How Easy Is It for Businesses to Walk Away from Problematic Artists?

The move has been both lauded and met with controversy, raising questions about free speech, censorship, and the slippery slope of moral jurisdiction; even Spotify itself acknowledges that the policy presents prickly, complex territory to navigate.

If Spotify’s announcement is perhaps cavalier, it also highlights the relative silence and inaction from other music companies who have relationships with these artists—streaming services, record labels, publishers, and more—up until now, as the industry navigates the gap between due process and the court of public opinion. Kelly, for example, remains with his label, RCA, and its parent company, Sony Music Entertainment, has thus far declined to comment on the status of their relationship. XXXTentacion, who had been charged with allegedly attacking and strangling his then-pregnant girlfriend in 2016, landed a reported $6 million deal two weeks after the Harvey Weinstein scandal broke last October. (When contacted by Noisey late last year, a publicist for XXXTentacion confirmed the deal was on but said the amount was undisclosed.)

Amongst fans and listeners, the moral dilemma is relatively simple: You don’t have to listen to or otherwise support abusive artists. Music companies ultimately face the same choice, but walking away from an artist means first reckoning with the legal and ethical mechanisms lurking beneath the surface of right vs. wrong.

Can other companies walk away from allegedly abusive artists as seemingly easily as Spotify has? Depends on how you define “easily”—and how much money is at stake. According to music industry lawyers with whom Noisey spoke, the situation varies case by case, depending on what the company is, the nature of their relationship, and the allegations at hand.

“One of the things [a company] has to consider is that typically for there to be any kind of relationship, that relationship is generally governed by a contract,” says litigation and transaction attorney James E. McMillan, managing partner of NYC firm James E. McMillan, P.C. “Unless that contract has a morals clause in the agreement, which would allow a company to walk away in the event that the artist does something that casts them in a bad light, then [the company] is generally bound by their contract. And even then, that doesn't give them the right to not pay royalties and things of that nature that they are already obligated to pay from previous sales.”

Unlike executive contracts, morals clauses are relatively rare in artist contracts—though, if post-#metoo Hollywood is an indication, they could become more common. When morals clauses are included, they tend to be broad in scope. That can make them legally tricky to invoke against one type of bad behavior, like sexual misconduct, in an industry where rulebreaking and moral defiance have historically been championed as artists’ selling points.

“At that point, you start to raise issues of freedom of speech,” McMillan says. “You’re constitutionally protected, and it becomes, is this art, or not?”

Of course, when criminal or civil cases are involved, the lines are a little more clear. But, without a morals clause, that doesn’t necessarily hold sway over an artist’s contract. Criminal convictions, particularly of heinous crimes, can provide grounds for terminating a contractual relationship. But few of the artists in question have legally reached that point. R. Kelly, for example, was acquitted of child pornography charges in 2008, due to the absence of testimony from the alleged victim. Despite increasing scrutiny and a long paper trail of sexual misconduct allegations, the fact remains that the singer has never been charged with a crime.

McMillan says that means that those still in business with Kelly remain contractually obligated to fulfilling their agreement with him; anyone who chooses not to, or otherwise aggrieves him without legal justification, risks legal consequences.

“They could get sued for breach of contract and they can open themselves up to liability in that instance,” McMillan says. “And anyone getting caught interfering with the artist agreements could potentially be liable too for tortious interference.”

In lieu of a morals clause or criminal conviction, a company is left with two paths. They can choose not to renew an artist’s contract when the next option period comes up—the simplest, cut-and-dry option, but one that may mean continuing to release or otherwise support an artist’s work while they’re still under contract.

The other path is more of a gamble.

“If it's not time to decide whether to pick up an option, or maybe it's a different kind of agreement that doesn't have options, then it becomes a conversation, and maybe there's a buyout or other form of compensation to make it palatable for the parties to not work together anymore,” says Erin M. Jacobson, Esq., a Beverly Hills-based music transactional lawyer whose practice is focused on contract and intellectual property law within the music industry.

In addition to negotiations, a company can also take an artist to court to make a case for severing ties early, but it’s a risky move wracked with complicating precedents and no express terms.

“There's all kinds of things you do in defense when you're representing an artist,” says LA-based entertainment attorney Edwin McPherson, managing partner at McPherson Rane LLP. “You look at other artists similarly situated that might have done something that was bad, and you say ‘You didn't do anything to him…You just want to get rid of this client.’ It's like discrimination cases. You say you fired somebody, they say it's discrimination [because] ten people did the same thing and you didn't fire them.”

Beyond getting countersued by an artist for discrimination or breach of contract, a company’s choice to dissolve a relationship with an artist can also risk giving competitors an advantage.

“Competitors may think they no longer have the stomach to be in business with them,” McMillan says. “Or another record company may not do it the same way and say, ‘Well, you know what, we're going to take a risk. You haven't been convicted of anything and it's ridiculous that people would try to limit your livelihood based on the court of public opinion.”

Ultimately, McMillan says, a company’s choice to stay with or walk away from an artist can come down to a difficult cost-benefit analysis.

“It depends on the artist, how many records the artist has sold…There's a bunch of different factors,” he says. “These companies are making money with these people. My opinion is that they're not so quick to cut those relationships because they want to contribute to that gravy train.”

Andrea Domanick is Noisey's West Coast editor. Follow her on Twitter.