California Plans Probe Of Labels' Accounting
The California Senate's Judiciary Committee and the Select Committee on the Entertainment Industry have tentatively set a July 23 date for a joint hearing looking into the record industry's accountingThe California Senate's Judiciary Committee and the Select Committee on the Entertainment Industry have tentatively set a July 23 date for a joint hearing looking into the record industry's accounting practices. The latter committee is chaired by Sen. Kevin Murray (D-L.A.), who has spearheaded the move to repeal a sub-section of the California Labor Code exempting recording artists from the seven-year limit on personal-services contracts.
Murray tells Billboard Bulletin that if the hearing reveals a pattern of withholding royalties on the part of the labels, legislation could be introduced mandating payment of the equivalent of punitive damages in a lawsuit.
Countless artists have sued their labels claiming faulty accounting practices, including Dixie Chicks, Meat Loaf, Luther Vandross, the Beach Boys, and Barry White. Meat Loaf alleged that Sony failed to pay him $20 million in royalties, and Dixie Chicks claimed $4 million was due to them. All of the cases were settled out of court.
Murray pointed to the fine print in record contacts as a key problem. "The most insidious part of any recording contract is the provision that states that even if the record company is found to have committed fraud in the reporting of royalties, the most that they will have to pay the artist is what they are rightfully owed," he said. "There is absolutely no disincentive for the record company to outright steal."
In order to discourage the record labels from such practices, one lawmaker said, perhaps record companies that repeatedly underpay artists should be penalized. "I encourage the Senate to really get into detail on this because there are so many underhanded methods being used to cheat the artists out of what they are entitled to," top music attorney Don Engel said. "Somebody has to remedy the problem."
In a sharply worded statement, Recording Industry Association of America chairman/CEO Hilary Rosen called the news "a disappointment and a surprise."