One of the most critical areas of the music industry and the segment that can have the most adverse affect on the progress of a project or a person’s career is the legal sector. With all of the negotiating, legal wrangling and subtle details that go into a contract, having knowledgeable legal representation is imperative. Oftentimes, employing a skilled attorney can be the difference in the advancement of business.

What better person to discuss the specifics of entertainment and music law than prominent lawyer L. Londell McMillan. Adept at the art of making a deal, L. Londell McMillan has effectively navigated his way through the music business, becoming a legal power broker (he spearheaded the high-profiled contractual releases of Prince from his deal with Warner Bros. Records and The Lox from their deal with Bad Boy Records) and representative to many notable figures, including but not limited to: Prince, Stevie Wonder, Michael Jackson, Usher, Kanye West, and Spike Lee.

Currently a partner at international law firm Dewey & LeBoeuf, where he heads the Entertainment, Media and Sports Group, and co-owner and Executive Publisher of The Source magazine [post-bankruptcy], Mr. McMillan shared his views with A&R Department about everything from negotiating record contracts to 360 deals to the overall state of the music industry.

After getting Prince and The Lox out of their legal contracts with Warner Bros. and Bad Boy Records, respectively, you’ve become sort of the go-to guy when artists are dissatisfied with their record deals. What can artists do to protect themselves in the beginning of their deals so that it doesn’t get to a point where someone like yourself enters the picture to re-negotiate the deal?

First, artists has to know what they really want, and appreciate that they’re an artist, a creative person, and a business at the same time. Their talents and their creativity is commoditized in a business industry that we know as the music industry or entertainment business—and the brand business now. So the first thing is to appreciate that when you enter into any kind of agreement that it is binding and you need to be thoroughly aware of what you’re entering into, and you should understand the consequences of it. You gotta make sure you know what you want before you ask for it because a lot of times artists want to be famous, they don’t necessarily want to sign contracts. And then in order for someone to invest in their talents and distribute their product, the company that’s investing and distributing want a contract so that once they make the person famous they can’t just walk away. So they have to really know what they want, appreciate that these agreements can have long standing consequences, and they want to understand the terms and conditions of the agreement—and ask around, shop around. Their first couple of agreements are the most important, so don’t be as excited to get in the game without understanding the price of the fame.

What’s the difference between negotiating a contract for Kanye West, the superstar, versus Kanye West, the budding producer/artist?

They differ in many ways including the amount of money usually that’s being offered, but often, what you call the leverage. The leverage is essentially “can you dictate terms of conditions of a contract, or will these terms and conditions be dictated to you.” Can you use the value of what you’re client is offering to get shorter term contracts, more creative control, more money, and possibly even more ownership, more insurance, more security, better travel, better accommodations. Essentially any and everything that’s important to your client is enhanced by the status that they have, and you wanna make sure you know the status, and you wanna know that that status will get you specific results. You can’t try to get something that’s too far outside of reality or you’ll lose an opportunity, but you can’t short change your client as well. So, in addition to knowing the legal way to go … to be a good lawyer you also have to know what the business is, and be as up on what the business value of your client is as much as what the legal terms of agreements should look like.

How do you feel about the multiple rights or “360 deals” that record labels are employing? And who really benefits? The artists or the labels?

My initial reaction was not favorable because I thought that these companies are now acquiring too many rights with too few resources and too little expertise, because you go to a record company to help build your record and your music publishing career. Many of them don’t have expertise in all these other areas such as management, such as touring, such as branding, such as film, such as entertainment. But they want to gobble these rights because they’re losing money, and their view is they’re making these investments … make you famous and they want to share in the fame. So … but, if it’s the only way that you can get to the marketplace then you gotta look at your options, and you gotta say “ok, it may not be the most ideal, but if this is the only way that I can play the game and my alternatives are not many,” then you got to take the best hand your dealt. So, the answer is if you got other options that make more sense, then obviously you play to your strength, but if that’s the only way that you can move forward then you wanna make sure that you enter into those agreements very carefully, and you try to reduce the amount of control, the length of time, and increase the resources that come your way for entering into those kind of deals.

Recently, superstar artists like Madonna, Jay-Z, Snoop [Dogg], and U2 have all left the major record labels for other major companies. What type of effect do you think those moves will have on the music industry?

I think what they’ll do is just popularize things that Prince and I have been doing for so long, which is appreciating that when you are an artist that create a product, you already have an existing brand, you already can connect to your consumer base, they’re already checking for you. You really then can go out and become the vehicle to drive the traffic and the commerce for your art, your talent, and your performances. And so I think it’s just gonna highlight that there are alternative ways to do things other than just going to the record company or the film studio, and that you can look at building strategic partners in different ways.

Will large companies like Myspace, MTV, and Live Nation pose a legitimate threat as competitors to major record labels?

Absolutely in one way, but they can also pose a viable strategic partner for record labels in another way. So, right now you’re at a place where it’s all fair and love. Any and everybody can make a deal if you got the right product and you got the right leverage. So whether it’s Warner Bros. reaching out to Myspace or whether it’s Jay-Z, or Madonna, or Prince, or Stevie Wonder, whomever it is, if you can create the right business opportunity and make the right deal then you’re gonna be in a position that’s gonna be better than your competitor.

How has the new 360° business model affected the way deals are negotiated?

