Ceremony eclipsed by artists' revolt over contracts

An industry in the doldrums, record sales in decline, artists in ferment over accounting rip-offs and the internet: such was the backdrop to last night's Grammy awards, supposedly the brightest evening in the music industry's calendar, laden this time around with one portent of doom after another.

An industry in the doldrums, record sales in decline, artists in ferment over accounting rip-offs and the internet: such was the backdrop to last night's Grammy awards, supposedly the brightest evening in the music industry's calendar, laden this time around with one portent of doom after another.

The gossip on the red carpet outside the Staples Centre in Los Angeles, where the awards ceremony was taking place, was not about this year's hottest nominees but rather about oppressive seven-year contracts, the proliferation of free online music, the boom in blank CD sales, and the corporate bottom-line mentality of major-label executives.

On Tuesday evening, headline acts including Beck, Billy Joel, the Eagles, the Dixie Chicks, Sheryl Crow and Emmylou Harris performed at four simultaneous benefit concerts around Los Angeles to promote a new group called the Recording Artists' Coalition – a fledgling union committed, at least in theory, to negotiating better deals for musicians at all levels of success and promoting new talent.

Don Henley, the Eagles' former frontman, vowed to expose an accounting scandal in the record industry of Enron-sized proportions. Other coalition luminaries likened their movement to the creation of the Hollywood guilds in the 1930s and 1940s, which eventually broke the stranglehold the movie studios held over actors, writers and directors.

Unlike the film industry, the music business has never had any form of collective bargaining, and still signs up artists to seven-year contracts, and often weigh down others with massive advances on royalties that they can never pay off.

The grassroots rebellion could not come at a worse time for the big labels, which are struggling with declining sales (a 3 per cent drop-off in 2001), a dearth of exciting new acts, the challenges of free musical downloads from the internet and CD-burning, and ever more vociferous accusations that they have lost touch with the artistic passion that once drove their industry.

David Geffen, one of the music industry's most prominent executives, said this week: "It's the most grim it's been since I've been around the business," .

Miles Copeland, the former manager of the Police turned independent producer, compared the situation to Europe in 1938, when the clouds of war were gathering but too many people shrouded themselves in denial. He feared that any change in contract arrangements at a time of diminishing returns would result in the big acts negotiating even better deals and new artists getting pushed further on to the margins. The musicians, however, are getting so angry that it is doubtful how much they care about the rationale of the businessmen. Don Engel, a lawyer who represents the Dixie Chicks, said the record companies have been getting away with murder for years. "They cheat the artist on an institutional and systematic basis," he said.

One example: the Big Five record companies successfully drove Napster, the free online music-swapping service, out of business last year, in part because they argued that artists were not getting their financial due. However, the new music-swapping services the record companies have set up on a subscription basis still cut most artists out of the equation because of a loophole in the 1995 Digital Performance Right in a Sound Recordings Act. Several musicians have sent cease-and-desist letters to the companies, ordering them not to include their work in these services. According to The New York Times, a number of those letters have been ignored.

The controversies are gaining political momentum. A California senator, Kevin Murray, has promised to hold hearings on the way the record industry does business. "Artists have, for many years, generously given of themselves for charity," he said at a rally. "Now they must use their star power for another good cause – their own."