When To Never Grant “Universal” Rights

Is it realistic to negotiate territorial rights in music contacts?  Seeing almost all agreements contain language granting “universal rights” it appears stripping the territory down to specific regions is an unrealistic request.  To the contrary, there’s a time and a place to allow universal control so always negotiate the terms.  Surely you’ll be laughed out of the room but the request to limit territorial rights is no more outlandish than the request to grant them.   Despite the fact this is a standard term, it’s essential to understand the proper situations when to allow such widespread control.

It’s delivered in a simple package: “Artist, herein stated, grants Company rights within the territory also known as The Universe.”  This little clause packs a massive contractual punch.  As an artist, if you ask why the territory is “the universe” you’ll probably be ridiculed by the party who issued the contract.  Just know it’s all a ruse.  You’ll hear things like “It’s standard”, “all of our contracts are universal”, “you must know much about the music industry”, blah blah blah. The reality is a majority of these people have no idea why contracts use “universe” as the territory but you’re about to.  Back in the early early early days of Recording Agreements, it became highly debated what would happen to music in space.  Not kidding…..stay with me.  The thought process was that radio signals might have the ability to penetrate “unknown areas” such as outer space.  Spawned from an abundance of caution, label attorneys began to draft the territorial rights as “universe” in case future technology and radio waves hit territories not stated in the contract – hence “universal” rights were born.  Because labels used the terminology, managers, agents, publicists, etc. followed suit even though it didn’t necessarily apply to these professions.  Ridiculous? Yes. Personally, I believe universal rights to be limiting.  For my clients, I go well beyond the unknown, asking for territorial rights in Realm of Mordor on Mt. Doom.  You’ve got to gain control beyond the universe and The Shire to assure middle earth.  Call me old fashioned.

Even though it’s ridiculous, unfortunately it’s the starting point.  Despite this it’s important understand the appropriate circumstances to fight it and grant it.  For starters, bands should never allow for universal rights with managers and agents unless the situation calls for it as identified below.  Not a knock on managers or agents, rather it just doesn’t apply in a blanket format.  Typically managers are centrally located (North America, Europe, Asia, etc.), therefore meaning their expertise are centrally located as well.  If they don’t have expertise outside of their location it’s unreasonable to give away rights elsewhere in the world.  Example – a band from New York who has success in North America and Australia shouldn’t sign universal rights away to a booking agency in NYC if that booking agency has no professional penetration in Australia, otherwise the band has limited their potential expansion in Australia.  Scenarios in which bands may grant universal rights with management and agents is when their using a well know individual/firm that has a global experience or reputation.  With labels, never sign over universal rights unless the label has specifically identified a global marketing plan or a royalty structure for international territories.   Both of these areas are clearly defined in major label contracts but typically remained unaddressed in indie label contacts.  If unaddressed, address it.   Regardless, one tactic to use while negotiation territorial rights is to deny the Company universal rights.  You’ll lose, but fight like hell to keep it in the agreement knowing you’re going to lose it in the end.  Essentially territorial rights become a throw away negotiation point.  If you make the Company think it’s a big negotiation element even though it’s not, demand changes in return.  “Fine, if we grant you universal rights, we must receive a 1% royalty in return.”  Quid Pro Quo at it’s finest.  Use it.  Got more questions on how to fight territorial rights?  Contact me. Want more?  Stay connected:

@Frascognamusic or mff@frascognalaw.com  

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