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Entertainment Law - Primary Live Performance Contracts

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Entertainment Law - Primary Live Performance Contracts

With the increasing legal complexities in the live performance industry, lawyers, agencies, promoters, managers and talent buyers have had to re-examine their template agreements and legal protocols related to performers and entertainment. In this CLE course, you will learn more about the intricacies of the live performance industry, primary agreements within the industry, how the industry is evolving, and how you can protect your clients in the industry.

Presenters

Lauren Spahn
Partner
Shackelford, Bowen, McKinley & Norton, LLP

Transcript

Lauren Spahn: Now that we have an understanding of the parties that are involved, let's look at the primary contracts that are typically part of a live performance deal. The first is the performance agreement. This is the deal that's directly between the artist and the purchaser. This is going to detail the specifications related to the event, the date, the time, the place. It's also going to detail how the artist gets paid, when they get paid, how much they get paid and it will contain other specific details surrounding the event. There is typically legal language that is attached to this document that goes over all of the material, legal aspects, such as force majeure, inclement weather, insurance, all of which we'll get into later.

The second primary contract is the artist writer. This is the contract that details what an artist requires of the purchaser. A artist writer typically is broken up into two different parts. The first is the technical writer. This details the production that is required for the artist, whether it be lighting, staging, sound and various equipment. The second component is the hospitality writer. This may detail more so the requirements of the artist when it comes to food, catering, hotels, transportation. The artist's team puts together this document in order to give the event a clear understanding of what the artist needs in order to make the event happen as successfully as possible on the artist behalf. The third primary contract is the venue agreement. This is the agreement between the venue and the event. The venue agreement specifies the details and obligations of the venue and what they need to do in order to make the event happen successfully. This will, again, detail things like the event date, event time, but it will also go into specifications around announcements, seating and the various employees or contractors that are required by the venue in order to make the event happen.

Now that we have the full picture of the parties that are involved and the primary contracts let's dig into the first contract, the performance agreement. As I alluded to before, this agreement is between the purchaser and the artist. And typically, the agency through the agent is the one who puts this agreement together and sends it out to the purchaser. At that time, the agency and the purchaser will negotiate the terms of this deal amongst themselves. The agent has the authority to act on behalf of the artist in order to negotiate this deal. The standard terms of this agreement include the following, the venue, the date, the ticket price, the lineup, the billing, and the marketing and promotional matters. It's important that each performance contract has the exact specifications of that particular event and the artist's requirement for that event. If the artist is supposed to go on at 7:00 PM, it's important that that's noted because if the artist went on at a much earlier or later time, that could greatly skew the event.

In addition to those specific terms, it also details the artist compensation. How much is the artist going to get paid? When will they receive that payment? Oftentimes, the performance agreement requires that the artists be paid a percentage of their guarantee upfront. This payment is often due before the event can make any announcement with regards to the artist performing at that date. Once that initial amount is paid, we consider it a deposit. The legal provisions of the agreement typically detail around when an artist's deposit is refundable and when it's not, and what circumstances and events would make the artist have to either pay back that deposit or retain it.

The remainder of the guarantee is typically paid at the time the artist takes stage. This is because the purchaser wants to require that the artist is there performing before they're required to pay the remaining amounts to the artist. This is a negotiating point that's typically found in these agreements, and the percentage that the agency has to pay upfront and on the backend is typically a very big discussion point. If the purchaser is someone that the agency has done business with before, they are more likely to require a smaller percentage up front because they trust and know that that purchaser will make the payments in a timely manner. If the purchaser is someone that the agency hasn't done business with before, and they don't know whether or not that person will be trustworthy in order to make payments on time, they likely will require that the amount be paid in much larger scale upfront, as opposed to once the event actually takes place.

