The world’s largest record labels will return $50 million in unpaid royalties to thousands of artists following a two-year probe by the New York State Attorney General’s Office, Attorney General Eliot Spitzer said Tuesday.
While some popular artists such as David Bowie, Sean “P Diddy” Combs and Dolly Parton will benefit, the majority of the artists are not stars, but rather more obscure performers and one-hit wonders, Spitzer said.
“We have this misperception that artists have all gained enormous wealth by virtue of their success,” he said at a press conference. “But there are many artists who struggle, who have one successful song and they depend on those royalties. We have found that there has been an accumulation of royalty payments that were not distributed to the artists.”
Label executives, for their part, say it was never their intention to withhold royalties. In many instances, artists simply failed to provide updated contact information where labels should send their checks.
“When artists cannot be located because, for example, they or their estates have moved without providing contact information, the royalties are held by the company for the artist to claim them,” said Steven Marks, general counsel for the industry’s trade group Recording Industry Association of America.
Warner Music said in a statement that such royalties account for 0.01 percent of all of its royalties, while BMG said they account for less than 1 percent.
'Did the right thing'Spitzer noted that the labels -- Vivendi Universal’s Universal Music Group, Sony Corp.’s Sony Music, EMI Group Plc Bertelsmann AG’s BMG Group and closely held Warner Music Group cooperated after his office approached them.
“They did the right thing,” he said.
Music industry attorney Bob Donnelly, whom Spitzer credited with bringing the issue to his attention, was more critical of the labels.
“I think there was a lot more money than was disbursed today,” said Donnelly, who has represented such artists as jazz giant Ornette Coleman and funk pioneer Bootsy Collins in such royalty disputes. “They’ve been making interest on this money for a long time.”
Spitzer said the interest on the royalties would be included in the payouts to the artists.
The record companies agreed to establish Web sites that include lists of artists and writers that are owed payments. They also agreed to take out advertisements in industry publications and pledged to share artists’ contact information with one another.
In the event that the royalties are not claimed, the money will be turned over to the state, which will hold them until the claims are made. But Spitzer said he hoped that all of the royalties would be claimed.
Donnelly said he originally considered filing class action suits against the labels. “But what we discovered is that every time we found a good plaintiff, the record companies would offer to pay them.”
The largest royalty payment -- nearly $230,000 --- in the settlement will go to the estate of Tommy Edwards, who recorded the hit single “It’s All In The Game” for what was then MGM Records. MGM Records catalog is now owned by Universal Music.
Other recipients include jazz saxophonist Gerry Mulligan, who is owed $78,000 and the Fontaine Sisters, who are owed nearly $107,000. Morning TV show host Regis Philbin, who recorded an album in 1968, is owed $7,255.