"Stronger" Together: Kanye Could Have Owned His Masters by Engaging in Collective Bargaining

Pepperdine Dispute Resolution Law Journal Pepperdine Dispute Resolution Law Journal

Volume 22 Issue 1 Article 2

5-15-2022

"Stronger" Together: Kanye Could Have Owned His Masters by "Stronger" Together: Kanye Could Have Owned His Masters by

Engaging in Collective Bargaining Engaging in Collective Bargaining

L. Camille Cordova

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"Stronger" Together: Kanye Could Have Owned His Masters by Engaging in Collective

Bargaining

, 22 Pepp. Disp. Resol. L.J. 39 (2022)

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“Stronger” Together: Kanye Could

Have Owned His Masters by

Engaging in Collective Bargaining

L. Camille Cordova

I. Introduction

“The music industry and the NBA are modern day

slave ships.”

1

After this bold preface, Kanye West published

his contract with Roc-A-Fella Records, a division of

Universal Music Group (“Universal”), page by page on

Twitter (in 114 tweets, no less) for “every lawyer in the

world to look at.”

2

West’s “Twitter rant” was sparked by

his frustration over litigation against Universal for the

ownership of his master recordings—the original, official

and final recording of West’s songs from which all copies

are later produced.

3

Recording artists with equal notoriety to West have

publicly challenged their record labels for the ownership

rights to their master recordings for decades.

4

In the ‘90s,

Prince painted “Slave” on his cheek to protest Warner Music

refusing to sell him his master recordings.

5

Almost thirty

1

Kanye West (@kanyewest), TWITTER (Sept. 14, 2020, 7:53 P.M.),

https://twitter.com/kanyewest/status/1305671043097468928.

2

Shawn Setaro, What We Learned From Reading Over 100 Pages of Kanye

West’s Record Contracts, COMPLEX.COM (Sept. 17, 2020),

https://www.complex.com/music/2020/09/kanye-west-record-contracts-what-

we-learned; Kanye West (@kanyewest), TWITTER (Sept. 16, 2020, 11:33A.M.),

https://twitter.com/kanyewest/status/1306270045354356737.

3

Murray Stassen, Kanye West: I Will Buy Universal Music Group For $33BN,

MUSIC BUSINESS WORLDWIDE (Oct. 26, 2020),

https://www.musicbusinessworldwide.com/kanye-west-i-will-buy-universal-

music-group-for-33bn/; Elizabeth Vulaj, Singing a different tune: Taylor Swift

& Other Artists' Fight for Music Ownership, 2020 PRINDBFR 0225 (2020).

4

Vulaj, supra note 3.

5

Lisa Kay Davis, Prince Fought Big Labels for Ownership, Artistic Control,

NBC NEWS (Apr. 21, 2016, 9:04 P.M.),

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years later, pop and country artist Taylor Swift took to

Tumblr and Instagram to vent her frustrations with Scooter

Braun of Big Machine Label Group and Scott Borchetta of

Big Machine Records for refusing to consider selling her

master recording copyrights to her.

6

Recording artists should own the master recording

rights to the music they create, but record labels are

disincentivized to give them up because a large amount of

income earned from the music is earned from licensing the

copyrights to them.

7

Moreover, it reasonable to give the

record labels an ownership interest in the master recording

rights because they undertake an enormous financial risk

when they sign new recording artists.

8

However, record

labels should not own them indefinitely. The proper balance

between the recording artists’ and record labels’ interests is

to initially grant the recording artist the proper ownership of

their master recording copyrights but require them to

immediately license or assign such rights to the record label,

after which the rights would revert to the recording artist.

9

However, most recording artists do not possess the

bargaining power to negotiate such terms into their initial

https://www.nbcnews.com/news/nbcblk/prince-fought-big-labels-ownership-

artistic-control-n560161/.

6

Vulaj, supra note 3.

7

Id. Ben Sisario and Joe Coscarelli, Taylor Swift’s Feud With Scooter Braun

Spotlights Musicians’ Struggles to Own Their Work, N.Y. TIMES (July 1, 2019),

https://www.nytimes.com/2019/07/01/arts/music/taylor-swift-master-

recordings.html. The copyright owner also controls how the music is

exploited—the owner decides how, where, and by whom the music can be

performed, and which mediums the music will be released through for sale and

whether the music can be licensed for use in movies and video games. Id. Vulaj,

supra note 3.

8

How Much Money Do Record Labels Spend on Marketing, INT’L CTR. FOR

SETTLEMENT INV. DISPS (Nov. 5, 2021) [hereinafter ICSID],

https://www.icsid.org/uncategorized/how-much-money-do-record-labels-

spend-on-marketing/. The International Federation of the Phonographic

Industry (IFPI) published a study in 2020 that found record labels spend

approximately $500,000 to $2,000,000 to break into the music industry. Id.

9

This mirrors the requirements and protections provided to other kinds of artists

(e.g., authors) protected by 17 U.S.C. § 203.

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contract. While the contract defense of unconscionability is

theoretically available to recording artists, no court has ever

found a standardized contract for recording artists

unconscionable,

10

and only a handful of recording artists

have been able to negotiate their master recording rights

back from the label after signing a contract that does not

provide for reversion of them.

11

Congress has similarly

failed to protect recording artists. Section 203 of the 1976

Copyright Act allows artists who created copyrighted

“works for hire” to terminate any previous transfers of the

copyright interest after a period of thirty-five years.

12

However, recording artists are considered employees of the

record label under the statute and do not possess these same

termination rights.

13

Because the legislature and judiciary have failed to

protect recording artists’ interests, this article proposes that

engaging in collective bargaining will re-balance the

bargaining positions of the major record labels and recording

artists to create a mutually beneficial agreement that gives

recording artists a termination of rights clause (“termination

clause”) that mirrors section 203 of the 1976 Copyright Act.

By contracting with a major record label, recording artists

are automatically eligible for union membership to the

Screen Actors Guild-American Federation of Television and

Radio Artists union (“SAG-AFTRA”), who have experience

negotiating other collective-bargaining agreements with

these record labels.

14

This agreement would provide

10

Omar Anorga, Music Contracts Have Musicians Playing in the Key of

Unconscionability, 24 WHITTIER L. REV. 739, 740 (2003).