Another important term is merchandise. Is the artist going to have the right to sell their merchandise at the show? And if they do then the purchaser typically retains a percentage of the merchandise. Common merchandise splits are 75% in favor of the artist and 25% to the purchaser. But when it comes to items like CDs and vinyls and intellectual property, that split is 90% to the artist and 10% of the venue. But again, this is a negotiation point in the deal. Recording is often a standard term, does the purchaser or the venue have the right to record the event? And if so, what do they have the ability to do further into that recording? Can they put it on their website? Can they sell it? This is, again, negotiated upfront. In addition to the venue or the purchaser recording the event, there's often provisions around the patrons at the event and what the purchaser or venue has to do in order to take steps to ensure that people aren't going to come in and record the entire show and put it online for others to view. The venue and the purchaser will typically take reasonable steps such as signage to indicate to the patrons that they do not have the ability to record and publicize the event.

Cancellation is also a heavily negotiated term. Oftentimes the agreement details when and how the event can be canceled. On the artist side, the artist may want the opportunity to cancel the event if it's found that the purchaser has not been conducting business in a professional manner with other parties. It may be that the artist wants the ability to cancel the event within 30 days notice because they may be starring in a movie or a TV show, and they might have a filming schedule that conflicts with the show. If you're the purchaser, you want to heavily negotiate these points, because if you are putting time, money, and energy into promoting your event and getting your event together, and the artist has the right to cancel 30 days out, then you can be left in a very difficult position of having to try to find a new artist, having to redo your marketing materials and having to take steps that are going to be costly to you.

Potential pitfalls in these items. So when you're looking at cancellations, you need to keep in mind the deposits, the due dates and the deadlines in order to make sure that you'll be off the hook for the money if cancellation happens. For example, if the artist has the ability to cancel 30 days out, you want to make sure that they have to return the deposit or any other money that you have given them in connection with the event. If the event has any cancellation rights, the event wants to make sure that they can retain any deposits back in the event that the date is canceled. On the flip side, if you are representing the artist and you're negotiating with an event that does not have a lot of experience, you haven't done business with them. and so you're unsure whether or not the event will actually happen, you may want to negotiate a large upfront deposit amount while also requiring that the guarantee be paid to you 30 days before the event. That way, if the event isn't able to happen for reasons due to the purchaser, then the artist has retained the money that they would otherwise be owed for the performance without having to go and chase after the purchaser in order to get paid.

Another potential pitfall is liability. It's important to negotiate the indemnification of both parties and the limitation of liability if something goes wrong. For example, it's common for the artist and the purchaser to only indemnify if there's negligence or willful misconduct on their behalf. For example, if the artist has equipment onsite, and the equipment is stolen because the artist did not properly lock the dressing room, or they left their items in a wide open space and just dropped them off and they forgot about them, the purchaser is only going to want to have to indemnify the artist for the stolen instruments if the purchaser did something wrong in that situation. If they were negligent because they, instead of the artist was responsible for locking up the room. On the other side, the artist wants to only indemnify if they've done something wrong. So again, if it's the responsibility of the purchaser to ensure that the dressing rooms are properly locked and secured, then the artist wants the purchaser to indemnify them for things that go wrong because of the purchaser's negligence.

So in crafting indemnification language, each party is going to push to only have to indemnify the other party if they do something negligent, or if it's because of their willful misconduct. Another great example of this would be with regards to the performance itself. So let's say that the artist is taking stage and they're going to perform at the event. And once they've taken stage, they have been drinking, they are falling all over the place and they decide to check an item such as a drumstick into the audience. The audience member gets poked in the eye with the drumstick and ends up having to go to the hospital and have emergency surgery. They then decide that they're going to come after both the artist and the purchaser for that action. If the purchaser has successfully negotiated the indemnification provisions such that they're only responsible for their negligence or willful misconduct, and it's found that the injury to the patron was due to the artist's negligence, (A) because they were drinking, and (B) because they made the decision to chuck the drumstick into the audience hitting the patron, then the artist is going to have to indemnify the purchaser for this action.

