GIANT STEP™ | The Scene - California Allows Auditing of Record Labels

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Chicago, IL

Jul 25th, 2004 at 02:59:50 AM EST

By ALEX VEIGA
Jul 16, 11:46 PM (ET)

LOS ANGELES (AP) - Gov. Arnold Schwarzenegger on Friday signed a law giving recording artists more flexibility to audit record companies' finances in search of potentially unpaid royalties.

The law, which goes into effect Jan. 1, allows artists to conduct annual audits and applies to any record companies doing business in California. The law holds down the cost of audits through means such as letting a single auditor work for several artists on the same label simultaneously.

"This is a significant step forward for artists' rights," said Sen. Kevin Murray, the Los Angeles Democrat and former music agent who sponsored the bill. "The ability to audit will keep record companies a little bit more honest."

The law is the culmination of a campaign by some musicians, including Don Henley, to give artists more power to determine whether they are due royalty payments.

Artist royalty rates are typically set around 12 percent to 16 percent of sales. But before any of the royalties reach an artist, they must usually cover promotion, production, packaging and other expenses. In addition, the labels withhold large percentages to cover discounts they offer to retailers as well as reserves for any returned goods.

Up to this point, artists have faced the choice between paying for expensive audits, possibly uncovering less money than the cost of the audit, or not conducting the audits and losing out on royalties.

"You get a limited right to audit in most contracts, but it's not a legitimate right if you can't afford to do it," Murray said.

No one was available Friday after hours at the Recording Industry Association of America, which represents the major record companies.

In May, major recording companies agreed to return nearly $50 million in unclaimed royalties to artists as part of a settlement with New York state Attorney General Eliot Spitzer.

A two-year probe by 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.


	WEDNESDAY \| AUG 20, 2008		Find a forum: Advanced Search You are here: All : The Scene : California Allows Auditing of Record Labels Author Message verb Location: Chicago, IL Jul 25th, 2004 at 02:59:50 AM EST By ALEX VEIGA Jul 16, 11:46 PM (ET) LOS ANGELES (AP) - Gov. Arnold Schwarzenegger on Friday signed a law giving recording artists more flexibility to audit record companies' finances in search of potentially unpaid royalties. The law, which goes into effect Jan. 1, allows artists to conduct annual audits and applies to any record companies doing business in California. The law holds down the cost of audits through means such as letting a single auditor work for several artists on the same label simultaneously. "This is a significant step forward for artists' rights," said Sen. Kevin Murray, the Los Angeles Democrat and former music agent who sponsored the bill. "The ability to audit will keep record companies a little bit more honest." The law is the culmination of a campaign by some musicians, including Don Henley, to give artists more power to determine whether they are due royalty payments. Artist royalty rates are typically set around 12 percent to 16 percent of sales. But before any of the royalties reach an artist, they must usually cover promotion, production, packaging and other expenses. In addition, the labels withhold large percentages to cover discounts they offer to retailers as well as reserves for any returned goods. Up to this point, artists have faced the choice between paying for expensive audits, possibly uncovering less money than the cost of the audit, or not conducting the audits and losing out on royalties. "You get a limited right to audit in most contracts, but it's not a legitimate right if you can't afford to do it," Murray said. No one was available Friday after hours at the Recording Industry Association of America, which represents the major record companies. In May, major recording companies agreed to return nearly $50 million in unclaimed royalties to artists as part of a settlement with New York state Attorney General Eliot Spitzer. A two-year probe by 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.