Madonna’s decision to leave Warner Bros. Records for a $120 million deal with concert promoter Live Nation, Inc. signifies a dramatic industry shift and is likely a harbinger of more changes ahead for entertainment movers and shakers — and the lawyers they hire to do the moving and the shaking.
At least that’s what entertainment lawyer Larry Stein tells Legal Pad.
“What’s different about this is that it’s not being done with a label,” said Stein, the head of Dreier Stein & Kahan’s entertainment practice. And that could mean a different realm of clients for entertainment lawyers as new players — such as concert promoters— replace labels in the big-money deals.
A series of factors are likely contributing to that shift, he said. For one, distribution — and promotion— is a lot easier as a result of the Internet.
“It used to be that you’d work with a label because the cost of making music was so expensive,” Stein said. “Now, you don’t need a label the same way you needed it before.”
And that spells trouble for music labels, unless they change their ways of doing business, Stein predicted.
“The problem in the music industry is that labels didn’t recognize changes that came with the Internet and held on to their model,” he said, pointing to their lawsuits trying to curb college students’ illegal downloads.
“It’s like Prohibition — if they’re going to want the booze, they’ll have it,” Stein said.
Labels are going to have to be more innovative, Stein said, such as creating profit participation for artists as an incentive to stick with them. They also need to get on board with new ways to make money, such as merchandising and promotions such as putting out cuts of albums for free.
“The artists and techies are way ahead of record companies,” he said. “They need to get on board with new ways to make money; otherwise they’re going to be dinosaurs.”
So, what does all this mean for entertainment lawyers?
Along with new clients, they also might need more flexibility in drafting new contracts to deal with the changing industry.
"They’ll still need lawyers to do all the same things, they’ll just be doing it for different companies," Stein said. "And, lawyers are going to be more adept at creating new contracts to deal with these issues, and won’t be able to rely on standardized contracts."
All you gotta do, he says, is hire the right attorney.
"It shouldn't be difficult if lawyers are smart and creative," Stein said.
— Kellie Schmitt