Would you have set Queen Elizabeth's face on fire?
In 1994, under the cover of an abandoned boathouse off the Scottish coast, two British bandmates came close. The Timelords, aka The KLF, transported a million quid of their own music earnings — all adorned with her highness’ likeness — and blazed the pounds to high hell. The cash took an hour to burn and left behind three decades of theorizing about the duo’s intent: PR plot, performance art, heinous waste, legendary prank, costly political hoodwink. Odds of an “all of the above” answer are high.
Subversive acts also come in nonplasmic packages. Six years before the inferno, fresh off a #1 hit single in 1988, the rave-archists published a booklet called The Manual. This tactical artist guide open-sourced pop music in an age of extreme opacity. Inside: a comical, incisive, 0-to-100 plan for achieving a chart-topper. Side quests include psychoanalysis of insecure industry heads and royalty lessons. To anyone who claims music has no roadmap, The KLF replied with unrivaled mischief and a big “fuck off.” Most of their words apply to today’s music landscape, but they didn’t crystal ball everything quite right:
“As more creators of music begin to realize it’s possible to make records themselves and steer those records in whatever direction they want, at the same time as retaining all the copyright in the product [and] thus a bigger chunk of the action, the attractiveness of signing your soul and its products away from now to eternity will become to look rather silly. Nothing to do with ideology, just business sense.”
For all the strides toward artist ownership and transparency in recent years, perpetuity deals held on tight.
“Perpetuity deals feel like a very excessive ask these days, given what the labels are usually doing to help an artist cut through, and yet they continue to be used,” says a senior A&R, requesting anonymity, who’s worked both within and outside of the major label system. “They aren’t giving singers the song, pressing the vinyl, bringing it to radio, putting it in stores. It’s pushing a button and asking artists to do more and more, often more than the label. How can you ask for between 80% and 85%? For decades?”
This isn’t another boogeymanification of record labels. In the absence of robust arts funding, it’s reasonable for an investor to expect a return. The issue is how much, how long, and what for. Artists, it must be said, have every right to sign deals they desire, or part ways with their art and sell to catalog acquirers if they choose. Too often, though, these decisions reek of false and forced choices, not just celebration.
After speaking with dozens of A&Rs, managers, lawyers, and artists, it’s clear that rights holders can achieve their objectives — recoupment, reinvestment, reward — on a far shorter time horizon. We’ve broken this story into two articles. The first, this one, looks at the status quo. The second digs into fallacious defenses of perpetuity contracts and how we might advocate for a new, improved standard.
https://notes.catalog.works/posts/record-deals-perpetuity-essay-sequel
Transparency’s Underbelly
By the end of 2007, not long after the Crank That Revolution, my music passions had taken me from first CD (Avril Lavigne) to industry curious. This meant frequent visions of utopia (re: treehouse studios) and half-brained optimism: every unpunished LimeWire binge felt like a thumbsup from God. (It had yet to occur to me that the music business and an illegal torrenting app weren’t on great terms; I just couldn’t believe the computer still worked.) During this epoch of The Office and T-Pain and a disastrous wAr On TeRrOr, a friend’s parents asked me The Career Question over pizza dinner.
Them, pleasant: “Do you know what you want to be when you grow up?”
Me, chipmunk-voiced middle schooler: “The music industry :D”
Them, aghast: “How about something else?”
At home, in search of backup, I recited this exchange to my father. He expressed immediate allegiance with Mrs. and Mr. Bonnet, honoring his duty as a man raised in an immigrant household. The music industry, I thought, was a place for those who create and cherish music. What's the problem? (Turns out "The Illuminati" wasn't their primary concern.)
Through these widened eyes I looked for proof of progress. In 2010, that meant cheering for Lupe Fiasco while he squared off with Lyor Cohen and Atlantic Records. Between 2013 and 2016, Chance The Rapper’s fairytale* ascent collided with Yeezus rants, warping my high school perspective. 2016 brought about digital distribution’s ongoing modernization. These early fan experiences — peppered with Wendy Day’s stories about Master P’s and Birdman’s business savvy — were bolstered during my time at Stem, during its open-to-almost-anyone days, and AWAL/Kobalt, before the 2021 Sony acquisition.
Nestled within music tech’s early stages of ‘artist-first’ promises, a largely VC-subsidized endeavor, music makers and their teams set new rules and better choices in motion. Frank Ocean, Brent Faiyaz, Little Simz, Omar Apollo, Bad Bunny... even Lauv and his radio streak stand out. These artists achieved substantial acclaim and lucrative careers without perpetuity deals, left such deals behind to do bigger and better things, or brought real bargaining power to eventual deal talks with Big 3 music companies. While the majors eyerolled their successes; ‘poached’ (a silly, deautonomizing word) the ‘success stories’; or spun up distro arms of their own for ‘music’s middle class,’ more deals took a lighter, license-based shape. The standardized perpetuity clause seemed to wobble on the edge of its supremacy. Hello optimism, my old friend.
