After a video leaked to TMZ of rising country artist Morgan Wallen using the N-word on Feb. 2, radio cut his songs, streaming services dropped him from official playlists, his booking agent stopped working with him and his label “suspended” his recording contract. The Academy of Country Music even deemed him ineligible for this year’s ACM Awards. He was essentially exiled from the music business.

Except by fans. Wallen — who on Feb. 10 issued a video apology saying, "I fully accept any penalties I’m facing" — is now spending his fifth straight week at No. 1 on the Billboard 200 chart dated Feb. 20, with his 30-track Dangerous: The Double Album. Wallen was helping lead the genre into the streaming era, appealing to a new generation of fans. But then his behavior thrust country music’s lack of inclusivity and diversity under serious scrutiny — and started a public conversation about the work it needs to do, both to update its practices and to reach beyond its core audience.

"One ignorant guy took the rest of us down with him as quickly as that drunken slur came from his mouth,” a leading Nashville industry executive recently told Billboard, which featured Wallen on the cover of its Jan. 16 issue, when the music business was still betting hands-down that Wallen would be country’s next global superstar. "While he sits on the sideline, the pressure is on the rest of us to advance the genre and remind the world that not all country music artists, creators [and] executives are this way."

Wallen’s label, Big Loud Records, and other associated businesses have been struggling to navigate the issue. "They’re thinking about music fans, they’re thinking about influential voices within the music industry, and they’re thinking about other prospective artists whom they might want to welcome onto their label someday," says Sean Smith, executive vp reputation practice at public relations firm Porter Novelli, who helped lead crisis management for the Obama administration.

In his video apology, Wallen asked fans not to defend his actions and said that he had begun meeting with Black leaders and stopped drinking. (He noted the TMZ video showed him at the end of a 72-hour bender.) But his followers haven’t stopped streaming or purchasing his music. Wallen’s airplay collapsed after iHeartRadio, Entercom and other radio conglomerates stopped playing his songs, but increased sales and on-demand streams by fans who can no longer hear him on the air have kept Dangerous atop the chart. “It’s not surprising. Morgan has a very devoted fan base,” says Leslie Fram, senior vp music strategy at CMT (which has pulled all Wallen programming from its platforms). Despite Wallen’s apology, she adds, "Any of his fans who felt he was wronged in any way came to his defense by buying the album."

Movements like #MeToo and Black Lives Matter have created a new era for artists and the companies that work with them. Days before Wallen’s video leaked, actress Evan Rachel Wood publicly accused rocker Marilyn Manson of sexual abuse, leading his label, agent and manager to drop him. (Manson has denied all claims, calling them “horrible distortions of reality.”) Weeks earlier, label Mexican Summer dropped indie-rocker Ariel Pink for attending the Jan. 6 rally in Washington, D.C., for then-President Trump that turned into a riot. (Pink has said he was there to “peacefully show my support for the president” and did not participate in the insurrection at the U.S. Capitol.)

Music companies are acting faster than ever in the wake of such events. "Labels are, in essence, public figures now," says Smith. "They need to be responsive to public opinion in ways that they’ve never had to before." That’s especially true for public companies like Warner Music Group and, soon, Universal Music Group, whose Republic Records works with Big Loud on Wallen.

Nearly three-quarters (72%) of Americans feel more empowered than ever to share their thoughts and opinions about companies, most often on social media, and one in three (36%) have "canceled" a brand in the past year, according to a new Porter Novelli study on cancel culture. The study found that companies are accountable for both their own brands and those of their representatives, as 87% of Americans think companies need to take responsibility for the words and statements of executives.

Big Loud swiftly issued a statement saying it had decided to "suspend" Wallen’s recording contract "indefinitely," though it wouldn’t explain what that meant in practical terms; the label continues to rake in over $1.5 million a week from Wallen’s sales and streaming, Billboard estimates. A source tells Billboard the label has halted all activity around Wallen, including promotion and planning what was expected to be a 2021-22 arena tour. But a prominent entertainment lawyer who requested anonymity says a "suspension" is a way to "kick the can down the road" without a clear legal meaning. "It would seem to mean that they’re waiting to see whether the public is satisfied with the steps that have been taken to rectify the situation," says the lawyer.

Big Loud is in the unusual position of also acting as Wallen’s management and publishing companies, and although Wallen has been removed from the roster on each company's official website, the status of those deals is unclear. Republic Records has not yet taken action publicly beyond posting on social media that it "fully supports Big Loud’s decision." Both labels declined to comment for this story.

Labels in such situations have several options: They could stop promoting an artist’s work, or even drop the artist instead of picking up another option on his or her contract. (Labels typically have six months to a year after an album is released to make this determination.) The most severe step would be to entirely pull an artist’s recordings from stores and streaming services. That’s what Sub Pop did with indie rock band Avi Buffalo last July after the band’s founder, Avi Zahner-Isenberg, was accused of raping a former bandmate (Zahner-Isenberg has not publicly responded to the claims). "That’s something we, as artists' lawyers, are probably going to have to beef up [negotiations about] in the future," the lawyer said. "There should be a mechanism for what would then be the artists' rights."

"In the end, labels must make a business decision," says Janet Comenos, CEO of entertainment insurance provider SpottedRisk, which offers "disgrace insurance" that reimburses companies and brands when celebrities they partner with are involved in scandals. "Is Wallen profitable enough to outweigh the legal fees, PR costs and incalculable reputational damage of keeping him on their roster?" (SpottedRisk rated Wallen’s use of a racial slur as Tier 3 out of 7 in its Public Outcry scoring system, reasoning that it was perceived to be directed at a friend and that the public expected this kind of behavior from Wallen, whose list of missteps includes being booted from a scheduled Saturday Night Live performance in October for partying in public without a face mask.)

More labels could also add safeguards to recording contracts known as morality clauses, which are common in brand endorsement deals. Most stipulate an agreement can be terminated if an artist commits an act of "moral turpitude," which can be anything that violates "community moral standards" and brings "public disrepute" to the company.

"These clauses are getting broader and broader, especially since the #MeToo movement," says Fox Rothschild partner Heidy Vaquerano, in response to changing circumstances. "The fans will not only attack the artists but also the company and push them" to sever ties with the talent.

The Black Music Action Coalition, in a Feb. 5 letter, applauded the country music industry’s "swift and sweeping" efforts to condemn Wallen’s actions, and Fram hopes the artist will "continue to help that same group of fans understand the reason behind the industry’s swift action against him."

That decisive condemnation has also set a new precedent for how quickly labels and other music companies are expected to react to such situations in the future, says Smith.

"Every time a company acts to respond to that public pressure, the bar is now raised," he says. "The next time that an artist finds themselves in a situation, the label will be judged against the new timeline."

Additional reporting by Ed Christman, Melinda Newman and Claudia Rosenbaum.