Remember record clubs? 20 CDs by hit artists for 1¢? These were the absurd organizations run by some of the smarmiest of the smarmy in our business that could not wait to get their greedy paws on your records by your artist who you busted your hump to help find an audience, often at the peak of their popularity. Front line labels were under tremendous pressure to hand over our precious cargo to them at the earliest opportunity so the clubs, too, could snarf up the hit gravy train while giving the artists and especially the songwriter a truly raw deal.
Thus arose the “club holdback” a contractual provision that required a fixed period of time to pass before the record went to the club abattoir. The standard give was 90 days from LP release, but that really wasn’t long enough. It takes time to find an audience and 90 days isn’t nearly long enough. So true to form, successful artists or competitive signings could get a longer holdback, sometimes as long as 12 months. Another trick was that at least one of the clubs refused to pay full statutory or even the full 3/4 rate, so the tricksie label lawyer could also get rid of the 3/4 of 3/4 rate that the clubs would expect you to get because that was forever. Extend that holdback to 12 months and eliminate the reduced rate mechanical, and you could legitimately say “wish I could help, but you know, the contract. We fought like dogs and I had to give them something…so I gave them your money.”
As any artist or particularly nonfeatured artist (aka session player) will tell you, streaming cannibalizes higher margin physical sales. That’s a fact. Streaming also throws off significant’ profits to the streaming distributor in both revenue and market valuation. (I co-wrote a whole paper about this with Professor Claudio Feijoo for the World Intellectual Property Organization.) So it should be no surprise that in the finest tradition of the record clubs that the film studios have discovered a new way to rip off their featured and nonfeatured talent. And the best evidence is Scarlett Johansson’s lawsuit against Marvel and Disney for the way Disney bungled the artist relations issues surrounding the release of Black Widow.
David Dayan at The American Prospect nails the real labor relations issues underlying this pivotal lawsuit in his must-read post The Implications of Scarlett Johansson’s Marvel Lawsuit. David is one of the only journalists out there today who takes the time to understand the true implications of streaming. I highly commend this post to you and every talent lawyer and union negotiator.
We should all rally around Ms. Johansson for taking on what is sure to be a grinding knockdown dragout lawsuit, but we can already learn a few things from the Happiest Place on Earth.
- Yes, they will screw you no matter how big you are, even if the result is you’ll never work for them again.
- Streaming is probably the most corrosive technology to hit the entertainment industry in history.
- Holdbacks (or “windowing”) is a real thing but it’s only as real as the downside for the inevitable breach. Whether that is a lawsuit or a liquidated damages clause that requires the studio to pay as if the windowed event had not occurred remains to be seen. (Example, I get 10x up front and 1000X cash bonus on the backend if theatrical is wildly successful plus studio agrees not to stream in the first 100 days. If studio breaches and streams, I get my 1000x cash bonus regardless of how theatrical window performs, plus whatever else I would get from the streaming release.)
- The days of backend-loaded deals may be drawing to a close which will cost the studios more money up front for fewer actors.
- Streaming platforms should be paying residuals and bonus payments to all workers on a film, including below the line union workers.
- The Happiest Place on Earth is headed for a strike, the likes of which we have never seen before and if it weren’t for COVID it would already have happened.
It’s a very important case that tells a really sad story. And it’s probably the first of many.