11

Tuneen E. Chisolm, Whose Song Is That? Searching for Equity and

Inspiration for Music Vocalists Under the Copyright Act, 19 YALE J. L. & TECH.

274, 312 (2017).

12

17 U.S.C. § 203(a).

13

17 U.S.C. § 201.

14

Elias Leight, There’s a Musicians Union. Many Musicians Are Unaware—or

Unable to Join, ROLLINGSTONE (May 6, 2019, 1:52 PM),

https://www.rollingstone.com/music/music-features/theres-a-musicians-union-

many-musicians-are-unaware-or-unable-to-join-831574/. The SAG-AFTRA

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industry wide benefits that are not necessarily limited to

termination rights.

15

Part II of this article assesses the disparity of

bargaining positions between the record label and the

recording artist. Part III explains why collective bargaining

is the best way for recording artists to gain ownership of their

master recording rights. Finally, Part IV concludes the

article by discussing the benefits of collective bargaining for

both parties.

II. Background

To understand how collective bargaining can help

recording artists regain ownership of their music, it is first

important to understand the record label-recording artist

relationship and the current state of relevant copyright and

contract law.

A. The “Major” Record Label Is In A

Superior Bargaining Position

Relative to the Recording Artist

In 2019, the recorded music industry generated

$11.1 billion in revenue in the United States.

16

The recorded

and the American Federation of Musicians of the United States and Canada

(“AFM”) are the two largest unions in the United States. Texas Music Office,

The Unions – Getting Started in the Music Business, STATE OF TEXAS (last

visited Nov. 12, 2020), https://gov.texas.gov/music/page/tmlp_unions.

15

Though the focus of this article is on termination rights, a collective-

bargaining agreement could also address a myriad of other issues recording

artists face such as ownership of their publication rights, streaming royalties,

duration of contracts, etc.

16

Dan Rys, US Recorded Music Revenue Reaches $11.1 Billion in 2019, 79%

From Streaming: RIAA, BILLBOARD.COM (Feb. 25, 2020),

https://www.billboard.com/articles/business/8551881/riaa-music-industry-

2019-revenue-streaming-vinyl-digital-physical. This figure is based on the

Recording Industry Association of America’s (“RIAA”) annual year-end report.

Id. The report takes only revenue generated from streaming (paid subscriptions,

ad-supported on-demand audio/video, and digital and customized radio

services), physical products, digital downloads, and synch listening. JOSHUA P.

FRIEDLANDER, YEAR-END 2019 RIAA MUSIC REVENUES REPORT 1 (Recording

Industry Association of America ed., 2020), https://www.riaa.com/wp-

content/uploads/2020/02/RIAA-2019-Year-End-Music-Industry-Revenue-

Report.pdf. This figure does not take other forms of music revenue into account

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music market is currently controlled by only three “major”

record label companies: Sony Music Entertainment,

Universal Music Group, and Warner Music Group.

17

Larry

Miller, director of New York University’s music business

program, likened these three record labels to venture

capitalists.

18

These record labels pay for all of the initial

costs associated with creating recordings and their

subsequent marketing and distribution.

19

In 2020, the IFPI

estimated that major record labels invest up to $2 million in

each new performance act they signed.

20

As former head of

the Recording Industry Association of America (“RIAA”)

explains, the record labels “take huge financial risks that

help advance artists’ careers—risks that few artists are

willing to take on their own.”

21

Accordingly, the record

label owns the master recordings rights in exchange for

making an investment in unproven talent.

22

Artists who want record label representation but

want to forego major labels can opt to sign with an

independent (“indie”) record label.

23

However, indie labels

do not generally have the same investment capital or

such as revenue made from publishing, performances, merchandise, etc. Id. Of

the $11.1 billion dollars, 79.5% was generated form streaming revenue which

includes paid subscriptions (Spotify Premium, Tidal), ad-supported on-demand

audio and video (Vevo, YouTube, and ad-supported Spotify), and digital and

customized radio services (SiriusXM and Pandora). Id.

17

Chisolm, supra note 11, at 305. Independent record labels that are not

affiliated with the “major” record labels exist, but they are not the subject of

this article because the recording artist is in a better position to acquire their

master recording rights from a “minor” record label. See id. at 306.

18

Sisario and Cocarelli, supra note 7.

19

Steven Bolaños, "Knock, Knock, Knockin' on (Congress's) Door": A Plea to

Congress to Amend Section 203 of the Copyright Act of 1976, 41 W. ST. U. L.

REV. 391, 397 (2014).

20

ICSID, supra note 8.

21

Chuck Phillips, Record Label Chorus: High Risk, Low Margin, L.A. TIMES,

(May 31, 2001, 12:00 A.M.), https://www.latimes.com/archives/la-xpm-2001-

may-31-mn-4713-story.html.

22

Sisario and Cocarelli, supra note 7.

23

Chisolm, supra note 11, at 306.

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distribution and marketing power that major labels do.

24

Additionally, the rise of social media and technology slightly

lessened the power of major record labels because artists can

produce, promote, and digitally distribute their music more

efficiently than before.

25

However, without the distributing

and marketing saturation major record labels provide, indie

recording artists cannot achieve the same success as their

represented counterparts.

26

B. The Recording Artist Must Accept

Unfavorable Contract Terms or

Risk Not Being Represented

Regardless of their notoriety, few artist hopefuls

have the capital to create, market, and distribute their music

on their own.

27

The major record labels take advantage of

potential recording artists—especially those who are more

vulnerable due to their age who may be easily goaded into

signing contracts with one-sided terms—in exchange for the

chance of fame and fortune.

28

While each is different, most

recording contracts contain the following standard terms:

24

Id. at 306.

25

Anna S. Huffman, What the Music Modernization Act Missed, and Why

Taylor Swift Has the Answer: Payments in Streaming Companies' Stock Should

Be Dispersed Among All the Artists at the Label, 45 J. CORP. L. 537, 552 (2020).

“Thanks to a series of technological developments ranging from widespread use

of the internet, the development of web-based marketplaces, social media, and,

of course, digital music formats, signing with a major record label is no longer

the sole path to becoming as recording artist.” Chisolm, supra note 13, at 306.

26

Bolaños, supra note 19, at 397.

