How the Music & Entertainment Industry Has Been Affected by Covid-19

entertainment industryCOVID-19 has certainly upended the economy, especially professions that cannot transition to remote work. While some professionals have been able to tackle their work from home, or change the way they work outside the home—for instance, through social distancing—professions associated with audiences and live fans have certainly been thrown for a loop…and that includes the music and entertainment industry.


Tours have been cancelled. Concert venues have closed their doors until further notice. And these sudden changes have trickled down into other areas as well, such as recording labels, talent and booking agencies, and other ancillary businesses that service entertainment professionals—everything from transportation companies to caterers to apparel makers.


But at the core of the entertainment industry is the artist. And any Miami entertainment lawyer will tell you that at the core of the relationship between the artist and his manager and/or recording label is their contract. In normal circumstances, the contract will spell out expectations from both parties in terms of pay, performance, and how to handle disputes should they arise—for example, through arbitration or trial.


But COVID-19 has made it nearly impossible to fulfill contractual obligations because of changes that were unforeseen at the time the contract was set up. To make matters worse, it’s unclear how long the effects of the pandemic will last. Life begins to resume as it had been pre-pandemic in many locales…only to revert back to a quarantine or some gradient thereof after a resurgence in cases. The ripple effect of this prolonged shutdown will affect various levels of the music and entertainment industry food chain, including end consumers.


With concerts cancelled, the music and entertainment industry will need to be creative about monetizing their product. Prior to COVID-19, around 50% of the revenue in music and entertainment came from live performances, with the remaining half coming from recorded music like streaming services, licenses for use in other media, and even physical sales. In fact, recorded music sales had even returned to some of the revenue thresholds that had been seen prior to the spread of music piracy. But now with the Pandemic, live stream concerting will likely become an increasing trend, while the importance of streaming services—already embedded in our culture—has become even more apparent.


But returning to the contract between the artist and their label, many questions will need to be addressed in the still unfolding situation of COVID-19—many of which are best addressed by a Miami entertainment law attorney. Can the unexpected nature of these circumstances excuse either side from fulfilling the contract? Who will shoulder any costs associated with tours that were already fully booked and underway? Thankfully, if a competent legal counselor among Florida record contract lawyers was involved in setting up your contract, many of these issues will actually be preemptively addressed by the contract itself.


Force Majeure, for instance, is often written into business contracts, and Miami business attorneys would be wise to include it in an entertainer’s contract. This clause will provide a path of action should circumstances outside either party’s control make fulfilling the contract onerous or impossible. Natural disasters, war, and even pandemic diseases like the current COVID-19 crisis can fall into the Force Majeure category. But this clause is not a one-size-fits-all blanket solution for every artist, every label, and every situation in the industry.


There will be a few factors that should be considered by the Miami entertainment business formation lawyer setting up the contract and its Force Majeure clause. Will both parties benefit from the clause, or only one? What will trigger the clause? Events are typically listed explicitly, and pandemic or quarantine will most likely be included in many such clauses moving forward—unless they are already included in some catch-all language such as Acts of God or including but not limited to. Does the triggering event in question need to make continuing the contractual duties impossible, or merely onerous? Is the triggering event one that could have been expected to happen, despite its catastrophic and undesirable nature?


Another contractual option includes leveraging the doctrine of Frustration of Purposes. In this doctrine, unforeseen circumstances have eliminated any possibility of financial return from the fulfillment of contractual duties, even if they can be fulfilled. In some circumstances, the contract can also become voided under general legal doctrines that don’t need to be specifically written into the contract, such as impracticality.


But a Miami business lawyer will tell you that it’s best to make a contract that is specific as possible in its anticipation of situations that make the contract onerous to fulfill for either party. COVID-19 has certainly provided food for thought in the legal profession about what type of language to include, and what events to anticipate.