Friday , 24 October 2014

Home » Featured Content » Record Label Obligations: Is a ‘Release Commitment’ for your record worth having?

Record Label Obligations: Is a ‘Release Commitment’ for your record worth having?

Forcing a company to release a record is of questionable value. Releasing a record is one thing, but marketing and promoting it in a positive manner is quite another (Lee Thompson)

One Sided contracts?

Recording contracts issued by majors may stretch to sixty or seventy pages. About a third of the agreement is taken up with financial provisions most of which, deal with the various means by which the artist’s basic royalty is reduced. The bulk of the contract is for the company’s benefit. It imposes obligations on, and extracts warranties (legallybinding promises) from, the artist. Beyond the obligation to pay an advance and possibly, at some future time, some royalties, it is difficult to find anything in the document which imposes any obligation on the company.

Release Commitments

One exception is that most recording agreements now include a release commitment of some kind. This would appear to favour the artist, but appearances can be deceptive. Record companies rarely agree to a positive commitment to release a particular record in a particular territory within a given period. A company would probably give such a commitment only for a record which has already been made, and for which there is an obvious market. In such a case, there is little benefit to the artist in securing a binding release commitment, because commercial reality will ensure the record is released in any event.

The main reason for the release commitment is to satisfy the company’s concern that without this there might be a stronger argument that the agreement constitutes an unreasonable restraint of trade. Courts do not look favourably upon an exclusive recording contract which does not contain an obligation to make the artist’s work available to the public.

Most release commitments are not “positive” commitments. They are best described as “negative” release commitments. Typically, release obligations relate only to the UK and apply only to minimum commitment albums (and not singles) and provide that the album must be released within, say, six months of delivery. If the company fails to release within that period the artist may serve a “cure” notice. This gives the company a further period, perhaps sixty days, from its receipt of the cure notice in which to release the album. If the company has still failed to release the album by the end of the cure period, the artist’s only remedy is usually to serve a further notice on the company terminating the contract. In other words, the artist will no longer be obliged to record for the company. Since the company has persistently refused to release the album this usually would not cause the company any difficulty. Moreover, all rights in the unreleased album would still vest in the company.

Reversion

In order to make release obligations more effective, the artist should try to shorten the periods involved and to ensure that if the right of termination arises, copyright in the unreleased album should automatically revert to the artist. This is difficult to achieve, but the company may agree to it, either on repayment of all or part of the recording costs and/or in return for a small royalty (normally referred to as an “override”) on any subsequent sales of the album through a third party.

Overseas Releases

In practical terms, disputes are more likely to arise over the company’s failure to release a particular record overseas, especially North America. Even a successful artist may have difficulty in securing a release in the US. The US is such a large market that the costs involved in “breaking” a new artist are much greater than elsewhere. Artists have to compete both with American artists and other foreign artists for the limited promotion and marketing resources of the US affiliate. The US affiliate may not wish to prioritise the artist. The UK company, which must grant rights to its US affiliate, may have no real influence over the extent, if at all, to which the US affiliate exploits those rights.

Territorial Reversions

The artist should therefore try to secure a positive commitment of some kind for the release of records not only in the US and Canada but all other major territories. Ideally, if the company fails to release in any overseas territory, all rights for that territory should revert to the artist, i.e. not only for the unreleased album but for all future recordings. This is difficult to obtain and is in any event problematic because usually the company has secured worldwide rights on the basis that it makes and pays for all of the recordings. There is a natural reluctance to give up copies of the masters to the artist or to some other record company in another territory.

This would give rise to difficulties over the appropriate contribution (if any) towards recording costs, how videos are to be dealt with, how to deal with imports and other practical matters. Often, the best that may be achieved is a provision that the artist may compel his record company to license another company in any territory in which its regular licensee is unwilling to release the album. Even this is not always possible because the internal licensing arrangements between the affiliates of a major may not easily permit the grant of a licence to anyone outside the major’s own group. Moreover, if this arrangement is accepted, the company is likely to insist upon some reduction in royalties (certainly if the royalty paid by the licensee is less than the artist’s royalty for sales in that territory plus a reasonable profit margin for the company).

Is a Release Commitment Worth Having?

The trend has been for release commitments to become more convoluted and of less practical relevance. Forcing a company to release a record is of questionable value. Releasing a record is one thing, but marketing and promoting it in a positive manner is quite another. Many release provisions benefit the record company rather than the artist, by limiting its exposure in the event of nonrelease.

Marketing and Promotion

It is difficult to persuade any record company to give a precise commitment on marketing and promotion. Sometimes, a company will agree to use “all reasonable endeavours to exploit” but this is almost meaningless. What the artist needs (but rarely gets) is a commitment that the company will spend a minimum sum on direct marketing and promotional expenses. Sometimes a company will agree to appoint independent promoters to support a record and may commit to spending a minimum sum on this. Beyond this, a company might commit to a minimum number of promotional videos (perhaps one or two for each album) in accordance with an agreed budget. Sometimes a company will accept a contractual commitment to provide a certain amount of “tour support” i.e. to make good the shortfall of expenditure over income from an approved promotional tour. However, even if tour support is paid, the company will insist on numerous rights of approval. Tour support is normally treated as a further advance, 100% recoupable from the artist’s royalties.

Record Label Obligations: Is a ‘Release Commitment’ for your record worth having? Reviewed by on . Forcing a company to release a record is of questionable value. Releasing a record is one thing, but marketing and promoting it in a positive manner is quite an Forcing a company to release a record is of questionable value. Releasing a record is one thing, but marketing and promoting it in a positive manner is quite an Rating:
scroll to top