This article appeared in Entertainment Law & Finance, your monthly source for real-world news and strategy from major players in entertainment, contract and intellectual property law — serious analysis of the issues and case law that affect your practice.

Leslie Jose Zigel is Chair of the Entertainment, Media & Technology Group at Greenspoon Marder. Based in the law firm's Miami, FL, office, Zigel focuses on music, film, TV and new technology. His clients include musical artists Pitbull, Carlos Vives, the Wailers and Wisin, as well as entertainment companies Endemol Shine Latino, DJ City, and the iii Points and Dirty Bird music festivals. In this interview with Entertainment Law & Finance Editor-in-Chief Stan Soocher, Zigel offers his thoughts on entertainment industry issues arising out of the COVID-19 pandemic. He can be reached at [email protected].

Q: Live events are a segment of the entertainment industry that the COVID-19 pandemic affected immediately and for the near future. What are some of the key impacts you see in this?

Zigel: Touring is the lifeblood of many artists. The impact of the COVID-19 pandemic is wide sweeping on the live performance industry as a whole. Think about big tours where you have 100-200 or more crewmembers, ten tractor-trailers carrying sound, lighting and special effects equipment, tour buses and drivers, and the myriad vendors that provide equipment and services for tours. In the venues, there are the ticket-takers, ushers, box office personnel, cleaning personnel, etc. All of these people who often times are independent contractors surviving tour to tour are now unemployed with no idea of when they'll be able to get back to work. Also, the promoters businesses are all about concerts happening; they now have all the sunk costs from advertising, overhead and many employees with no work to be done.

There are reverberations as well into the artist touring ecosystem. It's a bad year for artist managers and talent agencies because they commission from artist live income. And for those attorneys who are compensated based on a percentage from artist touring activities; these revenue streams are non-existent for a good part of the year.

From a legal standpoint, there are many issues to the extent that contracts have language about non-refundable deposits. For example, say a promoter agrees to pay an artist a 50% non-refundable fee to play a show. Is "non-refundable" trumped by a force majeure clause that provides for the suspension or termination of a contract in the event of uncontrollable events such as a pandemic? Promoters and artists are looking at their force majeure clauses in their performance agreements as well as their tour cancellation insurance policy provisions. On the artist's side, management is asking questions about whether the force majeure clauses allows them to keep the performance deposit payment? What happens if the concert is postponed, then rescheduled or cancelled at a later date? Concert promoters similarly ask, "Can we get back our deposits and have the right to reschedule the dates." For promoters of music festivals, some that take place only once a year, who have put out promotion funds for marketing and advertising, they may never be able to recoup that money. In addition, most tour cancellation insurance policies do not pay in the case of government-ordered shutdowns.

Generally, my sense and what I've seen on behalf of my clients is that everyone is having conversations and playing well in the sandbox as to the rescheduling of events as that is the preferred route; especially with the courts being closed for business.

Q: What happens with revenues from sales of artist merchandise on a concert promoter's website prior to a concert? A promoter may argue that because it spent money marketing and promoting the event, it is entitled to keep its revenue percentage of merchandise sales.

Zigel: If merchandise is sold through a promoter's or merchandise company's website in advance of an artist's show and shipped to consumers, the terms of the merchandise agreement apply and monies are remitted accordingly.

Q: When a promoter seeks to reschedule a government-mandated, COVID-19-impacted event cancellation, how might the permit process work where the government body already issued permits for the event that was canceled?

Zigel: If a government permit was issued but the event is canceled, a promoter would have to get the permit re-issued. Governments in most jurisdictions can do what they want to a certain extent. For example, if an event in April needs to be rescheduled for November, the promoter would have to speak to the government body that issued the permit for approval for the new November date.

Q: A lot of musicians are posting online videos of themselves performing. How could a record label agreement with an artist affect such online performances.

Zigel: If a performance is streamed live online, I do not see an issue; the artist could do it as long as he or she does not convert that performance into a recording that is commercially exploited. YouTube postings should be covered by YouTube's license agreements with the labels.

Q: What COVID-19 impacts do you see on TV and film-type productions?

Zigel: I have clients slated to film commercials that have been postponed due to the pandemic. If there are delays in filming, are parties to the production contracts required to extend the contracts to get benefit of bargain? Part of this goes back to force majeure provisions. Some provide for the extension of the contract term in case of a force majeure event but may also say that after a certain number of days, one party or another may be able to cancel. Sometimes, these rights are mutual.

Another issue is whether the parties have to return funds they've been paid; e.g., the equipment rental companies, production vendors, etc. Most production vendor invoices have provisions in small print on the back. Read those terms carefully to see what your rights and remedies are.