The quest of California State Sen. Kevin Murray (D.-Los Angeles) to help recording artists collect unpaid royalties took a big step toward becoming reality June 15 in Sacramento. However, some observe

SAN FRANCISCO -- The quest of California State Sen. Kevin Murray (D.-Los Angeles) to help recording artists collect unpaid royalties took a big step toward becoming reality June 15 in Sacramento. However, some observers are lamenting the fact that the bill no longer establishes a fiduciary duty for labels to accurately report and pay royalties.

The bill received unanimous support in the California Assembly Committee on Arts, Entertainment, Sports, Tourism and Internet Media. It now heads to the Assembly floor for a vote on June 21, followed by a concurrence vote in the Senate.

The current bill is a far cry from the version first introduced in February 2003, which sought to establish a fiduciary duty between recording artists and their labels. The legislation -- dubbed the Recording Industry Accounting Practices Act -- recently went through another round of amendments, the fourth such revision in less than two years.

The bill has evolved significantly over time as a result of record labels modifying their royalty accounting practices.

The current version includes the creation of "minimum audit procedures" for all royalty contracts. While the final version establishes a statutory right to audit royalty statements, it contains no penalties for underpayment by labels. The bill also discourages class action suits.

The Recording Artists Coalition (RAC) is disappointed that the bill does not establish a fiduciary duty.

"The bill does not give recording artists substantially more audit rights than they already have in most of their contracts," says RAC counsel Jay Rosenthal. "RAC hopes that the California legislature will strengthen the bill as soon as possible. Once passed as law, there will be very little chance of passing a real fiduciary-duty law in California."

However, Barry Broad, lobbyist for the American Federation of Television and Radio Artists, admits, "We came up with the best bill we could get under the circumstances.

"This was the David vs. Goliath struggle, not a battle of equal parties. You're talking very powerful corporations battling organized labor and recoding artists." Broad adds, "It's easy to say you could hold out for a fiduciary bill, but you may never get anything."

Murray calls the acknowledgement of a statutory right to audit a significant step forward. He is particularly positive about the bill's assertion of the right to conduct "simultaneous" audits -- i.e., audits of labels on behalf of multiple artists.

"A fiduciary right is a great thing, but what we got instead are some concrete things to move artist interests forward and allow them to audit and verify their income," Murray says.

Mitch Bainwol, chairman/CEO of the RIAA, cites the marketplace as the preferred forum for improving the clarity and transparency of the royalty reporting process.

"Now we need to band together to give (the music industry) a fighting chance at a decent future," Bainwol says.

Sources with Murray's office say the bill could be signed by Gov. Arnold Schwarzenegger in August. If passed, the bill would go into effect in January 2005.

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