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ROUND ONE IN SACTOWN:
NO KNOCKDOWN

RIAA, RAC Discuss Inner Workings
of Music Industry
Both sides came, both sides talked, nothing much happened.

Tuesday (3/19) afternoon, in what basically amounted to a Music Industry 101 lecture, artists, artist reps, lawyers, RIAA officials and label execs presented their sides of the business to the California Senate Judiciary Committee, which is delving further into the specifics of Sen. Kevin Murray’s SB 1246. The bill seeks to eliminate the music-industry exception to the seven-year statute and declare all California residents equally protected under the Labor Code’s provisions.

Those testifying before the seven-member Committee included the RIAA’s Hilary Rosen, Warner Bros.Jeff Ayeroff, Interscope Geffen A&M’s Steve Berman, Concord’s Glen Barros, Don Henley, attorneys John Branca and Jay Cooper and manager Simon Renshaw.

Both sides brought up the issue of fairness during the first few hours of the "informational hearing" but behaved more like dinner partners than antagonists.

Ayeroff, described by Henley as "artist-friendly," gave the Committee a tour of what a label does from the time a band is signed to the album’s release. "We don’t force anyone to come and sign with us," he said, and it is not our intent not to succeed. We are not a bank, but we are people who do invest in artists. I’m trying to figure out how I can make an investment in a career—not in seven years. We get nothing from touring, T-shirt sales, sponsorship…just [from] the records."

Berman explained that, of the four albums by bands his company broke last year, only one will make money this year—Puddle of Mudd.

Henley, who pointed out that the record execs in attendance were the cream of the crop, wants the law to revert back to the way it was before 1987. "There is no mutuality to recording contracts," he said.

Said Cooper, who compared the music business to the TV business and got into the lengths of many artist contracts, "Record companies and artists need to work together, and we [both] need to make profits."

Also on the agenda were opening remarks from Committee Chair Sen. Martha Escutia (D-Montebello) and background from Murray, followed by testimony from each side.

Topics of discussion included the following: Just what damages are available to record companies under the existing California Labor Code Section 2855 (b), the so-called music industry exemption to the seven-year statute, including a discussion of certain damages vs. speculative damages and possible defenses to damages claims; a dissection of the risks incurred by a label in putting out records, including advances, recoupment, etc. and what is charged back to the artist; contract renegotiations and when "tacking" takes place; contract practices, including "standardized" new-artist contracts and firm deals vs. option deals; and the timetable of an album release, including how touring and promotional duties take up time and whether touring benefits primarily the artist, the label, or both.

When all was said and done, Escutia invited Henley out for dinner.

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