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How The Major Labels Screw Artists: Jurisdiction & Venue
from the letting-out-the-secrets dept
Last year, entertainment lawyer Marty Frascogna made some waves by explaining the various hidden "gotchas" in major label contracts that could set up a situation where a band had sold over a million albums, but was still in debt. A few months later, we had him analyze an actual record label contract that had become public as evidence in a legal dispute (most of the time, those things are kept very, very secret).
Marty's back with some new work, this time a video explaining some more of the little clauses that most musicians probably overlook in their contracts, but which allow the major labels to screw over artists. Key terms this time around: jurisdiction and venue. We've seen this in other arenas as well -- and lots of online service providers also uses these clauses in the terms of service you sign -- basically trying to force you to use a court that's convenient for the company, but not for you.
This is one of those clauses that most people just skip right over. But, of course, it can make a big difference especially if -- as Frascogna uses in his example -- you're 3,000 miles away, and the label owes you lots of money. It can be more expensive to actually get to the court in question than the money that's owed to you. His suggestions are to push back and seek a jurisdiction and venue that's better for you, though he admits that's unlikely to happen. I'm less convinced by the next two suggestions: mandatory mediation and binding arbitration. Those are certainly cheaper than full on litigation, but there are details that matter there as well. Various studies have shown that, at least with arbitration, the big companies win a ridiculous percentage of the time -- and it's often because (even if the arbitrator is agreed upon by both parties) the arbitrator is going to do a lot more business with the big company over time and wants to be on the "recommended" list. So they have incentives to side with the company in order to "keep the business."
Either way, it's good to see Frascogna back to revealing some of the "tricks of the trade" of the major labels in setting up a contract that is inherently biased against artists.
Marty's back with some new work, this time a video explaining some more of the little clauses that most musicians probably overlook in their contracts, but which allow the major labels to screw over artists. Key terms this time around: jurisdiction and venue. We've seen this in other arenas as well -- and lots of online service providers also uses these clauses in the terms of service you sign -- basically trying to force you to use a court that's convenient for the company, but not for you.
Either way, it's good to see Frascogna back to revealing some of the "tricks of the trade" of the major labels in setting up a contract that is inherently biased against artists.
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Put it this way I swore I would never go Big Label back in the 70's and I never did.I stayed Punk Rock and Underground and intend to keep it that way.
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1. Learn about signing contracts
2. What you learn about signing contracts with record labels is to NOT sign them.
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You'd probably pee your pants if you were offered a contract. Unfortunately your music is such crap no one wants you.
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I mean, it doesn't further the conversation any and it doesn't find common ground to help everyone involved get richer/fame/etc.
As far as I can tell, Mike just wants the artists to get their fair due, unlike the embarrassingly horrible contracts that so many popular artists have brought to light.
Join the conversation and get the industry past the shameful behaviors of the past and help find a solution where everyone is happy to work with those providing the contracts.
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Since you're a person with such thin skin, maybe you should find non-internet activities to engage in. It is well known that everyone on the internet is a hooligan. Perhaps you should play shuffleboard or join a knitting circle instead.
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Not just record companies
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Re: Not just record companies
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This is standard fare in many contracts. Nothing special about the major labels doing it. The fact that you point it out says more about you and your crusade than it does about anything else.
I'm less convinced by the next two suggestions: mandatory mediation and binding arbitration. Those are certainly cheaper than full on litigation, but there are details that matter there as well. Various studies have shown that, at least with arbitration, the big companies win a ridiculous percentage of the time -- and it's often because (even if the arbitrator is agreed upon by both parties) the arbitrator is going to do a lot more business with the big company over time and wants to be on the "recommended" list. So they have incentives to side with the company in order to "keep the business."
Not even one link to back up your claim. Shocker.
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I was correct. Knew what you were going to say. I knew you would ignore the fact that the band were owed royalties, but because of their contract, were barred from getting those royalties back in a way that is cost effective. So it basically lets the label run rampant withholding royalties.
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BLAH BLAH not this site one of his other sites blah blather
wow no wonder the IP maxims can't hang with the net idea, they don't even read their own crap
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It really doens't matter at this point given whatever you say is utter BS. Oh well...
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Yeah, it's such BS that Mike acknowledged it was a good point and then changed his own terms and conditions.
You aren't too bright, are you?
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Really, you are an idiot.
