Defend Truth


Makhadzi’s legal battle with her producers highlights the pitfalls of music industry contracts


Professor Dr Omphemetse S Sibanda is a Professor of Law and the Executive Dean of the Faculty of Management and Law at the University of Limpopo. He holds a Doctor of Laws (in International Economic Law) from North West University, a Master of Laws from Georgetown University Law Centre, US; and an LLB (Hon) and B Juris from the then Vista University, Soweto Campus.

Do music artists need legal protection against unfair contracting with the recording industry? In particular, do they need protection from contracts that are riddled with illegality, unconscionability and lack of consideration?

The recent spat and tug-of-war between Makhadzi and her former producers, Open Mic, should be music to the ears of those who want to keep the fight of protecting performers in South Africa alive.

I would like to deal generally with the plight of performers in South Africa, with specific focus on the so-called automatic renewal of contracts by producers and record labels. The music industry is a world of cats and dogs, with many budding performers and newcomer artists willing to take whatever terms come their way in order to be thrust into the limelight by producers and record labels.

The producing industry is on its own a world of hard knocks. Yet, those with performing dreams and yearning to be rich and famous will go as far as drinking from the same well with buffaloes, lions and hyenas just to reach for their dreams.

The following excerpt from a paper by Carl Philipp Schöpe at the Chicago-Kent College of Law, succinctly describes the world of the music recording industry:

“The recording industry is, in many respects, unique. The prospect of becoming rich and famous by recording and performing music represents the dream of millions of bands and musicians. For many, it is reason enough to make any sacrifice necessary to enter the world of professional music.

“The line ‘I’m gonna trade this life for fortune and fame. I’d even cut my hair and change my name’ [from] the Canadian band Nickelback’s popular song, Rockstar, is describing the willingness of artists not only to give away natural contractual rights but also aspects of their lives, even including their identities.

“In addition to this unparalleled desire to enter into a recording contract, an oligopolistic structure with world-wide operating major labels which together control more than three-quarters of the world market, secures the companies an enormous superiority in bargaining power.”

The story of musician Makhadzi is about something that affects many artists out there – in South Africa and globally. Inasmuch as it comes as a challenge for one of South Africa’s beloved songstresses, it has some critical takeaways and lessons for all performers in South Africa.

Beware, many contracts have expiration dates and/or auto-renewals.  Automatic renewal clauses are designed to benefit the producers and/or distributors as “service providers” so that they can continually receive business.

Auto-renewal contract terms should not be contracts that place performers into a ‘slavery’ relationship with producers.

It has been reported that a renewal of the management agreement with Open Mic ties Makhadzi to an extended period of three years with effect from 9 March 2023. In a nutshell, she is considered contracted to Open Mic for six years.

Without legal counsel, artists can easily fall into the routine of scrolling past terms, conditions and agreements without thinking much about them, only to be negatively affected in the future. Some artists sign contracts without full consideration of the long-term effects.

Auto-renewal contract terms should not be contracts that place performers into a “slavery” relationship with producers. The Consumer Protection Act 68 of 2008 introduced general rules in South African law regulating how auto-renewals of contracts shall be handled and maintained.

Read more in Daily Maverick: Music streaming survey reveals SA musicians still get a raw deal based on the digital divide and lack of policy

The big question is whether a recording and/or producing contract as in Makhadzi’s case qualifies as a “consumer contract” for the purposes of considering its unreasonableness and the procedural unconscionability of the automatic extension by Open Mic.

I am still searching for a South African court decision that unambiguously and authoritatively deals with music producer-artist contracts as consumer contracts. Elsewhere, recording contracts are considered commercial contracts, and therefore may not enjoy the special protection afforded by consumer protection law under the same requirements as consumer contracts.

However, the case may be different when the contract was formed without legal counsel and contains standardised language similar to consumer contracts.

Auto-renewals are not per se unreasonable for musicians. Rather, it should be considered whether the musician or artist has an interest – and if so, what interest – in renewing the contract. The reasonable way to find out about this is to write to the artists within a reasonable time before the expiry of the main initial contract stating that it may be extended automatically unless the musician decides to the contrary. Artists should be properly notified of the upcoming automatic renewal and be afforded the right to terminate the contract in a reasonable period of time before the auto-renewal kicks in.

The current law protecting artists has loopholes which producers always find a way to exploit.

