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Testimony of Michael Greene, President & CEO, Grammys
California State Senate Hearings on Recording Artist Exemption to Seven Year Statute
By MusicDish
(more articles from this author)
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Michael Greene
President/Chief Executive Officer
National Academy of Recording Arts & Sciences, Inc.

Before the California State Senate
Select Committee on the Entertainment Industry
Hearings on Recording Artist Exemption to Seven Year Statute
(Labor Law Section 2855 (b))
September 5, 2001

Mr. Chairman and Members of the Select Committee:

Thank you for the opportunity to appear here today to discuss with you the issues surrounding Labor Code 2855, which impacts not only the members of the Recording Academy, but virtually every recording artist.

The Recording Academy is a non-profit organization comprised of more than 20,000 rank-and-file music industry professionals, and on behalf of our members, we respectfully request the repeal of subdivision (b) of Labor Code 2855 which excludes recording artists from protection under the seven-year statute. Our members include, among others, artists, songwriters, producers, musicians, and engineers representing such diverse music genres as classical, bluegrass, jazz, polka, rock and rap. While we are perhaps best known for our annual awards ceremony and telecast, the GRAMMY Awards, the Recording Academy also is a staunch advocate for the creative music community on a number of fronts, including music education, archiving and preservation, cultural enrichment – which includes supporting governmental funding for the arts – protection of intellectual property rights and providing human services for the members of the recording community.

We are here today to ensure that the California Senate is informed so a conscientious and fair debate will ensue. As you know, California Labor Code 2855 was designed to protect all employees in the state from being tied to personal services contracts for more than seven years; in the case of recording artists, these are typically onerous contracts.

The work of this committee and the state senate is to vigorously protect the interests of all of our citizens, including influential artists such as Don Henley, Courtney Love, the Dixie Chicks, and Patti Austin, and let's not forget the preponderance of music people who are not household names. In 1987, the recording industry-engineered exemption to the labor code successfully consolidated contractual power in the hands of five conglomerates, four of which are not controlled by U.S. interests – the Japan-based Sony Music, the Germany-based Bertelsmann, the United Kingdom-based EMI Recorded Music, and the France-based Vivendi, which owns Universal Music Group – all bleeding much of the power away from many U.S. citizens, specifically, recording musicians. It might shock you to know that this oligopoly controls the vast majority of the music industry's market share.

Now, more than ever, with the consolidation of not only the record companies, but also the radio industry, the concert business and virtually every other element that affects the artist's life, this exemption is causing undue hardship for the seemingly powerless recording artist, while providing unnecessary protection to those who need it least – the five multi-billion dollar music corporations.

Just a brief retrospective. In 1985, the recording labels sought to extend the limit on personal services contracts to ten years for recording artists, a crusade that rightfully failed. But in 1987, the industry again lobbied state politicians, this time winning an exemption to the code that allowed labels to sue artists who failed to "fulfill" their contracts by not delivering the contractually stated number of albums over the seven year term. Labels were allowed to claim damages for each undelivered album.

The result of this exemption was to effectively lock out recording artists from the protections offered by the code, rendering the code moot on any practical level for only one group of individuals – the music makers.

The labels insist that this exemption is necessary to protect them against rogue artists, on whom they spend millions of dollars building and marketing a career, who leave the label before fulfilling their contracts – typically, requiring the delivery of seven albums in seven years. Labels also claim artists fail to meet this obligation because they are negligent, deliberately avoiding the contractual obligation for their own purposes and gain.

But let me tell you what real life is like in the artist/label relationship in 2001, where the labels shift executive players faster than artists can update their phone books. As Patti illustrated, the development and nurturing of an artist is a very personal thing. When she signed with Clive Davis, or with Quincy Jones, those were personal relationships. That's the way this relationship should work. But today, the only thing an artist can count on is that everything will change, many times before the ink is dry on the contract.

Let's just look at the last 10 years in the life of the last remaining major U.S. record company, the Warner Music Group family of labels, which was once the most stable, artist-friendly label in the business. In 1994, seven years after the implementation of Subdivision (b) of the Labor Code, Steve Ross stepped down as Chairman of Time/Warner and a seismic shift took place in these companies.

Label stalwarts Mo Ostin and Lenny Waronker – the people who cultivated some of our greatest talent, from Joni Mitchell to Van Morrison, Neil Young to Van Halen – were fired in a highly publicized move many considered the end of the non-corporate record business. Since then, it's been an executive revolving door. Bob Morgado became CEO; HBO's Michael Fuchs was brought in to head the music group. Fuchs was gone within months. Morgado hired Atlantic's Doug Morris. He then fired Doug Morris, who now heads Universal Music. Danny Goldberg was hired as President of Warner Bros. He was quickly fired and became president of Mercury Records, and now heads Artemis Records. The Reprise and Warner labels were split, headed then by Howie Klein and Steven Baker, overseen by Russ Thyret. Phil Quartararo was brought in from Virgin to replace Thyret. Roger Ames is now head of the group, coming from Polygram, and about a month ago, Tom Whalley became the new president of Warner Bros, coming over from Interscope, a division of the Universal Music Group. Jeff Ayeroff came in last week as head of creative services; he was previously at Virgin and A&M prior to that. Klein recently stepped down from his post. And on it goes. We don't even have time to go into the changes at the other Warner music labels — Elektra and Atlantic.

The personal relationship an artist should have with the label as they make music – arguably the most interpretive art form – seems to be over. Obviously, we should end the exemption that keeps them tied to these relationships — even the word "relationships" doesn't seem appropriate here!

The artists are suffering. The message is clear: If you're an artist today, you better have a way to get out of these contracts if they're not working because you can get lost in a maze of corporate shifts, leveraged buyouts, IPOs, mergers and acquisitions, and upsizing and downsizing.

In closing, let's remember, the odds are totally stacked against the artist. Contracts are grossly one-sided. Virtually every expense is recoupable to the artist – that is, every cost for recording and marketing the record is applied against the artist's royalty before he or she ever sees a penny, most of the time years after a CD is released.

In fact, the labels, in their ongoing zeal to wrest every semblance of power from the artist, surreptitiously inserted a work-for-hire clause into the 1976 federal copyright law last year that took away artists' one hope to regain their copyrights via the 35 year reversion. It took many voices before the U.S. Congress in this same kind of hearing to help overturn that incredibly wrong-headed law. Moreover, the labels afford artists no health benefits, no 401k plans, no pensions – it's everyone for his or herself.

This exemption discriminates against the recording artist. While entertainers working in other related fields, such as motion pictures and television, enjoy the protection of labor code 2855, recording artists continue to work under draconian subjugation, and we believe that situation conflicts with their civil rights and the sense of justice for which this body stands.

You have the opportunity, Mr. Chairman and members of the Committee, to help rebalance the power between the individual artists – all hard-working citizens of the state of California – and the monolithic corporations who use their clout and financial standing to ensure the growth of their coffers, no matter at whose expense. We respectfully urge you to take that opportunity by repealing subdivision (b) in Labor Code section 2855.

Thank you.

Related MusicDish e-Journal Articles:
» Should Artists Pay for the Labels' Mistakes? - California Senate Hearings on the Seven Year Statute (2001-09-06)
» Testimony of Patti Austin, Recording Artist - California State Senate Hearings on Recording Artist Exemption to Seven Year Statute (2001-09-05)
» Testimony of Ann Chaitovitz, Director of Sound Recordings, AFTRA - California State Senate Hearings on Recording Artist Exemption to Seven Year Statute (2001-09-05)
» Testimony of Thomas F. Lee, President, AFM - California State Senate Hearings on Recording Artist Exemption to Seven Year Statute (2001-09-06)

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