Over the last decade the music industry has taken many hits. Labels felt the heavyweight blow transitioning between physical products to downloads. Artists fell victim among the conversion from downloads to streaming. No doubt, people have been negatively affected. Now, as the tides continue to turn towards the positive, one theme dominates this “new industry” – artist can do it themselves. Really, artists can literally do almost everything themselves. If a band needs distribution – there’s an app for that. Need marketing assistance – there’s an app for that. Funding? No worries – there’s an app for that. Merchandising alignments? Sure, there’s one for that as well. With this hyper ability to self curate, one thing is certain, traditional contracts are doomed. This timeless physical footprint of the old industry draws to a close, and I don’t just mean a transition towards digital contracts. They are literally dying. Here are three reasons why:
1. Artist efficiency
Cumbersome areas within the music industry cannot exist. Things are moving too quickly. Savvy industry minds are constantly seeking out more efficient ways to cut out the middleman, because more times than not, the middlemen are inconvenient. When I say inconvenient I mean “expensive” and “timely.” Contracts fall into this category. There is no room for inconvenience in the new industry. Zero. Artists should (and will) be able to control all areas of their career from A to Z. Is this to say artists will become their own attorneys, contract drafters and business advisors – “No” – but these clunky areas of inconvenience will need to adapt to survive.
There’s no two ways about it – contracts are expensive. Attorneys draft contracts and attorneys aren’t cheap. The irony, artists need attorneys but ninety percent of the time, artists can’t afford them. This is broken. The alternative being – artists find form contracts online for free. The irony here – free contracts create a mountain of legal problems because they’re drafted for the masses, not for the individual using it. In all, contracts have two built in cost: drafting and administration. Drafting a contract is labor intensive because it’s crafted around specific issues and projected problems, however the cost are generally predictable and allocated once. Administration of a contract becomes the hidden cost. This includes monitoring the agreement, the actions of the parties involved, potential disputes, subjective interpretation, and so forth. Administrative efforts fall into the “inconvenient” category because it’s almost impossible to budget accordingly – especially for indie bands (who still need legal representation).
In the spirit of efficiency, technology will bring about smart contracts. Smart contracts are essentially a proof to work based blockchain. Further explanation, blockchains are coding systems that will not allow X to happen without Y – therefore impossible for one circumstance to predate the preset scenario. For example: Instead of Band X playing a venue and attempting to track down payment following the gig in order to divvy up to their promoter, agent, manager, band members, bank deposit, etc. – smart contracts control the scenario. Band X performers at Venue Y and the blockchain begins. $X is wired into the Band’s account, followed by an immediate division of assists being paid to X, Y and Z. It’s done in seconds as opposed to days, and no administration is needed. The blockchain technology will not only assist the indies, as major labels will reap benefit. Recording agreements can be digitally cross referenced to label bylaws, crossed against publishing agreements, sales figures, and so forth. It’s all preload and coded accordingly. Human error, interpretation, administrative legal costs, and general accounting just got eliminated. More so, the inconvenience of administration is gone forever. The only cost becomes a onetime drafting and coding fee. Smart contracts aren’t being used by the music industry yet, but they’re coming, as similar technology is being implemented within other forms of business.
The new industry is different, and the new industry is unforgiving. There is no tolerance for inefficiency and “that’s the way it’s always been” mentality. Even physical contracts will not be granted immunity from the new industry. This alone is a battle cry to assure everything you’re doing is different and efficient. Set yourself up accordingly, otherwise you’ll be rapidly left behind.
Martin F. Frascogna is an entertainment lawyer who represents clients both indie and major in 31 countries spanning 6 continents. Frascogna’s practice, Frascogna Entertainment Law, notably specialises in advising DIY artists. Follow him on Twitter for daily tips. And don’t miss his Midem Academy presentation in Cannes next February! Full programme here.
Top photo via Shutterstock – file404