photo by Flickr user Cliff
This is a trick question: What is the difference between a bank and a musician?
The obvious answer is that a bank has money. It’s true that most musicians only dream of fame and fortune, but enough of them achieve at least comfortable wealth that I am looking for a different response.
My answer to this question is that a musician tries to make money by finding trustworthy people, while a bank does not believe trustworthy people exist. Their work is less inspiring, but on the other hand, banks protect their own interests a lot better than most musicians do.
Case in point: When Hurricane Irma made a mess at my vacation home, my insurance company made its check payable to my bank, as well as to me. I then had to commit verbal assault and battery on my mortgage lender to get them to release the insurance money to me after I had made repairs on my own dime.
Disasters happen to musicians too. One of the biggest was a notorious fire on the Universal Studios lot in Hollywood in 2008, which destroyed a trove of original master recordings and outtakes belonging to Universal Music Group. UMG, the world’s largest record label, is a former corporate sibling of the movie studio. Though the two entities had separated by the time of the fire, UMG was still leasing storage space on the movie studio backlot.
The scope and significance of the damage has been called into question, notably by a recent New York Times Magazine feature. That article asserted that UMG has dramatically understated the cultural and economic impact of the losses, both in public and in dealing with current artists and the estates of deceased legends, while seeking full insurance compensation and restitution from its landlord behind the scenes. NBCUniversal and UMG eventually settled for an undisclosed amount.
This allegation, unsurprisingly, elicited a response in the form of a class action lawsuit in the names of artists and deceased artists’ estates, including those of Tom Petty and Tupac Shakur. The lawsuit seeks $100 million in damages for the performers or their estates as a result of the loss of their past work. The suit claims that UMG breached agreements with its artists by not sharing the settlement it received from NBCUniversal and payments from its insurer related to the fire.
The tricky part is that, in most cases, performers do not own their master recordings; record labels own them. Performers hold an economic interest in those recordings in the form of the royalties they are contractually entitled to receive if labels reissue the recordings or otherwise put them to commercial use, or if previously unreleased material later finds a market. But the economic logic of the musicians’ lawsuit is akin to me selling my car to my neighbor, who promises to let me borrow it when I can’t get an Uber. If my neighbor wrecks the car, do I sue him for the cost of my future Ubers? Wisely or not (often not), musicians who need funding to launch their careers typically sell all economic rights to their recordings. No less a luminary than Taylor Swift has come to regret doing so. But in general, this is how the record industry has historically worked. The model is essentially a variation on venture capital.
Attorney Scott Edelman, writing on UMG’s behalf, pointed out that while the artists claim a breach of contract, their suit does not cite any specific language from recording agreements to back up their claims. “Those agreements grant UMG ownership of any master recordings and entitle the artists to royalties in specific enumerated circumstances, none of which has been or can be pleaded here,” Edelman wrote. “The Complaint does not and cannot plead any facts plausibly showing that UMG breached any provision in any contract.”
In effect, the musicians are instead trying to assert a form of “moral rights” in their creative works. The concept of moral rights is more familiar, and more explicit, in countries with so-called civil law systems than in Anglo-American common law principles. It is basically a form of nonmonetary ownership. For example, it may give the right to restrict where and how a work may be used. Many performers have found to their regret that they cannot legally prevent American politicians they oppose from using their music at rallies, as long as the venue has licensed the appropriate catalog for public performance. Artists might have a better chance in jurisdictions with broader and stronger moral rights provisions. In our system, when someone like a record label buys something, they own it.
This is why the musicians suing UMG seem to have such a steep hill to climb to win their case. If I buy a painting and it is destroyed when my house burns down, do I have to share my insurance proceeds with the artist whose work is now lost to history? Would it make a difference if I were a noted private collector and the presence of that artist’s work in my gallery enhanced the artist’s earning power for works sold to other buyers?
I don’t think so, on either count. Absent some unusual contract language in a performer’s long-forgotten record deal, I do not see how the record label owed its artists anything more than a moral duty of good stewardship. Music stewardship encompasses much more than mere physical custody of an original master recording, although that is certainly part of it.
Concerned artists could have paid out of their own pockets for duplicate copies of their original masters to store anywhere they wanted. While copies can never fully replace masters, which are by their nature one-of-a-kind artifacts, this step could ensure the valuable outtakes, alternate versions and session notes accompanying the originals are not completely lost in a disaster. Or artists could have demanded to be named as additional insured on the record label’s policies, as my bank did.
But musicians are not banks, and they don’t think like banks. Unfortunately, that means different outcomes when valuable property goes up in smoke.