Unlimited options in recording contract?

Hi

I have a friend who has signed a recording contract with a clause which says:

The Artiste hereby irrevocably grant to the company a first, second and third and unlimited options to extend the Term of this Agreement for a first, second and third and unlimited Contract period (as applicable)...

Is this lawful? It seems a bit ridiculous that a contract can have 'unlimited' options..

[fdeck]

What does your friend's lawyer think?

[Lazylion]

Hey, at least it calls him an "Artiste"! That's, like, French or something!

Originally Posted by fdeck

What does your friend's lawyer think?

My friend doesn't have a lawyer - she is a bit of a ninny.

[Steve]

Originally Posted by afromoose

Hi
The Artiste hereby irrevocably grant to the company a first, second and third and unlimited options to extend the Term of this Agreement for a first, second and third and unlimited Contract period (as applicable)...

Did they lead her into a Goth room full of black candles and make her sign in blood?

[somegeezer]

Is it just me or is it written using bad English?

Originally Posted by Steve

Did they lead her into a Goth room full of black candles and make her sign in blood?

I know what you mean - I am seriously trying to help her find out if this is even legal, so that she might be able to go to court and get it annulled.

[Music Attorney]

Originally Posted by afromoose

I know what you mean - I am seriously trying to help her find out if this is even legal, so that she might be able to go to court and get it annulled.

In the U.S., Individual states vary on their contract laws, and there are volumes of treatises on this stuff, but generally a contract is binding if the parties are able to contract (e.g., neither of the parties to the contract was a minor) and there is an offer (e.g., a recording contract), acceptance (e.g., artist agrees to the terms of that contract), and consideration (e.g., the artist sings on recordings in exchange for the record company marketing and distributing those recordings).

That said, I’m not a litigator and I don’t spend as much time on the legalities of contracts, but I could see where a court may view this situation differently if the options are open-ended in terms of when they must be exercised by the record company as opposed to the situation where the contractual language is clear about the timing constraints under which the record company must exercise its options (e.g., 9 months from release of the previous album). That is, the court may not be as much concerned about the number of options as it would be concerned about a clear understanding by the parties as to how those options work.

My world is much more about the practical than the legal. For example, when an artist comes into the office to get out of a contract they signed with party B, it’s usually something more like:

1. The artist hasn't had much/any success with party B.
2. The lack of success has left the artist frustrated and party B has spent money they'd like to get back.
3. Some other third party C with money (e.g., another record company or production company) becomes interested in artist (and thinks they can break the artist even though B hasn't, so far).
4. C then approaches B to discuss a release and settlement that allows artist to sign with C in exchange for money, royalties, profit share, or whatever the parties can agree to.

There is usually a fairly short window to negotiate the type of release and settlement situation outlined above. I find that attention spans, interest levels, and shelf life are pretty short in this business. There will be few, if any, party Cs that are going to hang around and invest their money to test legal theories that might take a long time to wind through the legal system. This is especially true on unproven talent which is normally the case in my scenario above. Even if there is some glaring whole in the contract, there still needs to be a court of competent jurisdiction that says so and it doesn't necessarily mean the court will invalidate the whole contract. It might just carve out the offending language. Litigation means lots of money, pain, suffering, and, most importantly, a lot of time that may pass before the person is free to perform for the new record company or production company and I haven't run across many party Cs that will stick around.

Annulment is a legal procedure for declaring a marriage null and void. Unless she has the resources to litigate, she may have to wait until some "white knight" comes along and can pay her way out of it. Of course, the "record company" may just let her go.

Okay, I'm still laughing at that last sentence, too ;-)

Best,
MA

[fdeck]

IANAL, but I suspect the best bet is for the Artiste to sit down with a lawyer and find out exactly what it is that she signed.

[Music Attorney]

Originally Posted by fdeck

IANAL, but I suspect the best bet is for the Artiste to sit down with a lawyer and find out exactly what it is that she signed.

Perhaps. Perhaps not. I think it depends on the goal(s) of the artist(e).

The lawyer that can truly explain the ins and outs of a recording agreement and the realities of the music business (like myself) is very unlikely to be the same lawyer that could litigate contract issues. However, there are, unfortunately, plenty of lawyers who would say they could do both because they practice an area of law called “Door” law (i.e., whatever walks in the door).

If she pays someone like me, it’s probably going to cost her a lot of money to hear she signed a lousy contract. While she may then better understand what the contract says, it’s not going to make the contract say anything different. Over the years, i have repped many artists who really had no clue (and weren't interested) in what the 80 page Sony Music agreement said. I'm not suggesting that's the right approach, but I can say, on a practical level, that their failure to understand everything in their contract did nothing to interfere with their career. Success and a good working relationship with the label are going to do more to "modify" a contract than any lawyer will. If there isn't success, then most of what's in the agreement doesn't matter.

She’s unlikely to find a litigator who will help on contingency because there are no damages here. However, I have run across the occasional litigator who wants into the music business and has helped their client with a non-entertainment related matter (e.g., helping a rapper with a personal injury case) in an effort to start obtaining clients in the entertainment industry. Not exactly the person I’d want repping my music career, but hey …

Best,
MA

[duff beer]

I hope the contract includes free condoms because your friend is taking a serious pounding up the ass...

[Munjibunga]

Just tell her to sing real crappy for a while until they cancel the contract.

[Music Attorney]

Originally Posted by duff beer

I hope the contract includes free condoms because your friend is taking a serious pounding up the ass...

Why do you say that? Do you have any idea what else is in the contract or are you just responding to the option language?

If it’s just in response to the option language, success by the artist has a way of curing contractual problems. Each artist I’ve represented who has released a successful album has had a different looking contract shortly thereafter. Obviously, when a record company first signs an artist, they have no way of knowing whether that artist will be successful (regardless of what the record company may believe or tell their artists). Therefore, the record company may have substantial money and resources at risk with no way of knowing if they’ll ever see a return. Once there is some success, it’s much easier to renegotiate a contract with improved terms that would have been in the contract originally had the parties known there was going to be success (i.e., not just hoping for it).

I have no idea what happened here, but there are many music lawyers and managers who don’t really aggressively negotiate new artist recording agreements other than the initial advance money. Their theory is that the failure rate is so high in the music business the likelihood of a successful album is incredibly low so why waste a bunch of time negotiating terms for a long agreement that are, in all likelihood, never going to be relevant. They want their percentage of the advance money (i.e., the only thing that IS certain) and, if there is success, then they’ll go back and beat the record company up. Also, part of the renegotiation process almost always entails some “make up” money. It’s not just about changing things going forward.

I don’t subscribe to that theory, but this approach can be successful in the right hands. If there is some initial success, the record companies want more new product in the pipeline from their successful artists (e.g., DVDs, holiday releases, etc.) and they also need the artist’s help in promoting that product. If the record company doesn’t play ball and improve the terms of the original agreement, then the record company often finds itself with an artist who seems to be “delaying” recording new material or not being available for promotional efforts. The record company also risks alienating what is likely to be one of the very few artists that are actually making them money. I find they will usually try to keep them happy within “reason.”

What if the next album is also successful? Then what happens?

Lather. Rinse. Repeat.

Best,
MA

[Munjibunga]

Originally Posted by Music Attorney

Lather. Rinse. Repeat.

Best,
MA

Know why it says that on your shampoo container? Not because it's necessary, but because they sell twice as much shampoo if you do that.