Artists Can Terminate Record Company Profits

By ROB PATTERSON

Yet another game-changing shift is coming for major record labels and their relationship with musical artists. It could be one that nails shut the coffin for big record companies.

A change in copyright laws back in the 1970s granted “termination rights” to recording artists and songwriters, allowing them to take ownership of their records and songs after 35 years. The first year included under this change is 1978, and artists who released albums that year can take possession of their recordings next year. That is, if they filed two years before and within five years of the time they’re eligible.

The year 1978 was a boom one for record labels and artists when quite a few albums sold in the many millions. Some of the recordings released that year with huge sales up to now are Steve Miller’s Greatest Hits (13 million), Van Halen’s self-titled debut (10 million) and such records that sold 7 million as The Cars, Don’t Look Back by Boston, and Foreigner’s Double Vision. Other ’78 multimillion selling artists were Bob Seger, Earth, Wind & Fire, Kenny Rogers and Bruce Springsteen.

These days it’s the rare album that even sells a million, which makes record companies even more reliant on catalog sales of such recordings to keep themselves afloat. So naturally the remaining four majors (Universal, Sony BMG, Warner Bros. and EMI) plan to fight termination.

Labels would sign an artist, give them an advance to make an album, and then recoup the advance as well as any promotional and other expenses out of royalties, and still own the recording. It was a sweet deal for the record companies and beyond indentured servitude for artists.

And the main contention the labels are using the retain rights to the albums soon to qualify is that they were made as “works for hire” by employees when the contractual relationship between artists and record companies were obviously anything but that. It all has the stench of desperation and reflects a disrespect for artists that knows little if any bounds.

The ironic note to all this is that in 1978, record companies were actually rather artist friendly in some ways, spending money on artist development and keeping notable if hardly profitable artists on their labels. Not any more. The majors are focused on largely shallow pop crap for the quick cash in. Another irony is that the termination rights resemble the kinds of deals that best-selling artists have made with labels in recent years where they lease their recordings to the companies on a long-term basis and eventually regain full rights. The big labels are able to make the large immediate money, and then the more residual profits go to the by then older artists at a higher rate. It’s a fair and sensible structure.

Termination rights are certainly one factor that in the end helps artists, at least those with the savvy and resources to get the rights to the fruits of their creativity. The Internet has helped independent labels and artists have more direct access to and contact with artists. These are all for the good in theory. Yet the changes wrought in the last two decades or so of the record business have also seen declining sales. And in my view a decline in the diversity of styles, artistry and genuine innovation that gets exposed to larger audiences. It’s very much a case of win some/lose some. Whether the music, artists and those who love it will ultimately benefit remains an open book.

But at least termination rights give musical artists their just due of owning their work in time.

Rob Patterson is an entertainment and political writer in Austin, Texas. Email orca@prismnet.com.

From The Progressive Populist, November 1, 2011