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Analysis

Does Megan Thee Stallion really have a “bad deal”?

Here’s what we know.

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Megan Thee Stallion (left), Carl Crawford (right)
6 min read
Story Highlights
  • Megan is suing 1501 Certified Entertainment, asking for the termination of her contract and a million dollars in damages.
  • 1501 claims Megan has not honored her deal and has not been paying them since signing with Roc Nation.

It is now public knowledge that Houston Rapper Megan Thee Stallion is involved in a legal dispute with her record label, 1501 Certified Entertainment. Prior to dripping her third EP, S.U.G.A., today (which is not an album), it was announced that Megan was allegedly suing 1501 for the amount of $1million and asking for the complete termination of her contract. She has accused the label of ‘fraud, breach of contract, negligent misrepresentation, and other violations of civil law’. The question is, why? And is her deal really as bad as she claims?

1501 has expectedly hit back with a few claims of their own, stating that Megan has not honored the terms of her contract.

Here's what we ...

1. Megan is yet to deliver an album to the label

According to 1501 CEO Carl Crawford, Megan signed a four-album deal with the label at the top 0f 2018. At the time, she was managed by her now-deceased mother and had a lawyer look over the deal – according to Crawford. Megan was given a $10,000 initial advance, then a further $50,000 later that year when 1501 signed a distribution deal with 300 Entertainment (totaling a $70,000 cash advance).

To date, Megan has delivered three EPs and a Mixtape to her label, but still no album.

2. Megan has a 60/40 profit split with 1501.

In court documents, it was revealed that Megan currently receives a 40% profit split from 1501. To the unfamiliar, that may seem low and unfair. In actuality, however, 40% is a very high split in the mainstream music market.

For a new artist on a major label, a typical royalty rate is usually somewhere around the 15% mark (it can be slightly less or more, depending on how many records you’ve already sold and how good of a lawyer you have). For an indie label, though (which 1501 is), it is usually a 50/50 profit split. So the 60/40 deal Megan has could be deemed unfair – which is part of her argument against 1501. However, according to Music Copyright Lawyer Brandon Clark, “it isn’t so low that it would immediately be shocking“. Furthermore, for the amount of money that 1501 has allegedly invested in Megan’s career, a 60/40 split could be seen as very generous. Which brings us to the next point.

...a typical 'hit record' can cost anywhere up to a million dollars.

3. 1501 claims to have invested at least $500,000 - $800,000 in Megan's career.

In an interview with Billboard, Carl Crawford claims that 1501 has receipts of between 5-$800,000 of investments made in Megan Thee Stallion’s career since she signed with them 2 years ago. Which, if true, equates their funding to that of a major record label. Thus, making the 60/40 split a very generous deal – especially for an artist who, at the time of signing, had no major success.

Furthermore, reflecting on the viral impact of Megan’s “Hot Girl Summer” smash last year, it is quite easy to believe 1501 have in fact put this much money behind Megan. The single was Megan’s first #1 on Billboard (on the Rhythmic Charts and #11 on the Hot 100) – which qualifies it as a major “hit”. And a typical “hit record” can cost anywhere up to a million dollars to become such. From digital marketing, TV & Radio promo and beyond – it all costs, very big bucks. There’s no telling how much was spent on the marketing for “Hot Girl Summer“, however it was more than likely in the six-figure range.

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4. Megan claims that 1501 did not want to approve her budget for SUGA

All budgets must be approved by a label prior to a release. This is standard practice. And, without context of the situation, it is difficult point the finger in either direction on this point.

5. Crawford claims the Megan has not been paying the label what she owes from her touring income since she signed with Roc Nation.

Megan signed a separate management deal with Roc Nation last September – during the height of the ‘Hot Girl Summer’ success. Since which time, Crawford claims she has not paid the label what she owes them from her touring income (agreed as part of her ’70/30 split’ 360 deal with them).

This may be the reason why the label wanted to put a hold on her releasing any new music – perhaps just until that issue has been resolved. This wouldn’t necessarily be unfair of them, but there is likely more to the story than we know.

6. Megan owns part of her master recordings in her current deal with 1501.

When you sign a recording agreement with a record company, you are typically giving up the rights to your master recordings – that’s essentially what a traditional record deal is. In Megan’s deal, however, she shares in the ownership of her masters. This is typically unheard of for a new artist, particular if a label is putting up the kind of capital that 1501 has claimed they’ve put into building Thee Stallion since 2018.

There seems to be a little conflict here, as the lawsuit filed by Megan’s lawyer claims one thing, but Megan claims another. Is the deal “so bad” that she wants out? Or is her new management at Roc Nation trying to get a bigger piece of her pie – and thus, encouraging Megan to try and find a way to alter the terms of her deal?

Owen Sloane, a music lawyer did state that the suit “sounds like a tactic to secure a renegotiation“. However, it’s tough to make assertions in a case like this from the outside in – so we ultimately have no choice but to see how this plays out in court. If there’s anything to learn here, though, it is to make sure you always read the fine print. In a world full of free resources and information, there aren’t too many excuses for signing “shady deals”.