Well, in a major way because you’re now not negotiating just a music recording and music publishing agreement, you’re now negotiating a multifaceted agreement and the way record companies have traditionally negotiated with artists has always been from a top-heavy position where they operated in a certain way, with certain kinds of—what you call business customs and norms. Those business customs and norms in music were not always consistent with the same business customs and norms in film for example, or for television for example, or for modeling for example, or for internet for example. So the term—a term in music was always done in these options where the record companies get one album plus they have unilateral options and they benefit for like maybe up to 6, 7 albums. That could go on for anywhere from 6 years to 20 years. That’s effectively a 20-year contract. But in the film industry—as opposed to the music industry—an actor doesn’t go enter into a deal with someone for 20 years; they’re usually doing it for picture by picture. So the way things are different is you’ve gotta now understand that you’re negotiating a deal for someone that basically is in different industries with one company, on one group of people. That’s a very complex set of arrangements and you just gotta be extremely knowledgeable. So a lot of that business is still in its infancy, and if you’re walking into that without someone who really understands each one of those industries, you can get hurt… you gotta be careful not only who your lawyer is in terms of whether or not they have a big name, or whether or not they’re well known, or whether or not they have connections, because many lawyers are connected but they’re connected to the record company. You want someone to be connected to your interest, someone that’s going to protect your interest if you’re an artist. You wanna understand where their sensibilities are, what their history has been, but you also don’t want someone that’s not gonna be able to make a deal. You want someone that’s got enough independence to work zealously for you, but you want someone who also has the kind of temperament to not make anything personal and get a deal done.

Based on the overall state of the music business, what type of changes would you want to see occur?

I’d like to see artists make more money from what they create; I’d like to see more artists development, and connection of the creative art form back to the people; I’d like to see a new music business model that is less complicating—less controlled in the hands of just a few corporations; I’d like to see a fusion of hip-hop in all forms of music worldwide; I’d like to see how hip-hop has influenced all parts of—not just me—I’d like for everyone to see how hip-hop has influenced all parts of the globe, and appreciate what we really had created, and for people to really just use that as a model for other business opportunities and creative endeavors. 

Are there any immediate things that the music industry needs to do to regain consumer confidence and make people want to purchase music again?

Yes. First thing they have to do is to get back to the basics of making great music, and not just putting out fillers and fluff, and signing friends who don’t have talent—that’s the first thing—get back to the music business. Second is understanding that the business has changed and the way we communicate and the way we relate to the ultimate consumer has changed, and they want their experience in many different kind of ways and we’ve gotta be responsive to that. So, on the creative side get back to just making great music and on the business side to realize that they’re no longer just in a power position, they have to be creative and strategic and smart, and get their business hustle up. And they can’t just sit back and say they’re one of the five major 50,000 lb. gorillas that you gotta come see. They gotta get out here in the arena, in the marketplace, and do business! And a lot of people are gonna lose jobs because they lost the ability to do business. They’ve only been put in positions because of friendships and they haven’t been able to compete in the marketplace. So you’ll see the companies that will stay around will be the ones that are nimble, quick, smart, and able to put together a team of people who know how to do good business.

…you gotta be careful not only who your lawyer is in terms of whether or not they have a big name, or whether or not they’re well known, or whether or not they have connections, because many lawyers are connected but they’re connected to the record company. You want someone to be connected to your interest, someone that’s going to protect your interest if you’re an artist. 

Quincy Jones has lobbied for President Obama to create a position in his Cabinet for Secretary of the Arts. Do you think a position like that would make a positive impact on the music industry? 

Absolutely. Arts is very, very important in many ways beyond hip-hop. Arts is a form of developing young peoples creative and cognitive development. And arts will also showcase throughout the world one of the greatest exports that we have in America, which is our talents, and our performances, and our creativity.

As an advocate of artists’ rights, and a person that has championed reform in the music industry, what are the difficulties of creating a labor union to act on behalf of artists?

The labels and the managers, who should be supportive of artists but often are working in hand-in-hand—the labels, the managers, and even most of the lawyers.

Now that recording artists are diversifying into different businesses and fields, how important is it for their legal representatives to be equally diverse in their knowledge of those respective fields?

It’s pivotal. And part of the reason most artists I think have not achieved their potential is because their managers and lawyers have been as limited as they are, and were just focused in one area, and you have to have expertise in multiple areas or be willing to develop a team for your client with expertise in other areas and you serve as the generalist. But many people are uncomfortable doing that, so you wind up not maximizing the potential of the people in your organization.

A lot of people—both in and out of the music industry—complain about the quality and diversity of music in the marketplace, putting the blame solely on the artists, record labels, and music executives. Is it fair to target them exclusively, or are there other factors worth considering?

Well, I think that it’s … there is other factors involved including radio. I think radio can be a stronger advocate for a broader diversity of musicality based on what they play. I think it’s the consumer. I think the consumer can start to support artists that showcase music in a broader way. I do think it’s the label and the record company that help develop artists so that they can pull out the best in the artists, because the artists should grow over a course of time. An artist on their fourth album shouldn’t be sounding the same as they did on their first album. They should show some growth while keeping that common thread that made them successful in the first place. So I think that it’s an evolution, you should always grow and recreate yourself—that’s why the artists that have lasted the longest and have made the most money over the course of time have been artists who have kind of recreated themselves and not got lost at the same time.

Prior to the recession, the music industry was already struggling. With the current state of our economy, what type of affect will it have on the music business?