8.0 Group Provisions

8.1 Leaving Members

Any group recording agreement will include leaving member provisions. These tend to be controversial because they are very restrictive, and are increasingly complex. Their basic effect is that an artist who signs a deal as a member of a group may find that even after he or she has left the group he or she is still tied to the record company. Despite their restrictive nature, record companies are confident that leaving member clauses are reasonable. No sensible company, they argue, would invest substantial sums of money in a group without protection if the group splits up. No recording agreement compels a group of artists to remain together as this would be too restrictive. If the group disbands, or a member leaves, the company insists upon the right to continue with the leaving members. The company retains complete flexibility. It may continue with the remaining members and drop the leaving member; or it may drop the remaining members and continue only with the leaving member; or it may continue with all members; or it may drop all members. If the group disbands, all members are treated as leaving members. The company may continue with all or any of them. If a band split is acrimonious and the company wants to continue with all members this may give rise to a conflict of interest on the part of the record company. Two warring factions are competing for priority in recording budgets, release schedules and promotion and marketing budgets. In practice, the record company will normally agree to release one side from the contract, usually in return for a payment of some kind. This is often financed by a new record company and may be coupled with an “override” royalty on sales of that artist’s subsequent recordings.

8.2 Cross Recoupment

The artist should try to ensure that if the company exercises a leaving member option any royalties payable to the leaving member may be used to recoup only the leaving member’s share of any unrecouped balance on the group’s royalty account at the time of his or her departure. The leaving member will probably have to concede that his or her share of royalties from group recordings on which he or she performs may be used towards recoupment of any advance (or other recoupable sums) paid under his or her new leaving member contract.

8.3 Leaving Member’s Commitment

Ordinarily, a leaving member contract will be on the same terms as the existing group contract for the balance of the commitment then outstanding. If the member leaves after three albums have been recorded under a five album deal, the leaving member contract should cover only two albums. The company may argue that as it now has to invest in a new project it needs the protection of a higher minimum number of albums, but the artist should resist this. The company may also try to insist that a lower royalty rate should apply for any leaving member. Again, whilst this used to be common practice, it is now usually successfully resisted.

8.4 Solo Work

A band member may not need to leave if he or she can work as a solo artist separately from any commitments as a member of the group. A recording agreement will rarely include separate provisions dealing with a solo commitment unless a particular group member has a specific project in mind when the deal is being negotiated. A group member may have to leave the group if he or she is determined to pursue a particular project. This involves the risk of being dropped by the record company and then failing to secure a deal elsewhere.