The Knitmedia settlement is significant for two reasons: it puts money directly in the hands of musicians and returns their copyrights to them, and every time a label is held accountable for underpaying it makes others less likely to behave similarly.

Knitmedia Inc., which runs the Knitting Factory clubs in New York and Los Angeles and Knitting Factory Records, agreed to pay $1,250 in back royalties to each musician who signed on to the settlement, said David Lennon, president of Local 802 of the American Federation of Musicians.

The company also agreed to return to the approximately 80 artists all rights to their work and the master recordings.

Existing inventories will be sold back to the musicians for $2 a piece rather than the standard $5, Lennon said.

Jared Hoffman, who took over Knitmedia in mid-2002, said many of the issues in the dispute arose before he became head of the company and he was pleased to see them resolved.

"We are extremely happy that the situation has been resolved amicably and that we are finally able to put this distant past behind us," he said.

The agreement was reached after several of the musicians who had formed a coalition called Take it to the Bridge in their fight against the company rallied outside the New York club Wednesday night, prompting a sit-down, Lennon said. [AP]

Marc Ribot, a New York musician who has played regularly at the club but was not involved in the settlement, said the situation underscores a lot of the difficulties independent artists face.

"There's a myth that its the little artist-friendly indie David against the corporate label giant. But artists get ripped off by both all the time," he said. "What's unique here is that the artists organized to do something about it, and it was also one of the first times that a major union was supporting them."