Steven Marks, general counsel for the Recording Industry Association of America, says, "You have artists represented by very sophisticated counsel who understand the ins and outs of the industry.
The length of the deals and the complexity of the industry results in contracts that are lengthy and complex. It's not as if the provisions are a surprise to the artists."
Standard contracts permit audits of the labels' accounting. "If you have serious sales, you have to have somebody take a look at your statements to keep everything honest," Passman says.
But typically, audit clauses impose time limits and daunting restrictions. An audit can run $25,000 to $50,000.
Wilhelm says, "Most artists never use the audit clause, because they can't afford to. It's a hollow promise."
Some artists, among them Don Henley and Courtney Love, are marshaling fame and fortune to push a reform agenda.
"As a consequence of artist groups' efforts, companies have taken some positive steps," says attorney L. Londell McMillan, Prince's business partner and founding member of the Artist Empowerment Coalition.
"The music industry is now on the radar of government regulation and oversight."
That includes the recent $50 million royalties payout negotiated by New York Attorney General Eliot Spitzer.
Though it represents a fraction of back pay owed to artists, the settlement "validates claims artists have made for years," McMillan says.
"It's an affirmation that there are too many holes in the system.
How can the industry justify seeking out young kids illegally downloading music over the Internet, yet they can't find artists to pay them royalties for generating billions of dollars?
How do you not find Willie Nelson?"
Activists support a bill before the California Legislature that would create a fiduciary-duty statute ensuring that labels treat artist revenues as favorably as their own.
Wilhelms, who detailed the industry's "sordid" habits before state senate hearings, says a law may be the most sensible remedy and that the California bill "is a wonderful start that raises the bar for record-company behavior."
In response to artist demands and outside scrutiny, labels have been rolling out enhancements.
• In 2002, BMG announced plans to adopt a "fairer, more transparent" royalty system that would shrink a standard contract to 12 pages from 100.
Article comments
1 - Douglas Mays
Good post! Yes, it is quite a battle therefore some fuckery takes place to balance the books. Wherever a buck can be reappropriated it will, such as the case with Sam Moore.
And now, with music downloading for a cost (iTunes, etc.) that is another spot on the bueracratic learning curve.
True, one hit artist pays for the other 9 that don't make it. Quite a roll of the dice on the record company, but the small change it takes to treat someone like Sam Moore as a human being sure makes the current state of the music industry look like assholes.
It is a very complex issue. The whole system needs a spin dry.
peaceloveguidance
2 - Vern Halen
Ouch! I don't know why anyone would want to be in the music biz if this is how it's run. Now that I think about it, almost every rockstar bio I've read has a section or two or ten containing a financial tale of terror.
Still, I guess it takes a certain kind of person to keep plugging away at it until the brass ring comes within reach. Unfortunately, having that kind of personality and having talent don't necessarily corelate with each other.
3 - brown_boognish
Just don't sign to a major label if you want to avoid this shit. You can live an adquate life on a smaller label, and still get substantial distribution. No long contracts to screw you over.
4 - Vern Halen
Maybe part of the problem is that there are no long term contracts - t least ones that are designed to develop & nurture an artist with an investment over a period of years. Big Biz wants big bucks NOW, and if you don't make it the first time round right out of the starting gate, it's hard to get a second chance.
Think of almost any major artist from the 70's: Springsteen or Aerosmith, for example. Had they been dropped after their first or second albums, which had only moderate sales, they might mot have developed into the megastars they are today.
Simply put, it'd be really nice if music was the most important word in the phrase "music business."
5 - Douglas Mays
hhhmmm... the question of go indy or major. My suggestion is go major, if it fails you always have indy to fall back on.
Utilize a major. Just on advances alone and marketing (however slight it might be) that puts you far ahead of what an indy can do for you.
Then think of this, being a broke starving artist or complaining that you are owed another $50,000 on top of your $million.
A good, creative music attorney is helpful. Take a look at White Stripes for example.
Anyway, big risky business. It is a shame that the trickle-down effect to artists like Sam Moore occur. That is one of the holes that has to be plugged up. The industry must take care of its own till they die. Then in this business, after death also. Funny how death can sell records in this biz. Oh gosh, the next phase of music business scandle. Record companies wacking artists to really cash in...
anyway,
peaceloveguidance
6 - Douglas Mays
A classic phrase in the business: "not happy with your record contract? Be lucky you have one."
peaceloveguidance
7 - Vern Halen
hmmm.......makes you wonder about all those Cobain conspiracy theories out there.....
8 - Douglas Mays
I wonder... it wasn't Courtney. It might of been Tony 'the weasel' Belefukio.
Sorry, Courtney. Didn't mean to remind you of all these hack accusations being thrown at you.
peaceloveguidance
9 - Douglas Mays
Come to think of it, could be the case with Tupac...