The Music Industry's Efforts to Rigidify Its Contracts with Artists

Singapore.
For the second round of ICA 2010 papers this morning, I'm in a popular communication session, and Matt Stahl is the first presenter. He notes the ongoing turbulence in the recording industry, dating back to the late 1970s which led it to embrace a blockbuster model for which Thriller is the best example; there was an intensification of rigidity in labour relations as a result (with a focus on high-earning artists in both industry employment and product marketing), but also a flexibility in the exploration of new business models to support this and identify new artists.

Entertainment industries are dependent on risky streams of income, especially given the mobility of stars, and this is addressed by entering into long-term contracts with key artists; contracts are often option contracts which enable the company to continue the contract or drop the artist, but artists do not have matching power and often enter into such contracts before they become famous. The continuation of such contracts also determines company share prices.

There are a number of examples for legal battles between artists and their record companies - George Michael vs. Sony is one, but Olivia Newton-John's struggle with MCA is perhaps more important; she refused delivering new records under the term of her contract, and could not be forced to do so. However, she could be prevented by law from delivering records for any other publisher, for the duration of her remaining contract (or, under US law, for a maximum of seven years).

This created a problem for the recording industry, and it sought to change the seven-year rule to extend the term, arguing that the limitation to seven years was a crucial threat to the industry; the right of the artist to use their legal position to renegotiate contracts was seen as a problem that needed to be addressed by new legislation. (And there is some nice, very typical, Orwellian RIAA language in the industry's argument.) In 1987, the industry got its way. This increased rigidity of employment laws allowed for a flexibilisation of the market, on the terms of the industry, and benefitting it.

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