Edna Gunderson delineates the conflict between artists and labels:

What started as a classic David-and-Goliath skirmish over contractual terms could be tilting toward a level battlefield as opposition on a wide range of issues swells against an industry mired in a sales slump.

"The record business is in rough enough shape that something might actually change," says Craig Marks, editor of Blender magazine. "If things weren't so uncertain, so bleak and in such disarray, the industry would be immovable, even with a gun to its head. If there was ever a set of circumstances that could lead to artists making inroads, it's now."

Clinging to the status quo are the world's five major record conglomerates: Universal, Sony, Time Warner, EMI/Virgin and Bertelsmann, represented by a powerful trade group, the Recording Industry Association of America (RIAA). They face challenges from increasingly vocal performers supporting the Recording Artists' Coalition (RAC), whose diverse roster of 150 members includes Bruce Springsteen, Sting, R.E.M., Bonnie Raitt, Madonna, Eric Clapton, Dave Matthews, Billy Joel, Elton John, Linkin Park, Aimee Mann, No Doubt, Puddle of Mudd, Staind and Static-X.

Key concerns from the broad range of byzantine conflicts:

Caps on contract lengths. Most major-label agreements require a commitment of six to eight albums, an obligation that can entail an indefinite term of indentured servitude. California state Sen. Kevin Murray, a Democrat, wrote a bill to repeal an amendment that exempts recording artists from a state law limiting contracts to seven years.
After RAC and the RIAA failed to reach a compromise, the bill was pulled Aug. 15. Murray plans to resubmit it next year as part of a larger package also addressing accounting practices, pension plans and health benefits.

Accounting practices. Audits routinely detect unpaid royalties. Music industry lawyer Don Engel, who estimates that labels misreport and underpay artist royalties by 10% to 40%, says industry accounting practices are "intentionally fraudulent." Music writer Dave Marsh describes the process as "an entrenched system whose prowess and conniving makes Enron look like amateur hour." Royalties, based on complex and antiquated formulas that favor labels, are disbursed only after artists pay back advances, recording costs and other expenses.
Greg Hessinger, director of the American Federation of Television and Radio Artists (AFTRA), a union representing 80,000 actors, musicians and other entertainment workers, says this recoupment method "is so replete with ambiguity, complexity and subjectivity that the only true long-term solution is a complete overhaul. Until we can bury the recoupment system, changes must be implemented that provide for greater transparency and a fuller duty to account so that artists can at least be certain that they are being paid correctly."

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