27

Chisolm, supra note 11, at 320.

28

Vulaj, supra note 3. Singer Jojo was twelve years old when she signed with

Background Entertainment in 2004. Id. In 2019, of the top twenty solo artists

of the Billboard 200 album chart, fifteen were under the age of thirty, and five

were under twenty-five. Tatiana Cirisano, Why Are Today’s Top-Charting

Music Stars So Young?, BILLBOARD (Sep. 12, 2019),

https://www.billboard.com/articles/business/8529105/young-top-charting-

music-stars-streaming-analysis/. Since 2000, the average age of Billboard 200

solo artists continues to trend downward. Id. Recording artists may also suffer

from mental health conditions that make them more vulnerable to predatory

agents and record label executives. See, e.g., Zack O’Malley Greenburg,

Kanye’s Second Coming: Inside the Billion-Dollar Yeezy Empire, FORBES (Aug.

31, 2019),

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1. Duration

The duration of a recording contract is typically

measured in albums, not years.

29

Though the terms may

vary, a typical recording contract requires the recording

artist to create music exclusively for the record label for the

duration of the term.

30

The record label has minimal

obligations regarding actually recording the artists’ music

while simultaneously reserving a number of unilateral

options of additional albums from the artist.

31

Put more

simply, the record label is usually only obligated to record

one album for an artist while at the same time reserving the

option to have the artist deliver five to six studio albums.

32

Additionally, satisfactory delivery of albums turns

on whether the artist is required to deliver “commercially

satisfactory recordings” or “technically satisfactory

recordings.”

33

A commercially satisfactory recording is one

that the label believes will generate substantial income and

is standard for most new artists.

34

A technically satisfactory

recording just has to be well made (i.e., in tune with a steady

tempo and good technique, etc.).

35

A well-established artist

may be able to negotiate a technically satisfactory recording

term, but it is usually conditioned on being in the same style

as the artist’s previous work.

36

https://www.forbes.com/sites/zackomalleygreenburg/2019/07/09/kanyes-

second-coming-inside-the-billion-dollar-yeezy-

empire/amp/?__twitter_impression=true (in an interview, Kanye West admitted

he suffered from bipolar disorder).

29

Chisolm, supra note 11, at 309.

30

Id, at 308.

31

Id.

32

Id.; Stella Brown, It Takes a Village to Make a Difference: Continuing the

Spirit of Copyright, 12 NW. J. TECH. & INTELL. PROP. 129, 135 (2014). This

gives the record label time to determine whether the recording artist will be a

commercial success and gives them the option to drop the recording artist if

they are not determined to be profitable. Id. at 136.

33

Chisolm, supra note 11, at 308.

34

Id.

35

Id.

36

Id.

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An album is usually ten to twelve songs.

37

Depending on how long it takes the artist to deliver a

“satisfactory” recording and how many options the record

label exercises, the artist could be bound by the exclusive

contract for seven years or more.

38

Unfortunately, “no

successful artist can deliver seven albums in seven years

[and ‘no one expects them to’], especially considering that

the record companies usually require an 18-month to two-

year gap between releases.”

39

This gap between record

releases allows the artist to tour and the record label to assess

the profitability of the album before deciding whether to

exercise another option.

40

California does not allow for personal service

contracts like those held by recording artists, actors, and

authors to be for a period of more than seven years.

41

However, there is a statutory exception for recording artists

that allows record labels to “recover damages for each

phonorecord” the artist fails to deliver.

42

While the

constitutionality of California’s law has been challenged,

ultimately all the lawsuits have settled out of court.

43

Statutory exceptions like these that exclude recording artists

from other kinds of creative professionals demonstrate the

lobbying power the major record labels possess and can lead

to contracts like Kanye West’s with EMI Music Publishing

that prohibited him from retiring.

44

2. Compensation

37

Id. at 308–09.

38

Id. at 309.

39

Id.

40

Id. Brown, supra note 32, at 136.

41

CAL. LAB. CODE § 2855(a) (West 2007).

42

CAL. LAB. CODE § 2855(b) (West 2007).

43

Chisolm, supra note 11, at 310.

44

Jem Aswad, Kanye West’s Publishing Contract Does Not Allow Him to Retire,

VARIETY (Mar. 4, 2019, 2:33 PM),

https://variety.com/2019/music/news/kanye-west-publishing-contract-does-

not-allow-him-to-retire-1203154689/.

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Recording artists do not directly earn income from

the licensing of their master recordings if they do not own

the copyrights.

45

In that instance, recording artists would

earn usage-based payments called royalties.

46

Typical

contracts allocate 13–16% of wholesale revenue of records

to new artists.

47

A new recording artist may renegotiate their

royalty rate if their album reaches a pre-determined number

of sales, but they still do not usually receive more than 14–

15% than the total wholesale sales.

48

Well-established

artists can typically negotiate up to a rate of 21% for royalty

payments.

49

Record labels will often give recording artists an

advance on the royalties the label anticipates from record

sales in order to provide the recording artist with cash flow

prior to the music release.

50

This advance is meant to cover

the expenses for recording the first album and the remainder

is spent at the recording artist’s discretion (i.e., living

expenses).

51

Most often these advances must be repaid to

the record label, meaning that artists can start out millions of

dollars in debt without having even made an album.

52

Since

the income recording artists earn from their contract with the

record label comes from royalties, the record label will often

withhold all or part of their royalty payments to the artist

until the advance is repaid in full.

53

Artists may go years

45

Chisolm, supra note 11, at 281.

46

Id. at 312. Royalty percentages are based on the wholesale album price (the

price the retail store purchases the album from the record label before the album

is sold to consumers). Id.

47

Id. at 313.

48

Id.

49

Id.

50

Id. at 312.

51

Id.

52

Id. at 312-13. For example, “if you receive a $10 advance and you have a

15% royalty, your music will have to generate about $66.67 in Gross Receipts

(total sales), not $10, before you start seeing steady checks from your music.”

AWAL, The Ins & Outs of Signing a Record Deal, AWAL BLOG (May 7, 2019),

https://www.awal.com/blog/signing-a-record-deal-decoded.

53

Chisolm, supra note 11, at 312; Sisario and Coscarelli, supra note 7.

