MDRCs: the ‘Archaic’ Contract Clause That’s Harmed Many Songwriters

MDRCs: the ‘Archaic’ Contract Clause That’s Harmed Many Songwriters

It might seem reasonable to expect a professional songwriter to have two songs officially released over the course of a year, and certainly within five or 10 years. But as many have found out, it’s not that simple.

What sounds like an easy lift gets more complicated when one factors in how few contemporary hits have been written by a sole composer — five to more than a dozen is the norm in the pop and hip-hop worlds — plus myriad other conditions that populate a contract clause known as “minimum delivery release commitment” (MDRC), a once-standard stipulation that is still frequently found in the publishing landscape. As its name states, MDRCs set a quota for songs by a writer that have been released as commercial sound recordings in a certain time period.

The issues surrounding MDRCs rose to the broader industry’s attention over the past year, due largely to songwriters’ advocacy groups beating the drum about them. But although these clauses are not included in new deals as often as they once were, extracting them from long-standing deals will take time.

Lawyers who represent creators have long tried to avoid MDRCs, and in an era when publishers and labels seek to project a creator-friendly stance, these requirements have lost favor on the publishing side, too. That evolution aligns with recent artist-friendly moves, like major labels sharing proceeds from their Spotify stock with artists, Sony Music’s recent pledge to pay royalties to unrecouped legacy artists, and the royalty portals that major publishers have launched.

“As our industry continues to evolve, the publishing and licensing agreements we sign need to evolve as well,” reads a statement from Songwriters of North America, a trade group headed by composer Michelle Lewis. “SONA is appreciative of the publishers who have been willing to openly discuss ways to move away from restrictive and outdated provisions like Minimum Delivery and Release Commitments. We are also grateful to the companies who have chosen to lead in making these changes, even before we began asking for them publicly. SONA is hopeful that those companies who have yet to address this issue will follow these examples.”

“Acknowledging that MDRC deals are archaic is a significant first step in the modernization of a music industry that has long needed to participate in its own evolution,” says artist-songwriter Tiffany Red, who has written hits for Jennifer Hudson, Fantasia and Zendaya and is director and founder of the 100 Percenters, a non-profit advocacy group working on behalf of music creators. “We look forward to swift action to insure a more healthy, supportive partnership between publishers and creatives.”

Statements from Sony Music Publishing, along with Warner Chappell, BMG and Kobalt, support ceasing the practice, while a Universal Music Group Publishing spokesperson pledges the major will “keep pace with music’s rapid evolution.” (The publishers’ lengthy statements on the issue appear at the end of this article.)

But even as fewer contracts include MDRCs, wrestling them out of existing contracts can be a headache. Take the cases of Raelene Selma Arreguin, aka Queen Pheena, who hasn’t worked through a three-song commitment over the course of 10 years, or Rosemarie Tan, who has been chipping away at a modest requirement of just one and a half songs since 2010.

Arreguin was one of the writers on Shakira’s FIFA theme “La La La (Brazil 2014),” which was also featured at the 2020 Super Bowl, while Tan’s biggest credit was her very first placement, Danity Kane’s platinum single, “Damaged,” on which she was one of 10 credited writers.

And therein lies the rub: Even though Tan has a credit on a platinum single, because she was one of 10 writers, it only counts as 10% of a credit toward an MDRC. In an era when the overwhelming majority of hits have multiple writers, even a seemingly modest threshold can feel like climbing Mount Everest.

Tan says she’s written “hundreds” of songs since she entered into her current Sony Music Publishing deal 11 years ago, after being part of an earlier contract with the songwriting group BWB. Nearly 30 of her songs have been released since 2010, yet she remains encumbered.

Attorneys tell Variety that typical MDRC counts range from three to five per year, with lower requirements for writers who usually collaborate, or eight to 10 over the course of a contract phase. Higher numbers might be required for Nashville staff writers; country songs tend to have fewer credited writers than pop or hip-hop hits.

“Like all talent, the one thing that songwriters have is confidence in their ability to create quality and marketable content,” says Guy Blake, managing partner at Granderson Des Rochers. “So, when they hear, ‘We’re going to give you x amount of dollars, but in exchange, you have to guarantee us three songs recorded and released per year,’ they think, ‘Three songs a year? No problem.’ But they don’t understand that they’re getting maybe 15% of that release.”

Veteran attorney Peter Paterno, partner at King, Holmes, Paterno & Soriano, notes that when he began representing four chart-topping songwriting artists in the 2010s, all four were still stuck in the first phase of pacts that had been signed in the mid to late ‘90s. “Twenty years later, they were still not out of them,” he says.

In one of those cases, which Paterno declines to identify, the biggest hit of the artist’s own career — and one of the top songs of the year it was released — did not count to his MDRC, evidence of how complicated these clauses can be. Further, Paterno adds, “If you don’t send a commitment notice by a certain date, it just extends, so if I never notify the publisher, they just continue the terms.”

