Tuesday, June 20, 2017

Why today’s record deals are too long, too demanding – and prone to making artists feel resentful | Music Business Worldwide

Robert Horsfall (pictured) is one of the UK’s most respected music lawyers, and the founder of Sound Advice LLP – whose clients over the years have included the likes of The Rolling Stones, Sia, Roger Waters, Chase & Status, Queen, BMG, Naughty Boy, London Records, Elton John, Zane Lowe, Coca Cola, Depeche Mode, INXS and Phonogram. Earlier this year, Horsfall presented at Music 4.5’s ‘The Record Label of the Future’, giving a rousing speech which we’ve lightly edited into the below blog. He calls for a revolution in the music industry’s approach to recording contracts – in order to create truly long-term relationships between artists and labels.

I have been a lawyer in the music industry for 35 years, mostly working with artists and managers but also working with and for major labels and indie labels.

My personal music consumption has moved from vinyl to cassette to CD to downloads to streaming and now back to vinyl.

I suspect the new worlds of AR, VR, AI and holograms are going to throw more complex challenges to us lawyers.

Our industry will always be about new technologies and new rights issues and involve debates about who owns the pie or how it’s sliced up.

Two of the first contracts I saw as a young lawyer were Cat Stevens’ 1967 contract with Decca and his 1970 contract with Island.

Oh, how very simple things were in those days.

Is it a co-incidence that some esteemed critics consider 1971 the healthiest ever year for music?

Last year, I handled a ‘360’ contract with a major label. I was so physically and emotionally exhausted by the process of reading and amending it, that at the end of that very long day, I did a word count.

The 74 page contract was 38,004 words long. That got me Googling and I came across a site that gives the word count of famous novels.

Oh dear.

The Great Gatsby is 47,000 words; The Lion, The Witch and The Wardrobe is 36,000 words.

That Cat Stevens / Island contract in 1967 was 2,458 words.

What’s more significant though, is this: the Island contract was a three-album deal.

Cat released those three albums – all classics – in April 1970, November 1970 and October 1971.

He was out of contract, a free agent, within two years of signing to Chris Blackwell.

“In previous decades, New contracts were put in place by grown-up people being grown-up: ‘if it ain’t broke, don’t fix it.'”

But… Cat happily and consensually carried on in business with Island, making six more albums for them, before he retired in 1979.

New contracts were put in place by grown-up people being grown-up: “If it ain’t broke, don’t fix it.”

What’s more, when Cat – now Yusuf – returned to making music in 2006, he renewed his relationship with Universal, the new owners of Island Records.

In May 2009, at Shepherd’s Bush Empire for Island’s 50th birthday concert, I happened to be stood next to Chris Blackwell, enjoying Cat’s performance as much as if it was a concert in his and Cat’s heyday.

Manic Street Preachers were signed to Columbia in 1992, probably on a six-album deal. They have gone on to make 12 albums for them.

Other “lifers”, if we call them that, include Bruce Springsteen and Bob Dylan with Columbia; Dire Straits and Mark Knopfler with Phonogram.

Billy Bragg talks about his 11 albums with Cooking Vinyl, over a 24 years period under seven different contracts.

Back in 2004, I worked on a book looking back at a 30-year-long gestation of music industry contracts. I wrote about a mythical label called Harmony Records and its innovative ‘360’ contract.

In a follow-up book in 2009, I wrote again about Harmony and listed its business philosophy as a ‘Decalogue’, which included:

  • We are in a partnership with you;
  • We trust the relationship and believe we will be in business together for a long time;
  • We will stick together in sickness and in health; and
  • Our business model is about paying you royalties and not forever leaving you un-recouped.

The current buzzword in our business is transparency.

I suggest we adopt a new buzzword – simplicity.

The greatest partnership of all perhaps, a marriage, has wedding vows of less than 50 words (multiplied by two, of course).

Simplicity might lead to greater harmony.

And if new business models can be calibrated differently then maybe this industry’s A&R hit-miss ratio might improve – with greater profits for investment in new signings.

I still get a kick when a client gets signed to a record deal; there are so many great labels and brilliant executives out there.

Artists need to surround themselves with the best of breed, a dream team. It’s not about the money – it’s about getting muscle and validation.

Of course, labels take big risks with new artists and, like any business, they must get a fair return on their investment.

I have no problem with the concept of a ‘360’ deal. I originally welcomed them in the hope – perhaps naïve, with the benefit of hindsight – that they might help labels sustain more long-term careers.

But the ‘360’ deal needs to be fair and balanced.

Asking for a share of gross live income without, for example, some guaranteed tour support is difficult to accept.

“if new business models can be calibrated differently then maybe our A&R hit-miss ratio might improve – with greater profits for investment in new signings.”

Sadly, today’s contracts are too long, too intricate, too overreaching – and too prone to fostering resentment at some point or in some way.

The best way to achieve a greater balance is to have the contract limited to three albums. If the relationship is a healthy one, the deal can then get re-calibrated.

The deal can be adjusted up, down or sideways, as it were, to reflect success, lack of success, new technologies, new opportunities or changed dynamics.

