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Indie Label Signing Practices OR Oral Contracts Are Bad But Oral Sex Is Still OK

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tricia kidd:

--- Quote from: Ptommydski on 18 Feb 2010, 10:11 ---
--- Quote from: tricia kidd on 18 Feb 2010, 09:43 ---i do understand the mindset
--- End quote ---

It's weird how everything about your posts suggests that you don't then.

--- End quote ---

then perhaps you could help me to understand by answering my questions.  or at least simply answering the question: why did Rusk feel he had the right to own the master tapes for albums that had already recouped their cost when the Surfers wanted them?

pilsner:

--- Quote from: Ptommydski on 18 Feb 2010, 06:58 ---
--- Quote from: Ian Mackaye ---"Conceptually [the Copyright Act] is a good law," says MacKaye. "It happens that in this perverse situation it was used against something that's right. It doesn't surprise me. Courts don't understand this--it's outside of their domain. Courts are the domain of lawyers. If you have an oral contract, lawyers don't get paid. It's kind of perfect that a court would be offended by that."
--- End quote ---

So yeah, it does seem ridiculous by most people's standards but that's what made and makes these labels so incredible. That's why they stand out against the majors/less than honest smaller labels and why I'll always support them as long as they continue to exist. They took an idealistic, seemingly naive set up and somehow made it work against all logical thinking.

--- End quote ---

This more or less makes the point I was attempting to make.  When MacKaye says "If you have an oral contract, lawyers don't get paid. It's kind of perfect that a court would be offended by that," he is not only wrong, he is the diametric opposite of right.  This is because a number of facts (yes, facts) about the legal system that I should have perhaps made explicit at the outset.

-- An oral/handshake agreement is still legally binding with regard to some intellectual property rights and most contractual rights.  The only thing keeping an agreement oral accomplishes is allowing the other party to make up ludicrous lies should they ever become evil and litigate or die and the beneficiaries of their estate litigate or (perhaps most likely of all) attempt to sell their ill-defined intellectual property rights to a third party, who litigates.

-- In all jurisdictions that I am familiar with, particularly the United States and Canada, a written agreement dealing with contractual and "soft" (ie. trademark and copyright) intellectual property rights doesn't need any involvement from a lawyer whatsoever to be totally legally binding.  It's never a bad idea to pay a lawyer a few hundred dollars to look at the agreement before you have the counter-party sign it to make sure that you are not fucking yourself, but you don't need to.  You will still benefit from the written agreement because it makes it a lot harder for the party to make up ludicrous lies and fuck you down the line.  Again, and I need to emphasize this, just because you are memorializing your agreement in writing does not mean lawyers need to get paid.  A contract is something any band can write up and sign in the time they might otherwise spend bullshitting or trying and failing to get laid in a single afternoon.

-- Lawyers love oral agreements.  That's because legal fees in a situation controlled by an oral agreement are generally far higher than in a case with a relatively clearly drafted written agreement.  In an oral agreement you can call witnesses to testify to their intention when they negotiated, drafted and concluded the agreement.  You can get into an old-fashioned ding dang full trial.  You can go for months!  Oral agreements and gentleman's understandings do not keep the lawyers away, instead they make the lawyers impoverish you should your agreement give way to a legal dispute.

-- There is no way to anticipate the full impact of the oral agreements under discussion because for the most part insufficient time has elapsed to see their full impact.  Only once artists are transferring their intellectual property rights in some number will the full impact of the this informal approach become clear.  More importantly, we do not know how many artists wanted to transfer or otherwise monetize their intellectual property rights but couldn't because of the nature of the agreement they concluded. 

What an oral agreement will do is provide substantial inertia to keep those intellectual property rights with the label with which it was concluded because it's unofficial nature makes it difficult to transfer.  Which is fine as long as the original label was a font of beauty, fairness and understanding, but not so good for all the labels that use the same practices but are run by absolute bastards.  To anyone interested reading more about this phenomenon (probably nobody but just in case), I refer you to Hernando de Soto's The Mystery of Capital, an extremely influential book that posits convincingly that third world countries are frequently kept poor because they lack sufficient infrastructure to permit official recognition of the property rights of the poor.  The analogy pretty much makes itself.

Ptommydski:

--- Quote from: tricia kidd ---then perhaps you could help me to understand by answering my questions.  or at least simply answering the question: why did Rusk feel he had the right to own the master tapes for albums that had already recouped their cost when the Surfers wanted them?
--- End quote ---

The BH Surfers were a band, they wanted to make some records. Touch & Go decided that they would be happy to pay for and then put out their records using a deal which they had used with several other bands, who accepted and understood the arrangement thus - the band and the label would receive an equal split of the proceeds (50/50). Everybody knew this was the deal which Touch & Go favoured, it was literally public knowledge. Furthermore, the other bands on the label signed to Touch & Go specifically because of this deal. This was largely because they knew Corey Rusk to be an honest and decent individual that everybody could trust to do business with. If you look at the names on the Touch & Go roster now and especially then and think about the people in these bands, it should be apparent that some people renowned for their demanding ethical criteria considered Touch & Go to be the appropriate label to represent themselves and their music. No small part of this was the lack of contracts and lawyers involved and the dramatically higher royalty rate (remember on major labels the artist usually gets about 5-9% of the proceeds after costs, usually after owing the label a significant amount of money for their advance, among other bolt-ons).

