Zoe Rosen
For decades, Los Angeles, California, has been home to record labels, management companies, agencies, entertainment attorneys, and artists, creating one of the United States’ main centers for the music industry. However, California State assemblywoman Lorena Gonzalez recently proposed legislation that could have a longstanding impact on recording contracts and shape the music industry in California. Earlier this year, she introduced Assembly Bill 1385, known as the Free Artists from Industry Relations (FAIR) Act.[1] If passed, it would which would remove an influential loophole in California’s current labor laws as applied to recording contracts.[2]
California’s current labor laws include a “Seven Year Statute,” which imposes a seven-year limit on contracts for all industries.[3] Since 1987, recording contracts in California have been subject to “a loophole that allows labels to sue recording artists who try to leave their contracts after seven years without first turning in all recordings they promised.”[4] Litigation surrounding the California law can be traced to a 1944 case, De Haviland v. Warner Bros. Pictures, Inc.[5] Warner Brothers attempted to extend her seven year contract in response to de Havilland refusing “a few roles.”[6] The “California Court of Appeals agreed,” that “her contract could not be enforced past the seven-year mark.”[7] However, in 1987, major labels and the Recording Industry Association of America’s (RIAA) lobbied for a change, which resulted in the creation of this loophole.[8]
Supporters of this bill argue that as a result of this loophole, the seven year limit on contracts in California effectively does not apply to recording artists. Therefore, supporters of the bill view it as a critical step to supporting musicians. California’s FAIR Act website provides the example of the fact that an artist may even take 20 years to produce a specified number of albums in a contract.[9] As a result, this can hold artists to an “indefinite contract.”[10] While record labels have the authority to decide whether to release an album or not, musicians can be left with little power over whether they have met the term of the contract.
Examples such as the headline-reaching story of rock band 30 Seconds to Mars being sued by their former label, EMI, are frequently cited by supporters. EMI sued the band for trying to terminate their contract after nine years when the band had only delivered three out of five contracted albums.[11] EMI sued for $30 million, resulting in a settlement and the band agreeing to enter into a new deal with EMI.[12] The lawsuit brought up contract law issues stemming from De Haviland. In fact, Jared Leto, 30 Seconds to Mars’ frontman, befriended Olivia De Havilland after initially reaching out to her to discuss her lawsuit for a documentary.[13]
In contrast, opponents of the bill, largely record labels, are concerned about the bill’s impact on both the labels and California’s economy. The California Music Coalition website describes the proposed bill as “introduce[ing] new uncertainty which will destabilize California’s music industry and cut opportunities for working artists.” [14] The Recording Industry Association of America’s (RIAA) chairman and CEO, Mitch Glazier, explains how the bill would negatively impact labels’ ability to invest in emerging artists’ careers.[15] Record labels often take large financial risks when signing new artists, so he explains that the number of albums in a contract is important to “provide the label with a return on their investment.”[16] He also explains that currently “advances are higher than ever, [and] the number of albums to be delivered is lower than ever.”[17] This lowers the risk of negative effects from the 1987 loophole.[18] As a result, while artists are not facing significant risk based on industry trends, New York University Professor Larry Miller explains that “the logical consequence of AB 1385 is that record labels will reduce their risk – which will ultimately hurt California recording artists.”[19]
Ultimately, many opponents of the bill are concerned that record labels will become hesitant to invest in new artists. The bill also proposes limiting option periods to only six months, which would only allow labels six months after the first album’s release to decide whether to pick up the option to keep the artist signed.[20] This may put a label in a difficult position because it is not uncommon for a new artist to take longer than six months to become popular. For example, Florence and the Machine’s 2008 release “Dog Days are Over,” took over a year to reach the Top 40.[21] Therefore, with a six month option period, artists could be released from a label before having adequate time for their music to become successful.
A date to vote on this proposed legislation is still pending.[22] Whether this legislation passes or not could have a profound impact on the entire recording industry in California.
[1] The California FAIR Act, https://cafairact.com/our-voices (last visited Nov. 11, 2021).
[2] Id.
[3] Id.
[4] Bill Hochberg, Musicians and Actors Love California’s FAIR Act – But companies Eye Exit If It Passes, Forbes (August 24, 2021), https://www.forbes.com/sites/williamhochberg/2021/08/24/musicians-and-actors-love-californias-fair-act--but-companies-eye-exit-if-it-passes/?sh=60b34989a668.
[5] Kathryn Rosenberg, Restoring the Seven Year Rule in the Music Industry, 26 Fordham Ent. L.J. 275 (2015).
[6] Id.
[7] Id.
[8] Id.
[9] The California FAIR Act, https://cafairact.com/our-voices (last visited Nov. 11, 2021).
[10] The California FAIR Act, https://cafairact.com/our-voices (last visited Nov. 11, 2021).
[11] Kathryn Rosenberg, Restoring the Seven Year Rule in the Music Industry, 26 Fordham Ent. L.J. 275 (2015).
[12] Id.
[13] Victoria Miller, Jared Leto Pays Tribute to Unlikely Friend, Golden-Age Star Olivia De Havilland, Following Her Death at 104,(July 26,2020) https://www.inquisitr.com/6187559/jared-leto-olivia-de-havilland-death/.
[14] California Music Coalition, https://www.calimusiccoalition.com (last visited Nov. 11, 2021).
[15] Mitch Glazier, RIAA: ‘Fair Act’ Jeopardizes Next Generation of Artists (Guest Op-Ed), (April 23, 2021), https://www.billboard.com/articles/business/9561602/fair-act-riaa-mitch-glazier-guest-op-ed/
[16] Id.
[17] Id.
[18] Id.
[19] Larry S. Miller, On the Impact of Proposed Bill AB 1385 to the California Music Community, http://musonomics.com/Miller_AB_1385_to_the_California_Music_Community_June_2021.pdf (last visited Nov. 11, 2021).
[20] Id.
[21] Justin Myers, Second Chance Singles: The Songs That Underperformed First Time Round, (September 27, 2019), https://www.officialcharts.com/chart-news/second-chance-singles-the-songs-that-underperformed-first-time-round__15964/
[22] Bill Hochberg, Musicians and Actors Love California’s FAIR Act – But companies Eye Exit If It Passes, Forbes (August 24, 2021), https://www.forbes.com/sites/williamhochberg/2021/08/24/musicians-and-actors-love-californias-fair-act--but-companies-eye-exit-if-it-passes/?sh=60b34989a668.