Panelists: Erin Jacobson, Bob Mair, Pedro Costa, Michael Eames
Moderator: Michael Laskow
I’m gonna change the topic a little bit. Let’s start with Michael (Eames) on this. Michael, explain why music libraries hate to negotiate their deals. If a library has a standard contract that it offers composers and artists, and we like each other and we want to do some business, but I go, “You know, I’m not that comfortable with the percentage; I want to negotiate a deal that’s different than what you’re offering me,” my experience and observation over the years tell me that libraries don’t want to negotiate the deals because it’s very messy to keep track of, “These people have this kind of deal. Those people have another type…” So am I right in saying that, and can you elaborate?
Michael: Yeah, I guess I’d address it with two responses, and that being a company, too, that does a lot of agreements—and granted ours are more admin agreements than library agreements since we don’t do much of the library stuff—but you do have a contract, and maybe you’ve spent a lot of money with Erin to prepare the contract….
Erin: And it was well worth it. [laughter]
Michael: And you just want to treat everybody the same way. And of course, every dollar spent with Erin was well spent. [laughter]
Erin: Thank you, Michael.
Michael: But you do something and you kinda don’t really want to change it. You just want to use the same contract with everybody. And then to go a step further, there might even be some agreements where the library has signed someone and had to put in what is called most-favored-nations language, where they are literally contractually saying, “We will never treat anyone more favorable than you”—this writer that I am signing. So that if they were ever to change an agreement somewhere down the line to address someone who wanted a better deal, it triggers that most-favored-nations clause that they would have to go back and adjust [every contract with all of their composers], and that’s a huge mess and a headache that no one really wants to deal with that. So it’s kind of like, “Hey, this is our business model; this is our deal.” And you try not to be rude enough to say, “Take or leave it,” and move on to the next one. But it’s more like, “Hey, we do the same [deal] with everyone. I hope you’re comfortable with it, and if you’re not, I’m sorry it can’t work out.”
I saw a company do something that on one hand seemed a little underhanded, and then giving it some thought after the fact, I thought maybe that was a good business decision. They came up exactly with that scenario you just described with most-favored nations. It was a band, a well-known large indie band that had had some chart success and touring success. And they were out of their deals, they were free agents, and this publishing company wanted them in the worst possible way to pitch them, and he had MFN. He thought, “Man, if I do this—if I give them the deal that I want to give them that they want to get them in my catalog—I’ve got to change everybody else’s deal.” He created another company. It’s like stupidly simple, but totally kosher, I think. Right, Erin?
Erin: Yeah, it’s a separate company, so it’s not bound by the terms of the other company. I mean it’s like okay, that was kind of sneaky, but there’s a fine line there.
The people who were signed under the less-good deal with the original company were not as big and powerful and desirable as the band that had some success. And they weren’t a brand in the industry, and they were anonymous and unknown, whereas the other band was a brand name that would command higher fees. So I thought it was a pretty good solution, personally. I thought it was crafty, not underhanded.
Bob: It’s interesting. I got a story this afternoon that was a scenario I hadn’t heard of before, which is companies being mandated by the PMA [Production Music Association] to only do exclusive agreements. So this particular company has a separate entity under their umbrella that they can do non-exclusive agreements. Because it’s a separate entity, they don’t fight with the mandate of PMA. There’s always a way around everything, which is why you call your attorney and have them look this over.
That’s right!
Bob: And I can’t tell you how many times I have people call me the week after an agreement is signed and go, “Oh! You’re an exclusive catalog?” And it’s like wait, that was in the contract!
Erin: That’s because people don’t read things when they sign them!
Bob: And it goes on a lot. At that point I go, “You know what? Take it back, you go read the contract, meet with your attorney. We’ll call this a “not done,” you go figure it out. But it happens a lot.
Let’s talk about Frankensteined or piecemealed contracts. I believe that the industry is full of them. And it’s happened because there are so many smaller libraries that can’t afford the legal fees to get it right. So oftentimes they are like Pedro, where they were a composer, they had become successful and they had more work coming to them than they could fulfill with their own time and talent. So they start a library, and they will then go take their contracts they got from five or six different companies, and take the best pieces. And rather than calling an attorney and saying, “I like this clause, and I like that clause.” I understand the desire to Frankenstein the contract in theory, but they don’t take the final step, which is running it by an attorney, because there could be stuff that you and I have talked about that will conflict when you Frankenstein a contract.
