Ricky Montgomery began rehearsals for his tour in late January. The singer/songwriter performed across America before heading to Europe, Asia and Australia, returning to the US in June. “It was a long year and I was also sick,” he says. It was then that he discovered his tag had been dropped.
“There was a disconnect in terms of creative direction,” he explains. “The label didn't know what to do with me and instead of listening to my ideas, they just tried to apply standard pop standards. Ed Sheeran was the one they thought would work.”
That “disconnection” is the subject of Montgomery's upcoming single, a wistful acoustic ballad out Oct. 24 titled “Superfan.” He sings with a deflated twinkle: “The group just got the numbers/Said to try it more like Ed Sheeran/But it's not me and it's not him.”
However, the rejection hasn't hurt Montgomery's career. In fact, he's now getting more streams — about 2 million a day to his catalog — than before. “For better or worse, it's a social media content game now,” says the 31-year-old singer, who has nearly 2 million TikTok followers. “So if you've invested your time in it, chances are you'll be pretty good if a company decides to drop you.”
The drop is all the rage this year: Two of 2024's biggest artists, Chappell Roan and Shaboozey, were both cut by major labels before their recent breakout success. And more acts could soon be joining their ranks as major labels cut costs by downsizing — and shedding artists.
“Every time there were big layoffs across the label systems, artists were released from the catalogs at the same time,” he says. Leon Morabiapartner at Mark Music & Media Law. “Some artists are really happy and relieved about it, and some artists are really upset. Their reaction ultimately depends on how dependent they are on the record company to do what they do.”
Rejected operations lose access to an extended support team. Plans for upcoming releases must be scrapped or heavily revised. tours can be cancelled. That said, Lulu Padinfounder of loop legal, is adamant that “rejection has nothing to do with long-term success.” And this is probably truer than ever.
During a recent interview with BloombergCEO of Sony Music Rob Stringer he pointed out that when he entered the music industry in 1985, record labels had a lock on manufacturing, distribution and radio. “We had a lot more power,” he said. Today, on the contrary, “artists have at least as much power as we do.”
This is because they can make music cheaply, and get it out internationally, without ever leaving home. “Artists have to be as good, if not better, at marketing as any professional marketer now,” Montgomery says. “They are, by default, the most experienced person in the room at marketing meetings.”
At the same time, the buttons that labels can push — for radio play, appearances on awards shows and late-night TV, and prominent press placements — no longer guarantee true fans. As a result, Montgomery says, “Labels only want to focus on Tiktok or Reels or YouTube Shorts right now. I had three times more meetings on TikTok strategy than I did on music. There's no reason you can't do these things yourself.”
However, falling out can be embarrassing, a corporate version of a breakup. And like a breakup, untangling takes a while, requiring additional negotiation between the artist's team and the label. “It's not just, somebody waves a magic wand and then you're dropped,” says one A&R who left a major-label job earlier this year.
This legal dispute can be critical to the next phase of an artist's career. In a typical record deal, the label enjoys exclusive rights to all songs delivered during the contract — even if they haven't been released yet. For artists shown the door, then, “the bottom line is who gets ownership of the unreleased music,” says Pantin.
Record companies are reluctant to give up these rights, as they helped finance the creation of the songs. In order to secure the return of unreleased music, artists may have to grant the label, either in the form of a 'bypass' payment or royalties on sales and streams,” adds Pantin.
If the company refuses to relinquish rights to unreleased songs, artists have another option. “I've called record labels and asked them to waive the re-recording restriction,” he says Tiffany Almyfounder of PKA Law. The re-recording restriction is in place to prevent an artist from releasing a competing version of an already released song, a tactic made famous by Taylor Swift with her Taylor edition album re-recordings. But the restriction serves no purpose if the company never released the track in the first place. And if the artist can get the record company to drop that prediction, they can then re-cut their music – on their own dime this time – for release.
Another point of negotiation when artists and labels sign off: The act can secure some extra money, depending on how their contract is structured. “The deal could be worth $500,000 and $150,000 is given to the artist at signing and the rest is for recording,” explains the former A&R executive. “Then when you deliver the album, whatever's left of the fund is supposed to go into the artist's pocket.”
Lawyers try to prepare for these situations long before the label even thinks about cutting catalogs by including what's known as a “pay-or-play provision” in the artist's original contract. (The initial deal negotiation period is when lawyers push for other protections: “I always try to reinforce the caveats that the rewriting restriction doesn't apply if the track isn't released within a certain period of time,” says Almy.)
The pay-or-play clause ensures that, “If you leave in the middle of the contract period, you will be entitled to at least part of the remaining fund,” he explains Oren Agmanentertainment lawyer. “The labels limit it now, so they'll give you maybe 30% or 40% of the balance. [But] if you don't have a pay or play provision then you get nothing but the deposit.” Jody Sihandehmusic attorney, calls this provision “one of the last sticking points” when negotiating a record deal.
While lawyers on both sides go back and forth after an act is dismissed, the artist may be stuck twiddling his thumbs. “I've seen labels delay responses for months, extending the process and keeping artists in limbo,” says Pantin.
This gap period is important because an artist technically cannot sign a new deal before exiting the old deal. Some do anyway, finding a label that dropped them isn't likely to spend money suing them for breach of contract. “It can be a game of chicken,” notes the former A&R.
For an artist's partners, it can be more than that — they don't have the potential cushion of a pay-or-play clause. Many labels give a producer half their fee for a track up front, and only split the rest when that track comes out, says Almy. A dropped artist can mean a piece on the shelf. For a producer, a shelved piece represents lost income. “I called the A&R company at the label that dropped the artist and asked them to consider paying the producer for the work they had already done,” says Almy. Mixers are often in the same predicament.
Artists have it easier because they can just start recording and release as they see fit. “I've seen some artists who were really helped by the fact that they fell, even though they didn't want to be,” says Shihadeh.
Another recent post-fall success story is Gigi Perez, who parted ways with Interscope earlier this year. “I was stuck inside a machine that didn't work or make sense to me and I was unhappy,” she wrote in a lengthy Instagram message on March 8. “I think a ton of artists were/are in that position as this new model of the music industry changes.”
She ended her post on an upbeat note: “Let's go bitches.” And in July, he released “Sailor Song,” a muscular folk track that works as well in an arena as it does around a campfire. It also proved effective on TikTok: Soon users were soundtracking tens of thousands of videos with at least three different snippets of the single.
“Sailor Song” streams are up. And on October 8, Perez announced a new record label: Island Records.