Songwriters Red, Arreguin and Tan concur, complaining that publishers don’t proactively inform composers of the progress they’re making toward their commitments. Thus, Tan isn’t sure where the remainder of her MDRC stands; the fact that she’s had many different point people at her publisher is one of the problems. Says Red, “I always hear the voice of Michelle Lewis in my head, saying ‘You’ve got to do the math as a songwriter.’”

And along with the partial-credit barrier, MRDCs come loaded with a large array of exceptions that have whittled Tan’s DMRC total down from around 30 to “a handful, maybe five” that have counted. In many of these clauses, songs placed on soundtracks don’t count — a particular pain point for Arreguin, who co-wrote five songs for the Nickelodeon film “Rags.”

Also excluded are songs placed on greatest hits, live or holiday albums, and compilations, nor do new recordings of older songs count. Even EPs, which have become increasingly common in the modern market, are excluded from the commitments on many older agreements, and in at least one contract that Variety reviewed, placements on gospel albums were also set aside, leading Red to quip, “What’s their issue with God?”

Over and above those carveouts, most MDRCs require that these releases are delivered by a “major label,” a definition that becomes ever fuzzier in today’s market, while songs written for sync opportunities — an ever-growing revenue pool — also don’t count toward these goals.

That all of those exceptions make money for the publisher is yet another way that MDRCs are tilted heavily against the songwriter.

Why? “I think it’s because opportunities [like soundtracks and syncs] are off the core of how [publishers] really make their money, and how they know to calculate making their money,” says a Nashville-based partner of a leading music law firm. “Something off the edge could be extremely valuable and make them a lot of money or it could make them nothing, but it’s not something they want to base their contract around taking high risks.”

Blake, who was SVP of business and legal affairs at Warner Chappell before he started representing talent in 2004, notes that in the early days, such commitments were much less rigorous. “Most of Warner Chappell’s deals, to the extent they had a delivery requirement, you just had to give demos of songs,” he says. “Like, ‘Here’s 10 songs over the course of the year, publisher. Do with them whatever you can.’”

But during the ‘70s and ‘80s, when blockbuster rock acts shifted the industry from singles-based economics to the bigger dollars found in albums, Blake says big advances sought by songwriters — along with solo artists or band members who wrote their own tunes — ratcheted up the stakes. “You started seeing rock and roll bands coming to fruition and having more and more power to negotiate deals with higher advances, and in exchange for the that, the publisher would typically make the deal look a lot like a record deal,” he says. “It would be linked to albums. ‘You want a $500,000 advance? That’s fine, but you have to give us an album in exchange, and we get x amount of albums after that.’”

Blake, whose firm represents H.E.R., J Balvin, Bernie Taupin and songwriter-producer and Recording Academy CEO Harvey Mason, is among those attorneys who prefers to exclude MDRCs from writers’ contracts. Same for attorney Matt Buser, who has recently updated the deals of five different writers who had been bound by those clauses. In the words a partner at one of the major music law firms: “I’ve avoided them like the plague in my practice for a long time — I’m talking a 20-year aversion to it. Or, when I represented publishers, I would try to come up with a creative situation to deal with that as well.”

As publishers’ statements collected by Variety suggest, attorneys on the other side of the table have begun to sing from the same sheet music. “This is something we’ve been doing for a long period of time, and happily,” says a high-ranking executive at one of the majors. “It’s the right thing to do; it’s good for us and it’s good for the writers. The elimination of MDRCs is part of the continuing evolution of publishing deals that has been going on for decades, with most of the changes being in favor of the songwriters.”

Warner Chappell’s statement on the matter reads in part, “We agree that MDRCs have become an archaic practice and only include them upon the request of the songwriter or artist”; Sony’s reads, “We have been modernizing our contracts to better serve our songwriters, which includes eliminating outdated practices involving minimum delivery and release commitments.”

Expected support comes from two of the companies that long pride their businesses as creator-friendly, including Kobalt, which says in part that “as a leader of creating a better and fairer music industry for songwriters and the creative community, we support the eradication of MDRC.” Likewise, BMG “is not in favor of contractual provisions that can trap a songwriter in an exclusive songwriting term indefinitely.”

But even with the tide changing, some writers are still having difficulty moving out of or amending their MDRC-bound deals, with sources suggesting writers who sign with independent publishers involved in a joint venture face more hurdles than those who sign to a major.

“A lot of the companies that are trying to impose these conditions are independent companies that have joint ventures with a major publisher,” says an experienced attorney. “My guess would maybe be that there’s a lot more pressure on the major publishers to modernize with respect to this and all kinds of other things, whereas the smaller companies continue to get by.”

