Royalties, Please

The California Senate Judiciary Committee cleared SB 1034 on Tuesday, and it will now go to the full Senate for a vote:

The spot bill was introduced by Sen. Kevin Murray, D-Culver City, in February as part of a package of music bills, including a measure that would prevent artists from being tied to record companies for more than seven years.

Under SB1034, a record company’s obligation to account accurately for artist royalties would become a fiduciary duty. [“the fiduciary relationship involves some sort of reposing of trust or confidence from one party to the other (the fiduciary), and a corresponding duty on the fiduciary to be loyal to the other party by not breaching that trust or confidence. This obligation is based upon the fact that the trusting party is now vulnerable, and that the fiduciary is in a position to hurt the trusting party by abusing that trust or confidence.”]

Recording Industry Assn. of America president Cary Sherman, whose lobby group represents the major labels, countered the bill in his testimony before the Senate Judiciary Committee on Tuesday: ‘The solution proposed in SB 1034 doesn’t work, because it tries to apply a doctrine of fiduciary duty to what is plainly a non-fiduciary, contractual relationship.’

….’While I applaud the recent attempts by some of the record companies to address issues raised by artists … under the current structure, there is no disincentive for record companies to properly account for and pay royalties,’ Murray said. ‘Therefore, bad behavior by companies is rewarded. SB1034 simply makes it law that record companies must accurately report royalties to the artist.’ [Hollywood Reporter]

Warner Music Group, Universal Music Group and BMG Entertainment have presented plans to make their accounting systems more artist friendly, but you know they have only done so with the threat of this bill hanging over their heads. Pass this bill, make record companies accountable.