This story is developing…

Analysis

Twinkie Clark’s publishing catalog worth millions, says Attorney

Twinkie’s songwriter journey was recently depicted in Lifetime TV Biopic ‘The Clark Sisters: First Ladies of Gospel’.

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The Clark Sisters at the 19th Annual BET Super Bowl Gospel Celebration
7 min read

Story Highlights

  • The Clark Sisters’ story was recently depicted in a Lifetime movie biopic.
  • Attorney James L. Walker, Jr. recaptured Twinkie Clark’s publishing rights after she sold her catalog for a car.

Gospel Music Legends The Clark Sisters have recently seen a huge resurgence in interest and popularity. On April 11, the faith-based music icons saw their story told in more detail than it has ever been – as their first biopic ‘The Clark Sisters: First Ladies of Gospel’ aired on Lifetime TV. Produced by Dr. Holly Carter (alongside Grammy Award Winning Artists Mary J. Blige, Missy Elliott and Queen Latifah) – the initial broadcast captured an audience of a 2.7 million, and closed out with 11 million total (after repeat airs and DVR ratings came in).

The movie told the lives of sisters Denise, Jacky, Elbernita (otherwise known as Twinkie), Dorinda and Karen – their rise to fame, and everything in between. One of the highlights, from a music business perspective, was the sale of Twinkie’s publishing catalog.

It is unknown exactly how accurate the Lifetime movie depiction was, as a number of scenes have been disputed by Larry Clark (son of Denise) and Twinkie’s former husband Johnny Terrrell. However, with the Clarks themselves being listed as Producers – and Executive Producer Dr. Holly Carter already having a working relationship with the family – one can assume most of the events were not too far from the truth.

'The Clark Sisters: First Ladies of Gospel' Cast - From Left to Right: Aunjanue Ellis (Dr. Mattie Moss Clark), Kierra Sheard (Karen Clark Sheard), Angela Birchett (Jacky Cullum Chisholm), Raven Goodwin (Denise Clark Bradford), Christina Bell (Elbernita "Twinkie" Clark-Terrell), Shelea Frazier (Dorinda Clark Cole)

During their earlier days, Twinkie was the sole songwriter for The Clark Sisters – penning several hit songs for the group. The biggest of these was ‘You Brought The Sunshine’ – from the 1981 album of the same name. The single became a crossover hit, landing a Top 20 Spot on Billboard’s R&B Charts and a Top 30 spot on its Dance Club Songs listing.

It has been claimed that the single and album achieved a Gold certification – for sales in the excess of 500,000. Music Biz Nation was unable to verify either claim using the RIAA database – which lists U.S. gold and platinum certifications awarded as far back as 1958. We did, however, reach out to RIAA for comment, but had not heard back at the time of writing. At present, we can verify that the single had sold at least 200,000 within the two years following its release, according to a 1985 article in Billboard Magazine.

At some point during this era, according to the movie – Twinkie sold her publishing catalog to Michigan-based Bridgeport Music (which was given a fictitious name in the film) in exchange for a Lincoln Continental. Of course, the car selected for the scene may have not been the exact same as what was exchanged in the actual deal. However, if we are to assume it was of similar luxury status – that particular vehicle retailed for around $24,000 in 1979 – close to the time when Twinkie made the deal. In today’s money, that would be equal to $85,000.

The interesting part is, according to a calculated estimation by Music Biz Nation, the success of “You Brought The Sunshine” possibly made Twinkie’s catalog worth at least $400,000 to $450,000 from that release alone – more than 5x what it was sold for. It was later worth ‘millions’.

...artists and songwriters have lost millions of dollars by giving up their publishing

James L. Walker, Jr., Esq.

Music Biz Nation spoke with James L. Walker, Esq. –  the Atlanta-based Entertainment Attorney who worked with Twinkie to recapture her rights five years ago. Walker was not working Twinkie when she initially sold her catalog, but did say that “generally speaking artists and songwriters have lost millions of dollars by giving up their publishing“.

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When discussing the amount of publishing money made from record sales, Walker shared that “one song on a gold album is worth about $50,000“. Meaning, if it is true that the 8-song ‘You Brought The Sunshine’ album did achieve Gold status, Twinkie’s catalog on that release would have been worth $400,000 from record sales alone. This does not include additional income generated from the success of the lead single.

We also discussed the impact of the radio success and other types of revenue. Walker stated that “a hit song is worth well over a millions dollars, if it’s promoted right“. MBN asked if he would place “You Brought The Sunshine” (single) in that category – to which Walker confidently responded “oh, yes“.

'You Brought The Sunshine', The Clark Sisters

Later in the conversation, Walker was asked how he was able to get Twinkie’s rights back. He shared: “There’s what we call ‘the copyright act’, and with the copyright act the writer is allowed to reclaim their rights in the 35th year of the assignment“.

