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["Casey, Leo J" <CaseyL@VOLPE.DOT.GOV>]

Recording firms face legislators' scrutiny 
By Jim Wasserman, Associated Press, 4/4/2003 
SACRAMENTO -- Record companies plagued by steadily declining sales 
now face legislation, both in California and in New York, that will attack contract 
and accounting practices. 
Last year, California legislators convened hearings involving disgruntled 
recording artists and their record companies. The artists said the industry 
had cheated them; the record executives complained about spoiled superstars. 
Stars, including Carole King, Montel Jordan, Fleetwood Mac's Stevie Nicks, 
Television's Tom Verlaine, and the Backstreet Boys' Kevin Richardson, complained 
of short earnings and long contracts. Clint Black, the country singer, said he 
owed his label money, although he had sold millions of records. Merle Haggard 
has made similar charges of underreported royalties. 
No laws were passed in California, and two major music firms pledged to reform 
their dealings with artists. But state Senator Kevin Murray, a former music 
agent who led last year's attack, is introducing four bills this year that would 
change how the industry signs and pays its artists. 
''I still think a lot of this is ripe for discussions with the companies and the 
artists,'' Murray said of the industry, which employs 28,000 Californians. 
Murray's bills aim generally to toughen penalties for companies that underpay 
recording artists. The bills also provide greater access to internal accounting 
within labels. Murray would also modernize and simplify royalty accounting 
methods, some of which date to vinyl albums. 
The new bills are coming due as falling sales are shaking the industry. 
New York-based Nielsen SoundScan says the music business sold 104 million 
fewer CDs and cassettes in 2002 than in 2000. 
Cary Sherman, president of the Recording Industry Association of America, said 
Murray's bills had hurt an industry that has seen artists and their labels fighting 
piracy and illegal downloading. 
''Collectively, industry artists and labels alike are seeing layoffs, retail stores 
closing, double-digit sales declines; and that impacts the economics of everybody,'' 
Sherman said. 
Stung by criticism last year from stars such as Hole's Courtney Love and the Eagles' 
Don Henley, and unsettled by attacks on the industry's financial integrity, two of the music 
industry's biggest players, the French-owned Universal Music Group and the 
German-owned Bertelsmann Music Group, have floated some reforms similar to 
those proposed by Murray. 
Both firms are considering ideas to simplify industry accounting methods, 
to become more receptive to outside audits, and, for the first time, to tell 
artists the number of CDs they've manufactured. For years musicians 
have never been given the numbers. This has led many to suspect that some 
CDs bring them no money. 
''There does seem to be a change in the wind in terms of attitude,'' said Donald 
Passman, a Beverly Hills music lawyer and author of the book ''All You Need to 
Know About the Music Business.'' 
But Passman, like others who interact with a recording industry dominated 
by five global giants, said it's too early to tell if anything is really happening. 
A California auditor, Fred Wolinsky, said he has yet to see any records from 
CD manufacturers for his artist clients. ''I'll believe it when I see them,'' he said. 
A fourth Murray bill would impose seven-year limits on the contracts that record 
labels sign with their artists, making California's rules for the record business more 
like those for its movie business. Musical acts from the Dixie Chicks to LeAnn Rimes 
and Sheryl Crow complained last year that the record industry's standard contract for 
several albums can bind artists to the same company for much of their careers. 
In New York, where recording is also a major industry, Sheldon Silver, the 
state's Assembly speaker, expects to reintroduce a bill called the Artistic 
Freedom Act limiting contracts to seven years. Meanwhile, staff members for 
Representative John Conyers, Democrat of Michigan, who has discussed national 
legislation to limit contracts, says colleagues are ''waiting to see what happens in 
California.'' 
Record industry representatives who won a 1987 exemption to California labor 
law for the practice say they need long-term contracts for successful artists to 
cover the losses of acts that fail. Seven-year limits, said the Recording Industry 
Association of America's Sherman, would simply ''let artists walk away from their 
contractual commitments.'' 
Artists, Sherman said, have bigger issues. ''The fact is,'' he said, ''the seven-year 
issue is of no relevance to an artist who can't make a living because everybody is 
downloading for free.'' 
This story ran on page C13 of the Boston Globe on 4/4/2003. 
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