Legislation would make accurate report royalties the law

NEW YORK — A bid to make the major record labels more accountable in the way they tally up artist royalties got a leg up in the California state Senate this week, passing out of the Judiciary Committee and into the full Senate chamber for a vote.

Bill, authored by Sen. Kevin Murray (D-Los Angeles), would make accurately reporting royalties a “fiduciary duty” enshrined in state law. Legislation arose out of hearings on music industry practices held in the committee last year.

“Under the current structure, there is no disincentive for record companies to properly account for and pay royalties, and therefore bad behavior by companies is rewarded,” Murray said. “SB1034 simply makes it law that record companies must accurately report royalties to the artist.”

At hearings in September, musicians and artists’ reps testified that labels routinely underreport the amount of money owed artists for record sales. Backstreet Boy Kevin Richardson said at the time that there was “not a lot of faith” in the majors.

But labels countered that audits turn up underreporting in only a tiny fraction of cases and that any mistakes made are not the result of bad faith.

Further, in testimony to the Judiciary Committee last week, Recording Industry Assn. of America president Cary Sherman argued that Murray’s bill “would distort the intensely negotiated, arms-length contractual relationship between the artist and recording label.”

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