Earlier this year, an unsigned band (we’ll call them The Free Palestines to protect their identity) accepted a $2.5M, 12-year licensing deal for one of their older records. This perpetuity-free feel-good story has grown more common in the 2020s; relative to traditional deals, which put the con in economics, it’s a win. Yet even these scenarios hover just north of lottery odds. The song that led to a less-than-forever contract had generated $300K over the previous 12 months. Social media’s invisible sorting hat rejuvenated its life force — a small miracle. Another blessing: the band’s team, seasoned enough between management and legal counsel to hold their own in negotiations. The internet, in this context, is less a democratizing force than a divinely anointing stroke of luck. Banking on a Hail Mary doesn’t equal progress. Without additional limits, regulations, watchdogs, or internal checks and balances, many rights-holding orgs continue to seek maximized ownership via cookiecutter deals. Artists lifted by digital winds to prominence risk signing exploitative agreements without principled advisers in place.
Music tech’s always been a mixed bag because data’s malleable. Look at two hallmark gamechangers of the pre-AI era — automated royalty splits on one hand (very good), the metrics olympics of socials and streaming stats on the other (very conflicting). Artist teams can gauge their own worth more concretely while labels can eschew ‘creative bets’ for ‘derisked assets.’ Join a big label meeting with a potential signee and you’re bound to spot an executive eyeballing Monthly Listeners on their laptop, rather than focusing on the music created by the person across the table. (Splits, it’s worth noting, didn’t become standard in music until a decade after Venmo launched. Some prominent alternative music platforms still don’t offer this feature while Suno and Udio try to usurp humans under the guise of 'song-making for everyone.')
“It’s easier to spend $50,000 marketing an older song generating $50,000 already,” says a vice president of A&R at one of music’s larger multinational indie labels, requesting anonymity. “It de-risks that investment as a label. The longer you own that, the more you’re de-risking.”
This much we know. What’s most tragic, though, is that the same data powering a supposed Age of Transparency for artists also dialed up their commodification. The ability for anyone, anywhere to track the performance of music makers has lured new entrants into the IP market with perpetuity ambitions. The appeal of life-of-rights deals have, in some respects, broadened. Within the traditional industry, exceptions to perpetuity deals have just become slightly less exceptional.
You, Too, Can Sell Your Rights
Or buy your shares of Taylor Swift today :) Courtesy of perpetuity (and Ryan Tedder).
Fantasies of an Artist Stock Market refuse to die in technocratic minds, as if NASDAQ tickers and the carcass systems strung around them represent financial liberation. Visit Royalty Exchange’s homepage and you’ll squint to uncover any mention of music, just “assets” and “30-year” or “life-of-rights” listings. Travel over to its About section, though, and you’ll feast your eyes on brand hysterics:
“We believe that the value of ideas should flow to all creators, not just gatekeepers or the 1%. So we created an open marketplace that gives any artist earning royalties the ability to share them with any investor interested in paying a fair price. The result is the only solution that serves the 99% of artists and investors previously ignored by the old system we’re disrupting… A commercially successful idea is the most meaningful currency of our time. It’s the only true competitive advantage left.”
Everything sounds nicer with the 2016 Bernie Sanders filter (I’ve been guilty of the same, I know it well). Unfortunately, music makers generally have less sway than those with the capital to invest in them. This threatens to drive prices down and contract durations up, even if artists nominally set their terms. Without opinionated guardrails, open markets like RoyaltyExchange struggle to meaningfully disrupt much. Genuine solutions must account for the power dynamics and imbalances that precede them.
The rush to expand access to selling copyrights, led by the likes of Duetti in pursuit of making a Hipgnosis Fund for everyone*, reflects the cynical wheatpasting of progressive values over antihero behavior. Is music’s democratization endgame just letting more artists relinquish 50-plus percent of their tracks for 10 to 35 years to keep rent paid a bit longer? Maybe its advances offered by sleek, ‘unbiased’ software to help sweeten the loan’s obscene interest rate. A company may accept negotiated terms when data presents an artist favorably, but its ideal starting and ending position = forever-ever rights ownership.
“Most funds I speak with won’t entertain anything less than perpetuity,” a broker of music catalog sales tells us, requesting anonymity. “They just won’t consider it.”