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before receiving any cash flow beyond the advance from the

record label.

54

Since an artist may not actually receive royalty

checks from the record label, most of their disposable

income is generated from touring, publishing, and

merchandise sales.

55

“Three-sixty deals,” in which the

record label gets a portion of the recording artist’s income

from all sources whether the record label participated in the

generation of revenue or not, have become increasingly

popular.

56

Because these kinds of contracts are relatively

new, the industry has not yet standardized how much the

record label makes off the deals, but the majority fall

between 15–35%.

57

These kinds of deals demonstrate how

much bargaining power major record labels have has

increased recently.

3. Master Recording Rights

Very few artists own their master recording rights.

58

Even highly successful artists that have been in the industry

for decades have a difficult time regaining them.

59

Major

record labels “claim outright ownership of the master

recordings made under a recording contract” either by

expressly writing in the contract that the artist assigns all of

its copyright interests to the record label in perpetuity or by

classifying the sound recordings as “works-for-hire.”

60

C. The 1976 Copyright Act Provides

For A Termination Of Rights

Remedy But Excepts Recording

Artists

54

See Chisolm, supra note 11; Sisario and Coscarelli, supra note 7.

55

Huffman, supra note 25, at 552.

56

Chisolm, supra note 11, at 314.

57

Id. at 314–15.

58

Id. at 311.

59

Id. at 328.

60

Id. at 311.

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Music copyrights are, in theory, initially vested in

the work’s author.

61

However, copyrights, like any property,

are transferable.

62

As explained supra, most record labels

require artists to grant them the copyrights to their music as

a risk premium for investing in them.

63

section 203 of the

1976 Copyright Act provides that “the exclusive or

nonexclusive grant of a transfer or license of copyright or of

any right under a copyright . . . otherwise than by will, is

subject to termination.”

64

This effectively reverts all

copyright interests granted from the recording artist to the

record label back to the author.

65

In order to effectuate

Section 203 termination rights, a living recording artist must

give written notice to the record label they are seeking

reversion from within thirty-five to forty years from the

execution of the copyright to one other than the recording

artist or publication of the work.

66

Recordings artists

possess this termination right regardless of the express terms

in the contractual agreement with the record label.

67

However, section 201 of the 1976 Copyright Act

provides a “work for hire” exception to this rule.

68

A work

for hire is:

(1) a work prepared by an employee within the

scope of his or her employment; or (2) a work specially

ordered or commissioned for use as a contribution to a

collective work, as a part of a motion picture or other

audiovisual work, as a translation, as a supplementary work,

as a compilation, as an instructional text, as a test, as answer

material for a test, or as an atlas, if the parties expressly agree

61

17 U.S.C. § 201(a).

62

Chisolm, supra note 11, at 285.

63

See Vulaj, supra note 3; Sisario and Coscarelli, supra note 7.

64

17 U.S.C. § 203(a).

65

17 U.S.C. § 203(b).

66

17 U.S.C. § 203(a)(3)–(4).

67

17 U.S.C. § 201.

68

17 U.S.C. § 201(b).

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in a written instrument signed by them that the work shall be

considered a work made for hire.

69

An “employer or other person for whom the work

was prepared is considered the author for purposes of this

title, and, unless the parties have expressly agreed otherwise

in a written instrument signed by them, owns all of the rights

comprised in the copyright.”

70

Most major record labels

classify albums as “works for hire” in the contract so that the

recording artists are considered employees, in which case

Section 203 does not apply and the record label is considered

the outright owner of the master recording copyrights.

71

However, just because record labels call recording

artists employees in their contracts does not make it so.

72

In

Community for Creative Non-Violence v. Reid, the Supreme

Court held that agency and labor law determine the

employment status of recording artists.

73

If a recording artist

qualifies as an employee under the Reid standard, the artist

is not entitled to Section 203 termination protection;

however, if the recording artist is considered an independent

contractor under the Reid standard, they are entitled to

69

17 U.S.C. § 101.

70

17 U.S.C. § 201(b).

71

Bolaños, supra note 19, at 406.

72

Abdullahi Abdullahi, Termination Rights in Music: A Practical Framework

for Resolving Ownership Conflicts in Sound Recordings, 2012 UNIV. ILL. J.L.

TECH & POL’Y 457, 369 (2012).

73

Community for Creative Non-Violence v. Reid, 490 U.S. 730, 739-40 (1989).

The Act nowhere defines the terms “employee” or

“scope of employment.” It is, however, well established

that “[w]here Congress uses terms that have accumulated

settled meaning under ... the common law, a court must

infer, unless the statute otherwise dictates, that Congress

means to incorporate the established meaning of these

terms.” In the past, when Congress has used the term

“employee” without defining it, we have concluded that

Congress intended to describe the conventional master-

servant relationship as understood by common-law

agency doctrine.

Id. (citations omitted).

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protection.

74

Thus, under the 1976 Copyright Act, the artists

that really need protection are not the ones that have “works

for hire” written in their contracts but rather the ones that are

considered employees under the common law. Because

most recording artists are not aware of the consequences of

their employment status when they first sign on, all masters

recording litigation is retrospective.

75

More specifically, the

recording artist learns later that they will never be entitled to

the ownership rights of their master recordings, so they file

a Section 203 copyright infringement suit they cannot win

because it is too late to change their employment status to be

unaffected by Section 201.

An additional wrinkle with Sections 201 and 203 is

that even if recording artists have met all of the requirements

for a Section 203 termination, the record labels are rejecting

the notice of termination on the grounds that it is not the

recording artists who are allowed to exercise the reversions

but their “loan out” companies.

76

There are currently two

74

Id. at 751.

In determining whether a hired party is an employee

under the general common law of agency, we consider

the hiring party's right to control the manner and means

by which the product is accomplished.

Among the other

factors relevant to this inquiry are the skill required; the

source of the instrumentalities and tools; the location of

the work; the duration of the relationship between

the parties; whether the hiring party has the right to

assign additional projects to the hired party; the extent of

the hired party's discretion over when and how long to

work; the method of payment; the hired party's role in

hiring and paying assistants; whether the work is part of

the regular business of the hiring party; whether the

hiring party is in business; the provision of employee

benefits; and the tax treatment of the hired party. No one

of these factors is determinative.

