Case Study

Case Study 001 – Intimate Music versus Atlantic Records Inc

Case presented by: Errol Michael Henry

The Deal

In 1997 I was running my independent record label (Intimate Music) from my studio in Northwest London. I had a couple of artists signed to major labels, releases coming out on the label, plus new artists in development. I received a call from Paul Samuels (UK A&R Representative for Atlantic Records) requesting a meeting with me. He came over to studio the following week and told me that he worked for Craig Kallman who ran the entire A&R division for Atlantic Records from their Head Office in New York. Paul wanted to hear the new music I was working on to see if anything I had might be of interest to Craig. I had been working on a gospel album with a recently formed all-girl group and when the song I had written for them came on, Paul declared: “That’s a smash hit!” He asked for a copy to send to Craig – a request I refused, as I was not interested at that point in handing over my music to people I didn’t know nor had any working relationship with.

The following week Paul called me again to tell me that Craig was in the UK and was keen to hear the song. I went to the Atlantic Records office in Kensington and met with Craig. He heard the song and immediately agreed with Paul’s view that it was a ‘hit’ and urged me not play it to anyone else. He told me that he wanted not only to sign the group, but to create a joint venture between my company and Atlantic Records. Having grown up listening to the likes of Chic, Roberta Flack, Otis Redding and Aretha Franklin, it’s not difficult to understand why I was really happy at the prospect of such an alliance. Once the framework of the deal was agreed, it was clear that I could not deliver the work required and continue to manage the other projects I was involved with, so based on the assurances I had received from Craig (especially in regards to future projects) I withdrew from the other arrangements that had previously provided much of my income.

Craig recommended that I use Fred Davis, a well-known music industry lawyer who was also based in New York, as he had plenty of experience doing deals with Atlantic and would help to smooth the path to completion. The deal involved 3 parties (True Solace, Intimate Music and Atlantic Records) and required the creation of complex legal documents, which took a considerable amount of time to resolve. After months of wrangling, we were ready to sign. I noted that some of the promises Craig had made to me in person hadn’t made it into the final draft of the agreement, but during another meeting in London he told me not to worry and that such was his influence within Atlantic Records, his word carried even more weight than anything that could be written down on paper – guarantees that later proved to be utterly worthless.

The Shakedown

Once the deal was signed in February 1998, I devoted every waking hour to writing and producing the music required to complete the album. I often worked 7 days a week and refused all offers from other companies to take on projects for them because I was totally committed to making my arrangement with Atlantic work and didn’t want anything else to get in the way. I travelled to New York in the autumn of 1998 to complete the mixing process and then to Los Angeles to oversee the mastering. By January 1999, the creative process was complete and it was time to set-up the marketing and release schedule. To this end, I was invited to meet Val Azzoli (President of Atlantic Records), Armhet Ertegun (founder of Atlantic Records) and various other Heads of Departments. Armhet Ertegun told me that the record I had delivered was one of the finest recordings he’d ever heard and was proud to have it on the label, which was an endorsement that seemed to vindicate all of the hard work and effort it had taken to get the album finished.

Craig Kallman has cultivated an image as ‘the musician’s friend’ but my experiences with him tell an entirely different story. Having already approved the record for commercial release, agreed the final artwork and set a release date, he made a move that left me utterly stunned. He called me and told me that he wanted me to change the lyrics to ‘Thank You’, which was the song that had been chosen as the lead single to promote the album. What made this request so perplexing is that on a visit to London, I had played the song to Craig at my studio and he has declared it to be potentially one of the biggest records in the history of the label. He went on to say that he’d personally compel the people charged with radio promotions to ensure that the song was given ‘priority status’ which I was obviously pleased to hear.

So why was Craig now asking me to do what he knew I could never agree to? ‘Thank You’ was written for the sole purpose of expressing my gratitude and an open expression of my faith, so to ask me remove such references was as disturbing as it was calculated. During the call Craig told me in no uncertain terms that if I didn’t do as he asked, he would set in motion a series of events that would damage me in ways that I could not begin to imagine. At the time I simply could not understand why this was happening. I later learned that there were all sorts of inter-departmental politics in play – corporate back stabbing that had nothing whatsoever to do with me.