The Common Law, in my view, also applies to automatic renewals of contracts. In particular, it must be considered whether the auto-renewal is unreasonable based on general principles of contract. 

For instance, it is alleged that Makhadzi never received a copy of her contract and there is not even an indication if as a lay person she had the necessary legal assistance when signing her rights away to Open Mic.

The impression therefore is that she entered into this contract with an inferior position in the contractual relationship with Open Mic, and this suggests that particular consideration should be given with regard to her position that she should not be bound to the automatic contract extension.

More protection

The subject of protection of performers in South Africa is one of those that are quickly forgotten. I can bet my last penny that instead of leveraging the story of Makhadzi towards protecting South African artists, the story will be forgotten in weeks to come.

South African artists need more protection by the government with the introduction of appropriate legislation. The current law protecting artists has loopholes which producers always find a way to exploit.

Key in such legislation should be to set a clear standard across the music industry that auto-renewal of performers’ contracts should be considered unreasonable, as musicians enjoy no considerable benefits from the auto-renewal and it is primarily in the interests of the music producer or distributor to auto-renew the contract. 

Further provisions favouring performers should include, among others “use-it-or-lose it” provision against record labels; reversion rights of artists who are creators of the music; and the contract adjustment right for artists/performers/musicians.

For example, a report by the UK Intellectual Property Office, titled Rights Reversion and Contract Adjustment, looked into two proposals to protect the contractual interests of UK music creators by making changes to domestic copyright law.

One proposal seeks to “introduce a reversion right, which would provide a means by which the transfer of copyright returns to the music creator at an agreed time period after the contract with a rights holder has been signed”.

The other proposal seeks to “introduce a contract adjustment right, which would enable music creators to address disproportionate revenues resulting from contractual terms”.

South African artists like Makhadzi would wish they had the benefit of the two proposals. The UK report looked at streaming, and evidence was presented that “the turn to streaming had led to ‘historic levels of profitability for the major labels whilst performers’ incomes are less than the median wage’”.

According to the report, the “alleged disproportionality was associated with recording contracts, which were viewed by some as offering terms ‘under which the major music groups in particular acquire the rights to music […] at the expense of the creators’.”

We need to shine the spotlight on the “Roach Motel” of the music industry, in which music producers can easily bring a musician to their stables but make it hard for them to get out of. Roach Motel here is used after the eponymous pest control slogan: “Roaches check in, but they don’t check out.”

Read more in Daily Maverick: Arts and culture a multibillion-rand industry, so why are our artists dying in poverty?

Producers have enormous power to dictate the content of the contract and thereby turn autonomy of the parties to contract into heteronomy. This superior bargaining power is used to coerce newcomer artists and less-informed artists without the benefit of legal counsel to sign contracts on a take-it-or-leave-it basis. Some of these artists are bound for long periods, and accept the unfair allocation of risks.

I would like to conclude with an excerpt from a journal article by Phillip W Hall Jnr, titled “Smells like Slavery: Unconscionability in Recording Industry Contracts”, in which he notes: “The music recording industry today is fundamentally broken. Artists are in open revolt against the labels, because the labels have used their overwhelming bargaining strength to force the artists into standard industry contracts that are clearly oppressive and unjust; and one US senator has even stated, ‘this is the only industry in which after you pay off the mortgage the bank still owns the house’…

“The recording industry’s use of a standard industry-wide contract has forced artists into a position that some have said amounts to professional slavery.” DM


Comments - Please in order to comment.

  • William Stucke says:

    Absolutely appalling. And then they bribe USian politicians into passing outrageous Copyright Legislation. And force smaller countries into accepting their corrupt version of the law in order to access aid or trade.

    I lost all respect for them when Disney stole Winnie the Pooh from the public domain, gave him a USian accent, added a couple more characters and copyrighted the entire thing in the name of Walt Disney Inc. That means it’s now permanently OUT of the public domain. Unless of course:
    1. Walt Disney Inc goes bust, and
    2. No one buys its assets, and
    3. We wait a mere 90 years.

    So far from the original concept of a balance of interests that it’s beyond belief.

Please peer review 3 community comments before your comment can be posted

[%% img-description %%]

The Spy Bill: An autocratic roadmap to State Capture 2.0

Join Heidi Swart in conversation with Anton Harber and Marianne Merten as they discuss a concerning push to pass a controversial “Spy Bill” into law by May 2024. Tues 5 Dec at 12pm, live, online and free of charge.