Another example would be, let's say that the purchaser has not put adequate security at the event, and they've also left wires out in the open where someone could easily trip on it. A patron ultimately ends up tripping over a wire falling and causing a piece of equipment to come down with them, who would be liable in that situation? Again, if these provisions are successfully negotiated, then the purchaser, as the entity that did not properly secure the wires, left the wires out in the open and did not have the right security in place to prevent people from coming into an area where there were open wires, will ultimately be negligent and would have to indemnify the artist in that situation.

Let's look at a example scenario of what may go wrong and how you would proceed. So if we're the attorney for the purchaser and we sent a performance agreement to book an artist who was a top headliner, and we were left in a situation where the agreement significantly detoured from what the artist was requiring, how would we handle that scenario? This allows us to jump into the typical way that these agreements are negotiated. So how do we get to a place where the information significantly contradicts? Did we not communicate upfront the material deal points that we needed? Did we not detail in writing what we required as the purchaser or the event as opposed to what the artist was asking for [inaudible 00:24:07] back on? All of those questions stem to the process in which we got to this place.

So a purchaser typically submits an offer to an artist through their agency. That offer details the material terms that we've discussed, payment, date, the scheduling, when the artist is going to perform. And it may also contain material legal deal points. These legal deal points may discuss indemnification, insurance, force majeure, very specific points and where the purchaser stands on this issue. The offers submitted to the artist through their agency, and the agency will discuss that offer with the artist and may come back with changes. They may want additional money. They may want a larger deposit. They may require certain cancellation provisions, all of the items that we've already discussed. At the time that the two parties reached an agreement, the agency will then submit the live performance agreement to the purchaser. And the live performance agreement may contain further deal points that weren't discussed or agreed to at the offer stage. If the deal points differ then the purchaser is required to revise and push back on those terms of the performance agreement. At which time the agency may come back on with additional issues, depending upon the purchaser's pushback.

All of this is important because where you are in this process impacts the scenario we just discussed. Who was the last one to push back on these items? Was it the purchaser? Was it the agency? Where are we left at in these negotiating points? Because if we get to the event and the artist is saying, "Well, I required this and I required that." And the purchaser is able to show, "No, I did not agree to these points and I pushed back on them stating exactly that." Then what happens next can greatly vary. So it's important to pay attention to the deal points that are going into the performance agreement and whether or not they differ or are in addition to what's already been discussed. And as the purchaser, it's important to quickly come back and notate what you will and will not agree to.

The next type of agreement that we are going to discuss is the artist writer. Many of the provisions that are contained in the performance agreement are also covered in the artist writer. However, the artist writer goes into more detail and specifies things like the production equipment, the catering and elements of the artist's performance that are specific to just that artist. A lot of times these artist writers will go into detail about the number of complimentary tickets the artist wants, artist parking, passes, the type of hotel and flight accommodations that they require. As well as specific transportation requirements detailing who picks up the artist? When they pick them up? And those relevant details. The artist writer will also go into detail regarding advertising, media, sponsors and how the artist can or cannot be connected with these various third parties. It may also go into details regarding cancellation privileges, what can cause the artists to have the right to cancel with penalty or without penalty.

And as I previously mentioned, a lot of the production elements and the technical specifications that the artist requires in order to put on their show may be included in this as well. This may include certain types of rigging, lighting, stage requirements. And oftentimes, these specifications may vary from what the venue already has in place or what the venue can handle depending upon its capabilities. So when the purchaser or the venue's going through the artist write, they must pay careful attention to the details surrounding the various technical elements that the artist is requesting or requiring for their performance. The purchaser, or the venue, or collectively will go through and notate on the contract what they may not be able to accommodate. And they will often put the words per advance next to some of these elements. The advance of the show, hence the per advance, is the process by which the purchaser, potentially the venue, and the artist normally through their management, will go through these various details.

The advanced process discusses the timing of load in, the timing of load out, the timing of when the artist and their team are going to get on site, the requirements of artists for food and catering and these various technical specifications that they may require for their performance. The purchaser is going to go into detail typically with the tour manager for the artist with the specifications that they can or cannot accommodate. This process is normally done two weeks or so prior to the event. And that's why when marking up the contract, we will often cross stuff out and say "per advanced" because we're not agreeing to it then and there. We are stating that we will work in good faith with the artist's team in order to figure out these accommodations two weeks or so prior to the event.