Id. at 751–52 (citations omitted).

75

See generally Vulaj, supra note 3.

76

Evynne Grover, Copyright Act 203 Termination of Transfers and Licenses:

Could More Blockbusters Get Busted?, COMM. LAW. 23, 28 (2020).

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class actions pending that challenge this contention.

77

Both

Waite v. UMG Recordings, Inc. and Johansen v. Sony Music

Entertainment, Inc. were filed in the Southern District of

New York in 2019 and 2020, respectively.

78

However it

could take years for this litigation to resolve.

D. Unconscionability Is Not A Practical

Contract Defense

The traditional contract defense of

unconscionability is also a theoretical judicial remedy

available to recording artists. In order to succeed in an

unconscionability defense, a party must establish substantive

unconscionability and procedural unconscionability.

79

That

is, the party must show that there was unfairness in the both

the bargaining procedure and in the contract terms.

80

Despite this defense, “no American court has held a

standardized music contract unconscionable.”

81

This is

largely because most major record labels settle with the

recording artist prior to trial.

82

It is also because courts

generally do not find contracts unconscionable. However,

even if this was an effective remedy, it is only available after

the fact; it does not prevent the injustice in the first place.

It is reasonable for the record label to demand a

license of the recording artists’ master recording rights

because the recording label is incurring almost all of the risk

77

Murray Stassen, Class Action Lawsuits Filed in New York Against Sony and

Universal, MUSIC BUSINESS WORLDWIDE (Feb. 5, 2019),

https://www.musicbusinessworldwide.com/class-action-suits-filed-in-new-

york-against-sony-and-universal/.

78

Waite v. UMG Recordings, Inc., 477 F. Supp. 3d 265, 268 (S.D.N.Y. 2020)

(filed June 5, 2019); Johansen v. Sony Music Entertainment, Inc., No. 19-cv-

01094 (ER) 2020 WL 1529442 (S.D.N.Y. filed June 26, 2020).

79

Phillip W. Hall Jr., Smells Like Slavery: Unconscionability in Recording

Industry Contracts, 25 HASTINGS COMM. & ENT. L.J. 189, 194 (2002) (citing

Brian A. Blum, Contracts: Examples and Explanations § 13.11.2, 366 (2d ed.,

Aspen Law & Business 2001).

80

Hall, supra note 80, at 194.

81

Anorga, supra note 10, at 740.

82

Id.

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of investing in an artist.

83

However, it is not reasonable for

the record label to maintain this license in perpetuity.

Thirty-five years is a reasonable amount of time for the

record label to recoup their investment while still giving the

artist time to benefit from ownership of the master recording

rights.

III. Artists Can Use Collective Bargaining To

Negotiate A Termination Clause Into Their

Recording Contracts

The largest obstacle a recording artist faces when

negotiating with a major record label over their recording

contract is the uncertainty of the artist’s future success.

84

Each recording artist requires a significant amount of

investment capital from the major record label, but the

potential returns for the label are enormous.

85

The major

record labels sign more recording artists who fail than

succeed, but the income generated from successful artists is

enough to create a surplus.

86

The more recording artists that

the major record labels sign, the more probability they

signed a successful artist.

87

This strategy has given major

record labels the upper hand in contract negotiations until to

this point, but it can be weaponized against them if new

recording artists join a union.

88

For centuries, workers in the United States with

little individual power have organized into labor unions to

prevent their employers from taking advantage of them.

89

83

Vulaj, supra note 3.

84

See Sisario and Cocarelli, supra note 7.

85

Ian Youngs, Music Stars ‘Still Need Labels’, BBC NEWS (Mar. 9, 2010, 2:47

PM), http://news.bbc.co.uk/2/hi/entertainment/8557734.stm.

86

See Sisario and Cocarelli, supra note 7.

87

See id.

88

Id.

89

Joshua Freeman, The History of Labor in the U.S., U.S. DEP’T OF STATE (June

17, 2020, 3:00 P.M.), https://2017-2021.state.gov/briefings-foreign-press-

centers/the-history-of-labor-in-the-u-s/index.html. The first labor union in the

United States was an association of shoemakers that was founded in 1792 in

Philadelphia. Id. Labor unions expanded to include other blue-collar

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Collective bargaining refers to the “[n]egotiations between

an employer and the representatives of organized employees

to determine the conditions of employment.”

90

The result of

the negotiations is a formal contract called a collective-

bargaining agreement.

91

Section 157 of the National Labor

Relations Act (“NLRA”) gives employees the right “to

bargain collectively through representatives of their own

choosing” and join trade unions.

92

Under the NLRA,

employers are required to bargain with union representatives,

but neither the union nor the employer are required to agree

to anything so long as they bargain in good faith.

93

The

NLRA also regulates how the parties may further their

bargaining objectives (e.g., strikes, lockouts, picketing).

94

A. A Collective-Bargaining Agreement Would Be

Beneficial to All Parties

Most recording artists have little individual

bargaining power over the major record labels during their

contract negotiations.

95

Additionally, many recording artists

cannot afford to hire an attorney or do not realize that they

need one to represent them during this process.

96

By

engaging in collective bargaining, recording artists will have

a knowledgeable, experienced representative of their

choosing who will advocate for their interests despite their

inability to afford one or ignorance of the necessity of such

a representative. Specifically, their representative could

advocate for a termination clause in the collective-

professions throughout the 1800s, and by 1877 unions had gained widespread

popularity throughout the U.S. Id. Enacted by Congress in 1935, the National

Labor Relations Act (“NLRA”) officially gave workers the right to form and

join unions to bargain collectively. 29 U.S.C.A § 157 (West).

90

Collective Bargaining, BLACK'S LAW DICTIONARY (11th ed. 2019).

91

Collective-Bargaining Agreement, BLACK'S LAW DICTIONARY (11th ed.

2019).

92

29 U.S.C. § 157.

93

29 U.S.C. § 158.

94

29 U.S.C. § 158.

95

See Vulaj, supra note 3.

96

Id.

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bargaining agreement in way that only a handful of artists

have ever been able to do by putting the recording artists

with the least amount of earning potential on the same level

as those with the most.

