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When singer Dale Bozzio fell 40 feet from a room at a Holiday Inn in Downtown L.A. in 1976, breaking a kneecap, her elbows and her floating ribs and splitting open her head, she was not signed to a record contract. She had yet to form Missing Persons with fellow members of Frank Zappa’s band or compose what would become their signature songs (“Words,” “Destination Unknown,” “Walking in L.A.”). But because she was an employee of Zappa (who passed away in 1993) at the time, she had health insurance, which paid for her medical care over the next year, much of which she spent in a coma.
If Bozzio had been signed to a label as an artist, it would’ve been her responsibility as an independent contractor to obtain health insurance on her own or through membership in a union like SAG-AFTRA or the American Federation of Musicians Local 47 in Los Angeles. That only would have been possible if she met the income thresholds (currently, one must earn $27,540 over the course of 12 months to qualify for SAG-AFTRA coverage).
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This fundamental fact seemed to be lost on Chappell Roan, who internet commentators have placed at two degrees of stylistic separation from Bozzio (i.e., Roan’s look is reminiscent of Lady Gaga, who’s sported a look reminiscent of Bozzio in her ’80s prime). Roan sparked an industrywide conversation about the issue with a well-intentioned speech at the Grammys in February in which she called on record labels “to treat their artists as valuable employees with a livable wage and health insurance.”
“Maybe if there was more transparency [in record contracts] a great, successful, articulate artist like Chappell Roan would have a better sense of those economics and how that relationship works, that they’re not your employer. You’re an independent contractor, and they don’t provide health care to anybody other than their staff, their employees,” says Daniel Shulman, a partner at Eisner.
Bozzio knew the rules of the game and its pitfalls because she had a mentor like Zappa, who referred Missing Persons to his attorney, Owen J. Sloane, to negotiate their contract with Capitol Records.
“Frank saved my life from the beginning of time till now because everything he did for me,” says Bozzio, who’s developing a movie based on her life story, which she recounted in her 2021 autobiography “Life Is Strange.” “He taught us everything we know.”
Unfortunately, most artists don’t have a Zappa. But they have attorneys and other reps who should be guiding them through the finer points of the label agreements that will be affecting their lives for years, if not decades, to come. But it’s not always so easy.
“You explain what you consider to be the salient points of the deal, and they go, ‘Yeah, yeah, yeah,’” says attorney Jess Rosen of Greenberg Traurig of tyro label signees. “They just don’t care. They want to be creative. They want to get in the game.”
According to Paul Schindler, another attorney at Greenberg Traurig, there are only four or five points in a record contract that truly matter.
Number one is the term of the contract, which should be as short as possible. Next is what you’re getting paid and how you’re getting paid, whether it’s on a royalty basis or net income, and if you’re getting substantial ownership stake in the master. After that, the things to consider are the guarantees for advances, monies being committed for marketing and promotion, and whether they’re giving you the maximum rate on your publishing.
“If the artist is successful, you can renegotiate,” says Schindler. “If the artist is not successful, it doesn’t matter what the contract says, they’re not going to get any money.”
In his 2024 memoir “Brothers,” Van Halen drummer, Alex Van Halen, recounts how the band returned home from a successful seven-month tour in support of their 1978 debut album, which had already sold more than a million copies, only to find that they were a million dollars in debt to the label.
Situations like this aren’t uncommon for artists who came up in the ’70s and ’80s. Many talk of how they were unaware that all those things the record company ostensibly paid for — from recording costs, tour support and marketing (advertising, videos, etc.) to the drinks and dinner bought for them by the glad-handing local label rep — were actually recoupable expenses that would be deducted from their future earnings, which may never exceed their expenses.
Then there are the deductions that can remain in contracts long after technical progress has rendered them obsolete. According to band members, Van Halen’s original contract with Warner Bros. took 10% off the top for “breakage” before calculating their royalty share — a holdover from the ’20s, ’30s and ’40s, when the medium of choice was 78 rpm records made of easy-to-shatter shellac. More recently, packaging fees were still being applied to digital downloads.
With the rise of music piracy in the 2000s, record labels began insisting on “360” or “all rights” deals, which promised increased promotional and tour support, while taking a cut of a wide array of artist revenue streams, including downloads, merchandise and live performances.
In the years since, technological advances have put power back in the hands of artists. The ability to record radio-ready music at home has largely negated the need for big recording advances, and artists are able to self-promote on social media and self-distribute on digital platforms, leading to the rise of distribution-only deals and a proliferation of buyers, encompassing indie labels, media companies and passive distributors.
“It’s no longer like you go to the three major labels,” says Audrey Benoualid, a partner at Myman Greenspan Fox Rosenberg Mobasser Younger & Light. “You have 20 or 30 different options, at least, of where you can go see what services they are offering, and the deal is dependent on each specific artist and their needs.”
But while today’s distribution deals offer the artists increased control, a bigger cut of the profits and ownership of the masters, as well as shorter contractual commitments, there’s less motivation for labels to invest in career development because they don’t have as much skin in the game.
“The majors are being far more selective about which artists they choose to sign and to develop,” says Aaron Rosenberg, also a partner at Myman Greenspan. “So you’re actually seeing fewer new artist deals.”
Attorney Loren Wells of Wells & Kappel believes that part of the reason why major labels are shifting to the distribution deal model is because they’re publicly traded companies.
“It’s not because of some grand economic genius, but simply because they care about quarterly returns,” he says.
There’s also a potential downside to the biggest upside: ownership of the masters. No matter how little money a recording makes, all its profit participants (songwriters, producers, etc.) must be paid their share, which can become burdensome, both fiscally and logistically, when ownership is returned to the artist after the label’s license expires.
“On traditional deals, there was always the record label who was going to handle getting everybody paid,” says Shulman. “Now, we’re entering this new world where the artists are operating a sophisticated business that requires lots of different interlocking parts. And I don’t think a lot of people thought a ton about it when they were structuring the deals at the outset.”
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