And so it's important that the purchaser is not agreeing to provide things that they cannot provide. And that the purchaser is notating that all of these various elements will be worked through when they are advancing and doing the prep work a few weeks out from the event in question. Potential pitfalls with this include technical confusion. Like we just discussed, we want to make sure that everyone's on the same page regarding technical elements, the size of the stage, the type of speakers, the type of microphones, all of these elements are important for the artist to put on a good performance, but they are also important for the purchaser to be able to accommodate those specifications and/or figure out a middle ground with the artist to ensure this is well.

Another potential pitfall is the cancellation language. Oftentimes, the terms of the artist writer may differ from the terms of the contract. So as we previously discussed, things like the amount of the deposit, when the deposit is due and when those deadlines are set for both the payment of the deposit and the remainder of the balance. It's important that all of these elements be on the same page across all documents. So if the artist is requiring different cancellation privileges or different types of deposit dates, and if they're not met, whether or not the artist has the right to cancel, it's important that these various elements are uniform and agreed upon throughout the various contracts.

Lastly, liability is another huge issue. As we discussed in the performance contract, you often have the identification language, liability regarding if equipment is left or if equipment is stolen, who is on the hook? And oftentimes the artist's blanket language that's in their artist writer may differ from what is in the performance contract or different from what the purchaser has amended in that contract as well. Obviously, as we talk about all the various contracts and how they may or may not differ from each other, it begs the question, what document prevails? And how do we make sure that our interests, whether we're the agency representing the artist or the purchaser, that our interests are protected?

Oftentimes the purchaser will have a separate addendum that they attach to these various documents. That addendum will have the legal language that the purchaser is comfortable with. It may also have the specifications that that purchaser's going to require. So when the purchaser is looking at the artist writer and the performance contract, and they see differing indemnification language, the purchaser may go ahead and insert the indemnification language that they're comfortable with and their purchaser addendum, attach that to the contracts and write on both the artist contract and the performance agreement, "Please see purchaser addendum number blank." And the corresponding number of the purchaser's addendum will match up to the provisions in either the performance contract or the artist writer that contain those specific terms. The purchaser addendum may also include specifications for that purchaser or that venue. So things like sound level, or meet-and-greet, or staging and catering specifications, may be inserted into the purchaser addendum so that the purchaser is notating on everything that, "This is all that we can and will do when it comes down to these specific things."

The last contract that we're going to discuss today is the venue agreement. The venue agreement is the document that is between the venue and oftentimes the purchaser. The venue agreement is typically provided to the purchaser by the venue. And this document will contain a number of elements that are specific to that venue. For example, that venue may include or may require a fee for the use of their venue, let's call it a rental fee. They may also require that the purchaser pay for certain things like production, security, concession, individuals. So this document is going to detail who is responsible for all of those various fees, costs, and expenses that are related to holding the event at that particular venue.

Oftentimes, the purchaser and the venue will determine revenue share as well. So if the venue is receiving money from concessions or parking or sweet rentals, they may or may not split that revenue with the purchaser. This is an important element that is negotiated between the purchaser and the venue, because as the purchaser, you're going to be required for paying the artist deposits and the full guarantee, and any bonuses that the artist may get as a result of their performance. So the purchaser is going to want access to as many revenue streams as possible. This would include ticket sales, but may also include the things I previously mentioned like food and beverage, concessions, parking and sweet rentals. Because all of those items and any revenue from those items that can go directly to the purchaser will help offset the costs and help to allow them to potentially make more money in the long run.