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You know that and I know that but most independent musicians don't know that, or how it will affect them. And yes, it is standard fare -- for large entities seeking to take advantage of smaller entities -- which is exactly what RIAA members are doing.
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"Its morning in America..."
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It is completely standard fare to determine jurisdiction and venue in many kinds of contract. The specific problem arises from labels having offices in several cities and thereby gaining this very suspicious advantage. Not a lot of independent companies can muster up as advantageous venues as someone based in 51 states. It is therefore biased towards the major labels using the geographical hide and seek.
"Your tie is ugly"-argument follows.
For the second point, there is a logical reasoning supporting his statement, but I agree that the statement needs some statistical evidence for it too. The existence of "good" statistical evidence in this case will probably fall to subjective measures or too little data, so without some kind of argument (almost anything will do against a logical argument!) for why it is true, will be enough to at least give you some ammunition against his side of the argument. Just asking for proof is never an argument against anything in itself.
I suppose your name is Shocker or do you really throw another "your tie is ugly" out there?
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And you're right, Mike didn't back up his claim with any sort of evidence.
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No AJ, the fact that Mike has pointed this out goes to show that Mike wants the artists to actually get paid for their work. Letting artists know that they could be screwed by this overlooked legal loophole in their contracts is a extremely moral thing to do.
And it also provides yet another prime example of how something that is perfectly legal to do (putting questionable clauses into contracts) can be immoral (screwing artists out of their compensation).
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Then shut up, sit down and be quiet for the remainder of the day.
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What is in the label contracts is pretty much exactly what Mike put in his own contract online. What happens if he fails to pay Marcus for his wonderful contributions? If Marcus wants to take him to court, he would be forced to do so in California, which would be a great expense to him (especially to collect the $10 or so Mike probably pays).
So is Mike potentially "screwing the help" here? It seems that he uses the same terms as the labels, so perhaps he could do so in the future - at least by his own standards set in the post.
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LOL
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Here you go.
https://www.citizen.org/documents/ArbitrationDebateTrap%28Final%29.pdf
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Actually, the fact that you made this statement says more about your crusade than it does anything else.
There's a whole video to go with this post. Did you watch it? He's the one bringing this up. Mike is providing commentary. Doesn't that display more about HIM (the lawyer in the video) than it does about MIKE?
Shocker, I know!
Are you mad? Is the idea that some band might watch this and wise up going to be bad for your future in ripping off bands as a lawyer representing the record labels?
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Unconscionable?
Also, "just go without" isn't an option courts consider too much when dealing with unconscionability...
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Re: Unconscionable?
BUT, by that logic, Microsoft's EULA for Windows XP Pro would be unconscionable as well, since the only way to use XP legally is to agree to the EULA, and the EULA has an applicable law clause that specifies the jurisdiction as Washington State, or Ontario if in Canada.
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Business oppertunity?
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Mediation and Arbitration
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Let's look at the Terms & Conditions of Mike's own website:Source: https://www.insightcommunity.com/terms.php
LMAO! Duplicity thy name is Masnick.
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If not, I don't see how this is remotely relevant to the discussion, especially when you've spammed it in the form of multiple replies.
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Because, you ignoramus, Mike doesn't offer to pay anyone, no one pays Mike any money, for anything.
the labels are SUPPOSED to pay artists and, if you watched the video, you'd understand why.
Clear enough for you?
If not, let me explain more clearly.
If you're owed as much as $15,000 from a major label and you have to go to California instead of having a court fight in your back yard (if you are from Florida for example), it costs WAY too much (upwards of hundreds of thousands of dollars) to try and get the $15,000 that you are owed.
And then, let's not even get into the problems of international distributors and records.
So, is THAT clear enough for you?
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Mike doesn't pay anyone? Then why does his contract talk about paying people?
It says: "Commission Cases are assigned to specific individuals for a pre-determined fee. Challenge Cases are made available to subgroups within the Insight Community with compensation awarded to a group of those respondents deemed to provide the best answer."
Weird. It's almost like you're clueless.
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Try being part of the reasonable conversation?
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And where were you when Mike was being rude to me and calling me names just earlier today?
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Mike agreed. Or are you too dumb to follow what happened? You and silverscarcat are just nonthinking reactionaries. Congrats.
