Leslie E. Frank: Record Labels and Accused Artists Can RCA Drop R. Kelly?
Can RCA Records Drop R. Kelly? A Veteran Music-Business Attorney Explains
By: Jem Aswad / VARIETY
May 03, 2018
Can RCA Records Drop R. Kelly? A Veteran Music-Business Attorney Explains
Over the past 25 years, R. Kelly has been hit with multiple accusations of sexual misconduct against young and underage women. Among others, these range from child-pornography charges (for which he was acquitted in 2008, despite a videotape that prosecutors claim shows him urinating on and having sex with a 13-year-old girl) to more recent allegations that he is running an “abusive sex cult” in which he “controls every aspect of [several women’s] lives.”
But assisted by a deft legal team and a popular and lucrative catalog of hits that dates back 25 years, Kelly has denied and deflected all charges. In a 2013 live Q&A with journalist Elliott Wilson, he said if he had his entire life to live over, he “wouldn’t change a thing.” He has continued to tour and record and remains on the active roster of RCA Records, although he hasn’t released an album since 2016.
Yet WOC, the women of color branch within the #TimesUp movement, recently joined the #MuteRKelly online campaign and targeted him as their next subject after Bill Cosby’s conviction, and there are signs that the allegations are becoming too much for many people to continue to support him.
Last week his manager, publicist and entertainment attorney all confirmed they are no longer working with him (although he already has a new publicist and apparently new management) who is attempting to characterize the #TimesUp statements as “a greedy, conscious and malicious conspiracy to demean him.” John Legend, Ava DuVernay and many other celebrities have spoken out against him; several concerts, including one this weekend in his hometown of Chicago, have been cancelled due to public outcry and petitions; and RCA labelmate Jack Antonoff of Bleachers said he’s asked the company many times to drop Kelly.
RCA, a subsidiary of Sony Music whose roster Kelly joined when it was merged with his original label, Jive, in 2007, was singled out by the #TimesUp petition along with Apple Music and Spotify (for “currently monetizing” Kelly’s music), Ticketmaster (for selling tickets to Kelly’s only remaining scheduled upcoming concert), the Greensboro Coliseum Complex in North Carolina (for hosting that concert).
But can RCA simply drop him? While the specifics of his contract are not publicly available, Variety spoke about the matter with attorney Leslie Frank, a partner of King, Holmes, Paterno & Soriano, where she represents entertainment-industry clients and has negotiated contracts and settled disputes on behalf of clients that include Metallica (whose legal team she was a member of in its 2000 lawsuit against Napster), Dr. Dre, Nirvana, Pearl Jam, Skrillex, Zedd, Steve Aoki, Blink-182 and others.
While Frank notes that she has not seen Kelly’s agreement with RCA, she says it’s possible that the company could be quietly allowing his contract to lapse.
Recording agreements are usually structured whereby after an album is released, the label has the option to continue the contract for another period or album. Kelly’s last proper studio album, “The Buffet,” was released on RCA in December of 2015. (He issued a Christmas-themed outing in 2016, but such releases are often considered differently contractually, Frank notes.)
“Most of the time, the label would have the option to exercise its right to another contract period — usually there’s a number of them, for well-established artist it’s going to be 2 to 4 contract periods, and usually for legacy artists the delivery commitment is one album per contract period,” Frank says. “So assuming they are not finished exercising options and RCA has not exercised its next option — once R. Kelly sends them notice [reminding RCA that they have not exercised the option], they have 30 days to do so. If they don’t exercise, they’re out of contract.
“So actually, they could be in that situation,” she says. “The chances are pretty good that, since his last record was so long ago, something has happened. [If Kelly sent them notice], RCA could let the 30 days run out and not exercise its option and then be free from the agreement, without any damages.”
Frank confirmed that such a course would be RCA’s smoothest exit from its contract with Kelly. For more on the issue, see below. Reps for RCA did not immediately grant Variety’s requests for comment; a rep for Kelly provided the following statement from his management: “R. Kelly has enjoyed a loyal and fruitful relationship with Sony and RCA Records for 30 years, and he has the utmost respect for his music partners. They have supported his career and his creativity and, in even the most difficult times, they have avoided rushing to judgment without the facts. That faith and kindness are rare in the music business, and Mr. Kelly looks forward to continuing his relationship with Sony/RCA for many years to come.”
Variety: Can a recording artist essentially be fired for cause by a record label?
Frank: Contractually, some recording agreements say that if you are convicted of a felony or a crime of moral turpitude, generally speaking it is the label’s right to terminate the contract. But that is a modern concept; if a contract is older or maybe with a very prominent artist whom the label has no reason to believe would have any trouble of the criminal variety, then it won’t necessarily have that provision. I can only speak to the few recording agreements I see year to year, but probably the first time I personally saw it was in a contract from about three years ago.
But if R. Kelly isn’t actually convicted of anything, can they drop him if there’s no such provision?
