The crux of the case, argued by rock legends like Don Henley of the Eagles and cult singer Tom Waits, is that it has become the ‘industry standard’ for artists to have their record companies audited to find out just how much they are owed.
As a result many mid-level acts cannot afford the audits and don’t know whether they are receiving the right payments.
Stars came face-to-face with the record companies in a showdown during a Senate hearing in California last week.
Senator Kevin Murray said, during the hearing, that he was considering introducing legislation next year that would penalise record labels that account improperly.
‘The music business needs a more transparent accounting process. One suggestion is to create penalties,’ he said adding that there was a lot of ‘angry’ artists who ‘don’t feel taken care of’ by their record labels.
Eagles singer Don Henley waded into the argument during the hearing by declaring that there was a place for legislation to sort out the whole royalties debacle.
‘The argument can be made that this is not the place for lawmakers but I say to you today, if this is a matter of instituting some kind of higher fiduciary responsibilities or any fiduciary responsibility at all, then we believe there is a place for lawmakers in this,’ Henley claimed.
Artists’ representatives claim that recording contracts are designed to make the audits difficult because they generally limit an artist’s right to hire an auditor. Simon Renshaw, a band manager, claimed an auditor could not be hired by more than one artist at a time to save costs or hired on contingency basis.
Meanwhile the record companies saw themselves as the injured parties.
At the senate hearing Cary Sherman, president of the Recording Industry Association of America, said: ‘It is offensive and malicious to malign an entire industry based on stereotypes, innuendo and myths.’
Paul Robinson, senior vice-president of Warner Music Group said his company did not deliberately underreport artists earnings and then claimed that the real issue to be tackled in the music industry was ‘piracy’.
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