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For     years, 28 year old Lou Sohn has been trying to make it as a musician.         He has played bars from Maine to California.     He has had some songs he     wrote and recorded played on college radio.     He was a first round     contestant on American Idol, but was cut before making it to Hollywood.         He is getting ready to give up the business when a friend arranges an     audition for Lou with Ashley Alan Dicker, of ADD Records, a twenty year     old record label that has had a few hits, but never broken into the big     time.
Lou’s     audition seems to go well.     Ashley called Lou up a week later and gave     him the good news.     “Lou, baby,†Ashley said, “I think you’ve got “IT†    ADD is going to make you a big star.     Who are your manager and lawyer.
Lou     tells Ashley he has never had a manager or lawyer before.     “That’s a     good thing,†says Ashley, “they just waste time and money.     Trust me     baby, I will be the one looking out for you.â€Â
Lou     can’t believe his good fortune.     Ashley hands him a 15 page contract     and says, “Just sign it baby.     It is a standard contract.     We advance     the money for the recordings, we distribute, you get the first $5,000     gross income and then we split everything down the middle .†    Ashley     hands Lou a shiny gold pen.     Lou hesitates.     “What’s the matter baby?†    Ashley asks.     “Well, honestly, I am broke,†says Lou, “Is it possible to     get any money up front?’
Ashley     pulls out his checkbook.     “I like you baby, we are going to do great     things.     Sign right now and I will give you a $500 advance.†    That was     all Lou needed to hear.     He didn’t even read the contract, he just     signed it on the spot.
Lou     recorded his first CD for ADD, “Out of My Cave.†    It got some     alternative rock air play, but never caught on with Itunes.         After six     months, total sales were only $8,500.     Lou wasn’t thrilled, but still,     he could use the money.     He wrote to ADD and asked for his $5,000 in     first royalties plus 50% of the remaining $3,500 for a total of $6,750.         ADD’s accounting department responded by sending him a bill:
INVOICE
Recording costs
Studio time $         3,700
Engineers                                                 $         2,700
Producer advance $         5,000
Total Recording costs                                                 $ 11,400
Promotion costs                                                                                             $ 3,700
Total Costs                                                                                                                     $15,100
Less credit for sales $     6,750
TOTAL BALANCE DUE $     8,350
The     hottest movie this summer is the block buster super hero film “The     White Knight Ascends.†    Lou goes to see it and is shocked to find that     “Out of My Cave†is played several times in the movie.     It appears ADD     licensed Lou’s song to the film for $100,000.     When Lou calls ADD to ask     about it, he is told that all the licensing money belongs to ADD.
Lou     comes to you asking for help. He brings his contract with him.     By now     he has tried to read it, but cannot make heads or tails of it.     In     looking it over, you see that some of the relevant provisions are as     follows:
    “17 C – Sohn agrees to pay, or to reimburse ADD, for all recording     costs including, without limitation, all costs related to the use of the     studio, hiring of engineers and producers, and all promotion costs.”
“41     F – Sohn grants ADD all rights to the songs written by artist and the     Master recordings of such songs as are included on any recordings     produced pursuant to this agreement. Without limitation, this shall     include the right to license such masters and underlying songs for use     in motion pictures.     And Sohn hereby waives any claim to the income from     such licenseâ€Â
What can Lou do (with your help, of course)?     Analyze the strengths and weaknesses of his case.
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