Pedro: Just to be clear, we Frankensteined our contract in the sense that in the beginning I wanted the best pieces of the contracts that I knew. However, it was checked by an attorney.
Right. See, that’s what I said.
Pedro: Well, actually, the attorney took the ideas and created a contract for me, I should say.
That’s the right way to do it, and that’s why I chose to say, “Yes, Pedro, you can start a library, and we’ll run listings for you, because that’s the way you were built.” But a lot of people are not. They’re not necessarily devious or evil, they’re just looking for the shortcut, and the shortcut can get everybody in trouble. So, Erin, do you want to comment on this Frankenstein syndrome?
Erin: Don’t Frankenstein your contract. The thing is, I see this from both sides. I see this from libraries that come to me, or actually that they have Frankensteined the contract, and then they do want me to look it over. And then I see it from composers who are saying, “I got an offer from a library. Can you review it?” So when a library is coming to me with a Frankensteined contract, a lot of times they will also then go, “Well, I’ve already drafted it, so I just need you to fix it.” And it will take me more time and cost them more for me to fix it than for me to just draft it correctly to begin with. And then, also, when people Frankenstein contracts, they often don’t completely understand the clauses that they’re pasting together. So, yes, it can create conflicts and circumstances that you don’t want. But it can also leave things out, or it can also be a clause that you think it is saying what you want it to say, but it doesn’t. From the other side, when composers give me a contract to review that they have been offered, I can immediately tell that it is a Frankensteined contract. I can immediately tell when it was something somebody got for free on the Internet, and I can immediately gauge the level of competency and professionalism that the library has. So what I say to the composer that I’m representing is judging by the way that their contract looks, they don’t know what they are doing, and is this somebody that you want to put your music with?
That’s a great bottom-line business discussion. So how do these people [in the audience] know, if they’re not that well-versed in being able to spot a Frankensteined contract, is there a delicate way to approach a library when you see the contract? How do they know if it has been piecemealed?
Erin: Well, sometimes it’s really easy to tell in that the formatting is weird, there are typos, or when you read it you can tell that the style of writing is kind of different. Because even though contracts are contracts—depending on who’s drafting that contract—the language might be a little more formal or it might be more simple. So if it kind of doesn’t flow well, and it doesn’t read real well, that could be just an easy way to say, “Who drafted this? Is this the way it’s supposed to be?”
If the first paragraph is a 10-point Helvetica, the second paragraph is Times, you know it’s Frankensteined.
Erin: Yeah, because that just says to me this is somebody that hasn’t checked the details. If they are letting contracts go out like that, and if they can’t check the details and make sure that the contract with you is correct, then they’re not going to be checking the details and making sure that the PRO registrations and the copyright registrations, or whatever they’re handling on your behalf, or the licenses that they are doing on your behalf, or the accounting that they are doing on your behalf, those details aren’t going to be right either.
That’s a great point. And you know what, that’s why I’ve asked these guys to be on this panel. I know them all very well, and they’re the white hat guys who take care of business the right way.
Bob: And on the contract side of things, this door swings both ways. And we’ve had the conversation, we want you guys to know what you’re signing, and the more educated you are, the more power to you. But there are things that I am constantly as a library, unwinding problems that have been created before. We’ve talked about [online distributors] like CD Baby [TuneCore, etc.], where we’ve got an artist clicking, “Yeah, publish my music.”
That’s my last topic, and I want to get all you guys to weigh in on that. So go ahead and weigh in.
Bob: Having done this for a long time, I have to have my agreements reviewed on a fairly regular basis. Because every year or two, there’s a whole new medium—neighboring rights. There are all the new ways of garnering income, and then I have to make sure that my rear end is covered, your rear end is covered, and everybody’s getting their money and it’s flowing contractually correctly.
