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Recording Industry's Accounting Slammed

July 24, 2002|Associated Press

The recording industry came under attack for accounting practices that, according to artists, routinely underreport royalties, cheating them out of millions of dollars. The allegations were made during a state Senate Judiciary Committee hearing in Sacramento.

Among those addressing the committee was Los Angeles music attorney Don Engel, who estimated that record companies routinely "underpay 10% to 40% on every royalty" and dare artists to challenge it without committing "artistic suicide."

Record industry spokesmen and attorneys denied the allegations. The industry also released an economic analysis of its record contracts, noting that fewer than 5% of signed artists produce a hit record. Likewise, for every hit the industry has, it loses $6.3 million on albums that bomb, it said.

The hearing comes as record executives fight a bill by state Sen. Kevin Murray (D-Culver City) to rein in a record industry practice that binds singers to long-term contracts lasting through much of their careers.

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