RAY SUAREZ: Next tonight, a high profile labor revolt within America's multibillion dollar music industry. Jeffrey Kaye of KCET Television reports.
SHERYL CROW (singing): All I want to do is have some fun...
JEFFREY KAYE: Sheryl Crow...
BILLY JOEL (singing): Anthony works in the grocery store...
JEFFREY KAYE: Billy Joel...
DIXIE CHICKS (singing): And the boss man started screamin'...
JEFFREY KAYE: The Dixie Chicks...
EAGLES (singing): Nights so long...
JEFFREY KAYE: And the Eagles. These are only some of the superstars involved in an unprecedented labor revolt rocking America's $40 billion a year recording industry. It's an insurrection that, if successful, could radically alter the economics and management practices of the music business.
SINGER: And you say you want your freedom...
JEFFREY KAYE: The opponents of the big name stars are their own record labels, many of them subsidiaries of five entertainment conglomerates, which control 90 percent of the global music market.
SINGER: I used to hurry a lot I used to worry a lot...
JEFFREY KAYE: Don Henley, co- founder of the Eagles, is one of the leaders of the talent revolt. Although his band is one of the most successful groups in pop music history, selling over 100 million albums and climbing, Henley has emerged as an outspoken critic of the music business, arguing that its exploitation of performers has run amok.
DON HENLEY, Recording Artist: The recording industry is a dirty business-- always has been, probably always will be. I don't think you could find a recording artist who has made more than two albums that would say anything good about his or her record company.
JEFFREY KAYE: But you've had a fabulous career.
DON HENLEY: Yeah, but that's not the point. It would have been more fabulous had I been treated fairly. It doesn't matter how well I've done, or how well anybody else has done, the point is, is the business is simply not fair and people are getting ripped off.
JEFFREY KAYE: In their crusade against the music industry, artists charge the record labels with operating a contract system that turns top performers into indentured servants, robbing them of potential earnings.
DON HENLEY: Artists could be held to one record company, to one contract, for their entire careers. Artists never get a chance to go out and compete in the open marketplace to see what their true worth really is, like all other working people.
SPOKESMAN: I said, "look, it's unreasonable to ask Sony to do this."
JEFFREY KAYE: Recording executives such as Miles Copeland, former manager of the rock group The Police and President of LA-based Ark 21 Records, aren't shedding tears for the artists' plight.
MILES COPELAND, Record Company Executive: If you ask any new artist, "How would you like to be an indentured servant like Don Henley," they'd all say, "where do I sign, because we'd love to have houses and millions like he has. Please let me be an indentured servant!"
SINGER: Sunday morning when the paper comes...
JEFFREY KAYE: The main stage for this battle royale between recording artists and record labels is California, the crossroads of the industry, where most of the music deals are made and the contracts signed.
Performers like alternative rocker, Beck, want to abolish a California law that excludes musical artists from the state's seven-year limit on labor contracts. Unprotected by the seven-year rule, which covers all other workers in the state, the artists claim that no matter how successful they become, they remain tied to multi-album, non- negotiable record deals; often signed when they were just starting their careers.
KEVIN MURRAY, California State Legislator: You shouldn't have to stay working for the same employer for longer than seven years. Anything beyond that, frankly, is indentured servitude.
JEFFREY KAYE: California state senator Kevin Murray, a former talent agent, is championing the artists' cause in the state legislature.
KEVIN MURRAY: No matter how much you're getting paid, if you still have to do whatever you have to do for that person and you are not getting your value in the marketplace, this isn't about whether you're getting a little or a lot, but it's whether you're getting compensated the way that you would in an open marketplace. And we're prepared to let somebody have exclusive right to your services for a period of seven years but I don't think we should go beyond that.
JEFFREY KAYE: Henley co-founded the Artists' Rights Movement after numerous legal disputes with Geffen Records, his former label.
JEFFREY KAYE: To what extent are you biting the hand that has fed you very well?
