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Trickle Down

Reports inside the press of contract disputes of years past Body favorite of the music, film and entertainment lawyer that is entitled "Dixie Chicks Sue Sony" - discussed another installment within the seemingly-perennial procedure for music recording artists suing the record labels in which they previously signed contracts. Based on "Dixie Chicks Sue Sony", the Dixie Chicks claimed that they were due at the very least US$4.One million in royalties under their contract, using their music label. There is a commonality between this type of music dispute, and a "net profits" or "points" dispute poor film or television.

This music, film, and entertainment lawyer article, alternatively, may offer no opinion about the merits from the Dixie Chicks litigation or contract, or opine intended for the oft-wondered question in litigations of "which side influences right?". The statistical odds in a music, film, or another contract litigation about royalties, net profits, or "points", are that the case will settle pursuant with a stipulation of confidentiality. Even when we observe the facts of the Dixie Chicks contract or case's resolution, we'll therefore never actually know for certain about how precisely other similar music royalty or other contract disputes may have been reconciled. But notwithstanding the sizable levels of money at risk, the Dixie Chicks-Sony case will probably be controlled by certain principles common to all music and film industry contract disputes of this type, because entertainment lawyer like myself will show you.

It amounts to the timing of every time a music artist, film talent, and other artist for that matter, is or needs to be paid beneath the contract. Though this will likely sound pedestrian, the equation is straightforward. The music activity and entertainment lawyer opines that, "Agreeing inside a contract to become paid the bulk of one's compensation later instead of sooner, enhances the odds that certain will probably be unhappy with all the amount of money of the royalty, "back end", "net profits", or "points" payment(s) at that later date". Would the Dixie Chicks-Sony music contract litigation have never occurred, in the event the band's paid-up-front recording advances was larger? No-one - not music and entertainment lawyer, and perhaps not even the parties to the lawsuit themselves - will ever actually know that answer definitely, either.

One cannot argue with all the equation. As argued and hammered-out between music or any other entertainment lawyer counsel in the contract negotiation, a bigger up-front advance towards the artist or group a minimum of cuts down on the magnitude of later artist dissatisfaction with the "net profits", "points", or royalty stream of payments that follow. Arguably the Dixie Chicks can be in the better economic position, if suing underneath the deal for "only" US$1.One million instead of US$4.1 million. The general type of equation stands up across film, television, publishing, and other entertainment, media, and related realms. You are happier the earlier you're paid.

Holding aside the Dixie Chicks contract dispute example as it were, the sensible reality for other artists in the music business is because they often sign record contracts - or now, 360 deals - without the help of a music and entertainment lawyer, before they become commercially successful. Every successful recording artist in the music business has historically stood a "breakthrough" album. What appears like a huge advance in the contract to a starving music artist poor a young record deal, may later appear to be a per diem compared to that same artist several years later after the pharmacist has "made it". And indeed, the record label's frugality is understandable. Few if any economically-rational record labels are able to plunk down a huge contractual advance with an artist who's yet to "make it" commercially, regardless of whether they have already retained the help of good music and entertainment lawyers. The music and entertainment lawyer can safeguard the artist. But under nearly all circumstances (apart from one great band and keyboard player which i know in Pittsburgh), the music and entertainment lawyer isn't the one also making the songs.

Again, these artist-payment contract disputes, in the music industry, film industry, and otherwise, certainly are a aim of serious amounts of timing. On this light, the Dixie Chicks are essentially fighting the cost-effective identities that elements inside music business unilaterally assigned to them several years ago, before these were hugely famous and successful. I would not know when inside the timeline the Dixie Chicks might have retained high-powered music and entertainment lawyer counsel. However, if the band was comparably famous and successful in the past whenever they signed their deal, they might have likely commanded much more through sizable contractual advances, and would presumably thereby happen to be better secured contrary to the chance of (alleged) back-end royalty payment deprivation through the record label.

It can be ironic that in the past almost a year before the suit, the Dixie Chicks were the main topics a TV news magazine show, in which at least two relevant things were said: (1) one band member suggested the ladies within the band might soon need to leave the songs and entertainment business; and (2) one band member boasted on-camera about having procured the "best [recording contract] offer Nashville", or words to that effect. As much as the viewer from the Tv show may even see, no music or entertainment lawyer was physically present on-camera combined with ladies when these statements were created.

