As the ongoing music industry boom puts labels under renewed pressure to make recording contracts more equitable and transparent, the next battle over creators’ rights will be fought in Sacramento, Calif., where artists, managers and their allies are lobbying to change the state’s “Seven-Year Statute.”
Enacted in 1937 after the judgment in actress Olivia de Havilland’s lawsuit against Warner Bros. Pictures, California Labor Code Section 2855 limits personal services contracts for state residents to seven years. In 1987, however, the law was amended, with the major labels’ support, to allow record companies to sue for damages (including potential revenue) if an artist attempts to leave after seven years but before delivering the required number of albums in a contract. In 2001, a group of artists and managers including Irving Azoff and backed by the Recording Artists’ Coalition he co-founded with Don Henley and Sheryl Crow attempted to repeal the 1987 amendment, without success. Now, two decades later, they’re trying again.
Assembly Bill 1385 — the Free Artists From Industry Restrictions (FAIR) Act, introduced March 18 by Assemblywoman Lorena Gonzalez, D-San Diego — would repeal that amendment, as well as allow artists to terminate contracts if a label hasn’t exercised its option to pick up a recording within a half year after it’s delivered.
Azoff is again leading the charge, this time with the Music Artists Coalition advocacy group he co-founded in 2019 with Henley, Maren Morris and manager Coran Capshaw, among others. Joining the effort are the Black Music Action Coalition (BMAC), Songwriters of North America and SAG-AFTRA. (The bill also includes a provision requiring TV production studios to exercise an option to renew a deal within a year after an actor completes work on a previous season.) The Recording Academy and Future of Music Coalition have also expressed support.
The legislation was scheduled for an April 22 vote before the California State Assembly’s Committee on Labor and Employment but was pulled from the calendar the day before and now won’t be heard until January 2022 to give legislators more time to research the issues, Gonzalez tells Billboard.
“We’ve been trying to do quickly the hard work necessary to get the supporters and opponents to talk about some of the issues, then engage the community and allow the creatives to be able to have a voice and talk about some of their issues directly with some of the members,” she says. However, COVID-19 restrictions were slowing the process, so Gonzalez opted to postpone the hearing and AB 1385 now becomes a two-year bill.
The artists and managers’ push for reform is occurring while labels are flush with streaming dollars. The U.S. recorded-music business is now worth $12.2 billion, up 9.2% since 2019 and 82% over the last five years, according to the RIAA. And while the legislation will face vociferous label opposition, the inevitable debate surrounding it will give artists and managers an opportunity to highlight other issues with recording contracts, including the more favorable cost structure of a streaming business that doesn’t have manufacturing or distribution expenses.
At a time when artists of color often dominate the streaming charts and the Black Lives Matter movement has drawn attention to issues of racial inequity, representatives for creators think social issues could frame this conversation as well. “This nation is in a different place than it was 19 years ago,” says BMAC co-founder/co-chair Prophet, who manages Asian Doll and Money Marr. “It’s that energy that can be used to fuel the engine necessary to get this particular law changed.”
Early last year, many of the same artist groups pushing for this law were working with the RIAA and the labels it represents to successfully push a music-business exemption for Gonzalez’s AB 5 legislation, which limits the use of independent contractors. Finding that Gonzalez was sympathetic, groups that represent creators continued to work with her to craft the FAIR Act. “We got phone calls after the bill had been introduced,” says RIAA chairman/CEO Mitch Glazier.
If the bill passes, says Glazier, it “could make a label think twice about signing a California artist.” And without a means to recover damages, “you’re going to crumble the entire economic model” that lets labels invest in unproven acts. (Label sources estimate that 10% of acts make the money that funds the other 90%.)
Artist managers essentially argue that their acts should be treated the same as athletes and actors under California law, while the RIAA and the labels say that comparison doesn’t make sense for artists, who divide their time between recording and touring. “If you are an athlete, you’re signed for a certain number of seasons. If you’re an actor, filming [a series] is going to last a certain amount of time,” says Glazier. “An artist is asked to make a record and expected to tour — and the better the records do, the longer the tour.” Setting contract terms by time instead of productivity, he says, would be bad for both sides and takes the creative time clock out of the artists’ hands.
There are other issues. Artist advocates say that the way labels count the number of albums delivered is outdated, which makes it hard for artists to fulfill their contracts. In particular, Prophet says mixtapes, which once weren’t counted as album releases because they were promotional endeavors, now generate revenue on streaming services but still don’t “count toward your commitment.” Same with guest features and soundtracks, says fellow BMAC board member and artist manager Caron Veazey. The FAIR Act does not address these issues, but managers say it would provide the means for artists to exit their deals — or, more likely, renegotiate them. “Let’s have a look at those pieces,” says Veazey.
(Acts including Metallica, Henley and Courtney Love have challenged the existing statute by suing their labels to avoid paying the damages it sets out, and Warner Bros. Records sued Avenged Sevenfold when the rock act attempted to leave after seven years while still needing to deliver albums. All of those cases were settled out of court.)
If it does pass, the FAIR Act would give the biggest boost to artists who are on a label for seven years and presumably achieved at least some success during that time. (Big labels generally drop artists who aren’t profitable by then.) But acts who do very well usually renegotiate their contracts well before they expire, receiving more favorable terms — usually in exchange for adding more albums to their existing contracts. If this law makes it easier for artists to leave, it will give them more leverage in these negotiations.
If the FAIR Act passes the Committee on Labor and Employment next year, it would then go to the State Assembly’s Committee on Arts, Entertainment, Sports, Tourism and Internet Media for another hearing, followed by an Appropriations Committee hearing. If the bill passes all three of these committees, it would go to the assembly floor for a vote — and, if it passes, move to the state Senate.
With eight months added to the process, Gonzalez hopes substantive discussions can take place between all parties over the “pretty complex issues,” she says. “We don’t legislate obviously in the entertainment business that often, so these are all new concepts for a lot of my colleagues and I want to make sure they truly understand the perspectives before they vote.”