WGA Strike: The Art of Negotiating for a Bigger Pot

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WGA Strike: The Art of Negotiating for a Bigger Pot

Mon Nov 19, 2007 @ 10:42AM PST

Posted by Eriq Gardner

Wga_labor_060506 Now that contract talks between the WGA and AMPTP will resume November 26, chatter has shifted to how these new negotiations might play out -- and where the studios might be willing to compromise for writers to receive a larger share of ancillary income.

Flip over to the music industry for a second, where demands for a bigger share of royalties are going in the opposite direction. Here, the conglomerates that own the labels are the supposedly beleaguered entities, asking artists for more concessions.

At CMT.com, Chet Flippo outlines the trend. Record labels increasingly want so-called "360 deals" or "multiple rights packages." As revenues from CD sales dwindle, these companies are fighting for survival by asking talent to give up a portion of artist revenue from tours and merchandise in exchange for record labels funding career development, marketing and other services. Flippo writes:

The initial reasoning was that, since the labels supposedly raise, nurture and guide the artists' careers, they are entitled to their "fair" share of the money the artist makes as a result of success achieved in the marketplace. So what had been for many artists their main income suddenly becomes whittled down.

But Flippo has doubts about the value of the labels' services. "Most labels today have stripped their staffs down so lean that there are few, if any, employees left who are skilled at those career development and maintenance skills that are supposedly part and parcel of 360," he writes.

Record label lawyers are increasingly getting acts to sign 360 deals. How? Mostly because they have the bargaining leverage when dealing with new talent. But as new media platforms like MySpace allow musicians to break to larger audiences without corporate backing, record labels will need to offer more in negotiations.

According to a recent Atlantic Records contract obtained by the New York Times, the label gave itself the option to give its artist $200,000 for 30 percent of the net income from all touring, merchandise, endorsements and fan-club fees. But Atlantic was also willing to give the artist 30 percent of the label’s album profits, up from the traditional 15 percent royalty rate. 

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The Hollywood Reporter, Esq. blog focuses on how the entertainment and media industries are impacted and influenced by the law. It is edited by Matthew Belloni with contributions from veteran legal reporter Eriq Gardner and others. Before joining The Hollywood Reporter, Belloni was a lawyer at an entertainment litigation firm in Los Angeles. He writes a column for THR devoted to entertainment law. Gardner is a New York-based writer and legal journalist. Send tips or comments to Matthew.Belloni@thr.com

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