There has been a great deal of discussion recently about contracts in the recording industry. Because it was announced that Clay Aiken chose not to renew his contract with RCA, there has been much speculation about what he can and cannot do or say.
None of Clay’s fans are privy to his contract details so any discussion is just a guessing game that will probably never be answered. However, it is possible to look at contracts in a general way and get some concrete facts.
Some research was done to write this article. More important than the reading done on the subject, was the opportunity I had to sit down with three attorneys and discuss “what ifs” with them. It made for a very interesting evening.
When asked why there was no discussion from either RCA or Clay Aiken about the end of their contract, four different scenarios were mentioned.
First, it was suggested that the contract has not yet ended. When there are large contracts that need to be renewed, the negotiations usually start about a year before the contract is void. This gives enough time for back and forth discussions that need to be studied. If there is a stalemate and the two sides cannot come to agreement, the parties will not step into a new contract. However, the old contract is still in place until the end of the contracted time.
The second suggestion regarding the current silent time was a Confidentiality Agreement. Also known as a non-disclosure agreement, it is simply a contract between two or more parties where the subject of the agreement is a promise that information will be maintained in secrecy. These types of agreements are usually used in the technical fields and when inventions and plans are important to a company. A non-disclosure agreement might be a part of the original contract or could be signed when the contract is not renewed.
The third suggestion from the lawyers was the one that they thought might be the correct one. It is a “Cooling-Off” Clause. This particular clause is usually agreed upon when the parties break off negotiations. It is used when there is apt to be bad publicity for either side.
There is a big difference between a Confidentiality Agreement and a “Cooling-Off” clause. In a Confidentiality Agreement, discussing the secrets of the company and/or the contract will not be discussed for many years, or never. A “Cooling-Off” clause is a temporary time to allow the news and discontent to….cool off! It almost sounds too casual to be a part of a contract, but I was told it is used often in many fields and certainly makes sense in this case.
The fourth and final suggestion was really quite simple. Perhaps both sides in this contract dispute decided to take the high road. Since both sides knew that this was a contentious subject that would cause much publicity and discussion, perhaps they decided to not get involved in the fray. This suggestion did come with a lot of laughter and eye-rolling.
We also discussed Non-compete Agreements, sometimes called a covenant not to compete. In this agreement, the employee agrees not to pursue the profession in competition against the employer. Most jurisdictions where such contracts have been examined by the courts have found them to be legally binding. However, the clause must have reasonable limitations on the timetable. The courts say that an individual cannot be barred from carrying out a trade in which he has been trained. This clause is very controversial. Some jurisdictions, such as the state of California, do not allow non-compete clauses at all.
Would this covenant not to compete be a part of Clay’s contract? It was agreed that this is a possibility. However, it would only have a short life. After all, artists change labels all the time and still continue in their chosen field. However, since all of this is speculation, we don’t have the full answer.
It was suggested that one other agreement is probably a big part of any Artist’s contract. It is an Exclusive Agreement Clause. It would prevent the Artist from entering a similar recording agreement with another recording company. When the contract is in force, it prevents conflicts when two companies attempt to market the same artist.
After the termination of the recording agreement, the Artist will continue to be bound by the terms of the Exclusive Agreement Clause for a period of time.
It is important to realize that non-compete, non-disclosure agreements and Exclusive Agreement Clauses are not related in any way. There can be one of these in a contract without the others, or all could be included or not.
Please remember that no one that was involved with this article knows any personal information about Clay or his contract. This article was only meant as an overview of general contract information. If nothing else, perhaps it will spur some thoughts and discussions.
All of us hope that this new step in Clay’s professional career is going smoothly and that we will hear something soon about his future in the recording industry. Perhaps then, all the speculation about his contract will come to an end and we can just enjoy his wonderful voice.