Entertainment Contracts: Performance Clauses

Editing masterworks of recorded music is a highly skilled art form. The entertainment lawyer’s role in drafting clauses, agreements, and other contractual language is also specialized. How does the entertainment lawyer’s legal drafting of a clause or contract impact the musician, composer or songwriter? Many artists believe they will be “home-free” as soon as they receive a draft contract proposal from the label’s entertainment lawyer. They then hand the contract to their own entertainment lawyer for a review of all clauses. They are wrong. They are wrong.

A U.S. record company may send an artist a “standard form” contract proposal. However, this does not mean one should blindly sign it. One can ask his entertainment lawyer to rubber stamp the agreement before signing blindly. Many of the label forms that are still in use today are very outdated and have been taken from contract form-books, or the “boilerplate”, of prior labels. Entertainment attorneys will find that many label recording clauses and contracts read almost as if they were written in haste. This is similar to how Nigel Tufnel wrote a Stonehenge monument 18 inches high on a napkin in Rob Reiner’s “This Is Spinal Tap”. If you’re a motion picture fan, musician, or entertainment lawyer, you probably know what happened to Tap because of that scrawl.

Before signing any contracts or draft clauses, an artist should consult with his or her attorney. The artist might be able, through negotiation, to include more specific and balanced language in the final contract signed. An entertainment lawyer must remove any inequities or unfair clauses from the first draft of a contract. Before the contract can be signed, it must be free from ambiguities.

An artist or his entertainment lawyer could leave an inequitable or ambiguous clause in a signed contract. This is especially true in the context of a signed recording agreement that could tie up the artist’s exclusive services for many decades. Remember, an entertainment lawyer who has studied this item for a long time will tell you that artists have a very short artistic “life-span”. This means that an artist could end up with just one bad contract, one bad signing or one bad clause. These bad contracts are often signed before an artist seeks counsel from an entertainment lawyer.

One seemingly-inexhaustible type of ambiguity that arises in clauses in entertainment contracts, is in the specific context of what I and other entertainment lawyers refer to as a contract “performance clause”. A contract that does not specify a performance obligation is usually unenforceable. Take a look at the following:

Contract Clause 1: “The Label shall make every effort to market and promote the Album within the Territory.”

Contract Clause 2: “The Album, as

Delivered to Label by Artist, the Album shall be produced and edited only using first-class equipment and facilities for sound recording and any other activities related to it.

Both clauses should not be used in a contract. You should not agree to either clause in a contract as it is written. Before signing, one should discuss contractual changes to these clauses with an entertainment lawyer. Both clauses propose contractual performance obligations that are at best vague. Why? Why? Even the entertainment lawyers involved in the negotiations can have differing opinions about what constitutes a first-class facility, as described in Contract Clause 2. These clauses could be invalidated if they were ever examined by a judge or jury in the heat of U.S. litigation. According to this New York entertainment lawyer, yes, these clauses are so bad.

From the perspective of an entertainment lawyer, consider Contract Clause 1, the “best effort” clause. What would the practical approach of an artist to enforce that clause against a U.S.-label? The short answer is that the artist wouldn’t. In the event of a dispute between artist and label about money or marketing expenditures, the “best efforts” clause could become the artist’s Achilles Heel. The artist’s entertainment lawyer might not be able help him out of the situation.

Artist: You have violated the ‘best effort’ clause of the contract!

Label: “No!” I tried! I tried! “I really did!”

This is the basic idea.

Is it legal for an artist to leave a label that has this kind of clause in it? Entertainment lawyers say there is no reason. Artists should not agree to vague or hesitant contractual marketing commitment clauses if they are to market the Album.
It is often seen as an integral part of the deal by the artist. This is often true. It could be the artist’s entire career at risk. Artist’s career and public recognition could be at stake if the artist’s marketing spend during the term of the contract decreases. In a contractual negotiation between entertainment lawyers over this item, the artist should have the upper hand.

If the label is not willing to sign a contract marketing spend clause, then the artist-side entertainment lawyer claims that the artist should have the right to know in advance what the label’s marketing spending will do to protect his or her career. The entertainment lawyer asks, “Why is the artist signing this contract other than an advance, marketing spending, and tour support?” These questions might be phrased differently in today’s “360 deal”, which is the current age of the contract. While the clauses can evolve or devolve, the equitable arguments are essentially the same.

It is not only performers who should be subject to performance clauses in contracts. Entertainment lawyers can also ask companies to sign performance clauses into contracts. A performance clause, such as the contractual obligation of a record label to market and publicly promote an album, requires that the artist and, if applicable, the artist’s entertainment lawyer be clear in the clause about the obligations of the record company. This clause should not be left to a later verbal side conversation. The artist should create a laundry-list clause with the help of his or her entertainment lawyer. This lists all the items that the label should do. Here’s a partial example.

Clause 3: “To promote and publicize the album in the Territory, Label will not spend less than ‘x” U.S. Dollars on advertising during the following period: 

Contract Clause 4: You, Label, will hire Public Relations to market the Album in the Territory. You will not allow less than ‘y’ dollars to be spent on publicity and directly related to the Album (and any other property) in New York, New York during the following period: 

Compare Clauses 3 and 4, to Contract Clause 1 earlier. Then ask yourself, or your entertainment lawyer: Which clauses are more hortatory. Which are more precise?

Concerning Contract Clause #2, and its unclear and unexplained definitions of “first class facilities and equipment”, why not just have an entertainment lawyer include in the contract a laundry list clause listing five recording studios located in the city that the artist and label would agree to be “first-class” in terms of definitional purposes. The entertainment lawyer opines that this is meant to be a contract. If you really want to keep more litigators busy debating bad clauses or bad contracts in the courts, don’t leave your definitions (and therefore definitional issues) for a later document.

If you don’t ask, you don’t get. The artist should ask the entertainment lawyer to make the label sign an explicit list of tasks in a suitable clause. They should also monitor the progress of the label and ensure that it adheres to the contractual standard the artist “carved in” to the clause.

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