Good article on music industry

Good article on music industry

Rights issue rocks the music world

Record companies see it as mutiny. Musicians call it an overdue rebellion. Either way, the artists' rights movement has set the stage for combat that could revolutionize the music industry.

What started as a classic David-and-Goliath skirmish over contractual terms could be tilting toward a level battlefield as opposition on a wide range of issues swells against an industry mired in a sales slump.

"The record business is in rough enough shape that something might actually change," says Craig Marks, editor of Blender magazine. "If things weren't so uncertain, so bleak and in such disarray, the industry would be immovable, even with a gun to its head. If there was ever a set of circumstances that could lead to artists making inroads, it's now."

Clinging to the status quo are the world's five major record conglomerates: Universal, Sony, Time Warner, EMI/Virgin and Bertelsmann, represented by a powerful trade group, the Recording Industry Association of America (RIAA). They face challenges from increasingly vocal performers supporting the Recording Artists' Coalition (RAC), whose diverse roster of 150 members includes Bruce Springsteen, Sting, R.E.M., Bonnie Raitt, Madonna, Eric Clapton, Dave Matthews, Billy Joel, Elton John, Linkin Park, Aimee Mann, No Doubt, Puddle of Mudd, Staind and Static-X.

Key concerns from the broad range of byzantine conflicts:

Caps on contract lengths. Most major-label agreements require a commitment of six to eight albums, an obligation that can entail an indefinite term of indentured servitude. California state Sen. Kevin Murray, a Democrat, wrote a bill to repeal an amendment that exempts recording artists from a state law limiting contracts to seven years. After RAC and the RIAA failed to reach a compromise, the bill was pulled Aug. 15. Murray plans to resubmit it next year as part of a larger package also addressing accounting practices, pension plans and health benefits.
Accounting practices. Audits routinely detect unpaid royalties. Music industry lawyer Don Engel, who estimates that labels misreport and underpay artist royalties by 10% to 40%, says industry accounting practices are "intentionally fraudulent." Music writer Dave Marsh describes the process as "an entrenched system whose prowess and conniving makes Enron look like amateur hour." Royalties, based on complex and antiquated formulas that favor labels, are disbursed only after artists pay back advances, recording costs and other expenses. Greg Hessinger, director of the American Federation of Television and Radio Artists (AFTRA), a union representing 80,000 actors, musicians and other entertainment workers, says this recoupment method "is so replete with ambiguity, complexity and subjectivity that the only true long-term solution is a complete overhaul. Until we can bury the recoupment system, changes must be implemented that provide for greater transparency and a fuller duty to account so that artists can at least be certain that they are being paid correctly."
Producer Steve Albini, trashing label practices in The Baffler magazine, outlines a hypothetical but typical record deal that bestows a $250,000 advance on a young band. The album sells 250,000 copies, earning $710,000 for the label. The band, after repaying expenses ranging from recording fees and video budgets to catering, wardrobe and tour bus costs, is left $14,000 in the hole on royalties.

A California Senate hearing on accounting practices is set for Sept. 24 in Los Angeles.
Health and pension benefits. Soul legend Sam Moore and other artists are suing record companies and the AFTRA Health and Retirement Funds (a separate entity from the union) for pension benefits. Atlantic, which has sold Moore's music since 1967, never deposited a nickel into his pension because of convoluted formulas tied to royalties. Not surprisingly, labels are balking at paying roughly 20,000 artists up to 30 years of back pension and health benefits. The union, negotiating with labels since May, hopes to secure increased access to health insurance and improvements in pension participation when talks resume in October. Among 200 artists who signed a letter supporting the union's proposal are Steve Earle, John Hiatt, Johnny Cash, Marilyn Horne, Carole King, Billy Bob Thornton and Coolio. Copyright and ownership. Sen. Orrin Hatch, R-Utah, once stated that the record business is the only industry in which the bank still owns the house after the mortgage is paid. Artists are demanding copyright reform and a reasonable means of reacquiring their master recordings. Payola reforms. Labels sidestep payola laws by hiring independent promoters to lobby and compensate radio stations for playing certain records. Opponents say this quasi-legal system stifles creativity and limits diversity. The drumbeat of war has been building in recent years as artists wrestle for self-empowerment and vow to amend a system that let soul greats Otis Blackwell, Jackie Wilson and Mary Wells die destitute. Before she died, Peggy Lee was part of a class-action settlement that won unpaid royalties. Courtney Love filed suit to break her Geffen contract. Prince fled the corporate structure and pitched camp on the Internet, where he sells directly to fans. Tom Petty's upcoming album, The Last D.J., slams industry greed.

