Recording artist Courtney Love’s widely publicized lawsuit against Universal Music Group, despite breathless media accounts about it being a landmark case, is drawing shrugs from music industry insiders who predict the record label will win handily and that the case will do little to change the industry.
Several senior-level music executives, most of whom declined to speak on the record, described the case as routine.
“The labels could care less. These companies routinely put aside $750 million for contingencies,” said one executive, noting that other acts, including Beck, Garbage and Tom Petty, have settled contract disputes outside of court. “She’ll settle like they all do.”
Bertram Fields, senior partner with Greenberg, Glusker, Fields, Claman, Machtinger & Kinsella LLP, who has served as legal consultant to Sony Music and Warner Music Group, agreed.
“These are tough cases (for plantiffs) to win,” he said.
Legal documents filed by UMG dismiss Love’s suit as a “meritless, inflammatory diatribe” designed to “attract media attention.” The contract is described as a “fair, industry-standard agreement” that Love “willingly” signed.
Russell J. Frackman, who is also representing the Recording Industry Association of America in its suit against Napster, is lead attorney for UMG. His office declined to comment, on instructions from UMG, which also declined comment on the case.
Recording companies, as exemplified by the united front they displayed in taking on Napster through the RIAA, quickly band together when they see collective interests at risk.
“The recording companies act like they’re a cartel,” said Love’s manager, Jim Barber.
But the attitude appears to be that Courtney Love is no Napster. Universal has gone outside of its house to find its legal team, Frackman and two associates at Mitchell, Silberberg & Knupp. The RIAA isn’t involved. In addition, the various major labels aren’t coming to the aid of Universal. Repeated inquiries at each studio elicited only the response that the case was a Universal matter, not an industry one.
But Love’s attorney A. Barry Cappello, managing partner in the Santa Barbara law firm of Cappello & McCann, said the industry should take the case seriously.
“The big labels are feeling pretty high and mighty since they broke Napster,” said Cappello. “But while others who’ve raised this issue have been broken by their money and power, settlement is not an issue for my client. We’re serious and they should be too.”
“Universal’s arrogance is outrageous,” added Love in a prepared statement. “I don’t have to take this and I won’t. I want to protect and create opportunity for other artists.”
Nature of suit
Love is challenging an amendment to a section of the state labor code that allows record companies to sue recording artists for damages if the artists do not fulfill their original contract and produce seven albums over a seven-year time period the minimum the labels claim it takes to recoup their investment in an unknown artist.
Love’s band, Hole, recorded only two albums between signing with Geffen Records Inc. in 1992 and 2000, when she and her band terminated their contract with UMG, which had bought Geffen in the interim. UMG is claiming that Hole owes $100 million for the future value of the five unrecorded albums.
UMG is owned by international entertainment conglomerate Vivendi Universal and is one of the seven major recording labels along with Warner Music Group, Virgin Records, BMG Entertainment, Sony Music, and Columbia Records that control nearly 90 percent of the music sold throughout the world.
The amendment to the labor code section has never been challenged in court. But most insiders agree that the recording companies have an ace in the hole if the case should go to trial. Today’s contracts are eagerly signed by up-and-coming artists who are willing to pay any price to be with a major label and its distribution system.
“Any kid off the streets would pay royalties per record to be signed by a Universal,” said Don Engel of Engel & Engel, which has taken on contract suits on behalf of Olivia Newton-John, the rock group Boston, Don Henley and Donna Summer all of which were settled before trial.
Deep pockets
The David-and-Goliath aspects of the case are reminiscent of when the popular grunge band Pearl Jam took on Ticketmaster, with little success. The record companies have deep pockets and they are willing to spend whatever it takes to prevent the case from setting a precedent that would go against the companies. While Love herself has plenty in her savings account in part from her recording and acting careers but mainly from her control of the estate of her late husband, Nirvana lead singer Kurt Cobain the recording companies might also be banking on Love to blink first in their staring contest.
“A record company farms its litigation out and doesn’t get emotional about it. Courtney Love is going to get a five-figure bill each month and be on an emotional roller coaster,” said Heller. “It’s tough for a major artist, both financially and emotionally, to stick something like this through.”
Love, infamous for her attitude and behavior, is known in the industry as a wild card, which raises doubt about her ability to sustain the “two years minimum” that Cappello predicts it will take to see her case to its conclusion.
The money at stake is major. Love and her band have sold around 4 million albums in the United States since her first album in 1994. Totaled up, she’s generated almost $50 million, of which UMG has taken about $40 million. UMG is suing for $20 million per album that Hole hasn’t recorded under its original seven-year, seven-album contract.
Broader issues
Swirling around the controversy are several other issues in the recording industry: working conditions, independent vs. major labels, overall reform and the ability for recording artists to unionize and demand fair payment for their recordings. Many hope that Love’s lawsuit will open the floodgates and end a system that Barber characterizes as “sharecropping.”
Love took pains to go outside the system by hiring Cappello, who has no ties to the entertainment industry. A ferocious litigator in his 35 years of practice, Cappello has wrested more than $3.5 billion from large companies and financial institutions, including Bank of America.
“It’s a straightforward legal case based on two readings of the law,” said Cappello. “We expect to win. The difference in the suit is that Courtney Love has the staying power (to see the case through trial).”
Several other sources, all more experienced with the music industry, said that, emotions aside, the record label will win on the legality of its case.
“The statute says that artists pay damages for non-completed records,” explained Fields. “It’s in the contract.”
