I teach a music business class, so I’m always looking for real-life moments to bring into my lectures and group discussions. There have been several interesting examples so far this year. Most recently, the purchase of Taylor Swift’s previous label, Big Machine Label Group, by artist manager Scooter Braun’s media company, Ithaca Holdings LLC, has given me a chance to talk about a little-known aspect of artist contracts: re-recording restrictions.
For record companies, re-recording restrictions are a bit like insurance policies: most have them, they’re rarely used, but when they come into effect, they’re incredibly important. Thinking about them in this way is apt: their presence in a recording contract insures the record company against unwanted competition.
For recording artists, they are most often an unwelcome surprise, lying dormant until they prevent the creation of new masters. In these situations, their presence is frustrating and angering. This has led many to question why some of their favorite artists have been forced into these deals.
The reality — as always — is much more complex.
Labels invest heavily in the artists that they sign, and they take on considerable risk in doing so. They view their masters as assets, and employ a variety of means to protect those investments and mitigate the risks associated with them.
“Labels invest heavily in the artists that they sign, and they take on considerable risk in doing so. They view their masters as assets, and employ a variety of means to protect those investments and mitigate the risks associated with them.”
The most commonly understood method involves the overall structure of a record deal. In it, the label will own the copyrights in any sound recordings made during the term of the recording contract. In return for giving up those rights, the artist will receive an advance and royalties in connection with their exploitation (not to mention the marketing and promotion money spent on their behalf). This structure allows the label to treat those masters as assets, and recoup from the artist certain costs spent in connection with their exploitation, thereby protecting their investment and reducing their risk.
But while ownership structure and recoupability are standard and long-standing ways for labels to protect themselves, labels are also known for changing the language in their deals to keep pace with changes in the business. Re-recording restrictions are a lesser-known means by which labels do that, but became newsworthy due to Taylor Swift’s outspokenness over the sale of her label and Kelly Clarkson’s subsequent suggestion that Taylor re-record new versions of the masters.
Re-recording restrictions were not standard in recording contracts until after the Everly Brothers famously left their label, Cadence, in 1960 for a million dollar deal with Warner Bros. Warner released a “Very Best of” compilation soon thereafter, but instead of just including the hits the duo had with Warner, they re-recorded some of their Cadence material, essentially copying (and therefore competing with) their previous work.
People might ask: so what if that artist or band doesn’t own the masters: why can’t they simply go back into the studio, cut new versions and release them instead? Without a re-recording restriction, an artist could do just that, repeating what the Everly Brothers did. Because labels wish to protect their investments, they view this kind of competition as dangerous, and added language to their contracts meant to prevent it.
Re-recording restrictions work by preventing the artist from creating a new version of any sound recording delivered under their agreement for anyone else for a defined period of time, often the greater of five years from delivery or three years from the end of the contract’s term. They are written to prevent any re-recording, even in situations where the original masters were never released.
“This was once less of an issue, as album cycles used to take years, but the effect of re-recording restrictions is worsening: three to five years is an eternity in today’s streaming music business, and labels are now writing restrictions designed to prevent re-recording specifically for film and TV placements.”
This was once less of an issue, as album cycles used to take years, but the effect of re-recording restrictions is worsening: three to five years is an eternity in today’s streaming music business, and labels are now writing restrictions designed to prevent re-recording specifically for film and TV placements. The reason for this is that such placements are increasingly easy for artists to obtain without labels, whether the artist is approached directly, or uses an outside firm to seek placements on their behalf. (Artists who own the master AND the publishing can approve such placements on their own, making licensing even simpler.)
This contractual language was only meant to protect the record company’s investment, but very often comes at the expense of the artist. These restrictions can affect producers too.
Most producer agreements will contain a similar clause, preventing the producer from producing the song(s) for any other artist for a period of time, usually three years. Again, this is primarily designed to protect the label’s investment in their artist by ensuring that the label retains control of the original master.
This situation doesn’t affect producers quite as much as artists. Because they were hired to produce a specific track for a specific artist, the result is so tailor-made it probably can’t be used elsewhere. It’s also unlikely the producer will ever be able to produce the same song for a different artist (at least not in the timeframe in which they are under the restriction). And regardless of these considerations, the production should be unique to the original artist, so nobody would want it recreated anyway.
