Calif. Legislature Widens Probe of Music Contracts

State Sen. Kevin Murray, one of the Democratic legislators spearheading the probe, said on Monday a new hearing set for Sept. 24 would examine a range of accounting practices that artists' lawyers and managers allege cheat their clients out of millions of dollars each year.

"Clearly we are just generally looking at whether artists are treated fairly," Murray said...

While Murray earlier this month withdrew a bill which would have addressed many of those complaints, he said the legislature would continue to gather information with an eye to passing a comprehensive package of "artists rights" bills early next year.

"There is clearly some momentum and we continue to move forward," Murray told Reuters. "People are now thinking about artists rights, and about making California an artist-friendly state. These are creative people, and we want them to live here."

To prepare for the next set of hearings, the state Senate Rules Committee will issue a number of subpoenas to follow up on charges that the world's five largest recording companies use complex accounting procedures to cheat artists out of money that is their due.

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Calif. Legislature Widens Probe of Music Contracts
Mon Aug 26, 6:12 PM ET

SACRAMENTO, Calif. (Reuters) - California's legislature has deepened its probe into music industry contracts, looking into charges that recording companies defraud pop stars through accounting tricks such as special deals with mail-order record clubs and video channels.

State Sen. Kevin Murray, one of the Democratic legislators spearheading the probe, said on Monday a new hearing set for Sept. 24 would examine a range of accounting practices that artists' lawyers and managers allege cheat their clients out of millions of dollars each year.

"Clearly we are just generally looking at whether artists are treated fairly," Murray said.

California's legislature has already held one set of hearings into the recording industry's treatment of music artists following a high-profile lobbying effort by the Recording Artists Coalition (RAC), led by stars like Eagles frontman Don Henley, Sheryl Crow and the Dixie Chicks.

The artists have complained that they are bound to contracts for over seven years -- longer than talent in other entertainment industries -- and are subject to multimillion-dollar lawsuits by recording companies for failing to deliver albums and fulfill other obligations under contract conditions they say are impossible to meet.

While Murray earlier this month withdrew a bill which would have addressed many of those complaints, he said the legislature would continue to gather information with an eye to passing a comprehensive package of "artists rights" bills early next year.

"There is clearly some momentum and we continue to move forward," Murray told Reuters. "People are now thinking about artists rights, and about making California an artist-friendly state. These are creative people, and we want them to live here."

To prepare for the next set of hearings, the state Senate Rules Committee will issue a number of subpoenas to follow up on charges that the world's five largest recording companies use complex accounting procedures to cheat artists out of money that is their due.

Several of the specific allegations include charges that recording companies have rigged the music video business to enrich themselves without adequately compensating artists, and that music company deals with mail-order record clubs also shortchange artists by delivering far lower royalty levels than retail music outlets.

Artist representatives also charge that recording companies use accounting tricks to underpay royalties for music which is sold overseas -- a charge record companies have denied.

The Recording Industry Association of America ( news - web sites) (RIAA), which represents all the big labels, including Bertelsmann AG ( news - web sites)'s BMG, EMI Group Plc ( news - web sites), AOL Time Warner Inc. , Vivendi Universal and Sony Corp ( news - web sites)., declined comment Monday, saying it was not in a position to discuss business deals which may be negotiated by individual companies.

The industry trade group had earlier said it was willing to make concessions to resolve the artists' concerns, but that they were holding out for terms that could not be met.

Entertainment lawyer Don Engel, who has represented both artists and record labels, said he was hopeful that the legislative examination of recording industry contracts would result in a fairer deal for artists.

"I tell people that if you want to be in the business, you are going to sign with a company that is going to cheat you," Engel said.