Collective-bargaining agreements also provide

stability and would protect both the record label and the

recording artist. Under the NLRA, employers are prohibited

from unilaterally changing the terms and conditions of the

collective-bargaining agreement, even after it expires.

97

Additionally, collective-bargaining agreements protect all

employees, including non-union members.

98

There are only

three major record labels for most of the recording artists in

the industry, and it is likely that any union that engages in

negotiations with one of them will be able to get the label to

agree to extending the terms and conditions of the collective-

bargaining agreement, specifically the termination clause, to

non-union recording artists.

99

Given the size of the market

share of the three major record labels, a collective-

bargaining agreement with a termination clause would

become the industry standard, even for recording artists who

sign to an indie label.

100

97

29 U.S.C. § 158(a).

98

In 2003, the Economic Policy Institute found that strong unions set pay

standards that non-union employers followed. Matthew Walters, How Unions

Help All Workers, ECON. POL’Y INST. (Aug. 26, 2003),

https://www.epi.org/publication/briefingpapers_bp143/ (“a high school

graduate whose workplace is not unionized but whose industry is 25%

unionized is paid 5% more than similar workers in less unionized industries”).

See also Patrick Denice, What do unions do for non-union workers?, WORK IN

PROGRESS (Dec. 5, 2018) http://www.wipsociology.org/2018/12/05/what-do-

unions-do-for-non-union-workers/ (“If unions in the private sector were as

strong today as they were in the late 1970s, we estimate that non-union men

working full-time would earn over $3,000 more annually than they currently

do.”).

99

Taylor Swift, acting individually, was able to get Universal to agree to

distribute non-recoupable royalties to all Universal recording artists each time

Universal sells Spotify stock. Huffman, supra note 25, at 546.

100

See Chisolm, supra note 11, at 306–07 (“the recording contracts for . . .

independent producer labels closely resemble the major label recording

contracts . . . .”).

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Furthermore, a collective-bargaining agreement

would provide more favorable contract terms to recording

artists in general, not just regarding termination clauses. A

union representative could bargain over other unfair terms

recording artists are typically stuck with such as limiting the

duration of the contracts to a maximum of seven years and

ensuring recording artists are able to see more royalty

payments upfront so that they have a continuous cashflow.

101

The parties could also agree to arbitrate any labor disputes,

which would provide a cheaper, more efficient alternative to

litigation for all parties and maintain confidentiality

throughout the proceedings.

Additionally, any lobbying done by unions for

recording artists for federal and state statues regarding

employment would similarly affect non-union employees.

102

If the record label and union could not agree to a collective-

bargaining agreement that included a termination clause, the

unions could always lobby Congress to revise the Section

201 provision allowing for the works for hire exception. In

this instance, recording artists signed to independent labels

would still benefit from the federal statute.

B. Recording Artists Already Have A Union That

Could Bargain Collectively On Their Behalf

Critics argue that artists in general are difficult to

organize because of their independent dispositions and the

101

Publishing rights are not addressed in this article, but they are substantially

similar to master recording rights and could also be subject to the collective-

bargaining agreement.

102

Denice, supra note 98.

Unions have been vocal supporters of recent various

efforts to raise the minimum wage. For instance, the

Service Employees International Union (SEIU) has

spent tens of millions of dollars on the Fight for

15 movement, pressuring cities like Seattle and New

York City to adopt a $15 per hour minimum wage and

yielding pay raises for over 8 million workers.

Id.

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remote nature of their work.

103

However, contrary to

popular belief, there is already a union available to recording

artists. SAG-AFTRA has 160,000 enrolled members, a

small percentage of which are recording artists.

104

By

signing with Universal Music Group, Sony Music

Entertainment, or Warner Music Group, recording artists are

automatically eligible for membership to SAG-AFTRA.

105

SAG-AFTRA’s Music Department manages the SAG-

AFTRA Sound Recordings Code, which governs contracts

between recording artists and record labels.

106

The Music

Department “negotiates these agreements with the major

record labels, signs companies to the agreements and

enforces the contracts on behalf of covered performers. This

103

Ken Green, Artists Need Unions, Too: The Role of Organized Labor in

Creative Industries, UNION TRACK (June 4, 2019),

https://www.uniontrack.com/blog/artists-unions.

Artists are naturally individualistic, explains British

artist Patrick Brill, better-known as Bob and Roberta

Smith. As such, they want to do their own thing, not

“jump on other people’s bandwagons,” Smith says. That

spirit of individualism makes it difficult to convince

them to join together as a collective . . . . Another key

obstacle is the distributed nature of the various artistic

professions. Locals by definition represent a centralized

area where the union has a physical presence. The remote

nature of work for painters, musicians, actors and other

artists makes that model of organizing difficult to apply.

Id. See also Scott Timberg, Can Unions Save the Creative Class?,

SALON (Mar. 18, 2013, 8:25 P.M.),

https://www.salon.com/2013/03/18/can_unions_save_the_creative

_class/ (“Collective bargaining requires an obedient rank-and-file,”

[Ted] Gioia says. “But is there a profession more resistant to this

than art-making? I'd rather try to put the toothpaste back in the tube

than attempt to get artists to march in lockstep.”).

104

About, SAG-AFTRA, https://www.sagaftra.org/about (last visited Jan. 15,

2021).

105

Sound Recordings, SAG-AFTRA, https://www.sagaftra.org/production-

center/contract/806/getting-started (last visited Jan. 15, 2021).

106

SAG-AFTRA is Your Voice in Music – Meet SAG-AFTRA’s Music

Department, SAG-AFTRA (Sept. 11, 2017), https://www.sagaftra.org/sag-

aftra-your-voice-music-–-meet-sag-aftra’s-music-department [hereinafter

“Music Department”].

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includes filing claims and tracking compliance by the

companies.”

107

SAG-AFTRA’s Government Affairs and

Public Policy Department advocates on behalf of recording

artists to Congress.

108

SAG-AFTRA’s executive director David White

likened SAG-AFTRA membership to “having a legal team

at [the artist’s] disposal.”

109

Presently, SAG-AFTRA

negotiated a collective-bargaining agreement with the major

record labels that requires them to pay royalty and non-

royalty artists a standard rate per hour of vocal session.

110

Payment by the record label must be made to the recording

artist within twenty-one days of the session.

