How to get out of record deals when they go wrong

If you need to wriggle out of a restricting recording contract, do what Metallica and Courtney have done - turn to the California Labor Code section 2855

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Stranded in the wilderness ... Jared's Leto's 30 Seconds to Mars try to abandon EMI. Photograph: PR
Jared Leto's band 30 Seconds to Mars are embroiled in a legal battle. The band has invoked the California Labor Code in an attempt to escape the label. This states that a contract cannot be enforced against an employee after seven years (the band signed their deal in 1999). EMI, in turn, are now exercising their right (stated in the same labour code) to sue the band for violating the terms of contract by refusing to deliver an additional three albums - and they want $30m.
30 Seconds to Mars are not the first to resort to the California Labor Code Section 2855 when dissatisfied with the terms of their contract. Created in 1937, it became known as the "de Havilland law", after actress Olivia de Havilland used it to fight the then oppressive studio contract system. Metallica and Courtney Love - among others - have used it in the past to either get out of or renegotiate their deals.
It's easy to see these legal cases as a David v Goliath scenario - the artist fighting the corporation - and, speaking as a musician, I tend take the side of the artist. But I can see the label's point of view too. To launch a new artist on a global scale costs a lot of money. Record labels are companies that don't see a return on their investments for years down the line - if ever.
In an online statement, Jared Leto writes: "If you think the fact that we have sold in excess of 2m records and have never been paid a penny is pretty unbelievable, well, so do we."
It's ridiculous, but not entirely unbelievable. Most record deals state that all expenses are recoupable against artists' royalties. Every limo taken, every flight and hotel room, production costs of MTV Awards performances (they're usually paid for by the artist/label), as well as advertising and tour costs - it all adds up, and it's all recoupable. If more artists took into consideration that it's their own money they're spending (that is, if they actually sell enough records to pay back what the label has spent), they might just start driving themselves and flying economy instead of first class.
Still, I agree that signing a contract at the beginning of your career that ties you down for a decade or more can be frustrating and unfair. Especially if the label you signed to is then swallowed up by a bigger corporation (I signed to BMG Publishing, but my back catalogue now belongs to Universal, who bought the company).
Jared Leto continues: "The new regime at EMI is firing most of the people we know and love, wanting to place advertisements on our website, EMI owning 100% of the masters of our record ... forever, and basically having a revolving door of regimes at the company made it easy to not want to continue as is."
That EMI is suing the band for $30m is beyond excessive. The label says it wants to resolve the matter amicably and continue working with the band "to take them to even greater levels of success".
The question is: once you've sued someone, what are the chances that you'll have an amicable, productive working relationship? Ask any divorcee. You can't force someone to make a great record and, ultimately, both artists and labels are in the business to make great records. That's why almost every single case like this has been settled out of court.
The most likely outcome is that 30 Seconds to Mars will go back to the negotiating table and work out a more favourable contract with EMI, or the label will decide it's not worth the legal costs, cut their losses and walk away - leaving the band free to sign with another label. What do you think are the chances?..................http://www.guardian.co.uk/music/musicblog/2008/aug/28/whenrecorddealsgowrongand