Record and music publishing lobbyists are gearing up to repeal a new California law they say could cost the industry millions of dollars and severely limit job opportunities.
California Senate Bill 1459, quietly passed in July, amends the state civil code to raise the minimum compensation on personal services contracts from $ 6, 000 to $ 50,000.
A record or publishing company wishing to retain their right to a court injunction prohibiting an artist from transferring services to another company would have to guarantee the artist a contractual minimum of $ 50,000.
Thus, a five-member group signed by a record company would require a guarantee of $ 300,000, an enormously high risk in a business where few recordings make money.
Companies refusing to meet the $ 50,000 minimum could still sue for damages if an artist attempts to break his/her contract, but would be unable to get a court order stopping any transfer until the matter was settled.
Although the new legislation is law only in California, non-resident artists and companies may be affected by the legislation, according to industry authorities, depending on the language of their contracts.
The $ 6,000 rate was established in 1919 as a protection for film studio contract players, but changes in the contractual relationships of artists to the studios has made the new law more applicable to record and music publishing.
The new $ 50,000 threshold was the result of the state Dept. of Finance applying an inflationary index to the 1919 wages.
The new law becomes effective Jan. 1, but lobbyists are already gearing up to ask for a “quick fix” that would repeal the new law.
“There is virtual unanimity from our member companies that the law be repealed,” said Tim Sites, VP of communications for the Recording Industry Assn. of America.
“If permitted to go into effect, the law would likely cost record companies millions of dollars, would limit their ability to sign new and emerging artists, and would cause the state to lose jobs and new businesses,” Sites said.
The new law was passed as a “consent bill,” Sites said, and did not require hearings or a tabulating of negative votes. Thus, when the bill arrived at Gov. Pete Wilson’s desk for approval, Sites said, it appeared there was no opposition.
“We certainly didn’t see it coming, but no other organization saw it coming either,” Sites said. “We’re working vigorously to have the California state legislature take a look at it and lay the groundwork for lowering the threshold.”
Sites declined to say what his organization will propose as a new threshold or whether any other organization will support the RIAA’s lobbying efforts.
The bill was introduced by the Beverly Hills Bar Assn.’s Marc Meadow, assistant exec director of the organization, said the new law is designed to “make management have to spend a reasonable amount of money to enjoin the artists. Because it was (formerly) such a small amount of money, it was used to further management positions rather than talent.”
Meadow said the result of the bill will be that “production companies won’t as easily spend a minimum amount of money just on supposition or speculation.”
He dismissed arguments that the new law would cause chaos with existing contracts and said he had not heard of any active opposition to the new law.
Jay Cooper, an attorney with the Beverly Hills firm of Cooper, Epstein, Hurewitz, said the industry will “certainly make a grand try at reversing this.”
Cooper, though noting that signings are traditionally slow at this time of year, said the new law may cause companies to “be more careful about who they’re signing. It’s a heavier commitment than before.”