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Royalty Audit Law Takes Effect In California

By John P. Kellogg

On January 1, 2005, the Recording Industry Accounting Practices Act took effect in California. (See Title 10, commencing with Section 2500, of Part 4 of Division 3 of the California Civil Code.) The law, which was proposed by California State Legislator Kevin Murray (D-Culver City), gives artists minimum statutory audit rights that override several of the disputed audit provisions of standard recording agreements.

The legislative intent of the measure was to “authorize a royalty recipient under a contract for the production of sound recordings, notwithstanding any provision of the contract, to audit the books and records of a royalty reporting party … to determine if the royalty recipient has earned all of the royalties due pursuant to the contract.” The legislature also found, “This act is important public policy and establishes minimum audit procedures that apply to all royalty contracts in the recording industry.”

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