I came to realise that Craig Kallman’s insistence that I remove the most important lyrics, from what everyone concerned agreed was the most influential and commercially viable song, was a power play and had I agreed, it would have led to my decent into an on going series of compromises. I have been around this business long enough to know that once you start down that road, there’s always ‘one more thing’ that people demand of you that leads to ‘yet another thing’ and before you know it – you’ve sold your soul for a price. This idea was proven beyond doubt during that fateful call. Craig named several household names that had achieved fame and fortune by ‘selling out’ and simply could not understand why I would not follow suit. When gentle persuasion failed to have the desired effect, direct threats soon followed but my answer remained the same: “No.”

The Penalty

Timing is everything in life and Craig knew that I had invested all of my time, all of my creative energy, all of my money and the future of my company in this record. He had timed his play to coincide with the point of the process when he perhaps believed that I would compromise because I had too much to lose and would simply fall into line – as so many before me had willingly done. Kallman warned me that all of the good will that had been built around the project within Atlantic Records would be cancelled out at his command and in this regard he was true to his word. My commitment to the True Solace project had led to my company being entirely dependent on the revenue coming from my Atlantic deal, plus the associated deal with Warner Chappell Music Publishing (another company within the Warner Music Group who also own Atlantic Records). Mr Kallman’s message was very clear indeed: “Do what I say or face the consequences.”

The album came out in August 1999 with little fuss or fanfare. The promised withdrawal of marketing and promotional support meant that the record stood no chance of success and soon disappeared without a trace. I was devastated, angry and distraught that supposedly professional people could behave in such a callous way, but this is typical behaviour within the music business and represents a cruel attitude to artistic people that I am determined to expose. Atlantic Records wrote off the money they had spent on the project up to that point but the fiscal losses were not an issue for them. They cared nothing for the deep hurt their actions would inflict on me and the other creative contributors to the project. I had given up all of my other income sources and the members of the group had all given up their jobs in order to complete the album – all for nothing. More than 2 years of work, hundreds of hours of writing, recording, editing and mixing were to be thrown away and forgotten.

I called Craig Kallman at his home to express my surprise and displeasure at what had transpired and he said: “I am in a battle with Ron Shapiro to become President of the label and I’ll do whatever I need to do in order to make that happen. I saw an opportunity to get out of the deal so I took it.” I also asked him about the personal assurances he had given me and about the promises of future projects – he hasn’t answered me to this day. I was simply collateral damage in a high stakes game being played by a man who demonstrated to me beyond doubt that he cannot be trusted.

The Breach

It was the stated intention of Atlantic Records to simply walk away from their commitments and leave me fiscally destitute and with my music eternally locked up in their vaults. I called Fred Davis (the attorney who had originally negotiated the deal) who promptly advised me that he could not comment nor act on the matter because he was also Craig Kallman’s personal lawyer and was legally ‘conflicted’. It transpires that he’d been Craig’s lawyer throughout the period he acted for me yet had no problem relieving me of thousands of dollars in legal fees! In that moment I better understood why Fred and his associates had advised me against inserting key clauses that I felt were necessary to protect my interests.

There had been specific stipulations inserted into the agreement at my behest – clear legal requirements that Atlantic Records failed to comply with. The contract had provisions to rectify any ‘breaches’ within a predetermined period of time. Atlantic Records had not ‘healed’ the relevant breaches within the time allocated, so I pointed these breaches out to Craig who told me that although he was well aware of them, they were no longer his concern and that the matter was now in the hands of others.

I received a call from Atlantic’s legal department informing that they had no plans to make restitution or settle with me in any way. They advised me that if I had the means, money or time, I could take them to court and would definitely win – as there were clear breaches of the agreement that could not be repaired. What came next was quite chilling. During this period of time, Time Warner (then the parent of Warner Music) was in the middle of a multi-billion dollar merger with AOL. I was told that a fund has been set-aside to fight all of the legal cases arising from recording agreements (including mine) that had been summarily terminated outside of proper protocol. I was warned that most of the most reputable legal firms with the expertise and skill to fight my case had been put on retainer by Atlantic Records, which meant that they could not be hired to represent victims of contractual breaches.

