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Calif. lawmakers consider record industry probe

Pop stars, led by Courtney Love and Don Henley, have been talking to members of the California state legislature about probing music industry accounting practices, lawmakers and artists said this week.

Henley, frontman for veteran rock band the Eagles, has been leading a group of recording artists lobbying for repeal of a loophole in state labor law they claim gives record companies unfair commercial control over performers’ careers.

More recently, Democratic members of both the California Assembly and Senate have spoken to Henley and his supporters about launching a legislative probe into the broader issues of record company accounting practices, he told Reuters.

Such an investigation, Henley said, would “shine the light on another dark corner of the industry.”

California lawmakers’ interest in corporate transparency has been sparked by recent financial scandals, he said.

State Sen. Kevin Murray, who represents a large swath of Los Angeles, told Reuters he plans to hold hearings this spring into accounting practices by the record labels.

Murray said his hearings would focus on allegations by artists that record companies routinely under-report and underpay royalties to performers.

A group of stars, including Love, Henley and Carole King, appeared in California’s state capital last week to lobby for new legislation that would free artists from what they say is “indentured servitude” to record companies.

The artists’ group, the Recording Artists Coalition, wants to repeal an amendment won by the music industry in 1987 that allows record labels to keeps performers tied to contracts longer than talent in other industries such as film and television.

Organized labor unions, including the AFL-CIO, have backed that campaign.

Now there is interest in examining how performers routinely have to spend money to audit expenses that labels claim against standard recording agreements, he said.

“I think there’s a treasure trove there,” Henley said.


State Assemblyman Joe Nation, who represents Marin County, north of San Francisco, said he, too, had spoken with Henley about hearings on record company accounting issues.

Nation, an economist with expertise in antitrust issues, said he was waiting for more information before deciding whether to call such hearings.

But Murray, who introduced legislation amending the state labor law to close the 15-year-old exemption for record labels, said he would move ahead with hearings in the Senate.

“The auditors tell us that every time they audit they find that the labels significantly underpay, leading to the conclusion that the labels are not making honest mistakes but have a practice of stealing from the artists,” he said.

Hilary Rosen, president and chief executive officer of the Recording Industry Association of America (RIAA), said such accusations were sensational and without merit.

The RIAA represents all five of the major record companies – AOL Time Warner Inc.’s Warner Music, Vivendi Universal’s Universal Music Group, Sony Corp.’s Sony Music Entertainment, Bertelsmann AG’s,BMG Entertainment and EMI Group Plc.

“Nobody would propose to make any excuse for bad accounting practices, but accusations of cheating are clearly emotional,” Rosen said.

Executives from the big record labels have publicly opposed repeal of the labor law amendment, maintaining they conduct their business fairly and that artists benefit from the contracts they sign voluntarily.

The state Senate Judiciary Committee is expected to hold hearings on that issue in the near future, a chief counsel of the panel’s chairman said.

Meanwhile, the artists’ coalition has planned several fund-raising concerts in Los Angeles featuring shows by the Eagles, Billy Joel, John Fogerty and others on Feb. 26, the eve of the Grammy Awards honoring the industry’s best music and biggest stars.

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