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The American Idol Contract why being a Finalist Isn’t as Good as it seems

To many fans at home it would seem like being on American Idol is like hitting the lottery. There is fame, money, recording deals, tour dates, and following a dream. That is mostly true except for the part about money. The reality is most American Idol contestants make squat in relation to what the show generates from their talent – or lack thereof in some cases – and that is even true by  industry standards. In fact, an American Idol contract issued through Simon Cowell’s 19 Entertainment is considered one of the worst in the business for performers to be stuck in.  

It seems hard for some people to believe – Carrie Underwood, Clay Aiken – they must be loaded right? They are doing well – but they could be much further ahead if they weren’t restricted by the AI contract they had to take or escape to start their careers. On the other hand, people say how can they complain – they had nothing and now they have everything! Maybe yes, and maybe no. The biggest talents likely would have broken through at some point on their own, the rest may have, but with less certainty – and if they did, their deals would be better.

Some parts of the American Idol 19 Entertainment contract (which will be referred to as the “AI contract”), remain a secret while other portions have been leaked and are easily available for viewing all over the web. What is hard for many people to fathom is that for the best performers that can easily have a  music career after appearing on American Idol it is better to lose. It sounds like a stretch, but that is the truth. Furthermore as we begin looking at the AI contract, you’ll notice that a performer has absolutely no say over what they do, how their image is handled, no recourse if it is damaged, a locked in poor pay scale, and fines so stinging for a number of infractions they may as well duct tape their mouths, live and closets, and only pop out to sing on demand until their contract expires.

Lets start by taking a look at this snippet of the AI contract each person appearing on the show must agree to.

“… I hereby grant to Producer the unconditional right throughout the universe in perpetuity to use, simulate or portray (and to authorize others to do so) or to refrain from using, simulating or portraying, my name, likeness (whether photographic or otherwise), voice, singing voice, personality, personal identification or personal experiences, my life story, biographical data, incidents, situations and events which heretofore occurred or hereafter occur, including without limitation the right to use, or to authorize others to use any of the foregoing in or in connection with the Series …”

Really take a look at all that entails and then keep in mind that is what can best be described as a forever clause. Were it limited to what happened on the show alone there would be little heartburn over this, however this encompasses the right to use everything a person does in their life in whatever way is desired or to sell that right without notification. The sharp people notice the last line which states “in connection with the series.”

So at first glance one might think that just means they can run some old clips or give updates on past Idols on new shows without their permission – which is partially true. The darker side is that the “series” encompasses all things associated to the American Idol name, so in essence if they chose to, they could write, film and distribute a movie called “The American Idol Carrie Underwood Story” for example, make it say anything they want, and there isn’t a thing Underwood could do. It would fall under the umbrella of the Idol series productions.

What might happen if someone let slip who won, or disclosed any details of what happened on the show week to week before it was aired – or even disclosed information about how the show works behind the scenes? The penalties would be so severe, most could never dig out of the hole.

“… I acknowledge that any disclosure of such information will constitute a material breach of this Agreement and will cause Producer and the Network substantial and irreparable Injury and will cause substantial damages in excess of Five Million Dollars ($5,000,000), entitling Producer (and/or the Network, as a third party beneficiary of this provision) to, among other things: (a) injunctive or other equitable relief, without posting any bond, to prevent and/or cure any breach or threatened breach of this paragraph by me; (b) recovery or disgorgement of the monies and other consideration, if
any, I received in connection with such disclosure; (c) forfeiture of any and all cash and prizes that I may have been entitled to for participating in the Series; and (d) recovery of the Producer’s and/or the Network’s damages, including but not limited to, lost profits and other consequential damages, to the extent permitted by law, and attorneys’ fees and court costs incurred to enforce this paragraph.”

Okay – enough with the boring stuff – let’s look at the real meat of the deal that screws people to the wall. Of course that means the money, the obligations, and the oh so hyped but utterly douchey 19 Recordings Ltd. Contract. There is no language harsh enough to describe what is done to contestants – if the people behind this were in another business they’d be in jail. It is no wonder that people have used terms like “pimp” to describe Cowell in regards to the contract his group puts out.

