Royalty Reform Drive Found to Be Lagging : Pop music: The movement gave rise to the Rhythm and Blues Foundation, but many labels are still making money at artists’ expense, survey finds.

The Washington-based Rhythm and Blues Foundation recently announced the recipients of the sixth annual Pioneer Awards, which recognize outstanding contributors to the genre. But for all the hoopla surrounding the awards (which will be presented tonight in Los Angeles at the Hollywood Palladium), the R&B; royalty reform movement that gave rise to the foundation seems to have hit a lull in the past two years. According to a recent foundation survey conducted by Washington attorney and RBF founder Howell Begle, several of the biggest industry powers (notably Sony and PolyGram) have not addressed royalty reform despite extensive reissue programs that continue to make money for the labels--but not the artists.

As Begle noted in his report, the contractual plight of artists who recorded from the ‘40s through the ‘60s was not unique to R&B.; But “considering the relative economic and social stature of African Americans during this period, (R&B; artists were) particularly disadvantaged,” whether they recorded for major labels like Mercury and Capitol or independents like Atlantic and Imperial. In that era, contracts provided royalty rates that were a small fraction of what today’s artists receive--often 1% to 4% of the wholesale price versus 10% of retail today.

It has long been known that at some labels, artists surrendered their royalties for lump-sum payments of as little as $50 a song. In addition, Begle noted, careless or artificially inflated debt accounts--in which the companies charged artists for expenses their contracts did not mention--left almost all R&B; acts, even major hit-makers, with “unrecouped royalty balances” when their contracts ended. No one envisioned future marketing opportunities, and many accounts were simply closed out, with no posting of subsequent royalties when recordings were reissued or recirculated.

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The royalty reform movement began in the mid-’80s, sparked by Begle’s efforts to recover royalties from Atlantic for Ruth Brown, the Coasters and several other groups. It probably didn’t hurt when, in 1986, Jesse Jackson met with Steve Ross, CEO of Warner Communications Inc. (which had bought Atlantic in 1977), to discuss what Jackson described as “racially exclusive, insensitive and economically exploitative policies.”

When Atlantic (and subsequently MCA and EMI) instituted reforms, label chiefs stated that they were responding to issues of artistic merit and financial need, not to the threat of lawsuits. Atlantic’s response in May, 1988--the label’s 40th anniversary--was unprecedented. It eliminated unrecouped balances for 35 early R&B; acts, and though it did not increase the royalty rate, it paid back royalties retroactive to 1970, resulting in substantial lump-sum payments. Atlantic’s parent company, WCI (now Time Warner), also seeded the Rhythm and Blues Foundation with several million dollars.

Eighteen months later, MCA went further by eliminating unrecouped royalty balances for all artists on the Chess and Checker labels (acquired by MCA in 1985); the company also increased the royalty rate for reissues to 10% and paid the artists back royalties. The biggest step came in April, 1992, when EMI instituted the most comprehensive reforms yet: Raising the royalty rate to 10%, it not only forgave unrecouped balances for all R&B; artists who had finished recording by 1972, but it applied the policy to all artists--and to all labels subsequently acquired by EMI, including Blue Note, Imperial, Aladdin and Flair.

The position of the Rhythm and Blues Foundation in all this has become somewhat awkward. While its stated goals are financial support and historic and cultural preservation, the foundation owes its existence to the reforms pursued by Begle and others. But under the direction of Suzan Jenkins, the foundation has distanced itself from that particular issue; Jenkins has repeatedly said royalties are an issue for individuals, not the organization.

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Would pushing for wider reform undermine the foundation’s fund-raising efforts with labels, many of whose executives are on its board? In truth, the foundation’s most avid supporters are those who have already made significant reforms.

But there’s still room for improvement, particularly when today’s $11-billion music industry owes much of its popularity to pioneering R&B; artists.