The Legal Shenanigans

I didn’t believe that any company could be quite so brazen so I asked my lawyers here in the UK to recommend 3 legal firms based in New York who were suitably qualified to fight cases at this level. I called all three companies and on each occasion, the lawyer on the other end of the line, asked for details of the case before declaring themselves ‘conflicted’ because they had already been retained by Atlantic Records. Another firm I spoke to originally agreed to take my case only to call back the next day to tell me they too had been retained by Atlantic Records, but had no idea why! I clearly had a simple choice to make: fight or walk away empty-handed.

Silda Palerm (a litigator working for Atlantic’s legal department) had told me quite openly of Atlantic’s intention to ‘starve me out.’ They knew that I had overheads to meet and with the immediate loss of funding, I would simply collapse into financial ruin. I knew that I could not afford to sue Atlantic in a New York court. I also knew that I simply couldn’t just let them walk away scot free – having treated me worse than a rabid dog. My own lawyers here in the UK advised me that there was no chance of winning a legal battle with Atlantic due to the logistics and costs involved – so I sacked those lawyers immediately. I started selling personal assets including rare musical instruments so that I could provide food for my family and to keep my phone lines working – such was the extent of the damage that Atlantic Records were inflicting on my life.

Things dragged on for what seemed like an eternity because Atlantic Records proved quite expert at stalling, avoiding phone calls and generally evading me wherever possible. I realised that I needed to take more drastic action. My recording studio was my most prized possession and also my most valuable asset. I knew that selling it would enable me to raise sufficient funds to fight on a little longer, but would also result in me losing the very means by which I made my living. With a heavy heart, I set about selling off all of my equipment (taking huge losses along the way) until nothing was left. The mental picture of the (now) empty room where my purpose designed facility used to be will stay with me until my dying day. I had built that place from being a rundown dilapidated ruin into a state-of the-art studio and now I had torn it all apart – just to get Atlantic Records to do the right thing.

The back and forth between me and Atlantic’s legal department went on for months before I decided to write to Val Azolli and let him know that since the forthcoming merger stood to earn all of the senior executives at Atlantic millions of dollars in share options, I would do everything in my power to alert the media and all other authorities to what was going on with me. 48 hours later, I received another call from Atlantic’s legal department who were ready to reach some kind of settlement. My music was what I had before Atlantic Records ever came into my life so getting it back was pivotal to me. I was told in no uncertain terms that such an outcome was simply impossible as Atlantic had never in its history returned copyrights and doing so would set a dangerous precedent. I didn’t care – I wanted my music back and would not countenance any deal that did not result in its return.

After yet more arguments, offers and counter-offers, Atlantic finally relented and agreed to return my recordings to me which meant that I got a lot less cash up front, but the matter would be put to bed. A fully executed agreement arrived nearly six months after the contract had originally been terminated and I was ready to move on with my life, but the settlement was conditional on me signing a ‘non disclosure agreement’ (NDA). The document required me not suggest that there had been any breaches at all. In effect, the settlement required me to pretend that everything I had been through did not happen.

In all honesty by that point, my health was suffering and months of dealing with extreme levels of stress and coping with severe fiscal hardship had taken its toll. I was concerned for the well being of my family and honestly had no idea how I would provide for them, so I signed the NDA.

The Aftermath

I had done everything that was required of me under the terms of my agreement with Atlantic Records – and much more. I worked tirelessly, travelled back and forth across the ocean to make sure that I had done everything possible to ensure the success of the music I had invested so heavily in. The general public (understandably) have no idea of just how much is required from creative people in order to get their music made, marketed and sold. Countless meetings with music executives, dealing with ‘money men’ in the boardroom, radio promoters, press officers, lawyers and various other related personnel – and that’s before a single note is written or recorded. Dealing with all of that stress was difficult enough, but realising that is was all for nothing due to broken promises, is something that I am still recovering from.

