When an Artist Goes to Jail, What Happens to Their Business?

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Jail time and prison stints can cut into an artist's career -- but what does it mean for the labels, lawyers and managers that are left behind?

Ed. Note (Sept. 9): This article has been updated to include the latest developments in the case against Bobby Shmurda, who pled guilty today to two counts and accepted a plea deal that will see him serve seven years in prison.

The record industry is no stranger to dealing with an artist's incarceration; musicians from Merle Haggard and Billie Holiday to Tommy Lee and Ronald Isley to Tupac Shakur and T.I. to Lil Kim and Lauryn Hill have all had their careers put on hold while they dealt with the consequences of falling on the wrong side of the law. 

In each instance, the charges and sentences vary (tax evasion, gun or drug possession, assault) but the result for the artist’s career and deals are subject to a series of legal and contractual decisions that come into play when an extended absence becomes a factor. But what does it mean for the labels, lawyers and managers that are left behind? While each situation is handled on a case-by-case basis, a blueprint of sorts for dealing with the fallout has emerged over the years.

"The labels are somewhat used to this, because it's happened over the history of the music industry numerous times; they kind of know that waking up and hearing that one of your superstars is in jail and gonna serve two years for gun possession, or a drug charge, is something that's pretty common," says Vernon J. Brown, a former business manager for Public Enemy and D'Angelo who has been Cash Money Records’ attorney for 20 years. "While they're in jail, [labels] are planning on how they're going to get the most out of releasing the product when they walk out the door and get the biggest marketing buzz from it."

Of course, the wait can be almost unbearably frustrating from both sides, something Atlantic Records and Florida rapper Kodak Black, 19, one of the most exciting MCs to emerge in the past year, know all too well. Kodak signed to Atlantic in October 2015, but by the time he landed his first appearance on a Billboard chart, as a featured guest on French Montana’s “Lockjaw” this May, he was in jail on a slew of charges. Last week a Florida judge ordered his release on probation, only for authorities to discover more serious outstanding warrants against him in another county, and locked him back up without bail before he was able to walk out the door. With the glacial pace of the legal system, his immediate future remains in doubt.

But from a label's perspective, severing a contract when an artist goes to jail makes little sense unless the crime is a public relations nightmare; for several reasons, fans in most genres are willing to overlook or even celebrate gun or drug charges, though violent or sexual felonies are trickier (or impossible) to navigate. T.I. and Lil Wayne, who both served sentences of around a year for gun possession, hardly skipped a beat in their careers. Gucci Mane, who served almost three years on gun charges before his release in May, and Boosie Badazz, strung up for nearly five on what amounted to drug charges after beating a murder rap, both returned with the highest-charting albums of their respective careers on release, and both were welcomed back by Atlantic.

Typical recording contracts are structured with minimum delivery requirements, extension options and time constraints. Essentially, if an artist can't reach the minimum delivery requirement of projects within a set amount of time, the label has two options. "The label could terminate the contract for failure to meet the minimum delivery obligation," Brown explains, though he says that's unlikely. "Or the label could just leave the contract as is, do nothing, in which case the contract would still stay in force, still be exclusive, and the artist would be under the contract when they get out of jail."

Julian Petty, a partner at Nixon Peabody who has represented Slick Rick, Earl Sweatshirt and the estate of the Notorious B.I.G., among others, compares that situation to the one Slick Rick found himself in in the early 1990s, when Rick pled guilty to two counts of attempted murder following a shooting in the Bronx, eventually serving five years in prison. Rick, who released his hugely successful debut The Great Adventures of Slick Rick on Def Jam in 1988, was bailed out by then-label boss Russell Simmons and rushed into the studio. "Def Jam still had additional options for his recording services and additional albums, so when he came out, he did a new album for Def Jam," Petty says. "Their contract wasn't terminated, it still stood up."

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Major labels, like booking agents, generally work with so many artists that if one goes to jail for a period of time it doesn’t cut too deep into the financial bottom line; setting aside personal affection for the artist – publicists, in particular, often look upon their artists as de facto family members, like a younger sibling – the business side will be fine. But for a personal manager, who typically earns 15-20 percent of an artist's gross revenue during the term of their contract, and juggles far more responsibilities for far fewer artists, any pause in an artist’s ability to work cuts directly into their paycheck.

Management deals are structured one of two ways, says Brown. "Usually it's in number of years, or it's under some occurrence, such as a tour or an album release," Brown says. "Many years ago it was always a number of years, but in the last 10 years we've seen many management contracts now that are based on cycles." (Think of the four-year gap between Frank Ocean’s first and second LPs as an album cycle, for instance.)