It depends on what R. Kelly’s recording agreement with RCA says — and I don’t know what’s in his agreement — but they can. Any record company — or, really, any party to any contract — can decide they no longer want to be in the contract. The question is what can happen as a result of them asserting their desire to terminate the term of the agreement, even though there’s no contractual provision saying that they can do so because he’s accused of the things he’s accused of. R. Kelly could sue for damages.
Would RCA have to buy him out of his contract if he doesn’t want to part ways?
I don’t think I would call it “buying out” because that has connotations that probably don’t apply in this situation. But if R. Kelly does not want to terminate the agreement and instigates a dispute saying that it’s a breach of contract by RCA, if RCA is concerned about the cost of litigation and how a court might decide, they could try to come to a settlement with R. Kelly.
What defense could RCA muster if they dropped him and R. Kelly sued for breach of contract?
If the purpose of an agreement is frustrated — in this case it would be the business of selling and streaming recordings by R. Kelly — by the fact that R. Kelly has been alleged to have committed a crime, and it’s a crime that is especially a focus of current culture and especially loathsome to people, then the label could say that the purpose of the contract has been frustrated by these allegations against R. Kelly and therefore they should be excused from performing under the agreement. That would be a defense to breach of contract — RCA could say, “We didn’t breach the contract because it became impracticable.”
Could RCA simply allow the contract to lapse?
There are a few circumstances [where the contract could be terminated]. The terms of recording agreements are contract periods, and the artist has to deliver a certain number of recordings — the traditional version is an album — and the record label would have some number of months to get it commercially released. If the record label doesn’t release the record, the contract usually says something like “the artist’s remedy is to terminate the agreement,” or the remedy might be that the artist requires the label to license the record to [another company] to release.
However, if he hasn’t delivered a record that he was supposed to deliver on the timeline in his current contract period, RCA would typically send him a written notice saying, “You were required to deliver this record as of whatever date, you haven’t done it, you have 30 days to cure.” If he doesn’t deliver it, that’s material breach and the label would have the right to terminate.
And then there’s yet another out: Let’s say R. Kelly’s last record was released and the label hasn’t exercised its next option. Most of the time, the label would have the option to exercise its right to another contract period — usually there’s a number of them, for well-established artist it’s going to be 2 to 4 contract periods, and usually for legacy artists the delivery commitment is one album per contract period. So assuming they are not finished exercising options and RCA has not exercised its next option, and R. Kelly has not reminded them — once he sends them that notice, then they have the 30 days, and if they don’t exercise, they’re out of contract.
So actually, they could be in that situation — where the label hasn’t exercised its next option for another record, and we don’t know whether R. Kelly sent them notice. The chances are pretty good that, since his last record was so long ago, something has happened, we just don’t know what it is. [If Kelly sent them notice], RCA could let the 30 days run out and not exercise its option and then be free from the agreement, without any damages.
What happens if they’re in the middle of a contract period?
That is the most difficult situation — where maybe they’ve started a contract period and he’s still within the period that he has to deliver a record, then he could potentially be owed money when he delivers the record. Then what does RCA do? Well, they could still terminate and see what happens. If R. Kelly is owed money during that contract period, RCA could then decide to pay him or not pay him and see what happens, if there’s nothing else in the agreement that would allow them to contractually terminate. R. Kelly could claim he’s been damaged in the amount of money that they didn’t pay him, or even beyond that because they didn’t release the record that they exercised the option for. It’s unlikely that he would get anything beyond any advance installments for delivery, in my personal opinion, because any other damages would be speculative — what he would have earned, et cetera. It’s possible that his recording agreement says if RCA doesn’t timely release [an album] he has the right to terminate, and that’s his only remedy. If that’s the case, then he can’t sue for lost royalties on the record that wasn’t released because that’s not something he [negotiated] for.
If it’s a mutual parting, they could simply go their separate ways?
This is on a smaller scale, but last year the band Pwr Bttm was dropped by the indie label Polyvinyl expressly because of sexual-assault allegations against a band member. Wouldn’t RCA parting ways with R. Kelly due to the allegations against him be a similar situation?
Well, I can’t talk about it, but there are other labels where this has happened. In that situation — we don’t know the background — the label may have had the contractual right to terminate for allegations of a crime, or they may have just decided to terminate and see what happens.
If Kelly’s contract were terminated, it would not affect his back catalog with the company, right?
Correct — it’s not as if his catalog would be suddenly silenced. Terminating the recording agreement doesn’t have implications for music that’s already been released.
Would it be possible for R. Kelly’s lawyers to point to other artists on RCA or other labels who have been convicted of felonies and cry foul?
I think most people in the music business understand that recording agreements are mostly at the discretion of the record label. Whether a label accepts a record [submitted by its artist] is often a matter of whether they like it or not; they don’t have to put it out. That’s not true of every deal but it is true of the majority.
So to me, the level of discretion that a record label has in general terms would make it questionable for R. Kelly to [point at an artist] who has a weapons or assault charge and say, “Look! That guy got to stay on his label!” Well, he’s not that guy. They have two different recording agreements and two different histories and RCA could say, “We find there to be a much more damning allegation against you, R. Kelly, than there was with this weapons charge.” It could be made as a business decision, although I hate to say it that way. There is a very wide variety of distinctions.