The crusade by California State Sen. Kevin Murray to help recording artists collect unpaid royalties is approaching the finish line. His legislation, dubbed the Recording Industry Accounting Practice
SACRAMENTO -- The crusade by California State Sen. Kevin Murray to help recording artists collect unpaid royalties is approaching the finish line.
His legislation, dubbed the Recording Industry Accounting Practices Act, goes to a final vote June 15.
The Democratic senator introduced the proposal in February 2003. The most recent form of the bill (SB 1034) was offered June 8 during a public hearing here at the California Assembly Committee on Arts, Entertainment, Sports, Tourism and Internet Media. That committee will cast the final vote.
The proposal seeks to create a statutory right to audit royalty statements that recording companies issue to recording artists. It would also institute penalties for underpayment by labels.
At the hearing, the American Federation of Television and Radio Artists, California Teamsters Public Affairs Council, Los Angeles County Federation of Labor, former industry executive Walter Yetnikoff and recording artists Jennifer Warnes, Joi Marshall and Kim Weston provided supporting testimony. The Recording Industry Assn. of America (RIAA) spoke in opposition.
The bill has evolved significantly over time as record labels have proactively modified their royalty accounting practices. The bill originally sought to create a fiduciary duty for labels to accurately report and pay royalties.
During the hearing, Yetnikoff said the labels are "conceding they are underreporting $150,000 for every million dollars in royalties, and they don't argue about it."
Yetnikoff also quoted noted entertainment lawyer Don Engel: "The intentional underpayment of royalties to all recording artists is a pervasive, consistent policy and practice."
Murray noted how the cost of an audit, usually around $30,000, forms an economic barrier for artists seeking unpaid royalties. The most recently proposed bill would allow individuals to join with other artists to conduct an audit on a contingency-fee basis.
During the hearing, the RIAA particularly opposed the notion of having to pay legal fees, audit fees and treble damages.
"If you have the kind of penalties that are in this bill with an after-the-fact determination by a jury as to what the interpretation of a contract should be, it's going to chill the record companies from exploring the new models that the record industry needs to survive," RIAA general counsel Steven Marks says.
Another bill from Murray, SB 1506, extends the current law that protects the distribution of CDs and DVDs to include digital content; it is another tool to fight Internet piracy. The bill received unanimous support from the assembly and will be heard by the Public Safety Committee in the coming weeks.
"I think that bill will be fine," Murray says, "and we'll clearly move forward on some piracy protection."