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Courtney Love Seeks to Rock Record Labels' Contract Policy

Music: Suit challenges Universal's royalty practices. Firm says it is fair.


Just as actress Olivia de Havilland brought down the Hollywood studio system in the 1950s and outfielder Curt Flood fought for free agency in baseball in the 1970s, rock star Courtney Love is determined to radically redefine the nature of the music recording business for the next century.

Love is seeking to break her contract with Vivendi Universal, the world's largest record conglomerate, and expose what she calls the "unconscionable and unlawful" business tactics of the major record labels.

The case threatens to throw back the curtain on what Love and others allege are the industry's corrupt accounting practices, designed to hide profits and cheat artists out of royalty payments.

Vivendi Universal officials declined to speak about the suit but in their legal papers dismissed Love's suit as a "meritless, inflammatory diatribe" designed to "attract media attention." Universal has sued Love seeking damages for five undelivered albums. The company describe the contract as a "fair, industry-standard agreement" that she "willingly" signed.

Universal and other labels contend that they invest a lot in developing and marketing artists, and that long-term contracts are the only means they have of recouping those expenses.

Should Love prevail in court, the case could rewrite the economics of the recorded music industry and lead to a wholesale exodus of recording acts from their labels--breaking the major music companies' decades-long lock on talent.

"If Courtney Love prevails, this case will nail the lid shut on the coffin of the standard long-term recording contract. It could change the business," said attorney Don Engel, who has represented such acts as Donna Summer and Don Henley in past contract disputes.

"It is difficult to challenge a giant music company and go up against traditional industry practices, but there is no reason why Courtney can't win this case," said attorney Yale Lewis, who successfully represented the father of Jimi Hendrix in a case to reclaim the rock star's catalog from MCA Records. "If this goes to trial, it will be a jury that decides the facts. Not the industry."

Long-Term Contracts Are Focus of Lawsuit

At its core, the suit is about the recording industry's tradition of long-term contracts that keep artists tied up for years longer than is legal in other industries, including television, film and sports. And it seeks to end the practice that allows companies to buy and sell artists' contracts, often against their will.

Officials with the Recording Industry Assn. of America declined to be interviewed.

Love and Universal are to appear in Los Angeles County Superior Court today for a status hearing on the suit.

The singer-songwriter might be the first artist to challenge the industry's standard contract who actually has the financial muscle to withstand a lengthy court battle.

Love is not only a successful music star, but she also has established a second career as a film actress, starring in "The People vs. Larry Flynt" and working with such acclaimed directors as Milos Forman and Martin Scorsese. In addition, she controls the estate and catalog of her late husband, Nirvana star Kurt Cobain, whose music generates millions of dollars annually.

"I could end up being the music industry's worst nightmare: a smart gal with a fat bank account who is unafraid to go down in flames fighting for a principle," Love said.

"Look, you show a music industry contract to any attorney in any other business, and their jaw just hits the floor. Somebody has to put a stop to this crap," she said. "I've been evangelized. I'm ready to take this thing all the way to the Supreme Court."

Peter Paterno, attorney for such acts as Metallica and Dr. Dre, says standard contracts keep artists tied up throughout their career with terms that are dictated by the industry.

"Record labels operate on the premise that because they take such a large financial risk and have such a low rate of success that they have the right to maximize their return when they do score a hit. So the terms are stacked against the artist," Paterno said.

"As an artist's representative, you wish there was something you could do to change that, but you can't. In this market, there are only five companies, and they all behave exactly the same."

Breaking with tradition, Love stepped outside of the industry to enlist a legal team to challenge the contract. She fired her former music attorney in December after his firm balked at trying the case and attempted to convince her to accept a settlement offer.

Love then hired A. Barry Cappello, a hard-nosed trial lawyer with no Hollywood ties who has won massive verdicts against such financial monoliths as Bank of America. She also recruited prominent private detective Jack Palladino, who helped former Brown & Williamson executive Jeffrey Wigand win his battle against the tobacco industry.

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