Another important element in the venue agreement is the restrictions. A venue may or may not be owned by a county or a city, those would be what we call "state entities". And so they may have certain restrictions that they have to put into all of their venue agreements. For example, there may be a county ordinance that requires all performances must end by a certain time. There may be ordinances that discuss where the sound level may or may not have to be at. Or the requirements of the venue to include certain names of sponsors or of third-parties that are associated with that venue. The venue is going to require the purchaser to take responsibility for and to agree that they will abide by those restrictions. And that if they don't abide by those restrictions, that they will indemnify and be on the hook for any ramifications that stem from the purchaser's decision or action that conflicts with those specific restrictions. Also, if a venue is a state entity, they may have their own restrictions on the type of insurance that they can carry, the type of indemnification that they can or cannot provide. And all of these things will be detailed in that specific venue agreement.

The venue is also going to do anything that they can to limit their liability. If the purchaser is coming in and acting as a tenant of the venue, and the only thing that the venue is required to do is to provide a space for the purchaser to hold their event, then the venue is going to require that if anything goes wrong, that the purchaser is going to be liable and on the hook for those actions. This is typically a point that's negotiated back and forth between the purchaser and the venue. For example, the purchaser is going to want to require that the venue provide a safe space that the heating and air conditioner work well, that the sound system works, that the venue is free from any kind of defect, and that everything is going to be in good and working order.

The venue, on the flip side, is going to require that the purchaser is responsible for anything that happens while the event is taking place. This would include if there was a audience member that tripped over a wire and fell, broke their arm and sued the venue and/or purchaser because of the wire that was not properly secured and/or marked, then it yields the question, who's going to be responsible? Typically in the markup of the venue agreement, the venue is only going to agree to be responsible for the structure that they have in place and for any blatant defects that were found prior to the event. If the purchaser was the one who was responsible for putting down the wire and they did not properly secure and/or mark the wire so that people would know that it's there, then the venue is going to push on the indemnification protection that they have in place by the purchaser, and try to make sure that the purchaser is liable for that particular instance. This is why it's important to look at what each party is representing and warranting, and when something goes wrong, which party is required to indemnify the other and for what instances.

Just like the other various agreements that we've discussed, these examples show why it's so important to carefully read all of the provisions that are contained in these documents. As when something goes wrong, whether you're the artist or the venue or the purchaser, you want to know who's on the hook and what they're on the hook for. Because little things like a wire that hasn't been properly secured, or a disagreement over a certain type of speaker or microphone that the artist is going to use can end up costing you thousands of dollars in legal fees or thousands of dollars in replacement costs for certain equipment that you otherwise wouldn't be on the hook for if you had carefully gone through the contracts and mark them up with what you are and aren't willing to agree to.

So in doing a quick overview of what we've discussed today, you can tell that there are various parties that are involved in the live performance industry. When contracting, we have to make sure that we are thinking about who are we contracting with? Is it the artist? Is it the agency that represents the artist? Is it with the purchaser who's engaging the artist and who's also in direct agreement with the venue? Who are we representing and what do we want to make sure that we have in place in order for them to be legally protected? As we have gone through the process today, we've seen that there can be inconsistencies across the various agreements, which is again, another important part of knowing who you're representing and making sure that as you go through these various documents, that you have the same goal and the same concepts throughout. We discussed that if you are representing the purchaser, it can be very advantageous to create your own separate document that details the language that that purchaser's willing to agree to, as well as specifications that that purchaser may have in doing the event. And that this document can be a baseline for the purchaser when reviewing inconsistencies between the various contract and being able to point back to specific provisions in the purchaser's addendum, to make sure that they know what they're agreeing to, and that they're agreeing to the same thing throughout the contracting process.

Now, let's test your understanding by talking through a few scenarios. The first: You are a legal counsel for [Rockstars Entertainment 00:51:37], the talent buyer for flower music festival, and have been asked to provide some advice. The agency sent over a performance agreement to book [Little Jams 00:51:47], one of the top headliners at the festival. However, their requirements significantly contradict the festival's requirements. How do you proceed? The first thing to do would be to look back at the offer and to see exactly what information was contained on the offer and whether or not the agent on behalf of the artist accepted the offer or provided deal points or pushback. And if they did, whether or not the festival accepted those revisions or not.