The thrust of the news magazine program was that despite having "the cheapest price in Nashville", (and presumably able music and entertainment lawyer counsel), an internationally-famous musical recording act were required to endure a contractual situation wherein their label was accused of holding most of the money. According to press reports, the Dixie Chicks albums "Ready to Run" and "Wide Open Spaces" sold more than 19 million units, producing more than US$175 million in revenue. That approaches 25 % of a billion dollars, and would normally seem to justify the retention of music and entertainment lawyer counsel, at least for future deals. Nevertheless the band's lead singer dolefully attested on camera that they didn't "even" have US$1 million staying with you herself during an interview. She jokingly added that her label should have remodeled its Nashville offices based upon the achievements of her band's music.

"Where 's all of the money going?", asks the artist-side music and entertainment lawyer, particularly. Well, we all know or suspect where it is. It's correct that launching and promoting albums, and developing artists, requires major expenditures with the record label, likely inside the huge amounts of money. The label has got to spend cash to generate money. The label has got to purchase its music and entertainment lawyers to draft and negotiate the contracts, as an example. The film studio or television production company will deploy similar rationales when defending "net profit", "points", or another back-end payment arrangements. In the case of your successful recording and touring act, a minimum of some of the incremental money above expenditures is certainly going towards someone's profit. It is reasonable to believe that the Dixie Chicks sued because they didn't think these were receiving their fair share of same under the signed contract, after which convinced one or more music and entertainment lawyer litigators to same effect.

What logical deductions can we make out of this case study, that apply to other individual musicians and bands - as well as perhaps with media and artistic representations like film, television, and publishing poor royalties, "net profits", and "points"? First, we need to back up, and make at heart first thing music as well as other entertainment lawyers learn used. There are two principal techniques for a performer to get purchased services within a contract: (1) "fixed compensation", and (2) "contingent compensation". Royalties are "contingent compensation", plus the original but now fast-evaporating record contract model usually contingent upon either the manufacture or sale of (non-returned) units. Strictly defined, "contingent" entails that it's possible they are going to never receives a commission. In film, television, as well as other realms, "points", "back-end", and "net profits" are common terms an indication of types of contingent compensation in the contract. One of my law professors back in the 1980's was obviously a well-known practicing entertainment lawyer which has a music, film, and television practice, and much of our own classroom workshops were comprised of haggling over proposed net income definitions in draft contracts. The song continues to be the same today, largely.

Music royalty calculations and film and television "net profit" or back-end "points" definitions often take many pages of contract text to define - being a music, film, or entertainment lawyer will show you. In defense in the companies, this verbosity might not be merely a product from the labels and studios as well as their entertainment lawyers so conspiring. Rather, the wages streams from the music and film and television companies are truly hydra-headed and fairly sophisticated, and try taking a little care and patience to define. As an entertainment lawyer I realize this is all scant consolation into a screenwriter working through a studio's or network's 50-page written contract definition of "net profits" - or, from the music context, a recording artist immersed in arcane label record contract text purporting to delineate methods of royalty computation. Yet the complexity of calculating contingent compensation can be a reality of the profession to which the film net profit or music royalty definition relates.

However, make no mistake regarding it. Accepting any type of contingent compensation, whether it is net profits, "points", music royalties you aren't, is tantamount to accepting another woman's "trickle-down", every artist-side music and entertainment lawyer will argue. That's, the artist deputizes the company to gather the artist's money, hold it (presumably) in trust, after which remit it in installments to the artist as time passes on the deferred basis. Do most of the people even do that with their own loved ones? Because the music and entertainment lawyer will attest from observing others, and human instinct and greed being powerful motivators that they are - the business will most likely thereupon pay the musical or any other artist if this is like it, and just how much it is like it, sometimes it doesn't matter what the contract says. And company "deductions" from the gross payment stream to get to "net" or "royalties", may become extremely creative to say the least. Music as well as other entertainment industry audit contract disputes often revolve around the acceptability and fairness for these "deductions" from "net profits" or "points", as fought and argued between entertainment lawyers on each side.

You can find contractual techniques for musical and other artists to perhaps the proverbial scales of justice with regards to their royalties, "net profits", "points", and other way of contingent compensation - typically best deployed with the artist's entertainment lawyer. Probably the most familiar technique is the deployment of contractual "accounting" and "audit" clauses or provisions. The background music or other artist can seek to contractually have to have the company to remit detailed written accountings coming from all revenues collected, and (carefully-circumscribed) deductions taken therefrom, on a regular basis. The clauses can be drafted through the artist's entertainment lawyer. Accordingly, the music activity artist may also the mouth area. reserve the contractual to certainly audit the books and records with the record company to make certain correct remittance of royalties. Inside the professional entertainment industry context, audits like this happen constantly, thus ensuring a livelihood for most entertainment industry accountants, entertainment lawyers, while others. It has been reported that wholly two-thirds of most entertainment industry audits lead to findings of underpayments. Usually thereafter, the parties reach an economic settlement and move on with their lives. Sometimes, they do not, and so they litigate using music or entertainment lawyers instead. In addition to being indicated above, virtually all litigations themselves settle before going to trial.

