American Idol or American Puppet? What contestants don't realize about record deals

It doesn’t take a business major to sign up for American Idol or pursue a career as a musician, just a bevy of talent and a wealth of ambition.

That’s why performers – including those who attain their contracts through competitive television shows such as American Idol – often find themselves stuck in oppressive contracts and hungry for a way out.

For example, former American Idol winner Phillip Phillips recently called his contract with 19 Entertainment, producer of  the long-running televised singing competition, “manipulative,” and is seeking to void his recording, management and merchandising deals with the company. For some time, the talent search has been fueled by the fact that there are millions of people out there who will sign any contract you hand to them, just for an opportunity to win the competition and the coveted deals that come with beating out the other singers.

Using California’s Talent Agency Act to combat unfortunate record deals

This mistreatment, among other things such as not revealing to the singer the name of his own album until it was announced publicly, led Philips to seek a way out of his contract with 19 Entertainment. His path? California’s Talent Agency Act. This piece of legislation requires that an individual or company acquire a license before acting as an artist’s agent. The act is meant to keep unscrupulous figures out of talent agencies and protect artists. Though controversial, the TAA has been around for sometime and has been used by numerous artists to get out of management contracts they found to be unseemly.

Basically, the TAA does not allow anyone without an agent’s license to procure performance engagements. This includes management companies. Many times in the past, and most recently in Philips’ case, musicians have taken advantage of the TAA to find a way out of oppressive or manipulative management contracts. Just because a firm or individual manages a performer, does not mean that the person or organization is licensed to act as the musician’s agent. Often, management will procure shows for their clients anyway though, and when a contract goes sour, those old performances can be an entertainer’s golden ticket out.

In January, Philips filed a petition with the California Labor Commissioner, claiming that details regarding his career have been held back from him and that he has been manipulated into performing at gigs that serve him no purpose, in order to advance the interests of 19 Entertainment.

The contract that Philips signed prior to winning Idol is extremely beneficial to the company. When Philips receives endorsements, for example, 19 receives 40 percent of the cut as part of his deal with the firm.

His petition noted a few of the indignities that Philips has had to deal with since hitting it big on American Idol. For example, in 2013 he was forced to perform a live show, without compensation, benefiting Jet Blue – a supporter of Idol’s 2013 American Idol Live Appearance Tour that Philips had no part in. Additionally, when he performed at a corporate event for an insurance company, 19 Entertainment claimed that the performance was subject to a Merchandise Agreement with the company with terms that come with a 40 percent commission for the company. Philips claimed commission instead should have been at the 20 percent rate included in the Management Agreement.

Not the first time an artist has used the TAA to escape a contract

In 1996, Dave Park, the former manager of the Deftones, sued the band after alleging the group did not pay him the commissions he earned and thus violated his then-existing agreement with the band, according to Forbes. In response, the group filed a complaint with the California Labor Commissioner, claiming that Park had violated the TAA. The commissioner eventually found that Park had procured performance engagements for the band on 84 separate occasions without a license – a breach of the TAA. All three of Park’s contracts with the Deftones were voided. The court also eventually sided with the band, and Park was left with no commissions, nor any valid management agreements with the group.

In California, the TAA has been utilized numerous times by artists to get out of contracts. If an artist is in a management deal that is manipulative or oppressive, as Philips states his with 19 Entertainment is, then the act can seem like a godsend. A management company cannot procure performance engagements for an artist without a license under the TAA, so when 19 Entertainment or David Park or any other manager secures performances for their clients, they are doing so illegally.

This presents a problem for 19 Entertainment, whose unique structure means that it both manages and books events for its clients. If Philips were to come out of the case victorious, it will have huge ramifications for previous and future Idol competitors, as well as other televised talent competitions.

Managers’ groups’ challenge against the TAA lives on

The TAA hasn’t been without its opponents, though – namely management companies and groups – who claim the act is unfair, according to Variety. The National Conference of Personal Managers challenged the act several years ago, and a federal appellate court just provided the organization’s efforts with a bit of a boost. Though the NCOPM’s challenge had been dismissed, the 9th Circuit Court of Appeals on Thursday, March 19, vacated the lower court’s ruling.

The managers claim that the TAA’s ban on unlicensed managers “procuring” employment for clients is “unconstitutionally vague.” U.S. District Court Judge Dean Pregerson, the judge who had dismissed the managers’ case in 2013, noted at the time that a clear definition for “procure” under the terms of the TAA already exists. However, the appellate court explained that while Pregerson had made a decision on the merits of the case, he had not followed through on the procedural aspect.

The case will return back to district court, where the future of the controversial TAA will once again be hashed out.