The world of publishing in gospel music slightly differs to that in the mainstream. Being a niche genre, gospel generally does not generate nearly as much as pop or hip hop music in revenue. To give context, it often takes less than 5,000 equivalent albums sales to land a #1 on Billboard’s Top Gospel Albums Chart. Grammy-nominated Artist Travis Greene topped the list last November, shifting just 3,000 units.

Though sales may not be where the money is at for the faith-based genre, Walker stated that ‘sampling’ is another income stream for many of its artists. Referring to Gospel Acts, he said: “Their music is used – people sample it. Jay Z sampled Twinkie’s song“.

Because Twinkie now owns her rights, she was able to claim 50% of publishing revenue when Jay-Z sampled her composition on his 2017 single release ‘Family Feud’. This 50% meant Twinkie owns a bigger share and made more publishing money from the record than lead artist Jay Z himself (and co-writer Beyonce, combined).

Twinkie Clark, the only BMI-registered composer on the song, owns 50% of "Family Feud" publishing share.

Outside of this example, Gospel Music has had a solid history of being sampled by mainstream artists. In the past year alone, Mary Mary’s most popular hit “Shackles” (a UK Top 10 and US Top 40) was sampled by BRIT Award Winning Rapper Stormzy on his UK #1 album “Heavy Is The Head”, and most recently by Lecrae and YK Osiris. Kirk Franklin was also sampled on Daniel Caeser’s ‘Freudian’ album.

Twinkie Clark now owning the rights to her work with The Clark Sisters means she will also receive revenue from her songs being used the Lifetime Biopic. The day following the premiere, the sisters received the largest amount of daily YouTube views since at least 2018.

The Clark Sisters, DEMAND - YouTube
The Clark Sisters received over 150,000 YouTube views on April 11, 2020. MBN research via Demand

There was also a huge spike in google searches for tickets to see them live, according to Music Industry Platform ‘DEMAND’.

The Clark Sisters, DEMAND - Google
Google searches related to live shows and tickets for The Clark Sisters reached its peak on April 12, 2020. MBN Research via Demand.

The Clark Sisters’ latest release ‘The Return’ was released on March 13, 2020.

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Analysis

A.R.M.S. has delivered $1.6m in unpaid royalties to artists since 2018

ARMS (Artist Royalty and Music Services) was launched in 2016 by producer David Salas.

MBN Staff

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Young Buck (of G-Unit), A.R.M.S. client
6 min read

Story Highlights

  • A.R.M.S. was launched in 2016 by producer David Salas.
  • The company has collected unclaimed royalties for The Chi-Lites, Young Buck (G-Unit), Fobia, Tierra, and Bobby Day.

Family-owned royalty collection agency ARMS (Artist Royalty and Music Services) announced today that they have successfully delivered $1.6million in unpaid royalties to artists and rights holders over the last two years. Founded by longtime music producer David Salas, the company’s unique model is one that favors the client. As opposed to paying any fees upfront, ARMS takes a backend commission on any royalties collected on behalf of rights holders.

According to the company’s website, David Salas (and wife Daphee) started ARMS to track down his father’s lost royalty payments. David is the son of Rudy Salas, former member of latin soul group El Chicano and co-founder of latin R&B group Tierra (along with his brother Steve).

Unaware to many, streamlining royalty payments – from processing to payouts – is not always as straightforward as what might assume it ‘should’ be. In many cases, artists never receive the royalties they are due – often referred to as ‘Black Box Royalties’. This occurs when a performer, writer, label or publisher cannot be properly traced – leaving their royalties unallocated.

It may be hard to understand how this can even happen in today’s world – but it does. One of the most common and substantial ways is with streaming services. Platforms like Spotify pay an upfront licensing fee to labels for the use of their catalogs for a limited period.

Spotify

If, however, the label’s catalog earns less in royalties on the platform than what was paid to them upfront before the contract ends, the ‘loose change’ ends up being unallocated.

Additionally, you still find cases where artists have not registered with the necessary collection societies, internationally – or the metadata on file is incorrect. In this case, the society does not know who to pay so the funds are held until they are sought out. This is where ARMS comes in.

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The company was launched in 2016, and has worked to collect royalties for The Chi-Lites, Young Buck (G-Unit), Fobia, Tierra, Bobby Day (“Rockin Robin”) and more.

ICYMI:

Most artists and even actors or voice over artists are not aware that they can receive royalties from their actual performance, like the hook, as a feature, as a band member etc”, said Salas.

Most artists and even actors or voice over artists are not aware that they can receive royalties from their actual performance

David Salas (CEO, Artist Royalty and Music Services)

Most royalties traditionally had gone to songwriters, publishers or the label but international streaming royalties are different and we help make sense of it all.”

To ensure artists are not shortchanged by their services, ARMS does not process any royalties they collect on behalf of performers or rights holders. Instead, the company has the collection society make the cheques payable to the client – who then pays ARMS a pre-agreed commission.

To that end, Salas added: “Being a musician myself, I know it’s hard to trust people in the music business, so I built this company with the premise that transparency would be absolute and our role would be hands-on. We are a small company with big ambitions.“

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