Okay, so I want to go around the loop on this one. I’ll start with Michael, because I have had this discussion, I believe, on TAXI TV with him. This is something that happens quite a bit lately: I do an episode that I play music that was forwarded, and music that was returned on a particular listing for our members. Oftentimes, before I even go off air, I’m already getting the email from YouTube saying there are people making copyright claims, telling me that I can’t monetize the video—not that I had anyway. And I look and go, “Wow, look at that we played 14 pieces of music on this episode, and nine of the 14 are already published either by TuneCore, by CD Baby, by some entity.” So I just want to be clear to the audience that I am not impuning the character or the business ethics or the legalities of what these companies are doing. Some of these are fine companies. But people are so horny—for lack of a better way to describe it—to get their music out there, that when they sign up for a service agreement with one of those entities, and the agreement is a distribution agreement, but there is also a very short paragraph and a checkbox, “If you would you like us to help you monetize your music by signing this publishing deal, check here.” And there are varying types of deals. It could be a non-exclusive with a 30-day out clause on it, it could be exclusive, it could be admin-only. Even if it’s admin-only, which means that they do the administrative work of tracking the money basically, you can’t submit your music to TAXI for a music library or publisher deal, because you are already published. Michael, did I get that right? How would you weigh in on that?
Michael: I’m not going to question ethics, but you’ve touched upon a very sensitive soapbox for me, so I’m gonna go off on my soapbox a little bit.
Please do.
Michael: You know, certainly—and let’s face it, we’re kind of picking on more of CD Baby and TuneCore for the most part, where I think for the most part is where the problem sort of lies the most. And the beef that I have with it is that in the presentation of the information, the information may be accurate in the sense of, “Oh, would you like to monetize your music on YouTube, or would you like to collect your foreign income?” Those are legitimate things. However, in my personal experience, I feel that those two companies have presented it in a way where it doesn’t necessarily say, “You can go to other companies and have them perform the exact same service. This is not a service that is unique to us.” But I think so many independent artists who don’t really know their business—which is something they need to fix—feel like when they get to that part in the uploading thing, and you get the, “Oh, would you like to do this, or…”
TuneCore years ago was to me… I mean, I bitched at them about this, so I can say it publicly, which is they would see all the international sales come back through, and they could do a rough calculation of how much publishing money had been left in the various countries from particularly in the days of digital downloads, but we still have the issue now with all this interactive streaming and Spotify. They would send emails to their artists and say, “Do you realize you are leaving $2,000 on the table in the foreign territories because you don’t have someone collecting for you?” And they would essentially kind of be scaring these artists into, “Oh my God. No, I had no idea. Oh, wow, they are the only way in which I can get this money. I’m gonna sign up. I’m gonna pay a flat fee, I’m gonna then pay 10% on top of the flat fee.”
I feel that it is taking advantage of a lack of knowledge in the marketplace of artists who just don’t really know what they are doing, They could stand to get a little more education, because to your point, not only about submitting to TAXI, but I am in a group of independent companies that we all pool our resources and our briefs for sync. And just literally in the last four months alone, we have had four artists that one of the other companies had already signed a deal with, had gotten a placement, and then they found out after the fact that the artist had opted in to the CD Baby PRO when they uploaded their records. And they had to go through the whole process of getting out of the CD Baby thing, because they had no clue that they had signed this exclusive sort of deal. And to me it’s a lack of information that everyone is suffering for.
Bob wants to chime in.
Bob: So, thankfully, I’ve learned my lesson on that front. So before I actually finish the agreement, we are already on the PRO’s websites. We’re looking to see, “Has that song been registered by that writer?” And it just came up last week: seven songs, I think it was Song Tradr, one of them, and I’m like, “We can’t enter into this agreement.” It was already listed as the publisher.
You called me, I believe, one night and said, “TAXI forwarded somebody I’ve already signed an exclusive deal with.” The member had signed a deal with Bob and then took the same song and was still submitting it for other publishing deals. And just by coincidence, one of the listings he pitched to was from Bob’s company. And Bob got it and called the guy up with, “Why are you still pitching this?” This is the kind of stuff that we all see all the time. And I’m on a mission, because I want you guys to be well-educated enough that you don’t get a black mark. I mean, there’s no official list of people who do dumb stuff, right?
Bob: There sure is… [laughter]
Don’t miss the final part of this very educational panel in next month’s TAXI Transmitter.