Organismos del sector asociado

The general contracting practices within the industry suggest that most record companies and music publishers appear to beheve that procedural fairness could be achieved by merely insisting upon independent legal advice for the artist. It is for this reason that the artist’s access to independent legal advice is considered a requisite element o f the contracting process. This is a reasonable assumption since the independent legal advice should cure any ‘ignorance’ on the part o f the artist and thus prevent exploitation by record companies and music publishers. Furthermore, it is arguable that fiduciary obligations may not arise where an artist obtains independent legal advice. The record company or music publisher does not assume a fiduciary burden or act in the artist’s best interests when he/she obtains independent legal advice which should act in his/her best interests. It is perhaps this confidence in such aspects o f procedure which encourages multiple contracting within the industry. However, the approach o f the courts with regard to standard form contracts and the lack o f a meaningfiil choice, as a measure o f procedural fairness encourages a reappraisal o f this overall view.

Procedural inquiries will ultimately refer to the substantive fairness o f the contract. The measure o f substantive fairness has proved controversial. Courts refer to terms such as mutuality, reasonableness, proportionality and the avoidance o f gross dispropoifionahty. Statutory hmitations provide minimum standards in substantive terms. Lawyers, however.

Some of the general problems with multiple contracts were discussed in Chapter 4.

^ Supra.n 320 at 281-282. This advice is echoed by most music industry lawyers.

Ibid. 160

refer to the ‘going rate’ as a relevant factor when measuring the substantive terms o f the contract. The ‘going rate’ is that which is set by the industry, and as such, ought to be negotiable in any fair contract. The inability to negotiate the ‘going rate’ demonstrates the lack o f a genuine choice for the weaker party

The non-negotiability o f an important term such as the royalty percentages exhibits the clear link between procedural and substantive fairness."**® In almost all cases royalties remain non-negotiable, and often static on renegotiation."** * Royalties are seen as an apportionment o f risk by the record company or music publisher. Therefore, it would be reasonable to assume, that on renegotiation, the artist would present a lesser risk which should be fairly reflected in improved royalty figures. Moreover, as a successful artist he/she should be able to fairly renegotiate for an important term, such as the royalty percentage. Therefore, the non-negotiability o f essential terms may be procedurally unfair.

As I suggested earlier in this chapter, advances are conceptually less important to the artist than royalties. Nevertheless, advances are considered as an ‘investment’ in or ‘loan’ to die artist. Therefore, record companies and music publishers claim that the non-negotiable royalty figures off-set the level o f investment/loan made in the artist. In addition, the number o f options is also seen as a means o f risk allocation. Therefore, another essential and generally non-negotiable going rate’ term is used to offset the levels o f advance offered to the artist. This ‘double counting’ o f risk appears substantively unfair, particularly when industry practitioners observe the overall reduction in the investment o f young artists within the industry."**^

The measure o f substantive fairness in renegotiations is also an issue which warrants some discussion. The common practice o f sequential cross-collateralisation may deny ‘new’ consideration for the renegotiated contract; and may amount to a mere modification o f the

cautious on this matter.

This appears particularly so when considering quasi oligarchical nature of the ‘majors’. "**® The courts have always required a link between procedure and substance.

"*** This seems to be particularly so with regard to recording contracts.

"**^ Los Angeles attorneys Richard Greenstone and Charles Robertson have voiced some concern about the level of investment in young artists in some, but not all, quarters of the music industry.

contract. Therefore, the fairness o f the practice o f sequential cross-collateralisation appears doubtful. Furthermore, the inability o f the artist to bargain on essential terms on renegotiation could be seen, in certain circumstances, as a contract modification rather than a renegotiated contract.'* The difference between a modified and a renegotiated contract is very important under the seven-year limit in California.

The uncertainty posed from the practice o f defining duration in terms o f options rather than years does not assist the substantive determination o f the overall contract. Furthermore, s2855 o f the Labor Code in California does not effectively monitor the actual duration o f contracts.'**'* Indeed, in the context o f exclusive music industry contracts the measurement o f the contractual duration in terms o f ‘years’ appears obsolete. Therefore, the minimum statutory protection it appears to provide is illusory. Moreover, s2855 restrict the freedom o f parties who are able to fairly negotiate contracts in excess o f seven years.

The determination o f fair terms is a matter o f procedural and substantive fairness. The Courts have attempted to pinpoint issues o f procedural fairness to some extent. However, issues o f substantive fairness remain somewhat confused. Moreover, essential terms, which often signify risk allocation remain for the most part non-negotiable and static on

renegotiation. These terms are governed by the ‘going rate’ within the industry. The courts have acknowledged that industry standard terms need not necessarily indicate fairness.'**^ Moreover, industry practices have tended to undermine contractual conceptions o f fairness to a large extent. Often abusive negotiating practices have been passed for ‘standard’ hard bargaining tactics, and particularly used in circumstances o f great disparity o f negotiating power. Therefore, the potential for unfair contracting practices within the industry is evident, particularly with regard to artists with minimal bargaining power.

The artistic and economic control in a contract is governed by the negotiating power

'**^ After all, advances are inclusive and recoupable. If royalties represent the risks the artist should be able to present a better risk on renegotiation. Otherwise, the record company or music publisher would not bother to renegotiate with him/her.

'**'* This failure particularly affects the more modest recording artists.

'**^ Or so the courts would suggest. However, a fair or reasonably expected standard of performance would be in accordance with industry custom.

o f both parties as well as the commercial demands and recoupment policies o f the music industry and this is so with regard to both recording and music publishing agreements/^^ Contractual consideration must illustrate both adequate payment, with regard to the terms as well as to the transfer o f copyright control o f the work. The latter must satisfy the

requirements o f federal copyright law.

Chapter VII