you are a new artist can and may have impact on their later career.
This article is not intended as legal advice, as an attorney specializing in the field should be consulted.