Why do artists keep signing record deals? Part 1: indentured servitude

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Todd A

, Building Your Brand

The “typical” major label deal sucks.

Last week, in a piece about how Kesha’s case is the latest and loudest to highlight a history of sexism and abuse in the music business, I mentioned that it was difficult to understand the intricacies of Kesha’s case against her contract with Dr. Luke. Why is Sony even involved? And if they are, then why can’t they remedy the problem? How was Luke able to deny her royalties for “Right Round”? How is it that she is prohibited from working with anyone else on a record?

The more we learn about Kesha’s deal and her current contract, the more we may wonder how anyone finds themselves in a deal like it. So the most chilling assessment of the case came from the judge who denied Kesha’s injunction. She said the contract was “typical for the industry.”

Typical deals

Last week, I covered heart-breaking stories about abuse against women in the industry. This week’s stories are heart-breaking in an entirely different way. Jeff Spross at The Week took a deeper look at Kesha’s contract in an attempt to explain it in an understandable way. You’ve probably heard of Kesha’s requirements:

Kesha is required to deliver six more albums, which could tie her to Gottwald’s company for another 12 years.

Spross cites an article in Forbes about how these deals are “typical” and can tie artists down for even longer.

As Melinda Newman explained at Forbes, record labels routinely sign artists and acts for one or two initial albums, with an option to sign them for five more. Such deals can tie up an act up for 20 years, depending on how long it takes to make the albums.

That is shocking enough but consider, as Spross did, the amount of work that goes into writing, recording, touring, promoting every single album and how one’s life will absolutely change over 12 to 20 years. It’s absurd to allow such contracts. Which, as Spross points out, is precisely why “California law explicitly limits these sorts of personal services contracts to 7 years.”

Wait for it…

The one exception — thanks to a massive lobbying push by the recording industry — is recording artists like Kesha.

Got that? California has realized that personal services contracts are harmful to individuals and limits them to 7 years, except in the case of recording contracts thanks to lobbying efforts by the music industry.

The Forbes article that Spross points to, by Melinda Newman, sheds more light on how that exception came to exist.

The RIAA was responsible for amendment (b) to Statute 2855 in the first place in 1987. Though the RIAA offered up some compromises, such as limiting the number of albums a label could sue an artist for should the artist leave after seven years with records still remaining on his or her contract — the original subsection b allows labels to sue for damages for all undelivered albums — the two sides could never come to anything near a workable compromise, and both sides walked away.

Newman’s piece is excellent but if there is one tiny flaw, it is that she seems to buy the RIAA’s reasoning that long-term options are necessary because it may take years for a label to recoup its costs.

Though his evidence is largely anecdotal, it’s important to consider Steve Albini’s article from the early 1990s, “The Problem With Music,” because Albini breaks down an album advance mathematically to show where the money really goes. With a $250,000 advance and 250,000 units sold, a band could still end up $14,000 in debt to their label. In Albini’s hypothetical case, the band members would have earned only $4,031.25 despite earning $3,000,000 in sales for the company. And they’d only be a quarter of the way through their contract.

“Some of your friends are probably already this fucked,” Albini closes.

So let’s look at a real case: Unlocking The Truth, a tween metal band you may have seen on YouTube. In 2014, the band signed a possible $1.7 million contract. “Possible” because the contract first requires two albums from the band after which — surprise! — “The label also has an option in the contract for an additional four albums.”

Then the kicker: “Should six albums come from the group during the contract the band could earn $1,700,000.”

Six albums? Even if they were able to produce one per year, they’re still indentured to their label for 6 years.

And there’s another kicker, they have to sell 250,000 copies of the first album to qualify for the big advance on the second. The label paid them a $60,000 advance on the first record. $60,000(!) for a trio (plus whichever parents are handling them and all the attorney fees and manager percentages) to make their first album. So MAYBE, they’re getting a little over minimum wage to make their first record.

And that 250,000 units? Metal Injection notes that Korn didn’t even crack 200,000 units with their last album. Yes, Unlocking the Truth is already this fucked.

It won’t surprise you to know Unlocking the Truth is currently negotiating their exit from that deal. The label they signed to? Sony.

You can find all sorts of breakdowns of major label contracts on the web. But it might be easiest to start with the Future of Music Coalition’s from 2001. While it is a bit dated, it does a great job of explaining the different clauses of contracts and why you should avoid or demand certain ones.

It is these “typical deals” that led the recently-departed Prince, arguably an industry heavyweight, to decry record contracts as “slavery” for more than two decades. Even Peter Buck of the ever-congenial band R.E.M recently declared that “everything” outside of writing, recording, and performing music is terrible in the industry.

If these deals are typical, can new media production and distribution provide a solution? Next week, we’ll look at The New Typical.

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