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HEADLINE: RECORDING ARTISTS SUE, AIMING TO ROCK INDUSTRY ACTION EXPECTED TO PUT BIG LABELS UNDER SCRUTINY
BYLINE: By Kathleen Sharp, Globe correspondent
LOS ANGELES - A few female rock stars are taking legal aim at the monolithic music industry, just as lawmakers are beginning to scrutinize the industry's practices. And the common refrain is to rebalance the scales toward artists and consumers.
At the forefront of the movement are grunge rocker Courtney Love, alternative songwriter Aimee Mann, and the country-pop trio the Dixie Chicks. Emboldened by musicians' growing dissatisfaction with the industry, these artists have sued their record labels, charging them with everything from cooking their books to breaking their word. The upcoming trials are expected to throw a spotlight on the practices of the music industry. About 90 percent of the music business is controlled by the Big Five conglomerates - Universal Music Group, Sony Music Entertainment, Warner Music, BMG, and EMI Group - which all use the same contracts, distributors, promoters, and policies.
Dozens of artists have sued the music giants over the past two decades, but none were as rich or determined as Love and the Dixie Chicks appear to be. If a jury decides in their favor in the coming months, the $40 billion-a-year industry could be shaken to its core.
Labels would be forced to share more power and control with their artists. That sea change would ultimately loosen the Big Five's stranglehold and usher in more competition. More labels and new ideas would ultimately lower album prices, said Jim Barber, who is Love's manager. "This is not a case about an artist and her money," said Barber. "This is about music and music lovers."
In Love's suit against Universal, she decried the "impossible" record contract in which labels typically demand an album a year.
Those companies expect artists to produce hit songs, create music videos, and launch a tour to promote the new album. That takes at least two years, Love said in her complaint.
Love also said that Universal broke her contract when it acquired other labels during its merger spree in 1998. When her seven-year contract expired in 1999, she left the company.
But Universal sued Love, saying she owed five more albums under her 1992 contract. Love countersued with her sweeping case. The company now wants $25 million - the profits it says it lost from five unreleased albums - and accuses Love of trying to "create a new special constitutional right for wealthy rock stars."
In July, a Los Angeles Superior Court ruled that Love could move to trial, probably in January. Unlike others who have sued their labels, Love vows not to settle. As she told reporters this summer: "Ego-wise, what's better than having a law named after you?"
Entertainment lawyers expect this trial to reveal some of the industry's most secret practices.
"The record companies spend money stupidly," said one lawyer, who works with these companies. "The system is so inefficient, only 5 percent of a company's acts turn a profit. And since all the radio stations are owned by a handful of people, it's hard to get your record on air without a big label."
That's why so many musicians sign the contracts, said Don Engle, a longtime music industry lawyer. "Many of them would pay a record company just to break into the industry," he said.
The labels say they must hold musicians to their contracts because they invest so much money to build star acts. "This is a high-risk business," said one executive.
However, most expenses are paid by the acts. Musicians must hand over 95 percent of their royalties to their labels, who charge them for producing their records, creating videos, and even promotion and packaging, said Engle.
Furthermore, say the Dixie Chicks, the labels often pad those charges. This group has sold $175 million in recordings since it signed with Sony in 1997, making it one of the world's top acts. Its members accuse Sony of "systematic thievery" by swindling them out of $4 million.
After an audit of Sony's records recently, the members said they discovered they had been overcharged on costs and underpaid in royalties. In disgust, the trio quit. Sony sued, saying the group broke the contract and owe Sony $100 million for five undelivered albums. The trio countersued.
In its defense, Sony cites a controversial clause contained in many record contracts: Basically, no matter how often a label overcharges or underpays the artist, and no matter for how much money, the artist can't walk out as long as the company repays the artist.
Last month, the Dixie Chicks, Love, and dozens of other acts went before California's Legislature to testify against these contracts. The state is the only one that restricts employment contracts to seven years, yet record companies are exempt.
Labels use the contracts to lock talent into "indentured servitude," the musicians testified, or they sue talent for not fulfilling "onerous" contracts.
Country singer LeAnn Rimes, for one, signed a deal when she was 12 years old, agreeing to deliver 21 records in seven years. Now, the 19-year-old can't leave without delivering more albums or paying her label. She testified that she would be working under that contract until she's 35, a situation she called "grossly unfair."
New disputes have been spawned by the Internet. Not long ago, consumers and artists looked to the Internet for musical adventures and commercial freedom. Mann is one of the few established artists who successfully tapped the Net to sell her records.
"In fact, we thought we had broken away from the major label system," said her manager, Michael Hausman.
Two years ago, Mann and her Universal label, Hip-O-Records, parted ways over creative differences. Mann went on to distribute her own album, "Bachelor No. 2," marketing it through her Web site. She sold more than 200,000 copies, said Hausman.
But a few months later, Universal issued its own, more expensive record: "Aimee Mann - The Ultimate Connection." Mann sued Universal, saying it breached her contract, piggybacked onto her own marketing efforts, and poisoned sales of her own disc.
Taken together, these lawsuits could force structural changes in the industry. Industry lawyers compare the current litigation to the lawsuit of actress Olivia de Havilland, who challenged the movie studio system that used to dictate the careers of Hollywood stars. Her 1947 court case ultimately changed the law, weakened the studio system, and led to the rise of independent film producers.
The same type of domino effect is expected if Love or the Dixie Chicks win. A court victory, along with anticipated legislative changes, would weaken the giants and allow young bloods to rush in, said Annie Chaitovitz of the American Federation of Television and Radio Artists.
"It will open things up to more competition and eventually, one hopes, lower prices," she said.
GRAPHIC: PHOTO, The Dixie Chicks (from left), Natalie Maines, Emily Robison, and Martie Seidel, and rocker Courtney Love have sued their record labels. / REUTERS PHOTO (LEFT )/ AP PHOTO