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Bowie, DMB Rescue Royalties

Labels to pay artists $50 Million in back payments

May 5, 2004 12:00 AM ET

David Bowie, the Dave Matthews Band, Sean "P. Diddy" Combs, Dolly Parton and John Mellencamp are just a few of the thousands of artists who will receive payments from the major labels for unclaimed, unpaid royalties.

The $50 million payout was the result of a deal struck by New York State Attorney General Eliot Spitzer, who negotiated with Sony Music Entertainment, Sony ATV Music Publishing, the Warner Music Group, UMG Recordings,Universal Music, EMI Music Publishing, EMI Music North America, BMG Songs, Careers-BMG Music Publishing, BMG and the Harry Fox Agency.

The deal caps a two-year investigation sparked by music industry attorney Bob Donnelly, who brought the issue of labels failing to keep contact with performers and making proper royalty payments. More than $25 million has been paid out so far, with another $25 still expected to be distributed.

As part of the deal, the labels and publishers also agreed to list the names of artists and writers who are owed monies, post the procedure to claim outstanding royalties in various music industry publications, share contact information for artists with other labels and work with various industry groups and unions to locate artists. The companies also pledged that their royalty and accounting departments would work towards improving their payment procedures and that they would abide by the state's Abandoned Property Law. If an artist or his or her family cannot be located for payment, those royalties are to be paid to the state, which holds them until a claim is made.

For some, the payout amounts to a drop in the bucket. The Dave Matthews Band is owed just over $14,000 (its 1996 album, Crash, for instance earned $4,000 that wasn't properly paid), while the $10,700 that Bowie was owed was just for 1997's Earthling. And for other artists, the payout comes too late, as deceased artists including Jim Croce, Waylon Jennings, Dizzy Gillespie and Frank Sinatra were all owed sums. But the estates of deceased musicians received some of the larger payouts, including that of songwriter Tommy Edward, which is due almost $230,000.

The investigation also found that outstanding royalties were also due to artists who didn't necessarily make vast sums of money, and the likes of Texas singer-songwriter Guy Clark or avant garde jazz pianist Cecil Taylor might benefit from the windfall of a few thousand dollars. "[Some] artists struggle," Spitzer said at a press conference announcing the deal in New York City today. "They depend on the stream of royalties."

Spitzer praised the record companies for their willingness to reach the agreement and suggested that the unpaid monies were an oversight. "It's not like there was a grand conspiracy to cheat them out of these big sums of money," he said. "It was just a failure to do what should have been done. That's why we have this settlement."

Spitzer is no stranger to investigating the business practices of the major labels. In August 2000, he led a charge against the five major labels charging them with conspiring to fix the prices of CDs. New York and Florida were at the front of a lawsuit filed by twenty-eight states that resulted in another settlement.

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