111

SAG-

AFTRA’s collective-bargaining agreement also currently

requires the record labels to contribute to its health and

retirement funds if it owns the master recording rights to a

recording artist’s song.

112

If there is a dispute over an

existing contract between a record label and recording artist,

SAG-AFTRA can provide arbitration.

113

However, despite the existing and potential benefits

of SAG-AFTRA membership, there are several concerns

with SAG-AFTRA. First, most recording artists do not

realize that they are eligible for SAG-AFTRA membership,

and record labels have no incentive to inform them.

114

107

Id.

108

Id.

109

Leight, supra note 14.

110

Music Department, supra note 106.

111

Id.

112

Sideletter from Michael J. Lebowich, Warner Bros. Records, et al., &

Duncan Crabtree-Ireland, SAG-AFTRA, on Agreed Interpretations of National

Code of Fair Practice for Sound Recordings Relating to Health & Retirement

Issues, (Oct. 18, 2018, 10:54 P.M.), https://www.sagaftra.org/files/2018-

2020%20Sound%20Recordings%20MOA.pdf.

113

Leight, supra note 14.

114

Id. In 2016, Lady Gaga told Carson Daly on his radio show, “We don’t have

a union as artists. We’re just fighting for ourselves.” Francesca Bacardi, Lady

Gaga Continues to Defend Kesha in Dr. Luke Battle, Says She’s Being

“Publicly Shamed”, E ONLINE (Mar. 8, 2016, 9:03 A.M.),

https://www.eonline.com/news/746788/lady-gaga-continues-to-defend-kesha-

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Without this awareness, recording artists cannot come

together on a large enough scale required to bargain for their

master recording rights. Second, unsigned artists and those

signed to independent labels are not privy to SAG-AFTRA’s

benefits.

115

Thus, even if SAG-AFTRA was able to

negotiate a termination clause granting Section 203

termination rights, a very large percentage of recording

artists would be left out of the benefit of their bargain.

116

For

these reasons, SAG-AFTRA must either expand their

representation of recording artists to all labels or recording

artists should organize an independent union open to

everyone. Once they have organized, the new union can

bargain on their behalf.

C. Collective Bargaining Has Been Effective in the

Entertainment Industry

SAG-AFTRA has been negotiating collective-

bargaining agreements since the 1930s.

117

SAG-AFTRA

has experience negotiating specifically with all three major

record labels, and it can also enforce the collective-

in-dr-luke-battle-says-she-s-being-publicly-shamed. During an interview with

rapper 2 Chainz, former rapper Joe Budden expressed his desire for a hip-hop

strike. Joe Budden, Pull Up Season 2 Episode 2 Featuring 2 Chainz, YOUTUBE

(Feb. 5, 2019), https://www.youtube.com/watch?v=qLn2IWcvpiU. In 2020,

Kanye West urged his “brother” musicians to band together to form a union to

stand up to record labels over ownership of their master recording rights. Kanye

West (@kanyewest), Twitter (Sept. 16, 2020, 8:23 A.M.),

https://twitter.com/kanyewest/status/1306207184347299840; Kanye West

(@kanyewest), Twitter (Sept. 22, 2020, 12:31 P.M.),

https://twitter.com/kanyewest/status/1308443797802508290.

115

Leight, supra note 14.

116

See Market Share of Record Companies in the United States From 2011 to

2019, by Label Ownership, STATISTA (Jan. 8, 2021),

https://www.statista.com/statistics/317632/market-share-record-companies-

label-ownership-usa/. In 2019, independent record labels comprised about 35%

of the U.S. market share. Id.

117

The History of the Unions During the 1930s, SAG-AFTRA,

https://www.sagaftra.org/about/our-history/1930s (last visited Feb. 11, 2021).

SAG negotiated its first collective-bargaining agreement in 1937 on behalf of

stunt doubles and stagehands. Id. The first national AFRA (the predecessor to

AFTRA) collective-bargaining agreement was signed in 1938 between AFRA

on behalf of radio talent and NBC and CBS. Id.

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bargaining agreements.

118

Collective-bargaining

agreements contain the rules for how labor unions and the

record labels may enforce their objectives, such as labor

strikes.

119

Strikes coordinated by labor unions are some of

the most effective ways workers can challenge unfair labor

practices by their employers.

120

A coordinated labor strike

by recording artists against major record labels would be an

effective remedy but would require a lot of organization on

a national level that only a labor union could provide. But it

has worked before.

121

In 1942, AMF musicians went on strike against the

major record companies in the United States seeking

royalties to be paid by the record companies for a union fund

supporting unemployed musicians.

122

Union musicians did

not make recordings for two years.

123

Independent record

companies were the first to settle with the unions.

124

Finally

in November 1944, all the major record companies came to

an agreement.

125

More recent strikes by other kinds of labor unions

in the music industry over collective-bargaining agreements

118

See SAG-AFTRA, Record Labels Reach Tentative Agreement, SAG-AFTRA

(Oct. 19, 2018), https://www.sagaftra.org/sag-aftra-record-labels-reach-

tentative-agreement.

119

29 U.S.C. § 158.

120

Ahmed White, Its Own Dubious Battle: The Impossible Defense of an

Effective Right to Strike, 2018 WIS. L. REV. 1065, 1068 (2018); Why Strikes

Matter, LABOR NOTES (Oct. 17, 2019), https://labornotes.org/2019/10/why-

strikes-matter.

121

Jim Dorsch, The American Federation of Musicians Recording Bans of

1942-1944 and 1948, SPINDITTY (Feb. 27, 2019),

https://spinditty.com/industry/Music-The-Recording-Bans-of-1942-1944-and-

1948.

122

Id. At the time, the AMF only represented instrumentalists. Id. Vocalists

were represented by the American Federation of Television and Radio Artists

(“AFTRA”), who later merged with the Screen Actors Guild to become SAG-

AFTRA. Id. AFTRA joined the strike shortly thereafter. Id.

123

Id. During this time, record companies continued to release music that had

been recorded prior to the strike, but this music was limited. Id.

124

Id.

125

Id.

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have also proven to be effective. In 2019, the Chicago

Symphony Orchestra’s seven-week strike led to an increased

salary and pension benefits.