DON HENLEY: Again, I take exception to -- I have fed me. I am responsible for my success. You know, my partners and I wrote those songs. We busted our butts touring for years and years before we made any money. Most artists don't see a penny of profit until their third or fourth album because of the way the business is structured. The record company gets all of its investment back before the artist gets a penny, you know. It is not a shared risk at all.
JEFFREY KAYE: The performers' struggle ranges from appeals and fundraising concerts...
DON HENLEY: This is to help recording artists get fair treatment. We appreciate your support very, very much.
JEFFREY KAYE: ...To lobbying before lawmakers in the California state capital.
KEVIN MURRAY: We know some of you want to catch red-eyes to get to the MTV video awards.
JEFFREY KAYE: In state legislative hearings held last September, performers, such as rock diva Courtney Love, cast their struggle as a David and Goliath battle.
COURTNEY LOVE: I too have a catalogue worth a billion dollars. I've made more for universal than the "Titanic." And are they even nice to me? No! They're rude!
JEFFREY KAYE: Disputes like Love's with record label only begin when performers start their careers. Young musicians flock to cities like LA or New York to launch their careers, often arriving with enthusiasm, but little business sense. Those looking for their big break can be found honing their skills in places like Hollywood's Musicians Institute, a music academy for young rockers. 20-year-old Brice Harris has come from Canada.
BRICE HARRIS: You know, on the legal side of things, I'm young and a lot of the players here are young as well too. If you get sucked into some sort of contract or whatever when you're young and stupid, and you don't have some sort of attorney to show you the way, you are going to get screwed so you have to be careful.
JEFFREY KAYE: Keith Wyatt is the institute's program director.
KEITH WYATT, Musicians Institute: They tend to be trusting and they tend to feel if there is a long complicated contract that is handed to them by an attorney, it is either more than they can understand or, because there's a big powerful corporation behind it, it must be okay in some way. And we have to teach them to look between the lines and not take anything at face value. But it's a struggle.
JEFFREY KAYE: But recording industry executives counter that it is their attention and investments that turn nobodies into music stars.
SINGER: All the people look at me like I'm a little girl
JEFFREY KAYE: To create a pop music sensation such as Britney Spears, labels can't just rely on the performers' talents and good looks. They have to spend money, lots of it, on what are typically seven album deals.
MILES COPELAND: For an artist going for the mainstream, you're looking at $1.5 million to $2 million is what it really takes to be in the game.
JEFFREY KAYE: That game includes making and marketing CD's, producing music videos, sending artists on tour and paying for the performer's house and car. The recording industry says upwards of half a million copies of an album have to be sold before a record label sees a dime of profit.
SINGER: My friend....
JEFFREY KAYE: The rockers' revolt comes at a precarious time for the music industry. Its profits are threatened by slumping concert attendance, declining CD sales and most worrisome, freely available music on the Internet.
MILES COPELAND: We're all sitting on the "Titanic" here and we've got a couple of artists arguing that the price of their first class cabin or size of the first class cabin is outrageous, meanwhile we've just spotted the iceberg and we say, "guys, let's argue later. We have an iceberg in front of us."
JEFFREY KAYE: Faced with such perils, music industry executives argue that open ended contracts with successful performers allow them to recoup their investments and launch new talent.
HILLARY ROSEN: When you spend money in investment, sometimes you have success. Most times you don't.
JEFFREY KAYE: Hillary Rosen is President of the Recording Industry Association of America, the record labels' Washington, D.C. Trade group. She says the industry's business model is sound and far from unusual.
HILLARY ROSEN: This is an R&D business to put it simply. When you have a success, that success pays for all of your investment in your new development. You know, fewer than 10 percent of records that get put into the marketplace make back their cost and those 10 percent pay for everything else. It's the same way in film. It is the same way in books. It is the same way in oil.
DON HENLEY: They will admit to you that they have over a 90 percent failure rate in this industry. It is the only industry I know of that operates this way with 90 percent plus failure rate. They say that's okay. What that says to me is that they don't know what the hell they're doing.
JEFFREY KAYE: Rebellious rockers promise to step up their activism, vowing to become as much as a political force in the music industry as an artistic one.
SINGER: Don't say it ain't so you know the time is now...