Legal Issues

by Mike Masnick

Filed Under:
contracts, jurisdiction, labels, venue

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.

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  1. identicon
    Anonymous Coward, 11 Sep 2012 @ 8:02am

    Re: Re: Re:

    So two wrongs make a right?

    Really, you are an idiot.

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