Grammy Chief Writes: Donate Songs or Else

Grammy chief C. Michael Greene last month told media giant Time Warner to be prepared for “short and long term ramifications” for refusing to contribute songs to a charitable fund-raising CD sponsored by the organization.

Greene--who plays a key role in deciding which acts perform on the annual Grammy TV awards show and which judges sit on the committees that choose award nominees--lashed out at Time Warner music executives in a July 21 letter obtained by The Times, calling the company’s decision “unconscionable.”

Time Warner’s Warner Music Group declined to comment, but several sources inside the company said record executives feared that crossing Greene could jeopardize the company’s chance at a coveted performance slot or award on the annual Grammy telecast. The company last week reconsidered its decision and agreed to provide several tracks for the proposed 40th Grammy Anniversary boxed set.

Greene declined to be interviewed on Thursday, referring queries to Grammy organization attorney Charles B. Ortner, who denied that Greene’s letter was intended as a threat.

“The only ramifications to which Mr. Greene was alluding in the letter was that it would be inevitable that the Warner Music Group labels would get calls from artists and the press who would view negatively the absence of those artists from this important, historical album project,” Ortner said.

Greene has faced intensifying questions about his management of the Grammy organization since the publication of a series of articles in The Times last year. The articles disclosed that Greene is the highest-paid nonprofit organization executive in the country and that the Grammy organization has consistently overstated the scale of its philanthropic activities.

Since publication of those articles, the Internal Revenue Service and the Justice Department began investigating Greene, law enforcement sources said this week. The IRS and the U.S. attorney’s office in Los Angeles refused to comment, but sources said federal agents have been reviewing documents and interviewing individuals connected to the Grammy organization.

Ortner said Greene knew nothing of that investigation.

The letter from Greene to Time Warner was written on the official stationery of the National Academy of Recording Arts and Sciences, the powerful nonprofit organization that puts on the Grammy awards show.

On Thursday, Ortner said the board “fully supports the actions of NARAS’ staff in relation to this project.”

NARAS trustees recently voted unanimously to extend Greene’s contract until 2001 and released a statement, through the executive committee, saying they were “delighted with Mr. Greene’s performance.”

Last year, the not-for-profit academy paid Greene nearly $1.3 million in salary, benefits and bonus--a total compensation that handily outstripped those of the heads of the nation’s leading universities, museums and other entertainment industry trade groups. His job perquisites include a leased Mercedes-Benz sedan and an annual membership in the Bel-Air Country Club.

That compensation package covered a year in which MusiCares, one of the academy’s two public charities, spent roughly 10 cents of every dollar it earned in revenue on grants to needy individuals--its primary charitable purpose. For the year ended July 31, 1998, the charity recorded about $2.35 million in income and spent $236,834, or just 10%, on direct grants to needy individuals, according to its public tax return.

The academy continues to charge both charities for rent and office services at its Santa Monica headquarters and, in the case of the NARAS Foundation, an 18% fee for use of the Grammy trademark.

The NARAS Foundation, which sponsors concerts and programs for disadvantaged youth, raises most of its income from the proceeds of a Grammy anthology album released each year by the academy. The world’s five largest record corporations generally contribute songs to the Grammy Nominees album, for which the artists and labels earn next to nothing.

Companies and recording artists participate primarily because they are told that all proceeds from the project go directly to charity.

In fact, the millions of dollars in profits generated by the project each year are paid directly to the academy, which decides how much to give to the NARAS Foundation. According to the most current tax filing available, the academy gave about $2.17 million to the foundation in 1997, but then charged the charity $553,248 for use of the Grammy trademark.

This year, the organization released a second Grammy Nominees album that highlighted rap singles. The dispute between Greene and Warner Music Group began in the spring, shortly after the academy decided to release another charity recording to coincide with a planned 40th anniversary TV special, sources said.

Initially, the academy proposed the recording as a three-CD set that would be released during the third fiscal quarter; it asked Warner to contribute about a dozen tracks. Warner agreed to participate in the project, from which academy officials said all proceeds would be donated to its MusiCares charity, sources said.

While Warner was in the process of clearing the tracks for release, the academy asked for more songs and informed the company that the project had grown into a four-CD set and had been pushed back to a fourth-quarter release. Warner executives objected, telling Greene they thought the boxed set would cannibalize sales during the industry’s most competitive quarter, which includes the lucrative Christmas shopping season, sources said.

In May, Warner notified the academy it had decided to pull out of the project.

Greene responded on July 21, firing off the letter to Warner that began: “So be it, we will move forward without the Warner Music Group. . . . Please be aware that some of the Warner artists in question are members of the Academy and are keenly aware of the project. They and most everyone else will find your refusal to be included in this collection as unconscionable. . . . “

Greene ended the letter with: “Hey, this is certainly your call but just be ready for the short and long term ramifications.”

Last week, the heads of Warner’s record labels decided to contribute one song each to the collection, sources said. Warner Music is expected to also donate Domenico Modugno’s 1958 hit, “Volare,” the first record ever to win a Grammy.