Tuesday, March 20, 2012

The Truth About Industry Standards

The following was posted on March 21, 2012 on FTM Arts Law's blog "Law and Disorder: Performing Arts Division" which can be found on MusicalAmerica.com:

The Truth About Industry Standards
By Brian Taylor Goldstein

Dear FTM Arts Law:

I was recently reviewing a contract I received from an agent. When I asked for some changes, she told me that her contract was “industry standard” and that nothing could be changed because that’s the way everyone does it. In the future, I don’t want to waste anyone’s time or appear like I don’t know what I’m doing. Are there industry standards for certain types of contracts? Where can I learn what is and is not legally required?

Do not mistake “industry standard” for “legally required.” Something which is “legally required” is mandated by statutes or regulations—such as visas, taxes, licenses, or permits. The term “industry standard”, on the other hand, usually means: “This is how I’m used to doing it and I’d rather not change.” Too often, its employed as a form of peer pressure to make you feel that you have no right to make counterproposals, counter offers, or suggest a new or different way to structure the deal or transaction. Nothing could be further from the truth! The only industry standards in this industry are that there are NO standards! This is not to suggest that there are not ways to structure some deals and transactions that are more common than others, but even a common practice or custom does not mean that it is unchangeable. More significantly, if you polled a cross section of performing arts professionals about any given topic, you will find a significant divergence of opinion as to what is and what is not “standard”. In other words, just because someone has done something a certain way for 20 years does not mean that’s the way everyone else must do it, much less you. It may be “standard” for that individual or organization, but it doesn’t make it “standard” for anyone else.

In your question, you don’t mention the specific terms that were at issue. Depending on the circumstances, what you were asking for may have been completely reasonable or completely ridiculous. But that really doesn’t matter. Perhaps more than in any other industry, the arts is based on relationships and success depends on the health and strength of those relationships. When entering into any arts-based relationship, you should always feel free to ask questions, propose new ways of doing things, and think creatively. This does not mean you will get what you want. That will depend on negotiations and the negotiating positions of the parties. If you need to licensing rights from another party or want to work with them more than they want to work with you, its to be expected that they may counter any or all of your proposals with “take it or leave it.” However, that’s not because of any predetermined “industry standard”, its just that they may be in a better position than you are to dictate the terms they want. That’s not necessarily unfair, its just reality. In response to an attorney who once presented me with a contract which he insisted was “industry standard”, I told him that, according to his “standard”, the artist gets screwed, so we need to pick a better standard. It never hurts to ask!

To ask your own question, write to lawanddisorder@musicalamerica.org

All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. FTM Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously.