Measure on Music Contracts Planned

A key California state senator is preparing legislation that could open the door on free agency for recording artists--setting the stage for a political showdown between the nation’s biggest music stars and the corporations that employ them.

Sen. Kevin Murray (D-Culver City) said he will launch a bill in January challenging an amendment to the state Labor Code that keeps recording artists tied to contracts longer than other workers.

That amendment was pushed through the Legislature 14 years ago by a powerful lobby group representing the five global record giants--with barely a peep from the artist community.

The music establishment, powerful though it is, won’t have it so easy this time around. Artist activists are mobilizing to take on the industry, competing for the attention of Gov. Gray Davis and other key officials who can help pass Murray’s bill. The musicians have formed their own trade groups, the Recording Artists Coalition and the Recording Artist Guild, amassed a $300,000 war chest and are in the process of hiring a bipartisan and high-powered team of lobbyists to push their agenda in Sacramento.

Murray, who oversaw a Senate hearing last month probing record company practices, said the stars could turn out to be the most effective lobbyists. Dozens of music celebrities--including Don Henley, Courtney Love, the Dixie Chicks andSheryl Crow--have pledged to visit and phone lawmakers in the next few months to persuade them to vote for Murray’s bill.

“I believe there is sympathy in the Legislature for the artists’ position on California Labor Code Section 2855,” Murray said. “The fact that the amendment singles out recording artists and no one else raises eyebrows among lawmakers--the amendment is suspect. I think we can repeal it.”

Hilary Rosen, chief executive of the Recording Industry Assn. of America, said large music corporations and tiny independent record labels adamantly oppose repealing the amendment.

“This is a difficult time in the California economy, and I don’t think ultimately that the Legislature is going to want to take this step,” Rosen said. “Especially when the marketplace hasn’t shown it to be necessary and there are real risks in doing so to California businesses.”

Henley and Love disagree. And they and other artists have lined up prominent lobbying firms to fight for Murray’s bill.

Henley has made arrangements to hire Platinum Advisors, founded at the start of Davis’ administration by Darius Anderson. Anderson was finance director of Davis’ 1998 election campaign. With his ties to the administration, Anderson’s firm quickly has become one of the top-billing lobby firms in Sacramento, generating $1.6 million in the first half of this year and almost $2.4 million last year. His client list ranges from Pacific Gas & Electric to Pacific Bell.

Love has hired Kevin Sloat, who built his firm after serving as legislative affairs director for then-Gov. Pete Wilson. Sloat is viewed as a lobbyist who is adept at winning over Republicans, and his partners have ties to Democrats.

“The citizens of California need to realize that this fight is about generating wealth and boosting the economy of our state,” Love said. “It’s about fixing a poorly managed industry.”

So far, Murray’s bill is not high on legislative leaders’ to-do list. With the economy faltering, lawmakers will be focused next year on lagging tax receipts and likely budget cuts. They also will be contending with the fallout from the energy crisis. Adding to the diversions, 2002 is an election year. Davis will be running for reelection. All 80 Assembly seats and half of the 40 Senate seats will be up.

Senate President Pro Tem John Burton (D-San Francisco) said, “Both sides have a valid point of view,” adding that he is not sure how the bill will be received. Assemblyman Herb Wesson (D-Culver City), expected to be elected speaker next year, declined to discuss the issue, saying he was not familiar with its nuances.

The statute that is the focus of Murray’s effort was first instituted in the late 1890s but achieved prominence 50 years ago after a legal battle by film star Olivia de Havilland to free actors from long-term studio deals. De Havilland’s court case allowed actors, for the first time, to negotiate employment contracts based on their fair-market value--a move that ultimately brought down the Hollywood studio system.

Section 2855 also sanctioned free agency for every other California citizen performing a service job, such as architects, commercial artists, designers, dancers and recording acts. During the 1980s, attorneys began threatening to invoke the seven-year statute on behalf of artists in the music industry--a business analysts liken to the old Hollywood studio system.

The statute is important because many young artists move to California to break into the business and often end up signing their deals with companies based in Los Angeles. Each of the five major music corporations maintains offices on the West Coast.

To avoid testing the law, record labels often rewrote the contracts of disgruntled stars, offering large cash advances and higher future royalty rates in exchange for additional albums.

Around 1985, the Recording Industry Assn. of America launched an effort to extend the statute to 10 years.

When those efforts failed, the RIAA asked legislators to grant “music labels a special exemption to the law” and give them the right to sue artists for damages resulting from undelivered albums.

Industry lobbyists argued that record companies made large investments in an artist’s career based on the promise that the act would deliver a certain number of albums under the contract--typically seven recordings. Industry lobbyists told lawmakers that labels don’t earn money on successful artists until after the fourth album and would be severely injured if the remaining three albums were not delivered.

But what the RIAA failed to disclose to the Legislature, artists say, was that labels typically require successful acts to spend two years per project touring and making videos and TV appearances to help boost music sales. It would take 14 years, artists say, for the average act to complete its obligations under a standard agreement.

But there was no way for legislators to know the inner workings of recording contracts in 1987--primarily because they never called a single artist to testify before passing the amendment.

“So far, the record industry lobby has been extremely effective at putting out propaganda and muddying the waters for the legislators,” Henley said. “We understand that getting this bill passed is not going to be a slam dunk by any stretch of the imagination.”

Although the RIAA maintains a multimillion-dollar federal war chest, record companies in recent years have been rather low-key players in Sacramento.

Last year, the organization spent $130,000 on lobbying, hardly significant by Sacramento standards.

But after a spate of corporate mergers, record labels are tiny divisions of some of the biggest conglomerates in the world--making their potential power huge. And the industry appears to be preparing for a giant political fight.

The firm of Rose & Kindel represents the RIAA. Its clients range from AT&T; to the California Psychological Assn.

The organizations founded by Henley and Love already have spoken with Murray and several federal lawmakers about holding hearings next year to examine terms of recording contracts and to probe industry accounting practices, ownership of original master recordings and lack of health care and pension benefits.

Artist managers already have enlisted an impressive list of music acts to perform at fund-raising concerts in the months ahead.

Exactly how lawmakers will view the issue remains to be seen. One lobbyist said the artists’ pleas could resonate with Republicans who advocate free markets. Other lobbyists, speaking on the condition that they not be identified, believe Republican lawmakers are most likely to be swayed by industry arguments that contracts should be honored. Some Democrats, who control both houses, may see it as a labor issue and side with artists.

Lawmakers versed in the issue and lobbyists believe the Senate is likely to approve the bill, in part because Murray is the author. Because he is a former entertainment lawyer and agent, Murray is given a degree of deference on such issues by other legislators.

The Assembly, however, could be a tougher sell.

The lower house is more moderate, and some believe the industry may be able to influence pro-business Democrats.

If the Legislature approves the bill, Davis, long a major recipient of entertainment industry donations, could be a tough sell, especially if the economy falls into a recession and he is convinced that a change in the law could damage the entertainment industry.

“Looking at the way the law is structured, it will be hard to repeal it,” said a lobbyist who has studied it.

More likely, the lobbyist said, “you would be able to tweak the law to create a more fair relationship from the artists’ standpoint.”