Final 10 contestants must sign and agree to the following terms:

1- An agreement with 19 Recordings Ltd. Or a designated affiliate for EXCLUSIVE services.
2- A similar agreement for the use of the contestants name, likeness biography, etc… with 19 Merchandising Ltd.
3 – An agreement with 19 Management Ltd. for career management
4 – Unless the contestant is the winner, the contract is not guaranteed and may or may not be exercised. If it is exercised it is done so for a lesser term than that of the winning contestant if the 19 Group so chooses. The thing is they almost always take the option on at least the top 5 for reasons which will be seen later.

For the winner, the win is a special kind of hell. Once you win you are contractually bound to do more appearances. Yes there are promotional events, the Idol concert series, and anything else they choose – but the kicker is the mandatory World Idol appearance obligation whether the contestant performs or not. It would be okay, except they only get $1,400 (USD) for the whole thing.

Before you think the contract citations are pulled out of the air, the actual AI Contract found it’s way into the hands of entertainment lawyer Gary Fine. Fine was presented the contract by the mother of someone who was chosen to be a contestant. She was told she had a couple hours to look it over and  the deal was take it or leave it. She was sharp enough to seek legal counsel, and on the advice of counsel opted to leave it.

There is the argument that the exposure is worth the unbalanced contract and that eventually they all do their time and can go on to anything they desire. That is very true, but in the meantime when they are bound to the contract they are working for very little, have no say over their career, and are generally as some have termed it slaves to the machine. Most contestants willing to speak after contractual release stated they didn’t mind the work – they just wanted to be paid fairly.

Consider that the 19 group gets about $1 million per episode from Fox. Add in their cut of the money from the show’s telephone vote in system, corporate sponsor deals, DVD and CD releases, and what is usually around a 30 city tour for each season. That is a lot of money. How much? The phone call cut is unknown but has to be substantial even when dealing in fractions of a cent per call. Over a five year run, the Idol concert tour has raked in $80 million. The merchandising of artists likenesses and media sales are rumored to be just as high if not higher.

With all that cake going around, what do you suppose the performers earn per concert – keeping in mind the average show pulls down in excess of $400,000. Try the princely sum of $5,000. It sounds phenomenal right? Figure 30 shows per year at $5,000 per show and that’s $150,000! That is good money! Not really once you get down to it.

Because each performer is under the AI contract, they give back 50% to the 19 group for management fees, meaning they are now looking at $75,000 – which is still pretty good you say. Again, not really. Travel and a small – very small it is rumored – per diem cover some road expenses, but they still have to pay for hair, makeup,  wardrobe and all those fun little expenses to get on stage which means on average you can shave about another 10% off bringing them down to $67, 500 or the vicinity. But that’s still good right? Take the taxes off the top of that, the inevitable touring expenses that run over cost they have to cover out of pocket, and associated fees charged by the 19 group for various advisory services not covered under the management agreement and they make very little in regards to what they earn. Keep in mind that Simon Cowell makes $45 million annually on his Idol contract and all he does is make an ass out of himself.

 Consider the track record of American idol with former contestants as to how they feel about their treatment and contract. When Kelly Clarkson got out of her 19 deal in 2004, she refused American Idol the right to have contestants sing any of her songs released by her new label. So far only Clarkson and Underwood have achieved huge fame – and they both did that after getting out of their deals. Clay Aiken, Ruben Stoddard, and Fantasia Barrino have done well but don’t touch the same heights as Clarkson and Underwood.

Then there is always the Mario Vazquez reminder of how much the AI contract sucks – he quit! He was a favorite to win in season 4, but as soon as he became a finalist he was off that show like a prom dress on a drunk promiscuous 16 year old girl. He was willing to risk getting nothing rather than win and be tied down to the restrictions of the winners contract. Officially, AI said he left for “personal reasons”,  but the day his contract expired he had a new deal and got on with his career. Clay Aiken later used the same attorney as Vazquez to slip out of his AI contract as well.

It all just goes to show that when it comes to American Idol, winning isn’t everything or even a good thing. The money isn’t quite what people think it is, and the entire system is not set up to launch careers or make dreams come true – it is designed to make money – just not for the people doing the singing.