NEW YORK — The record labels found themselves playing defense once again in California’s State Senate on Tuesday, refuting complaints that the industry’s business and accounting practices are unfairly stacked against performers.
In hearings convened jointly by the Senate’s Judiciary Committee and Select Committee on the Entertainment industry, the Recording Industry Assn. of America asserted that most acts are happy with the relationships with their record labels. The legal disputes that do arise, said RIAA senior VP of business and legal affairs Steve Marks, begin with bluster but generally end peacefully.
“After the public scrape in which it appears that a divorce is imminent, there is a quiet announcement that the parties have settled their differences, renegotiated a contract, and the artist is back in the very same studio recording once again,” Marks said in testimony Tuesday afternoon.
Marks claimed that it’s the artists — not the labels — who get the biggest slice of the revenue pie. He cited an RIAA-sponsored study indicating that 17% of domestic sales and licensing goes to talent, while 9% goes to the record companies.
The Select Committee, headed up by former music lawyer Sen. Kevin Murray (D-Culver City), called the hearings to looking into accounting practices at the record labels.
The issue of whether industry record contracts are fair to artists has received avid attention lately. Murray recently introduced a bill that would close a loophole exempting musical acts from California’s seven-year limit on service contracts.
Murray opened Tuesday’s hearing with testimony from several artists and their representatives, including Sam Moore — half of the legendary R&B duo Sam & Dave — and singer Montell Jordan.
Moore, who was joined by his wife and manager, Joyce, recounted his role as lead plaintiff in a massive, long-running lawsuit over pension benefits from health and retirement funds jointly run by reps of the industry and the American Federation of Television & Radio Artists.
“The record companies were supposed to be making contributions based on gross compensation. But we discovered that my husband had never had one penny of reported income on any of the labels he had recorded for,” Joyce Moore said.
Highlighting another perceived accounting abuse, Jordan said his 1995 album “This Is How We Do It,” which he was given $130,000 to produce, sold more than 1.2 million copies in the U.S. alone. Four albums later, he has yet to see his first royalty check from that debut release.
The experience, he said, taught him an important lesson about keeping an eye on expenditures, which the labels typically charge against the artist’s future royalties.
“After I spent some time in the industry and learned something about it, when someone said, ‘Hey we want to talk about your next album,’ my first question is: ‘Is it recoupable?'”
Murray acknowledged during Tuesday’s debate that it would be difficult for the legislature to intervene in the private contract-negotiation process. The result could very well be worse,” he said.
However, the lawmaker did entertain suggestions that the Senate could clarify the rules governing royalty accounting, eliminating some of the gray area in the process.
AFTRA exec director Greg Hessinger testified that the recording industry relies too heavily on artists to absorb business risks. He also called for fuller disclosure and greater “transparency” of artists’ contract info, alleging that the recoupment system is flawed because of its ambiguous and subjective nature.