Beggars don’t ask for more than three albums. If it works for them then it can surely work for us all.

They had Adele for three albums and I imagine they are quite sanguine about her deciding to move over to Sony, considering she is now in the “blockbuster” world, better suited to a global powerhouse.

Beggars, by the way, also don’t ask for ‘360’ rights.

If you ask around about the meaning of the word “partnership”, people often say “a relationship of equals”. The word evokes trust, respect, transparency, loyalty and fidelity.

So… let’s please trust the relationship more.

As a publisher, Kobalt is just like Airbnb, Uber, Amazon, Facebook – it owns nothing.

Kobalt trusts the relationship – typically signing writers up to short two or three year deals but, they say, most usually go way beyond that.

BMG’s recordings business is happy with two album deals. Once again, trusting the relationship.

“No other creative or sporting sector signs up the talent for as long as some major labels sign artists for.”

Meanwhile, agents normally work without contracts and managers typically get appointed for three years.

All these people are investing time, money and resources, but they are “trusting the relationship”.

No other creative or sporting sector signs up the talent for as long as some major labels sign artists for.

As an aside, industry executives typically sign three year employment contracts.

Here is some more food for thought: I recently signed an emerging act to a world-renowned jazz label.

The label offered the act a three-album firm deal.

They weren’t just “trusting the relationship” – they were trusting the talent.

“we need to see is a better streaming royalty for artists.”

This was not a ‘boom or bust’ deal.

The advances and recording budgets were sensible – and guess what? Within two years the band are recouped and everyone is happy.

I suspect the band will be with the label for life.

Other than this, the single most important change we need to see is a better streaming royalty for artists.

If the label is making a big cash investment I don’t expect 50% royalty – but I would like to see around 30% to 35%, potentially escalating on break-even or recoupment or after a period of time.

Of course, many indie labels still work off a 50/50 profit sharing model.

Other hot potatoes:

  • Copyright ownership: if publishers can give reversions, why can’t labels too?
  • Product commitments: in a track-driven business, today’s contracts still call for ‘albums’.

Publishers are converting from the old three or four-album contracts to a simplified term of just three or four years.

They seem to be beginning to take a pragmatic attitude of “we take what we are given, when we are given it” – and “trusting the relationship” to win contract renewals.


Fundamentally, though, we must move to more simplified documents, otherwise the whole system is in danger of collapse.

I just handled a three-album ‘360’ deal with a major label in Germany – all in around 5,000 words.

If they can do it there, why can’t we do it in the UK and US?

To some extent, the rule book has been torn up and we do now have a greater variety of business models for our artists to look at:

  • DIY setups
  • EIS setups
  • Label services deals
  • Distribution deals
  • BMG Masters-type deals

We are seeing the emergence of a service industry model, as compared to a rights-ownership model.

The reality: if your act is a new or emerging pop act or dance act, wanting mainstream support from radio, TV, press and streaming services, then they probably needs some kind of ‘360’ deal with a major label.

But other types of artists needing different models better able to manage the economics, the expectations and aspirations.

This more diverse landscape needs to flourish for us to have other methods for gauging success versus failure.

Otherwise, we will carry on with a high attrition rate of acts getting dropped, great executives and managers getting fired and vast sums of money getting lost.

More and more artists, especially those with empowered management or with support from brands, are bypassing the major label system altogether.

The Big Three are responding to this with greater flexibility in their deal models.

We need indie labels to flourish too, even if as a feeder system to the Big Three.

Back in 2010, Martin Mills (pictured) talked about ‘the new middle class’ – bands like Calexico or Midlake, who can sell 100,000 plus records every time they put out an album and can play to 3-4,000 people in 30 or 40 cities around the world.

“A more diverse landscape needs to flourish for us to have other methods for gauging success versus failure. Otherwise, we will carry on with a high attrition rate of acts getting dropped, great executives and managers getting fired and vast sums of money getting lost.”

They can make a pretty good living out of that, doing what they love doing. They can do it on their own terms and that’s fantastic.

We’ve got a bunch of bands like that at Sound Advice – they’re not necessarily seeking stardom or riches, which is incredibly healthy.

I recently read Billboard interviews with top US label executives, saying that the majority of their new signings are now artists on their second deals – i.e. with artists who got unceremoniously dropped after a “stiff” record.

That surely shows that something is wrong with the business models currently being used.

Are our expectations too high?


  • Kid A was Radiohead’s 4th album;
  • Born to Run, Bruce Springsteen’s 3rd album;
  • Thriller, Michael Jackson’s 6th album;
  • Dark Twisted Fantasy, Kanye West’s 5th album;
  • David Bowie started making music in 1963, had his first proper hit in 1969 with Space Oddity, then hit the big time in 1972 with Ziggy Stardust.

In the UK, I suspect the likes of Laura Marling, Michael Kiwanuka and Kate Tempest will be making music for many decades yet.

Ed Sheeran says he has forged a 10-album plan. I don’t doubt him.

As the label of these artists, wouldn’t you want a lifetime relationship with them?

Finally, ponder on this… Laura Mvula has just been dropped by RCA.Music Business Worldwide

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