What Megan Thee Stallion’s Lawsuit Won’t Solve

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Dan Runcie

Megan Thee Stallion (via Shutterstock)

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Both Megan Thee Stallion and her record label would have benefited from increased transparency that the industry needs.

Megan Thee Stallion won an age-old battle that’s plagued musicians for decades. Last Friday, a judge granted the Houston rapper permission to drop new music despite her ongoing lawsuit with her record label, 1501 Certified Entertainment. She had her day in court, rallied public support, did her promo run, dropped her latest mixtape Suga, and still had time to stop by ESPN’s First Take and defend her friend James Harden. What a week.

But her case is far from over. She’s suing 1501 for $1 million in damages. The Houston-based label is owned by former MLB player Carl Crawford. The 38-year-old contracted his business operations to T. Farris, the A&R from Swishahouse, who apparently had his own agenda for Hot Girl Meg’s career.

This situation follows a textbook process: Artist signs early contract. Artist gets hot and wants a new (or revised) deal. Artist and label start to dispute. Artist vents to fans. Legal action is taken to resolve. Rinse and repeat. This is often seen as a rite of passage, which is part of a bigger problem.

There’s blame on all sides, but the infrastructure needs to be fixed. Otherwise, this problem will continue.

Blame on both sides

“1501 don’t want me to put out no music. All I did was ask to renegotiate my contract, then it became a whole big thing. When I signed, I didn’t really know what was in my contract. I was young. I think I was like 20, and I ain’t know everything that was in my contract. So when I got with Roc Nation. I got management, real management. I got real lawyers. They was like, ‘Do you know that this is in your contract?’ And I was like, ‘Oh, damn, that’s crazy — no, I didn’t know.’”

Meg’s referring to the 360 deal she signed with 1501 in February 2018. She got a $10,000 signing bonus, 40% royalty split, 50% of her publishing, and 70% of her live performance money over $1,000, feature payments, endorsements, sponsorship, merchandise, and other ancillary revenue. The label gets the rest and part of her masters.

Record labels have always, and will always, be heavy underdogs in the court of public opinion. If a 360 deal is involved, all bets are off. 360s were designed to mitigate the decline in album sales, but labels gained control over parts of the business they had little involvement in. These deals are compared to modern-day sharecropping. It’s clickbait for the outrage culture that dominates social media.

But let’s backtrack to February 2018 when this deal was signed. What were the hypothetical Vegas odds that “hot girl summer” would takeover 2019? 10 to 1? 30 to 1?? Even if the 360 deal is out the picture, 1501 deserves compensation for the risk taken on.

Here’s Crawford in an interview with Billboard:

Where was Roc Nation at when we was grinding and riding around on them backstreets? Roc Nation was nowhere to be found.

Soon as we spent our money, blow it up, now all of a sudden, these strangers and people you just met — they introduce you to Beyoncé and now we the devil?

Carl said you wasn’t with me shootin in the gym, and he’s not wrong. Still, both he and Meg bear some responsibility. Here’s more from Crawford:

She got the dude [T. Farris] right up under her. He’s the snake. He did the contract. They had the lawyers. How didn’t you read your contract? She signed two contracts. You signed one with me and 300 [Entertainment]. You mean to tell me, you, your mama and your lawyer didn’t read over that stuff every time?

Remember, 1501 is still Crawford’s company! He may have contracted someone he no longer trusts, but he is still CEO. He’s humble and honest about his learning curve (as is Meg), so it shouldn’t be a surprise if there are certain aspects of the contract worth revisiting. In an interview with Genius, entertainment lawyer Tiffany Ballard said that 1501’s 30% ancillary revenue share is higher than the standard 10-20% in similar deals. The communication breakdown between Meg and Carl makes this difficult to sort through. It’s human nature for 1501 to stand ground if Roc Nation tries to strong-arm the smaller label, but the merits behind the revisitation are still valid.