Waiting for Artists With Amazing Leverage to nudge majors toward shorter, fairer deals can’t compensate for the unabated final form of those companies: infinite copyright holdings, no expiration dates, maximum popularity, cheapest/smallest workforce possible. The more perpetuity deals and long-term licenses a label locks in, all else equal, the prettier they sit in the eyes of shareholders, future investors, goliath acquirers, royalty rate and licensing negotiations with streaming services, execs like Lucian Grainge (with their nine-figure bonuses tethered to share price), and super stakeholders like fearmonger Bill Ackman, whose hedge fund Pershing Square owns 10% of Universal. The struggle to exist without compromising principles, a friend pointed out to me, can be seen in famed pro-Palestine artist Saint Levant's decision to sign to Universal Arabic Music, a decision that simultaneously benefits its spearhead, The Weeknd's manager Wassim Slaiby, and Bill Ackman. The Weeknd has spent millions of dollars to help fund aid for Gazans; Bill Ackman has encouraged doxxing of pro-Palestine students. (He might get 10,000 likes on X for posting a screenshot of this and accusing me, an Arab Jew, of hating Jews. TBD!) Where there's unchecked consolidation, there's hypocrisy.
Elsewhere, digital labels (built off YouTube channels, TikTok followings, or old school relationships) might offer a one-song perpetuity deal in exchange for $1000, or nothing more than exposure. Then there’s joint ventures, a hypothetically symbiotic marriage between partners (producers, managers) and ‘traditional’ labels, from which some of the most archaic perpetuity deals can spawn: inferior investment (e.g. subpar marketing budgets) for the same life-of-rights Spider-Man meme:
At numerous digital distribution companies offering funding with fairer contracts, the volume game leaves a sea of neglected artists. Exasperated label managers handle 50 to 100 'accounts,' instead of six to 20. Many beloved indies, caught in a classic prisoner’s dilemma, enforce perpetuity to try and keep pace. (If a cash-stacked major owns an album for 35 years and a cash-strapped indie owns an album for 10, a widening gap may expand further). According to two sources, Too Lost, a ‘tech-forward’ distro company that describes itself as “preserving [artists’] rights and ownership,” has withheld substantial earnings from one artist without explanation, and subjected another to a year-long retention period despite zero funding — a rule of the company’s ‘priority program,’ which the artist never knowingly opted into. Some rights holders compete with shorter terms and larger artist splits, but their successes won’t enshrine protections against life-of-rights. As the U.S. Federal Reserve hikes interest rates to stifle inflation — from ~0.06% (2021) to ~5.25% (2024) — the pressure on music ‘assets’ to overperform grows. Perpetuity ownership helps soften investor doubts.
“The low interest rate environment drove a catalog acquisition craze,” says Milana Rabkin-Lewis, the CEO of Stem. “Major record labels have gotten more aggressive in their ability to write big offers, which makes it much harder for indies to compete. This applies to both catalog acquisition and new artists. The majors largely use their own [resources] so they have a very cheap cost of capital [for deals], whereas a lot of indies depend on other forms of debt to finance offers to artists. In a high interest rate environment like the one we've been in for the last few years it has been harder and more expensive for labels and entities who need outside funding partners to remain competitive because it’s harder to pay back loans with high interest. I think music is still a very attractive investment, but because of how attractive treasuries are [today], you have to create a big enough spread for them to want to take the risk compared to them being able to just put their money to work in treasuries and generate 5-7% interest.”
Signals of overspending at the top haven’t stopped the train, which Blackstone and Concord just finished bidding for. One major publishing exec tells me music copyrights continue to sell for 12x to 15x their annual revenue, while a broker of recordings sees 2x to 5x multiples for shorter-term deals.