Point: 'Corporations don't have feelings'

"The record companies are like cartels, like countries, for God's sake," singer/songwriter Tom Waits says. "It's a nightmare to be trapped in one. I'm on a good label (Epitaph) now that's not part of the plantation system. But all the old records I did for Island have been swallowed up and spit out in whatever form they choose. These corporations don't have feelings, and they don't see themselves as the stewards of the work. They are making shoes, and then they want to go to the Bahamas and get a suntan."

He advises new artists to "get a good lawyer and don't ever sign away your publishing rights. Most people are so anxious to record, they'll sign anything. It's like going across the river on the back of an alligator."
Waits joined the artists' coalition in hopes of exposing the industry's shadowy business practices.
"Artists really do need to communicate and organize," he says. "Don Henley is willing to get a haircut and go to Washington. I'm all for that."

Rock veteran Henley, an RAC founder, is confident the movement will lead to significant change, despite reluctance by some artists to get involved.

"Newer artists don't want to rock the boat," he says. "They're still starry-eyed idealists and haven't been around long enough to be mistreated. Other artists simply don't understand the issues or are too self-absorbed."

A new artist's limited avenues fuel apprehension, says Marks, noting that such midlevel acts as Aimee Mann and Ani DiFranco are content to toil outside the empire, but "most artists want to hear their song on the radio, see their big-budget video on MTV and be on stage in front of 50,000 people. The major labels have access to radio and TV. If push comes to shove, you're being shoved off a fairly steep cliff."

Michael Jackson's recent high-profile leap onto the bandwagon was met with skepticism. In rallying support for his financial grievances against Sony Music, he asserted, "If you fight for me, you're fighting for all black people."

Industry observers dismissed his sudden allegiance as an opportunistic tactic in a heated feud with Sony chief Tommy Mottola, whom Jackson branded a racist and devil. After Jackson joined activist Al Sharpton in condemning unfair contract and royalty practices, MTV.com reported that "the summit came off more like a vehicle for damage control than a constructive outlet for record industry reform."

Even with many artists on the sidelines, "there are enough of us, older and new, who know what's going on," Henley says. "We're going up against labels that have a powerful presence in Washington and have been politically active for 60 years. And yet we're making strides. We're getting help from managers, lawyers and politicians to get the fair treatment we deserve. The pendulum is swinging to our side."

The artists' coalition, which is financed in part by benefit concerts, plans to staff offices in Washington and Los Angeles before Murray's bill resurfaces next year. Though reform efforts in the '50s led by the likes of Frank Sinatra and Stan Kenton fell short, Henley says music's empowered boomer generation, the fuel for the industry's expansion in the '60s and '70s, is better informed and more willing to speak out.

"Like all other corporations, the music industry has gotten greedier," Henley says. "It's about profit, profit and more profit that always comes at a cost of principles. The predicament the record industry finds itself in is of its own making. They've alienated consumers and artists, and whether the rights movement succeeds, the house will fall under its own weight."

RAC detractors argue that contracts are fair and that drastic revisions could undermine the industry. The newly formed California Music Coalition, comprising independent labels, manufacturers and merchandisers, opposes Murray's bill, fearing it will place California at an economic disadvantage and reduce investment in fresh talent.

Miles Copeland, chairman of Ark 21 Records, predicts that passage could significantly harm "the entire music business because of the very visible complaining by a few successful recording artists. If the mega artists succeed with this effort, I feel strongly that it would be at the expense of those artists who have not made it yet."

The CMC, supported by such independent labels as Priority, Hollywood, Restless and Triloka, contends that, because very few records prove profitable, labels need the cushion of long-term contracts to recoup investments and justify risk.
Counterpoint: For every hit, a $6.3 million loss