SAG-AFTRA & Music Artist Groups Tell FTC That “Onerous” Contracts Are “Rampant” In Entertainment, Recording & News Industries

David Robb | Deadline | 10/1/21

SAG-AFTRA and a coalition of music artist groups have submitted public comments to the Federal Trade Commission asserting that “onerous” contract and employment terms are “rampant” in the entertainment, recording and news industries. These “unconscionable” contracts, they say, not only “harm fair competition and restrict workers from building their careers,” but also “disproportionately” harm underrepresented groups, especially in the music business.

The comments, filed jointly with the Music Artists Coalition and Black Music Action Coalition, say:

“Unconscionably long contract terms are rampant in the industry, aided by an exemption to California’s Seven Year Rule, which keeps musicians and actors from accessing the Rule’s protections. The Rule, which prevents any personal service contract from being enforced beyond seven years, is one reason California is a haven of worker mobility that helps it become one of the great economic powers in the world. Musicians are singled out – to the economy and the publics’ detriment – as this anti-competitive law and Major Label practices deflate the movement of labor and stifle creativity in the workforce.

“Musicians sign record contracts for a chance at success in music. But for most musicians, record contracts are not a means to success but rather a mechanism Major Labels use to exploit their labor. While Major Labels contend that only 1 out of 10 artists recoup on their advances (sums given to artists before a record is released that are entirely recouped by the label before an artist is paid any royalties), this claim is immaterial: Major Labels do not provide many artists with access to the market.

“Musicians are routinely denied the chance to complete their contractual obligations and are thus severely or entirely restricted in the movement of their services and economic opportunities. One way artists are rebuffed is when labels ‘shelve’ an album, refusing to release a record entirely. Another is by releasing songs as ‘singles’ instead of on albums. In both instances, the label prolongs the term of the contract because record contracts for a specific number of albums, as opposed to a term of years or a total number of songs, and in California, because the Seven Year Rule excludes musicians.

“Three multinational, foreign-owned, multibillion dollar companies (collectively, the ‘Major Labels’) control over 65% of the market across the world. While artists today make pennies on the dollar compared to past generations, Major Labels have launched massive IPOs, riding skyrocketing margins, huge stakes in the top streaming companies, and ownership of their own publishing companies to huge profits and executive compensation. These and other historic predatory practices are still rampant today, where Major Label record deals ensnare young artists, many of whom are from underserved communities and are people of color.

“The restrictive and anti-competitive practices of the recording industry belong in a bygone era. An exemption like that in California’s Seven Year Rule gives the labels safe harbor to mistreat musicians. Our international allies have taken notice: the U.K., the third-largest music market by revenue in the world, has engaged in an anti-competitive investigation into the practices of the recording industry. Restricting the free movement of labor and services, and clamping down on creativity generally, is antithetical to American ideals and norms. The record labels already have a leg up–they do not need or deserve to have the law and leaders look the other way in the face of unfair contracting.”