Arreguin’s deal with one of producer Polow da Don’s companies, signed in conjunction with UMPG, is cited as one example. The producer, whose given name is Jamal Fincher Jones, has worked with the likes of Chris Brown, Nicki Minaj, Fergie and Pussycat Dolls. Arreguin says his company, much more so than UMPG, has complicated her attempt to end her 2011 deal, and that Jones asked for far more restrictive conditions in her proposed termination agreement than would typically be stipulated. Jones did not respond to Variety’s requests for comment.

She reckons that majors can be more flexible when a JV isn’t in the mix, explaining, “I’d have more of a chance because there’s more value there on their end, more equity,” says Arreguin. “But since they’re splitting a percentage with someone else, they’re not jumping at it.”

Tan, however, says modifying a deal with a major isn’t necessarily a slam dunk. She says that when Sony offered to modernize her deal, she was initially open to the idea, but ultimately it “was similar terms to what I had in phase one. In exchange for giving up the MDRCs I would get four more terms for no money. The last time I’d gotten a real advance was 2008.” Notified of these comments, a Sony exec said the publisher would be open to discussing her deal.

So, without MDRCs, how might publishers seek upside from the advances they offer writers?

Blake typically steers toward a deal which considers all revenue that a songwriter might generate with “a term no longer linked to delivery of product but rather a minimum period of time, and if you haven’t earned x amount of dollars by the end of that period, then the term extends. In a sense, the songwriter is just putting their money where their mouth is. The bigger advance you take, the bigger chance there is that your term may extend beyond that initial period.”

Another attorney agrees. “Something that would be more standard now would be the writer would either terminate the agreement or move on to the next contract period at the later of something like a year or two or when their account is recouped.”

However, Paterno resists even that modification. “A lot of the companies have reverted to a different model, which I don’t love either,” he says. “They’re just basically recoupment-based deals, so there’s no MDRC, but you’re stuck until they recoup the advances.”

He isn’t persuaded by the argument that publishers need to make good on their advances. “On some level, you placed the bet and you didn’t win,” he says. “It’s a risk/reward business and at some point, I like to have an absolute cut-off date. If you haven’t made the money back in three to five years, you’re probably not going to. I always try to negotiate some hard end date.”

Will publishers leave MDRCs behind, as statements provided for this article suggest? Time will tell, but SONA and the 100 Percenters will keep an eye on the issue. “I really hope that the publishers stick by their word and put some real energy and resources into rectifying this. It’s going to take a lot of manpower to modernize these deals, because a lot of people are signed with them,” says Red.

An attorney who spoke with Variety adds, “Songwriters don’t have these other income sources that artists do, such as touring, sponsorships, endorsements and merchandise. All their money is coming from royalties and advances from the publishers.

“So if they’re waiting on royalties and can’t get another advance,” the attorney concludes, “it’s tough to make a living.”

(Related article: “Inside the Dirty Business of Hit Songwriting.”)

Statements on MDRCs from five top music-publishing companies follow in full:

BMG Rights Management: “Consistent with our fundamental values of fairness and transparency, and approach across our business, BMG is not in favor of contractual provisions that can trap a songwriter in an exclusive songwriting term indefinitely. That’s why – just as we abandoned packaging deductions on streaming revenues for recording artists – we have been phasing out the indiscriminate use of MDRC in the U.S. for publishing deals. Songwriters have a tough enough time of it these days without publishing companies making it even harder to make a living.” 

Kobalt Music Group: “Since day one, Kobalt deals have been transparent and fair, allowing songwriters to retain 100% ownership of their compositions. It’s in our DNA to support and empower songwriters and this is a necessary step towards creating a better industry for songwriters. Therefore, as a leader of creating a better and fairer music industry for songwriters and the creative community, we support the eradication of MDRC.” 

Sony Music Publishing: “Songwriters are the heart and soul of the music industry. We have been modernizing our contracts to better serve our songwriters, which includes eliminating outdated practices involving minimum delivery and release commitments. We will continue working with our songwriters to ensure that their contracts reflect today’s music publishing landscape, and we remain dedicated to creating a more equitable industry for all songwriters.”

Universal Music Publishing: “As part of our ‘songwriters first’ ethos, we update our business policies and practices frequently to keep pace with music’s rapid evolution. Because we prioritize songwriters’ best interests, contractual policies and individuals’ contract terms are confidential, and we will continue to enhance our policies regularly without fanfare.”

Warner Chappell Music: “Warner Chappell values its songwriters and the creative community that serves as the innovators behind the incredible music we all love and cherish. We want our writers to feel heard throughout every phase of their careers and realize a songwriter’s needs may change over time. We agree that MDRCs have become an archaic practice and only include them upon the request of the songwriter or artist. We are fully committed to the modernization of music publishing agreements and intend to continue to look for ways to ensure our deals represent our writers’ best interests.”

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