126

In 2007, the Local One union

was able to negotiate higher wages, daily minimum worker

quotas, and better working hours for Broadway

stagehands.

127

These union victories are evidence that labor

unions are effective in the music industry.

Other kinds of artistic unions have also successfully

employed the labor strike. In 2007, the Writers Guild of

America and Screen Actors Guild walked out over

Hollywood producers refusing to grant union jurisdiction

over writing for new media such as Internet series and

residual payments for downloaded television shows and

movies.

128

Production companies ran reruns and old movies

to supplement their empty broadcast and cable network

airtime.

129

However, the unions prevailed because they

were well-organized, well-funded, had a lot of publicity, and

treated “scabs” harshly.

130

In 2014, the National Writers

126

Howard Reich, 7-Week CSO Strike Over as Musicians, Board Ratify New

Contract, CHI. TRIB. (Apr. 27, 2019),

https://www.chicagotribune.com/entertainment/music/howard-reich/ct-ent-

cso-strike-settlement-0428-story.html.

127

Campbell Robertson, Stagehands End Walkout on Broadway, N.Y. TIMES

(Nov. 29, 2007),

https://www.nytimes.com/2007/11/29/theater/29broadway.html.

128

Michael Cieply, David Carr & Brooks Barnes, Screenwriters on Strike Over

Stake in New Media, N.Y. TIMES (Nov. 6, 2007),

https://www.nytimes.com/2007/11/06/business/media/06strike.html.

129

Id.

130

Timberg, supra note 103.

The ’07-’08 campaign was also better run than most.

Support by high-profile stars – Steve Carell calling in

sick to "The Office" – helped, as did enlisting the

showrunners who head a television program and often

come out of the writers’ ranks. “These were people who

made a lot of money for the studios, and who were used

to working at the highest levels of the networks and

studios,” says [Howard] Rodman . . . . During a period

that cut into many writers’ savings, the union offered

loans to some, which kept screenwriters’ homes from

being taken or their medical coverage from being

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Union successfully collected unpaid fees from Heart & Soul

Magazine on behalf of twelve of its members.

131

Despite the

individuality of the writing industry (much like recording

artists), authors have a strong union presence that effectuates

polices and negotiates with publishing companies on their

behalf.

132

Once a collective-bargaining agreement has been

negotiated, SAG-AFTRA can guarantee its enforcement

through a large-scale recording artist strike. This would

require much organization and solidarity, lots of funding,

and swift retaliation against “scabs,” but it could be

successful in the recording artist-record label context as

previous entertainment-related union strikes have proven to

be.

D. Current Music Coalition Efforts Are Not

Effective

Presently, there are several non-union coalitions

that advocate for recording artists’ rights.

133

The Artist

Rights Alliance specifically advocates for the ownership of

master recording rights by recording artists.

134

The Music

Artists Coalition, formed in 2019,

135

“lobbies on national

cancelled . . . . Part of the reason Hollywood strikes can

work is that the unions protect their position: Anyone

who symbolically crossed the picket line can never be a

member.

Id.

131

Green, supra note 103.

132

Id.

133

These coalitions were formed to counter the RIAA, which lobbies on behalf

of over 85% of record labels in the U.S., including Sony Music Group,

Universal Music Group, and Warner Music Group. About RIAA, RIAA,

https://www.riaa.com/about-riaa/riaa-members/ (last visited Jan. 15, 2021).

134

Artists’ Bill of Rights, ARTIST RTS. ALL.,

https://artistrightsalliance.org/about_us (last visited Jan. 15, 2021) (“The Right

to Control Our Work – the ability to decide when and on what terms our creative

works are performed, reproduced, or distributed, and the ability to assign these

rights to partners of our choosing.”).

135

Artists, Songwriters and Executives Form Music Industry Coalition, MUSIC

CONNECTION (Jul. 30, 2019), https://www.musicconnection.com/artists-

songwriters-executives-form-coalition/.

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and state levels regarding issues that impact creators” in the

digital age.

136

The Recording Academy also “amplifies

music’s collective voice on Capitol Hill and empowers

creators” by “fighting for creators’ rights.”

137

However, these coalitions are opposed by the RIAA,

the well-funded organization behind passing the Section 201

“works for hire” exception in the first place.

138

Though

music coalitions advocating for recording artists eventually

prevailed and convinced the RIAA to petition Congress to

remove the harmful language from the Copyright Act, there

is still residual animosity between recording artist advocates

and the RIAA that make it difficult for them to negotiate.

139

A labor union with no history with the RIAA might be easier

to negotiate with and would better understand the artists’

interests from the collective bargaining negotiations that

need to be lobbied in Congress.

IV. Conclusion

Both the record labels and recording artists have

compelling reasons for owning the master recording rights,

and Section 203 provides a solution that balances these

competing interests through the termination of transfers and

licenses granted by the recording artist to the record label

after thirty-five years. Unfortunately, the parties are not of

equal bargaining power, so up until now recording artists

have not been able to negotiate such a term into their contract.

136

Mission, MUSIC ARTISTS COAL.,

https://www.musicartistscoalition.com/#!/who-we-are (last visited Jan. 15,

2021).

137

Helping Music and its Makers Thrive, RECORDING ACAD.,

https://www.grammy.com/recording-academy#advocacy (last visited Jan. 15,

2021).

138

Eric Boehlert, Four Little Words, SALON (Aug. 28, 2000, 11:30 P.M.),

https://www.salon.com/2000/08/28/work_for_hire/. On November 29, 2000,

Congress passed a bill that amended the then existing Copyright Act, 17 U.S.C.

101(e). Id. By quietly lobbying to insert “as a sound recording,” to the

definition of “work made for hire,” the RIAA ensured record labels were the

sole legal owners of the master recordings rights for their legally copyrightable

life—ninety-five years. Id.

139

Id.

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However, there is strength in numbers, and by organizing

into a new or existing union, recording artists can utilize the

knowledge and experience of union legal representatives and

put pressure on record labels via strikes to create a collective

bargaining agreement that vests ownership of the master

recording rights in recording artists, the true owners of the

works. Sadly, existing contracts would likely not be affected

by this collective bargaining agreement. However, it would

benefit future recording artists and future agreements for

existing recording artists; and hopefully the next Kanye

West will own their masters.

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