Cycle-based management contracts would function more along the lines of typical recording contracts, leaving them to essentially grind to a halt during a prison term. But some management contracts will have a suspension clause, allowing managers to freeze the terms of the deal under specific circumstances. One clause, deemed standard language by several lawyers contacted by Billboard, reads, "If for any reason Artist refuses or ceases to perform in the Entertainment Industry, Manager shall have the option to suspend the Term of this Agreement until such time that Artist shall commence performing in the Entertainment Industry again."

That would allow a manager to continue collecting a percentage of all income from projects -- label or publishing royalties, endorsements, merch sales, etc. -- negotiated during the term, though not for any new projects that arise while the contract is suspended. "That provision protects a manager, not only if an artist goes to jail, but if an artist gets incapacitated -- they get into a car accident, something happens to their vocal chords, anything like that," says Petty. "But what if a book deal comes up? They're writing a book while in jail -- many people have done that before. It's either one or the other."

Still, there is an incentive to suspending a management contract; while labels would continue paying out royalties to artists, touring income -- the biggest money-maker in the industry today -- and contractual advances would evaporate, meaning that those portions of a manager's percentage would dry up along with it.

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Then there’s the case of Bobby Shmurda, signed to Epic on the strength of his hit "Hot Boy" but indicted on drug and gun conspiracy charges before he could release an album. He has not been denied bail, but the $2 million set by a Manhattan Supreme Court judge has kept him behind bars, while Epic has declined to put up such a large sum, and still lists him as an artist on its website.

"If they're doing a traditional artist deal, the label has all the power. They choose whether to sign you, whether to drop you, whether to exercise additional albums, whether to suspend, whether to put out your record," Petty says. "[Epic] may just be waiting to see how this thing turns out, because [Shmurda] getting out could be a great marketing opportunity; he does have fans, he had a huge record, and why not try to recoup some of this money by putting out an album?"

Shmurda's situation, as with Kodak Black’s with Atlantic, raises another question: how long is a label willing to wait? The young rapper was arrested Dec. 17, 2014 and he will have been in jail for 21 months by the time his trial is set to finally begin Sept. 12. If found guilty, he's facing years in prison; with the relatively short life span of the average career in the music industry, that could render Shmurda a distant memory and a loss of investment for Epic by the time of his eventual release.

Update (Sept. 9, 2016, 5:18 p.m.): Earlier today, Bobby Shmurda appeared in a Manhattan courtroom and accepted a plea deal offered by the Special Narcotics Prosecutors' Office, which saw him plead guilty to one count of fourth-degree conspiracy to possess a weapon in the second degree, and one count of criminal possession of a weapon in the second degree. In exchange for his plea, the prosecution offered him a seven-year sentence; with credit for time served, Shmurda will serve someone around an additional five years in prison. A rep for Epic Records did not return a request for comment on the rapper's label situation following today's hearing. Shmurda's official sentencing date is set for Oct. 19.

"For people who might be in prison for a while, [a label] might check the temperature and see where they are [upon release]," Petty says. "While Shyne was in jail, many would say his star grew even more."

Shyne's case does have echoes of Shmurda's 15 years later. In 1999, just after the signing to Bad Boy Records, the young rapper was arrested for the infamous Club New York shooting incident involving Puff Daddy and Jennifer Lopez; two months after being convicted of assault, reckless endangerment and weapons possession and sentenced to 10 years in prison, his self-titled debut album was released, and a falling out with Puff ended in the termination of his Bad Boy deal. But Shyne's absence led to curiosity and demand from fans, and he was able to negotiate a multi-million dollar deal with L.A. Reid and Def Jam (coincidentally, Reid is now in charge of Epic) to release his LP Godfather Buried Alive in 2004 while serving his sentence; despite less-than-stellar reviews the album hit No. 3 on the Billboard 200.

 

That absence factor has driven countless marketing campaigns over the years, whether for incarcerated artists or those who for whatever reason -- D'Angelo and Frank Ocean come to mind -- take extended breaks in between releases. It's a bargaining chip that an artist's representatives could try to use to re-negotiate a deal upon an artist's return. And while a recording contract is almost never negotiated down -- in that case, a label might just as easily terminate the existing deal for failure to deliver and start over -- the length of a prison stint could bring labels to the bargaining table regardless.

"It may not even be that an artist's career is not what it was before, it may just be that the industry changed," Brown says. "If someone did a contract eight years ago in the music industry, that label does not what that contract today if they can help it -- the advances and recording funds are probably way higher in that contract than they are today."