Major recording companies have agreed to return nearly $50 million in unclaimed royalties to Sean Combs, Gloria Estefan, Dolly Parton and thousands of lesser known musicians under a settlement announced Tuesday.
A two-year investigation by New York state Attorney General Eliot Spitzer’s office found that many artists were not being paid royalties because record companies lost contact with the performers and had stopped making required payments.
As a result of the agreement, Spitzer said, new procedures will be adopted to ensure that artists and their descendants receive the compensation they are entitled to get.
“Once the recording companies have received royalties, those royalties have to be disbursed to the artists who are owed those funds,” Spitzer said at a news conference.
“There are many artists who struggle…. They depend on the stream of royalties,” he added.
The attorney general said about $25 million in royalties has already been paid, with the other $25 million still outstanding.
The Washington-based Recording Industry Association of America, which represents the companies, planned to comment later Tuesday, said spokesman Jonathan Lamy.
Representatives for Combs and Parton did not immediately return calls for comment. A spokesman for Estefan, reached prior to the announcement, was unaware of the settlement and had no immediate comment.
Spitzer had no explanation when asked how companies could lose contact with such big-name artists.
The participating companies include: SONY Music Entertainment; Sony ATV Music Publishing; Warner Music Group; UMG Recordings; Universal Music; EMI Music Publishing; BMG Songs; Careers-BMG Music Publishing; BMG Music and the Harry Fox Agency.
Under the settlement, the music companies agreed to make good-faith efforts to track down artists to whom royalties are due. If the artists still cannot be located, the money will revert to the state.
The settlement could expand to include other recording companies, Spitzer said.