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Mike is involved in a company based (solely as far as I am aware) in California, so it makes sense that it operates in this jurisdiction. If I ran a company, I'd expect it to operate under a Scottish jurisdiction and not be subject to random whims of US law. However, the labels are pretty ubiquitous and likely have offices in most major cities - but you can probably safely bet that a NY artist is given a contract based in CA, and vice versa.
Again, it's also a matter of scale as well. Mike isn't 'scamming artists' that we are aware of, let alone on the scale and in the multiple ways the labels are.
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Citation needed?
I mean, in reference to these royalties he has been screwing people out of.
But heck, you're not here to debate how the labels screw over artists, you're here to argue for your ego. IF you really wanted to prove Mike wrong, you'd use logic and reason, instead of grasping at straws.
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To this question: "Is Techdirt screwing artists out of royalties?"
So you were implying that Techdirt doesn't pay artists for royalties, which is ridiculous since Techdirt is not a record company.
Instead of admitting you were wrong, like Mike, you opted to justify what you had said in a half-assed egotistical stupor.
I find it funny that you're more concerned about proving him wrong, than actually addressing the issue brought up by the article.
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I see from the context that you could think the "it" in my sentence referred to royalties. It did not. The poster who I was responding to was responding to my point where I was only talking about the clause in his TOS. That poster changed the subject. I did not mean to give the impression that I was saying Mike has screwed anyone. He may have screwed every person he's ever done business with (wouldn't surprise), or he may not. I don't know. But the fact remains that I meant to infer or claim anything on that subject either way. If I thought I had done anything wrong, I would gladly admit it. Good job smoking me out on this.
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One good turn deserves another, though I'm sure you slap yourself on the back every time you prove Masnick wrong.
The fact remains that you only jumped in with your opinion to prove someone wrong. To me, that's hilarious because as much as the people who share your ideology on copyright complain about Mike's ego and his reporting, you make yourselves look just as bad to the opposing side.
If that's all you're here for, fine, but don't act like you're here to make meaningful discussion.
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The law is the law!
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*cough* Life of author +70 years *cough*
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MASNICK YOU FIEND! I trusted you!
/s
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Then again, with your apparent IQ being below average, I'm surprised you can spell at all.
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"Look, Mike's being evil in a tiny tiny fraction of the way that the big bad labels are, everyone see how eeeevil he is! What, no the labels being evil doesn't matter, you've got to see how eeeevil Mike is!"
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I did expect more from you.
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I don't know about evil. I don't think the point is that it is wrong to try to get a favorable venue in a contract. I think the point is that, because labels have been known to be somewhat lax about making royalty payments, the issue of venue becomes rather more acute for artists.
In other words, the clause isn't evil in itself, but only when labels (or anyone else) use it to get away with not paying royalties.
Has Mike failed to pay anyone money that he owes to them?
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Oh you don't have one, why not you said it was the same, so show us the pay stub... Derpa Duh....
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Good deal.
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He convinced Mike that he had some really bad jurisdiction issues on his terms of use, and talked him into removing them! I think that means we'll be seeing more of this kind of selfless behaviour on him from now on, where he'll call off all those abusive music labels on their contracts and convince them to remove them.
Guess he's not as hopeless as I thought. Welcome to the Light Side.
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18.3 Governing Law; Jurisdiction
These Terms will be governed by and construed in accordance with the laws of the State of California, without giving effect to any principles of conflicts of law.
Hence, jurisdiction and venue in Santa Clara County, and applicable law is that of California without reference to its conflict of law provisions.
These types of terms are commonplace in business contracts, be such contract one with a label, the sale of goods and services, etc. Nothing new here that necessitates calling out labels as somehow pulling a fast one.
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Yeah, but if you were predisposed to think the labels were pure evil, then this would be exactly the type of thing you whine about--even if you yourself do/did the same thing on your site.
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Record Companies Have Been Doing This For Years
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When you sign a contract (ANY contract) in the US, it will always have wording to define venue in case of dispute. Most often, it is the home state of the company, and this is pretty normal when you think about it. After all, if they didn't have a venue clause, they could required to retain council in all of the states and territories separately, and be forced to deal with litigation that might come up in any of them.
When you take away that basic issue, the rest of the story sort of falls apart. Clearly, if a band from Florida had the desire to sign a contract with a California company, and that contract contained clear language regarding venue, then they have nothing to bitch about.
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More to the essence of the *problem*
There really is no need in this day and age to sign a label contract, so why bother?
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