It doesn’t matter whether you know who Avenged Sevenfold is or not, the Huntington Beach, CA metal band is attempting something pretty rare in the music business that could end up changing how record label contracts are forever written. The band is challenging what’s known as the “7 year rule” that labels have employed in contracts since 1944 that bars the personal services of an actor, artist or band for more than 7 years. The problem is, the law is deceiving as there’s more to it than you think.
Basically the 7 year rule was created to prevent long-term contracts from becoming the means for involuntary servitude where the contract can drag on indefinitely. This was tested in 1944 when Olivia de Havilland used the law to break her contract with Warner Bros, a decision that was the prime mover in bringing Hollywood’s old studio system to a close.
While the 7 year rule was now finished in the film business, the major labels lobbied for an important change after Olivia Newton-John won a 7 year lawsuit with MCA Records in the 1980s. California lawmakers were convinced by record industry lobbyists that labels invest so much up front in their artists that they should be able to recover any “lost” profits from the uncompleted albums that an act owes in they even they don’t fulfill their contract. In other words, the contract is now based around the number of albums delivered instead of the term of the contract, which to many violates the intent of the 7 year rule.
Avenged Sevenfold agreed to record five studio and 2 live albums for Warner Music, and have delivered only 4 albums so far. As a result, the label says they’re still under contract while the band says that they’re beyond the 7 year time limit, since the deal was signed in 2004.
While other artists have tested this rule in recent years (Courtney Love and Thirty Seconds to Mars come to mind), the lawsuits were settled out of court. Avenged Sevenfold is the first band to actually take this as far as a trial. If it loses, the band could be on the hook for between $5 and 10 million. If it wins, on the other hand, expect many other major recording artists to attempt to exit their current deals.
According to Billboard, “Avenged Sevenfold intends to steer the label’s drive for lost profits around by asking what a record label does for its artists in this day and age,’ which is a very unique strategy and one that could only work today in our Music 4.0 world. Whatever happens, this is going to have an effect on every recording artist signed to a label going forward.