Industry Noize: TAA Exemption Denied For Managers

California’s Labor Commission limited an exemption to the Talent Agencies Act, which says only licensed talent agents may procure employment for clients, in a decision published Aug. 12 in a case where an artist/producer contracted with other artists, rather than a record label, to produce records.

In ruling against Marie Management Group, which argued it was entitled to commissions on an exemption to the TAA that allows managers to negotiate record label deals for their clients, it not only rejected the argument but voided the personal management agreement between the company and songwriter/producer Steve Lindsey. Lindsey’s onetime manager, Bennett Kaufman, secured a deal for Lindsey to produce a record for Guster that didn’t include the band’s label, Sire, as a party to the contract.

Sire distributed Guster recordings and provided royalty statements – and Lindsey’s royalty earnings were paid as a direct percentage of Guster’s earnings under its own Sire contract, according to Labor Commission documents.

A similar arrangement was made with trumpeter Chris Botti. Kaufman made the introductions and Lindsey did production work for Guster and Botti after signing agreements with them directly rather than Sire Records and Sony Music, respectively.

MMG argued that the contracts were for the production of recordings regardless of the relationship, and thus were exempt from the TAA. MMG argued that to not expand the exemption to include such artist-to-artist personal services would “send shockwaves through the industry and disturb long-held, highly developed rules and territory between managers and agents, not to mention a flurry of new claims by artists or non-artists involved in a recording contract.”

The Labor Commission, in its decision, said “it appears the intent of the recording contract exemption was to exempt the act of negotiating recording contracts between artists and the recording companies. Here the Guster and Botti agreements are agreements made directly between a producer and the artist. “In short, the record company is not a party to these contracts. These contracts are essentially contracts between two artists for services. And consequently, we choose not to expand the purview of the Act’s exemption to encompass contracts for personal services between artists and producer/artists.”

The Labor Commission ruled MMG’s violation of the TAA was so significant that it voided the entire personal management deal between Lindsey and the company.

Another ramification of the decision is MMG now can’t collect its former 15 percent commission on the sale of Windswept Pacific Entertainment Company, a joint venture in which Lindsey was a co-publisher.

Kaufman introduced Lindsey to Windswept, where he worked almost exclusively as a songwriter for several years and paid commissions to MMG.

In a 2003 amendment to his PMA, Lindsey and MMG agreed the company “shall also continue to be entitled to commission [for Lindsey’s] current publishing Joint Venture with Windswept Music Publishing” and was paid accordingly.

Lindsey terminated the PMA in 2005, in part because Kaufman left the firm.

He then sold his interest in Windswept back to the publisher in four installments, ending in July 2008, and stopped accounting for royalties to MMG, informing the company of the sale.

MMG requested the unpaid commissions on the Windswept deal and, when the bill was refused, MMG filed a claim in Los Angeles Superior Court for breach of contract. Lindsey challenged the claim on the basis MMG violated the TTA, and the Labor Commission agreed. The long-term effect on how managers and artists, including producers, negotiate recording contracts remain to be seen.

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