Would I ever commit so much emotionally, creatively, or fiscally to anyone else ever again? – Absolutely not. I can’t get back the effort I expended, the years I wasted, or the money I lost. I am still coming to terms with the sheer scale of the disappointment, pain and circumstantial losses I endured as a result of the way that Atlantic Records behaved towards me. It is very difficult to properly articulate to anyone else just how low I got during that period. I was totally isolated. There was no available work, no money and no means to record new material – since the tools of my trade had all been sold off on the cheap.

In one calendar year I lost all of my most valued possessions, including my unique Gibson Les Paul guitar, my vintage keyboards, plus custom made, irreplaceable sound equipment. I lost my recording studio, my office facility and was forced to sell off my cars at knocked down prices. My sense of well being plummeted and feelings of despair totally enveloped me. It took me many years even to accept that I was a victim of wrongdoing and being forced to remain silent by virtue of an NDA that I now consider legally and morally redundant – just made the whole experience even worse. I have come to realise that I must lead by example. My NDA must serve a higher purpose and breaking it is absolutely necessary if other creative people who have suffered similar fates to mine, are to gain the confidence to speak up. It is imperative that they feel able to tell their stories and to share their experiences without fear of reprisals from those who seek to confine them within intimidating walls of silence.

Prior to my horrific encounter with Atlantic Records, I was a prolific songwriter and producer. In the years that passed since they devastated my business I could not even listen to music, let alone make it. I couldn’t write anything, I didn’t want to play any musical instruments, or to produce music at all. The very thing I had once loved, now haunted me like a ghost. It’s difficult to make sincere music if you don’t love it and it’s hard to love it when untrustworthy people ‘infect’ the creative process with their devious endeavours. It has taken many years for my scars to heal and now emboldened with the knowledge that they’ve done their worst, but they didn’t finish me – I have resolved expose their evil ways for all the world to see. Companies like Atlantic Records love to do their dirty dealings in secret while selling an entirely different ‘face’ to the wider world. I’ve seen what goes on behind the scenes and I can say with experiential insight: “don’t believe the hype.”

I believe that everything happens for a reason and I know now (what many others have yet to discover) that dealing with companies like Atlantic Records is like dicing with death. They don’t necessarily kill you in actuality, but they do ‘murder’ your creative endeavour – which is in some ways far worse. I have had a lot of time to consider the events that unfolded and plenty of time to draw conclusions. I am finally ready to admit that I was severely wounded by wicked people who sought to do me harm. I was promised retribution if I did not surrender my beliefs and the aftermath was every bit as destructive as Kallman had assured me it would be. He is still propagating his ‘friend of the artist’ spiel to anyone who will listen, but I know who he really is, I know who he really works for and I know from personal experience what he really does to people given half-a-chance.

I have no intention of slandering anyone nor does Music Justice seek to assert false allegations against anyone. My purpose in speaking out at this time is simply to warn others about what goes on in this business beyond the glamorous ‘sheen’ that is proven so seductive to so many people. It is my duty to warn people about the reality of dealing with an industry that regards human beings as ‘tradable assets’ and contracts as worthless pieces of paper – when it suits their own corporate interests. I cannot realistically expect others to open their hearts and share experiences that might still have a great deal of pain attached, unless I first acknowledge what I went through and explain how awful the whole experience made me feel.

I wish I could tell you that individuals like Craig Kallman are one-offs – alas, I have seen the likes of him many times before and quite a few times since. The music industry willingly makes room for liars, thieves, manipulators and people of dubious moral character. It promotes them, rewards them, ennobles them and protects them from the consequences of their misdeeds. It is highly probable that both Craig and Atlantic Records thought they’d seen the last of me once the settlement agreement (and the silence enshrined within it) had been signed – they are about to discover that they were as wrong about me as I was about them. I have recently published another case related to Atlantic Records/Warner Music because despite the hell they originally put me through – they came back for a second helping a few years later. Read it here.

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