This is where the situation feels like countless others: Taylor Swift and Scooter Braun. Juicy J and Columbia. Kanye West and Def Jam. The specifics differ, but the underlying problem is similar.

Who has the power?

If 300 Entertainment and Roc Nation are the mid-stage investors in Meg’s career, then 1501 is the seed round. Crawford got in at a “lower valuation” and will reap the rewards when she goes “public” with her debut albums.

But the comparisons between venture capital and record labels stop there. Signing to a label is much more like an M&A deal. It’s an agreement to split proceeds moving forward. Each contract signed leaves less room for additional parties. The tech funding model is more comparable to the itemized releases with companies like EMPIRE or distribution deals with services like Stem or UnitedMasters.

Moreover, the court of public opinion in tech is flipped. There’s less sympathy for venture-backed founders, especially in the wake of Uber, WeWork, and Facebook’s scandals. Can you imagine a unicorn founder going on IG Live to blast his investors for unfair treatment? The response would be wild. That same celebrity-fan dynamic doesn’t exist. If anything, the investors and board members are the most-respected celebrities in the mix.

More transparency. Shorter contracts

Labels and production companies deserve terms that are commensurate with the risk taken on with new artists, but the outcomes are all over the place. “Get an attorney,” is wise advice, but lawyers should offer guidance and counsel, not fill the entire knowledge gap.

If similar deals were more public, it would help future Carl Crawfords and Megan Thee Stallions have a baseline understanding of what’s fair to aide their meetings with lawyers and other experts. In a recent episode of the Trapital Podcast, entertainment lawyer Karl Fowlkes said that he hopes there are less music lawyers in the future. It’s in hope that these types of situations can be addressed with more information.

Remember the infamous Google company spreadsheet with over 12,000 self-reported salaries? Artists can do the same with past and present deals. It would make waves, but anger even more people than that Google Sheet did.

The industry is hell-bent on the perceived power in its limited transparency. Jay Z’s attorneys once said that his Live Nation deal terms are as secretive as the Coca-Cola formula. First of all, what a ridiculous statement. Second of all, those terms were publicized and guess what? Jay never lost his competitive advantage. Cardi B team quickly deleted last year’s post about her festival guarantees, probably because her team wasn’t happy about it. But contrary to the age-old belief, transparency doesn’t hurt Jay or Cardi. Their leverage isn’t lost, especially at their level. Shared knowledge reduces friction and improves the result for the rest of the industry.

The other challenge is contract length. Meg is on a five-album deal with 1501, but she has yet to drop a 45-minute project that would qualify as an album, per the contract. Drake has technically only dropped five albums. Nicki Minaj has four. Kendrick Lamar has four. They’ve all outlasted most of their peers. Will the Hotties still wanna drive the boat with Meg by the time that fifth album drops in 2028? Or will they all be washed and staying at home by then?

Shorter contracts saved the NBA from the seven- and eight-year deals that stifled franchises with aging, expensive superstars. It hurt the on-court product. Today’s two- and three-year deals with player options are healthier for the league. It has fueled the player empowerment era that drives some fans crazy with the number of team changes. But the “I used to walk 5 miles to school” crowd should still agree that the pros outweigh the cons.

If artist deals were shorter and more transparent, renegotiations would happen naturally. The more-perfect the market, the less likely these issues are. Disputes will still happen, but less of them will stem from this underlying problem.

Meg may win this lawsuit and improve her personal situation, but the real problem still needs to be fixed. We are in an era where individuals have more power than ever, but the knowledge gap restricts that power. It would help record labels too. Upstarts like 1501 and majors like Columbia Records have all faced these issues. The less of them, the better.

Labels aren’t the enemy. Neither are artists who “need to read contracts,” despite what the Twitter lawyers say. There’s a better way. Let’s hope the industry gets there before hot girl summer is over.

Dan Runcie

Dan Runcie

Founder of Trapital

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