Legal—When Forever Is Too Long

Robin Mitchell Joyce—Milom Joyce Horsnell Crow PLC

Time is a very important concept in entertainment industry contracts relating to record deals, publishing and even management. By itself, time is neither an enemy or a friend, but there is no greater contractual disaster than when there is potentially no end in sight.

At one time, the “term” or length of a record contract was calculated as a number of years, the thought being that a record could and would be delivered, marketed, promoted and released in every year of the term. By the mid-1980’s, however, it was clear that capping the process at a year was inconsistent with the practical realities of how the industry worked. The “Contract Year” quickly evolved into the “Contract Period,” a length of time that only moves forward as certain events occur. First, there is a set period of time in which a record, acceptable to the company, should be produced and delivered. This is followed by the date on which the record is scheduled for release, leading through a period of months after release during which the record company can evaluate sales of the record. The Contract Period then usually ends on either the date that the company notifies the artist that it will exercise an option to record another record or the last date on which the company must have made this decision.

Sometimes a record contract can potentially hang forever in limbo if the artist has delivered, but the company hasn’t accepted, and if there is no date by which the record company must either accept the record or let the artist go. The vast majority of record contracts do not provide for this possibility, mostly because record companies have historically had a great financial incentive to release records. Today, record companies are more cautious about proclaiming a record satisfactorily delivered and on its way to release. As a result, an artist could possibly spend years cutting additional masters for the same record without ever being allowed to officially deliver that record.

Re-record Restriction
Record contracts can also reach out and affect the artist’s right to re-record certain songs even after the contract is over. Under a “re-recording restriction,” neither the artist nor the artist’s producer may re-record a song recorded under the artist’s current record deal with a later and different record company for a substantial period of time. The record company, of course, wants to protect the value of its recordings by preventing the artist from re-recording a hit song for another label and will try and structure the language of the re-recording provision so as to make the restricted period as long as possible. But what if the record is never released and there is no date upon which to start the restriction period? What if the period is to start at the date the record is delivered, but the artist is never allowed to officially deliver? In both of these cases, the re-recording restriction never actually begins and thus never ends, rendering it forever impossible for the artist to re-record valuable songs. What, also, if a writer/artist embodies years of self-written songs in a first album for a record company and the artist is dropped before the record is either officially delivered or released? Unless the contract either contains protective language providing for this possibility (and this awful scenario is not as uncommon as one might think), or the record company is willing to waive the re-recording restriction, the entire album of songs are effectively shelved and the devastated artist often never recovers.

Exclusive Songwriters
The exclusive songwriting agreement (“ESWA”) is also an agreement in which an individual is not only rendering services, but delivering an agreed-upon amount of product to a music publisher. This notion of extending the term of the contract until the fulfillment of all deliverables is common throughout all of the entertainment industries. Every contract based on this premise, however, also carries somewhere within it the danger of the never-ending term. In these ESWAs, the term is structured as a series of released records containing Controlled Songs and only moves forward as the artist or the producer delivers these records to a third party record company and they are released into the marketplace. In addition, there is often a requirement that each record contain at least a minimum number of Controlled Songs (often referred to as a “Delivery Commitment”) and there is a specific definition as to what constitutes an acceptable third party record company. But what happens if, often due to the best possible creative choices, the artist or producer fails to meet the Delivery Commitment on a record or the songs are recorded for an independent record company not identified in the ESWA? Given that songs are still probably being delivered to the publisher by the writer (even though the songs might not meet the definition under the Delivery Commitment), how many years should have to pass before the term becomes unconscionably long? What if the artist loses the record deal before the Delivery Commitment is satisfied? Should the term of the ESWA be allowed to continue for an unlimited period of time against the possibility that another deal will be secured?

Summary
Almost every agreement with a “term” has the possibility that a gap in the language will result in a contract that lasts longer than the parties ever expected. Luckily, when this happens and it is possible that the term might never end, the law will usually identify that term as too indefinite or vague as to be enforceable. In addition, many states have enacted laws that prevent personal services contracts from lasting an oppressively long period of time. In truth, however, no one wants to seek a court’s decision in answer to the basic question of “how long is it?” In this, as in many things, it’s probably more productive to look ahead, imagine the best and the worst, and to plan accordingly.