At this point, the BH Surfers had the choice of making a deal with Touch & Go or going elsewhere. Nobody put a gun to their heads and made them do a deal with Rusk, they were happy to be working with his label and very glad to get their records made. Corey Rusk's support of bands is legendary and there's no need for me to emphasise the point here with examples because they are too numerous. Rusk gave them the money to make the records, paid for the distribution and manufacture, as well as the advertising and tour support. He put his own financial well-being and that of the other bands on his label on the line for the BH Surfers. He held up his end of the deal and then some. I doubt that the band would ever amounted to much without the work of Rusk and Touch & Go. The deal was that Rusk and the BH Surfers would receive an equal share of the proceeds and that's exactly what happened for well over a decade. When the BH Surfers wanted to move on to another label, they did so. Rusk continued to hold up his end of the deal they had made because that's what you do if you've given someone your word. The records continued to be on the shelves, the BH Sufers kept getting their royalty cheques same as always.

Then suddenly years down the line, the deal is apparently no longer working for the BH Surfers. Nothing has changed, the records are moving at the same pace they ever did and Touch & Go is ensuring that the albums are available and the royalty cheques are going out. The dependable Rusk is holding up his end of the deal, same as ever. He doesn't deal with the manager who is calling him talking bullshit because it seems insane that anybody would genuinely want the ridiculous demands being made. His stance is that the manager wasn't involved with the original deal and that he doesn't even know if the manager is speaking on behalf of the BH Surfers, who haven't contacted him. Considering the fact that historically, especially by this point, the BH Surfers had built a reputation as incredibly difficult, dishonest people. All kinds of stories regarding their insanity had filtered through to Rusk and his peers but he continued to put out the records and post the cheques same as he ever did. A deal's a deal, he thought. It doesn't matter that they have been acting like assholes to all and everyone in the community for going on a decade, I made a deal and my word should count for something or my business is built on a lie.

Given all of the above, my instinct upon receiving a court order would have been the same. Rusk circled the wagons and fought it because no doubt he felt betrayed by the actions of a band whom he had by their own admission essentially made. I can completely understand why he felt so wounded because the deal was absolutely fair by anyone's standards and he had upheld his part of the deal. If he'd immediately rolled over, it might have looked like an admission that he was in some way in the wrong, when evidently to anyone with even scant regard for the practices of the independent music community knew he has upheld his part of the deal. He gave the band money to make the records. He manufactured and distributed the records. He advertised them for years and provided the band with extensive tour support for a long time. He made sure the records were always in print and available to anyone who wanted them. He didn't stop the BH Surfers from leaving the label when they wanted to. He continued to send out the royalty cheques, same as ever. Rusk went well beyond the call of duty for this band and it would naturally seem unfathomable that they would betray him in this manner, as indeed it continues to seem to me today. Literally all he wanted was the rights to continue selling the records which he had bankrolled, so he could continue paying his massively over the average royalty rate to the BH Surfers.

Thus - it's literally this simple. If you think that Touch & Go's handshake deal is an unfair one, don't ever work with Touch & Go. Don't buy their records, don't get involved in any way. That option is always available to you and I implore you to take it. Personally I know through experience that Touch & Go are an exemplary label and I support them in the above situation because they held to their deal, same as ever. If you don't understand that, I have no problem at all. This is actually a useful marker for where you and I stand, as I've already said.

Ptommydski:

--- Quote from: pilsner on 18 Feb 2010, 11:01 ---This more or less makes the point I was attempting to make.  When MacKaye says "If you have an oral contract, lawyers don't get paid. It's kind of perfect that a court would be offended by that," he is not only wrong, he is the diametric opposite of right.  This is because a number of facts (yes, facts) about the legal system that I should have perhaps made explicit at the outset.
--- End quote ---

Again, I couldn't debate you if I wanted to. You're absolutely right from a legal perspective. The handshake deal is ludicrous, it should not have worked as well as it has for so long. However, it has worked for Touch & Go and Dischord among others. That's the brilliance of it.

Rather than debate this again, when it's fairly obvious that we've reached an impasse in terms of the "this shouldn't work but it does" situation, let's do an intellectual exercise. If you had to start a record label tomorrow, especially given what you now know about Touch & Go and Dischord against your indisputably excellent, professional knowledge of the law, what arrangement would you personally have with bands? What kind of deal would make you comfortable?

tricia kidd:

--- Quote from: Ptommydski on 18 Feb 2010, 11:13 ---Given all of the above, my instinct upon receiving a court order would have been the same.

--- End quote ---

the article indicates that he didn't receive a court order until after he refused to release the master tapes to the band.

"The legal battle started officially in December 1995 when the Buttholes sent Rusk a letter demanding that their share of the net profit be increased to 80 percent. When Rusk refused their proposal in writing, they sent him another letter demanding that he stop selling their records and give back the master tapes. When Rusk again refused, the Buttholes sued him and Touch and Go."

unless my reading comprehension is completely broken, that timeline shows that no legal action was pursued until after the Surfers had, on their own, without lawyers, indicated that they wanted out of the contract and to have the master tapes.

if you have another source that indicates otherwise, feel free to correct me.

but none of that wall of text you typed addresses my question:

why did he feel it was his right to keep the physical master tapes well after the cost of recording and promoting the albums had been recouped?  why did he not respect the artists' wishes to own their own art, even after said art had made him a good profit?

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