Digging Into the Nitty Gritty
Perpetuity deals in the U.S. last 35 years. That’s 166% longer than Taylor Swift’s entire career to date, or 40% of the average American lifespan. “Creative deals,” industry speak for contracts that loosen the boa constrictor, only exist as uncommon outcomes to strive for and dream about. 20-year licenses with two options instead of four; perpetuity deals with 50/50 rev shares; a one-off release. To that end, we can imagine an improved perpetuity deal:
- A perpetuity deal that starts 50/50, then grants the artist a majority share of royalties once they’ve recouped. If additional recoupable budgets are granted by the rights holder and agreed upon by both parties, a new artist rate, reduced (within reason) until recoupment, makes sense to activate
- A perpetuity deal that recoups advances, recording budgets, and marketing budgets as a net profit split, rather than entirely from the artist’s share. If an artist has a 15% royalty deal and receives a $500,000 check, they have to generate ~seven times as much money to start earning royalties again, or $3.3 million. The artist must also pay all production, collaboration, and mixing costs from their share, despite the label also benefiting from that collective creative work
- A perpetuity deal that dissolves if recoupment hasn’t been achieved within a shorter window, ensuring shared responsibility between all parties for the financial ‘failure’ of a project
In practice, though, perpetuity deals usually enforce royalty tiers. Here’s what the splits look like for many multi-project agreements, whether the advance is $50K or $1.5M, based on contracts shared with me:
- Initial term (album one): 15% to 20% royalty share for artist
- First option (album two): 16% to 21% royalty share for artist
- Second option (album three): 17% to 22% royalty share for artist
- Third option (album four): 18% to 23% royalty share for artist
If you’ve rubbed shoulders with industry workers, you’ll recognize this four-project scenario as a “1+3,” or one guaranteed release, after which the label decides whether to continue footing the bill. Between these options, artists can find themselves in limbo. The label determines whether they’ve over-promised funding and/or have faith in the artist’s commercial viability. Occasionally, a label will offer a reduced budget and reduced artist royalty for what they deem “passion projects” or mixtapes. If the artist accepts these terms and the label agrees to distribute the result, the label still declines to count it as a fulfilled option. (Some readers might refer to this policy as the Endless Effect.)
In addition to the lavish upward mobility of graduating from a 17% artist royalty to an 18% artist royalty, accolades (a chart position, a Grammy nom) may yield improved rates, advances, or marketing budgets. That said, min-max adjustments, along with broader renegotiations, can’t be counted on. The deal on signing day is what most artists get, so the longer a deal lasts, the more important its mutuality becomes. That most music contracts double as nondisclosure agreements without regulatory scrutiny further tilts the power imbalance toward the company holding the carrot. Options can instead function as checkpoints for dual evaluation.
“Perpetuity deals only make sense if they’re tied to perpetual reinvestment, marketing, and maintenance,” says Chris Cajoleas, an artist manager and indie label operator. “The idea of spending some money on a project for one to three years then putting it in a closet for another 30? It’s a two way street, and both parties should agree to continue it or end it. If a label is going to commit to a $10,000 push every five years, the artist needs to be able to deliver on marketing asks and put energy into it. And at the same time: just because 10 dudes have good taste, that doesn’t make them good arbiters of your creative work for a lifetime. Smaller indie labels will still offer $20,000 for a 15/85 perpetuity deal in their favor. At least with a major, there’s people around the world ready to work if it shows enough promise.”
The worst offenders prey on age, gender, race, geographic isolation, or naïveté, holding inflated claims of relationships over the heads of artists they hope to sign. As Mick Jenkins said in our Liner Notes interview, there’s an embedded asymmetry between those who (ideally) spend their waking hours on art, and those who make their living off presenting legal agreements to artists in a generous light.
“Perpetuity deals are especially fucked if there aren’t any advances or budgets attached to the deal,” adds a multinational indie label’s VP of A&R. “Five or ten-year licenses are a reach with no funding, let alone perpetuity. We don’t do perpetuity deals. Most are in the range of 18 to 25 years. We always try to release artists from deals they’re really unhappy with, whether they’re $100,000 in the red or profitable.”
Sweeping character accusations help no one; to be clear, brilliant people go the extra mile every day at labels with perpetuity deals. Beyond the c-suite execs, business affairs team, and senior-most A&Rs, workers rarely have any say in the terms or the money exchanged between the artist and the label. They’re simply assigned their accounts and told to get to work. The inverse also applies: ‘“artist-first,” “artist-friendly” agreements don’t mean all involved are benevolent saints. Criticism of perpetuity isn’t about personal affronts but questions that transcend tribes:
- Are artists who succeed within perpetuity deals achieving success because of those deals?
- Are companies that offer perpetuity deals contributing resources (funding, marketing, radio promotion, admin, strategy, development) to a degree that warrants life-of-copyright profit?
- Are companies who offer perpetuity deals nurturing music they own throughout the term length?
- Are power imbalances and asymmetrical info a factor in the signing of perpetuity deals?
- Can companies only achieve recoupment, reinvestment, and reward with perpetuity deals?
- Are less one-sided contractual structures for longterm copyright custodianship possible?
- Do rights-holders and financiers in the industry operate with more or less regulatory oversight than, for example, restaurants and the mandatory hygiene safety ratings they answer to?
- What role do managers, lawyers, and business managers play in the inertia of perpetuity deals?
We’ll give those questions some air to breathe. Read Forever-Ever (Part II): Music Futures and Power Semantics, to dive into the flawed defenses of life-of-copyright contracts and how we might improve music's legal standards moving forward.