Assuming that everyone is on the same page with what the offer and the potential deal points stated, then we need to look at the performance agreement and see if any of its contents contradict with what was in the offer and/or the deal points. If there is conflicting information, then we would immediately go back to the agency and point out that in our offer, it was contingent that certain elements must be met. This could include if we included deal points on the price, the payment, the deposit. But oftentimes, a festival in their offers will go so far as to provide specifics on the stage, the production, the back-line, the lighting, and the sound. If there are points that were not contained in the offer or the deal points and are now in the agency agreement, then we would advise our client, the talent buyer, to go directly to the agency and work through those items.

For example, if we have a set size of stage, or if we have a production or lighting company that we're working with that only provides certain types of equipment, then we would need to go directly to the agency and communicate that with them. If our hands are tied and there's nothing that we can do, then we're going to need the artist to work with us on those elements as well. If there are terms in the performance agreement that directly contradict with the offer, then we would need to go back to the agency and point out that our offer in this agreement was contingent on the points that were contained in our offer. And that in them accepting it and moving it to long form, that they accepted the direct points that were in our offer. We would also want to make sure that we carefully went through the performance agreement and the artist writer, and that we marked up those agreements to reflect, (A) what was on the offer, but (B) what we can accept based on the specifications of our festival. And also what we can accept to make sure that our client's legal interests are protected as well.

The next scenario, you are a legal counsel for big music arena, a concert venue and the process of booking artist Little Jams through Rockstars Entertainment, the talent buyer. The talent buyer insists that the venue be held liable for all COVID-19 protocols during the show. How do you advise the venue? We would first want to make sure that the venue is following all COVID related mandates or requirements from their local and state authorities. For example, if their jurisdiction is requiring that masks must be worn indoors, and/or that social distancing is required throughout the venue, then we would want to make sure that, (A) the ticketing plan has social distancing implemented throughout the seating chart. And also that the venue is taking precautions to have signage and requirements on their website and throughout the venue that detail that masks are required.

If the venue is taking reasonable steps to ensure that these mandates are being followed, then that is all we would want the venue to be responsible for. We do not want a bright-line rule that says that the venue is the one that's liable for all COVID-19 protocols. The venue is likely going to have a limited role in the show. They may or may not be hiring security or employees that are going to work throughout the show. They may or may not be responsible for the backstage area. They may or may not be responsible for the advertising. So the venue is going to want to restrict their liability to only the items that they're furnishing and that they're controlling. And to also make sure that so long as they're taking reasonable steps, that they are adequately doing what they need to do under the COVID-19 protocols.

Now let's end with a quick recap of top tips. For the three types of agreements that we discussed, here are the potential pitfalls that we identify. In performance agreements, (1) cancellations. Negotiating the deposits, due dates and deadlines is vital to whether you will be on the hook for money in the event of a cancellation. (2) liability. Negotiating indemnification and limiting liability is important in avoiding potential liability for your client if something goes wrong. For the second agreement, artist writers, the important tips are: (1) technical confusion. It's important to make sure that everyone's on the same page regarding the technical elements, like back-line, stage, lighting and transportation. (2) cancellation. Negotiating deposits, due dates and deadlines, just like in the performance agreement are very important to make that your client isn't on the hook for money in the event of certain types of cancellation. And (3) liability. It's also important in artist writers to negotiate the liability provisions in order to avoid liability and/or limit it in the event that something goes wrong.

And for the third agreement, the venue agreements. It's important to negotiate cancellation, force majeure and inclement weather provisions. If something crazy happens that could make the event impossible or unsafe, we need to make sure that we know who's on the hook for fees, ticket refunds and also tying that to the second element, which is liability. We must make sure that we negotiate indemnification and that we limit the type of liability that each party has. Again, all of these provisions will depend on the arrangement or the deal between the various parties. If you pay attention to these portions of the agreements, you will drastically help your client make sure that they're in the best position and that they are legally protected as much as they can. Thanks everybody for your time today. Again, my name is Lauren Spahn. And I can be contacted at [email protected] That's S-H-A-C-K-E-L-F-O-R-D.law.

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