Company Town : Meat Loaf ‘s Beef Is Lack of Royalties

Soul star Jackie Wilson was buried without a headstone.

Supremes member Florence Ballard died a welfare recipient.

Rock and Roll Hall of Famers Jimmy Reed and Howlin’ Wolf lived and died in destitute conditions, abandoned by the same industry that sings their praises.

Now rock singer Meat Loaf, whose 1977 “Bat Out of Hell” remains one of the best-selling albums in pop history, says he has been shorted out of millions of dollars in royalty payments.

“It’s brutal the way entertainers are treated in this business,” Meat Loaf said in a phone interview from London. “All I’m asking is for these guys to be fair and live up to the agreement we signed. I did my part. I recorded an album that has been a giant seller for almost 20 years. They didn’t mind making a ton of money on my album. Is it too much to ask for them to pay what they owe me?”

The beefy entertainer, whose real name is Marvin Lee Aday, is expected to file a breach-of-contract lawsuit in New York today against Cleveland International, a small Ohio record label that signed a contract in 1977 with Epic Records to manufacture and distribute “Bat Out of Hell.” Meat Loaf contends Epic has sold more than 25 million copies of the album and owes him an estimated $14 million in unpaid royalties.

The singer’s suit comes just five months after Cleveland filed a similar claim against Sony Music, which purchased Epic in 1988, accusing the Japanese conglomerate of “willfully and maliciously” distorting contract deductions in order to reduce royalty payments.

In addition, the Cleveland suit alleges Sony violated its contract by refusing to make available the financial records Cleveland needed to conduct a complete accounting of funds owed Meat Loaf. The audit, based on six years, showed Sony owed Meat Loaf $5 million in royalties, the suit alleges.

Cleveland International owner Steve Popovich was unavailable for comment. Representatives for Sony declined to discuss the matter while litigation is pending.

The history of the music business is littered with artists who believe they were cheated by their record companies. Meat Loaf’s case is unusual in that such complaints by major stars usually are settled in private negotiations. His is among several high-profile complaints in recent years that have received a public airing.

R&B; trio TLC, who had the third-best-selling album in 1995, say they were forced to file for bankruptcy last year in part because their contract with Peppitone Records paid them such a meager royalty rate. Rap stars Run-DMC and R&B; crooners Silk have filed similar bankruptcy claims recently.

Delinquent or deficient royalty payments are difficult to track primarily because the artist’s accounting must be based on documents provided by the record company. Some companies impede the audit process, managers say, by refusing to turn over proper documents.

Some artist managers say they are afraid to ask for audits because they run the risk of alienating the very executives whom they must count on to market and promote their upcoming projects. In addition, the cost of a typical audit, estimated to exceed $50,000, can be prohibitive for many artists.

Meat Loaf is being represented by Los Angeles attorney Don Engel, who has conducted more than 50 audits of record companies over the last two decades.

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“My impression is that the main job of the accountants in the royalty departments is to take every advantage they can for the record company by shaving every dollar they can from the artist,” he said. “I have yet to see an audit of a record company where in the end the artist wasn’t owed money--although things have improved quite significantly in recent years.”

Music executives contend that Meat Loaf’s situation is an anomaly and that most artists signed to major labels are compensated fairly.

It is true, executives say, that most unknown artists still sign long-term deals with low 12% royalty rates. But companies typically invest an enormous amount of money trying to develop the careers of unknown artists--and in many instances, they never recoup a penny of it. In turn, those artist never get a royalty payment.

When a young artist has a hit, however, major labels typically rewrite their contract, offering a higher royalty rate and other considerations in exchange for additional albums.

The introduction of SoundScan, a computerized sales tracking system, has also improved the ability of artists to more accurately monitor royalty statements, artist managers say.

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“Compared to 25 years ago, the royalty payment situation is far more fair for artists,” said Lee Phillips, who represents Don Henley and Barbra Streisand. “I don’t believe that most companies these days intentionally underpay on royalties, but errors can occur due to a misinterpretation of a contract.”

Under most contracts, a record company is not required to pay royalties until the firm recovers funds advanced to the artist to cover studio recording, radio promotion, tour support and living expenses.

In addition, the firm is allowed to take deductions for packaging and promotional giveaways from the wholesale price before calculating the established royalty rate. In most cases, artists are also paid a lower royalty rate for compact discs as well as albums sold overseas and through record clubs. Some companies also delay payment of royalties to account for possible returns of unsold product.

During the 1980s, Meat Loaf said, he began to suspect that more copies of “Bat Out of Hell” were being sold than the company had acknowledged. Those suspicions, he said, were confirmed in 1991 when Billboard magazine began using SoundScan.

The first week that Billboard published charts based on SoundScan statistics, Meat Loaf’s 14-year-old album registered in the top 50--outselling hundreds of new albums released by current artists. By 1993, SoundScan had tracked 3 million sales of “Bat Out of Hell” in the United States alone--leading Cleveland to request an audit.

According to Meat Loaf, it has taken nearly a dozen years to get back on his feet after a string of legal battles with record companies and other business associates forced him into bankruptcy in 1983.

“It’s shameful,” Meat Loaf said. “I ended up bankrupt. I lost my house and everything--even the publishing rights to my songs, which the Bankruptcy Court took away. But I’m not the first artist who has ever been screwed. It happens all the time.”