Just as we are finally looking forward to seeing artists perform in front of audiences after more than a year of lockdown, an old legislative proposal that was considered and settled in California 20 years ago has been resurrected and threatens to upend investment in new artists. Using the name “FAIR Act,” its main proponents say that it rectifies an injustice regarding recording contracts and fairly benefits all artists, but in fact, it would deprive the next generation of needed investment and jeopardize the health and vitality of the entire music community right as our industry is getting back on track.
The bill’s supporters claim it is needed to bring recording deals in line with other personal services contracts in California, which limit services to no more than seven years. This is simply wrong. California’s record contracts are already subject to this rule, and artists cannot be forced to stay on contract any longer. Instead, the bill would eliminate a provision that gives a record label recourse if a successful artist ends their contract after seven years without delivering the recordings promised. While this change might be good for some lawyers, it would be entirely unfair and have devastating consequences for artist investment, a fact that was previously recognized and upheld by California’s legislature.
Record labels make investments in artists. They pay upfront advances that artists keep, regardless of the ultimate commercial success of their music. These advances give artists the economic security they need to quit side-gigs, focus on their craft, and make their best music. Record labels also invest substantial sums in marketing an artist’s recordings before they know if that artist’s music will ultimately achieve commercial success. In exchange, artists promise to deliver a certain number of albums, EPs or singles which, if successful, provide the label with a return on their investment.
This balance gives artists more control over the timing of their creativity, provides opportunities to renegotiate more advances for the next project, and grants them freedom to tour and earn additional income in between delivering albums since contracts are based on projects and investment rather than a time clock. Eliminating this balance will take away these freedoms and revenue opportunities and put artists on the clock.
If the law passes, it follows that labels will be more cautious when investing in new artists since they would have no way to know if they could get the full benefit of their investment. Advances to artists will go down. As several notable economists have pointed out, that would come at a terrible cost. Label investment provides the fuel for the entire music industry. Eroding it puts all the music community’s sectors at risk and disproportionally hurts the next generation of artists.
And as if this weren’t enough, there’s another provision in the proposed legislation that would require record labels to decide within six months of an album’s delivery whether to exercise their option on the next project. Given the lead time necessary to prepare and properly launch a new project, this deadline would occur well before any informed decision could be made, forcing labels to make investment decisions long before they knew that their current marketing, promotion and investment plans were working. Again, this would undoubtedly result in labels making lower investments and dropping more new artists if there were not instant signs of success.
It should be noted that this proposed legislation comes at a time when advances are higher than ever, the number of albums to be delivered is lower than ever, and there are more choices and flexibility in the marketplace for artists than ever. These facts alone would make the need for this legislation unnecessary. Given that it would also lower overall music investments and drive it to other states, California’s legislature should quash it. We can’t afford to take away vital investment in the next generation of artists who need access to the services and partnership that labels provide.
Mitch Glazier is the Chairman and CEO of the Recording Industry Association of America (RIAA), the trade organization that supports and promotes the creative and financial vitality of the recorded major music companies.