Calif. Legislature Widens Probe of Music Contracts

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

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

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

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

The artists have complained that they are bound to contracts forover seven years -- longer than talent in other entertainmentindustries -- and are subject to multimillion-dollar lawsuits byrecording companies for failing to deliver albums and fulfill otherobligations under contract conditions they say are impossible tomeet.

While Murray earlier this month withdrew a bill which would haveaddressed many of those complaints, he said the legislature wouldcontinue to gather information with an eye to passing a comprehensivepackage 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, andabout making California an artist-friendly state. These are creativepeople, and we want them to live here."

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

Several of the specific allegations include charges that recordingcompanies have rigged the music video business to enrich themselveswithout adequately compensating artists, and that music company dealswith mail-order record clubs also shortchange artists by delivering farlower royalty levels than retail music outlets.

Artist representatives also charge that recording companies useaccounting tricks to underpay royalties for music which is soldoverseas -- a charge record companies have denied.

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

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

Entertainment lawyer Don Engel, who has represented both artists andrecord labels, said he was hopeful that the legislative examination ofrecording industry contracts would result in a fairer deal forartists.

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