Then there is hope. Industry custom, and film, music, and entertainment lawyer practice, does often contemplate that recording as well as other artists can be paid on the "fixed" and also on a "contingent" basis. In theory, the contractually-specified recording "advance" represents a hard and fast up-front payment to the music artist. But some - uh - "creative" record label forms transform the development right into a contingent payment at the same time, no less than to some extent - this is sometimes called the "recording fund" concept. Film producer compensation might be manipulated from the studio in similar fashion, by payment into a budget as opposed to payment straight to a producer's banking account. For example, when the musical artist receives a US$300,000 "advance" underneath the contract, but must themselves direct-pay for the first album's recording expenses out of her or his "own" pocket, then it would behoove the artist to never blow all US$300,000 using one weekend at Monte Carlo. In other words, the bulk of that US$300,000 might not exactly actually certainly be a fixed payment to the artist, but should apply to things like studio time and fees for session musicians. There are lots of artists on the market who briefly thought these folks were rich for that reason, prior to the record contract was read and reviewed making use of their music and entertainment lawyer. Similarly, most likely the film producer ought not write a check mark for that Lamborghini as of this time, either.

What independent and unsigned artists will find with or without a music or entertainment lawyer, in particular those artists with talent, is always that there can be a lot of folks across the road that happen to be ready to bargain for his or her exclusive recording services, promising no money in advance, however, many fuzzy and inchoate "points" later on - without or with waving a proposed contract while watching artist. This phenomenon is often exactly what it feels like - Wimpy's "I will gladly purchase from you Tuesday for any hamburger today". Would-be entertainment company impresarios try and play actors and writers this way, constantly, too.

Sure, the music company and its entertainment lawyer could have a valid point that the artist should be forced to share in a few of the down-side risk how the recorded finished product is not going to sell. But by that analysis, the artist-side entertainment lawyer should also conclude that this musical artist must be paid some fixed compensation or "earnest money" up-front, and more additional contingent compensation later if the project succeed. Otherwise, what assurance will the artist get that the corporation is truly serious, committed to the background music project, and acting in good faith? And arguably, the up-front fixed payment to the artist must be at the very least sufficient to allow the artist to retain music and entertainment lawyer counsel to draft and negotiate an agreement clearly specifying what sort of back-end contingent compensation must be paid, along with what the artist's accounting and audit rights must be. Exactly the same rationale applies for back-end "net profits" or "points" deals from the film and tv realms. The up-front payment at minimum medicine glue that cements the agreement.

It can be astounding, however, the amount of artists, typically without music or entertainment lawyer counsel, will accept to be paid for their efforts in addition to their music or other work-product by "points" or "net profits" or other "back-end" alone, perhaps commemorated with writing on the back of the cocktail napkin, or perhaps (gasp) with a handshake alone. What makes these artists selling themselves so short? Perhaps because they are dying for their first big break, and possibly they do not plenty of confidence within their abilities such that they think that another valuable opportunity can come along. So they don't enlist assistance from a music or entertainment lawyer, and frequently sign bad contracts you aren't consent to bad deals.

But the point is, there ought to be some minimum standard of decency, perhaps similar to a well-known California case on point, Foxx v. Williams, along with a California statute on point, Civil Code Section 3423.

Some deals are simply just not worth an artist's making. Some contracts are not worth signing, and maybe shouldn't be able to be signed. Obviously any good http://www.nms1420.com in need of a beachfront apartment shouldn't transfer to a condemned premises in which the floor is in danger of collapsing. And in that real estate situation, the neighborhood government - from the building code or equivalent - is "watchdog", and prevents those tenants from striking those bad lease deals get the job done tenant otherwise desires to do so. However, there's typically no governmental or another "watchdog" that prevents a music artist from coming into an undesirable recording contract, only perhaps case law and statutes which can be invoked provided that absolutely suit ever later litigated - not to mention perhaps, only an artist-side music and entertainment lawyer, when enlisted for the situation. Rather, being a practical matter, from the recording agreement context, the "watchdog" needs to be prospective and internalized. Also must the watchdog be internalized in each and every artist, in the film, television, and other industries and art forms. The music and other artist could only turn to her or his wise practice, and hopefully occasionally the artist's music or entertainment lawyer's experience and judgment - which assessment must be made before signature from a contract.