However, such restrictions can become problematic for producers who are also writers. Because of his or her role as a writer, and because the track originates with them, the re-recording restriction can make it impossible for the producer to take the song (or their production of it) to another artist should the label decide not to release it. The producer marketplace is already difficult enough; this issue can make it much harder by eliminating the producer’s ability to sell their track to another artist or label.
“Artists are generally free to re-record their compositions once re-recording restrictions have lapsed, but they must also be willing to invest the time, effort, and money required to create those new versions. That is no small feat. There is also a competition factor, as those re-recordings will compete with masters already in the marketplace.”
Artists are generally free to re-record their compositions once re-recording restrictions have lapsed, but they must also be willing to invest the time, effort, and money required to create those new versions. That is no small feat. There is also a competition factor, as those re-recordings will compete with masters already in the marketplace, and fans familiar with the originals may feel very attached to them and never warm to the replacements.
(An additional issue for Taylor Swift is that she must also keep in mind that her new recording contract is with Universal’s label Republic Records. Because Big Machine will likely continue to be distributed by Universal post-sale, it’s possible that were she to re-record new versions of her past hits, she could end up putting Universal in a position where it is competing against itself.)
Re-recordings can be done, and can serve as an opportunity for artists to turn the tables on their label. Take Def Leppard, who wanted to create leverage during a dispute with Universal about digital royalties. Like many legacy acts, Def Leppard wanted greater control and increased compensation from their catalog. But the band had an ace in the hole: their recording contract gave them the ability to deny certain uses of their masters.
To create that leverage, Def Leppard told Universal to keep their records off digital services. The band then re-recorded and released new versions meant to replace the originals (at least online and in situations that the band could control). The gambit worked, as years later—once they’d agreed to new, more favourable, terms with Universal — they allowed their original catalog to be put online and removed the “forgeries” the band posted in the first place.
Another example is JoJo, who re-recorded new versions of her first two albums as a way to get back at her first label, Blackground Records, for holding her music hostage. JoJo signed that deal in the early 2000’s, when she was twelve, and released two well-received albums: JoJo and The High Road. Yet as her stardom increased, Blackground lost its distribution deal and stopped taking JoJo’s calls. She went on to record a third album, but was unable to get Blackground to release it. Compounding her problems, Blackground removed her music from streaming services, preventing fans from hearing it and JoJo from profiting from it.
Despite multiple lawsuits, the dispute continued for years. JoJo only became free to sign with another label in 2014. She released new material in 2016—after over a decade of silence—but her fans were still asking why they couldn’t find her first two albums. To satisfy them, JoJo hatched a plan to create new versions, just as Def Leppard had done.
For JoJo, the re-recordings didn’t represent an attempt to gain the upper hand in a negotiation, they were more personal: they were about reclaiming the work that had been taken from her. She asked her attorney whether her re-recording restrictions had expired, and then began work on re-recording new versions of her first two albums. Working on and off while touring during 2018, she created those reworked versions, and announced their release on her birthday. For JoJo, the time, effort, and expense of creating reworked recordings of her old albums was worthwhile, and allowed her to “close a chapter”in her life.
Both of these artists were able to turn the re-recording restrictions in their contracts into new opportunities. While both still had to wait for expiration of the clause, they used that newfound freedom to get something that they, and — more importantly, their fans — wanted.
“Both of these artists were able to turn the re-recording restrictions in their contracts into new opportunities. While both still had to wait for expiration of the clause, they used that newfound freedom to get something that they, and — more importantly, their fans — wanted.”
One would think that dealing with this issue upfront, when the contract is being negotiated, would make it easier to negotiate. The opposite is often true. This clause is so infrequently used, and so important, that labels might only be willing to reduce the length by a year, or at most two. And often for the artist, there are bigger issues to contend with during negotiations. Once a contract is on the table, they and their team might decide they aren’t willing to expend any leverage trying to change language that they might not ever have to deal with. (This is the reason the clauses often end up being an unwelcome surprise.) Consider master ownership or even copyright reversion: these issues are more important, and artists are more likely to use their leverage by trying to tackle them instead.
It’s important to remember that the situations that Def Leppard and JoJo found themselves in were exceptions to the norm. Labels still have a major impact on the careers of the artists that they sign, and will continue to protect their investments as best they can. With that said, as the tools to distribute sound recordings grow more and more robust, artists will be able to increase their leverage, using it to gain better terms and ultimately obtain greater control over their rights.