Lawsuit Aimed At Reclaiming Artist Rights Moves Ahead Despite Major Label Objections

Do artists have the right to terminate signing their rights away to major record labels? A court case moving forward is going to find out.

One of the more contentious aspects of artists signing a major record deal is that they hand the rights of their works over to the labels for the most part. Under a vast majority of the cases, the labels didn’t make those songs, but they are now the owner of not only the works, but the works destinies in the process. This aspect of the music business has seen artists watching their music get locked away in a vault somewhere or their works exploited with very little revenue flowing back to them among other things.

Of course, there was a time when it made sense to sign on with the major labels. They did, after all, own an effective monopoly on distribution. Radio listeners typically only hear music from the major labels in the first place unless its from a small little known specialty station. When fans go to music stores, they often only see the catalogue of major record labels. So, unless you are selling the music yourself at a table on the street corner, chances are, there isn’t really any market options for you.

On the flipside, those do sign on with the major record labels often find themselves seeing virtually no royalties from sales. So, the only way to make money for a while there is to go on major tours in an effort to pay off the “debt” accrued from the “deal”.

With the advent of the Internet, however, such monopolistic power began to loosen. Artists began seeing more options made available to them. Online radio and podcasts began breaking away from being locked in to only showcasing major label material. Marketing to a larger audience became more possible. So, more and more artists opt to go it alone. They may not be getting world famous, but at least they could have a reasonable shot at getting some revenue.

So, the question is, with the advancement of technology, what becomes of the artists that signed on with the major record labels? Some are attempting to sever their ties in various creative ways. Sometimes, it’s by forming “side projects” not under the major labels. Others, as it turns out, are attempting to utilize an aspect of copyright that allows them to terminate their relationships with the major labels. Under American law, these contracts can be terminated after 35 years. This allows artists to renegotiate new terms with the labels or go it alone.

The latter scenario is now before the courts at this point. A number of well known artists like Tom Petty, Bob Dylan and Prince are attempting to exercise their right to terminate their contract with their label. The label in question attempted to argue that if they wanted to terminate their contract, they should have made their objections clear much sooner. So, according to the label, now it’s too late to exercise these rights and, therefore, the case should be dismissed. The judge didn’t buy that argument and is now allowing the case to move ahead. From The Hollywood Reporter:

The putative class action was brought by John Waite and Joe Ely, musicians who alleged that Universal Music Group routinely and systematically refuses to honor termination notices. The judge is allowing a group of plaintiffs to move forward, but not without a pretty huge caveat.

Under Section 203 of the Copyright Act of 1976, authors can reclaim rights to works after 35 years. Congress enacted the law when it extended the copyright term. The idea was to give artists who bargained away rights during the early part of their careers a second bite at the apple. Because of the decades-long wait time, the impact of termination has only recently become explosive. Many prominent musicians including Tom Petty, Bob Dylan and Prince have used their prospective termination power to renegotiate more favorable royalty rates. Meanwhile, the termination provision has begun to threaten film studios’ hold on major movie franchises, too. But there’s still many legal issues quite unsettled. And that’s why Tuesday’s opinion figures to make an impact.

On Tuesday, U.S. District Court Judge Lewis Kaplan ruled the suit isn’t time-barred after acknowledging that the issue is a close one. He comes to the conclusion that the musicians can indeed sue now after deciding that they’re really making an infringement claim. The U.S. Supreme Court has made it clear that copyright plaintiffs may sue anytime within three years of an infringement.

“Indeed, it is impossible for there to be a legally cognizable infringement claim until a termination right vests, a valid and timely termination notice is sent, is ignored, and the copyright’s grantee continues to distribute the work,” writes Kaplan, later adding, “That the statute of limitations would begin to run against an artist the day the contract is signed would be incongruent with a termination right that does not vest for at least thirty-five years from that date. … To restrict the termination right based on the artist’s failure to bring a claim within three years of signing a recording agreement — a time during which the artist and recording company may still have disparate levels of bargaining power — would thwart Congress’s intent and eviscerate the right itself.”

That’s a pretty big victory for present and future authors on the copyright termination front. It’s one that figures to receive appellate review eventually, but in the meantime, it’ll embolden many terminators.

There are a lot of legal questions that are still unanswered at this stage. Still, this does offer a glimpse into how some artists are feeling about the deals they struck all those years ago. It almost gives the image of various artists sitting in long jail cell blocks trying to figure out how to break out. These class actions almost look like one of a number of coordinated prison breaks by these artists.

Given the 35 year threshold, this puts works that were published in 1985 and sooner into the spotlight. As time goes on, that threshold year will only move forward and this affects more and more artists who people have heard about.

It’s always interesting to see these rare glimpses into the music business. In 2018, Ricky Nelson made headlines for suing Sony for not properly compensating artists. In the same year, Bryan Adams made waves by calling on the Canadian government to reform copyright laws to end one-sided contracts. Then there is the court case in 2006 that saw the RIAA go to court demanding the right to pay artists less in royalties.

If anything, this shows that the friction between artists and major record labels have never gone away. In fact, artists are still looking at creative solutions just to regain some rights to their works. Whether it is lobbying the government for fairer copyright laws, rummaging through the law books to get out of a rotten deal, or finding legal loopholes to continue making music not chained to the original record deal in the first place, the efforts are still ongoing.

At the same time, this puts to question the image of major record labels being there to represent the interests of artists. This talking point has been used as a weapon in lobbying efforts and PR campaigns for decades – that major record labels are these valiant warriors banging on pots and pans fighting to give artists the world. With stories like these bubbling towards the surface, we once again see a very different picture being painted altogether.

Drew Wilson on Twitter: @icecube85 and Facebook.

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