Universal Music Cashed In On Insurance After It Let Thousands Of Master Recordings Burn... And Didn't Give Any To Artists

from the support-artists? dept

The greatest myth the RIAA and its friends ever pulled was convincing people -- including the press and some gullible musicians -- that it represented the best interests of artists and musicians. You would think musicians would have learned not to trust the RIAA long ago, especially given that its current CEO, Mitch Glazier, got his original job at the RIAA just months after he literally secretly inserted four words into an unrelated bill that literally stole the copyright from millions of musicians. Uproar from actual musicians finally got the RIAA to back down and Congress "corrected" Glazier's dirty work. Glazier's been at the RIAA ever since, and if you think the RIAA has artist's interests in mind, you've not been paying attention.

A bunch of musicians are now suing the RIAA's largest member, Universal Music, for yet another way it profited off their works and didn't share the windfall. The story is kind of crazy all around. Last week, the NY Times Magazine had an incredible long read about a massive fire at Universal Studios in 2008 that literally wiped out hundreds of thousands of master recordings. Even though Universal Studios and Universal Music Group are two totally separate companies these days, apparently UMG stored its archives on the Universal Studios lot, even years after the two had been split apart.

As the NY Times details, partly because of this split, nearly all of the media coverage skipped over the fact that a warehouse housing hundreds of thousands of original recordings was wiped out -- and the only reporter who did mention it, Deadline.com's Nikki Finke, later posted a correction, saying that, according to Universal Music, "there was little lost from UMG's vault." Universal Music was even more explicit in talking to Billboard saying: "We had no loss thankfully."

However, as the NY Times is now reporting, that was a blatant coverup by Universal Music, which lost a ton of old masters.

The scope of this calamity is laid out in litigation and company documents, thousands of pages of depositions and internal UMG files that I obtained while researching this article. UMG’s accounting of its losses, detailed in a March 2009 document marked “CONFIDENTIAL,” put the number of “assets destroyed” at 118,230. Randy Aronson considers that estimate low: The real number, he surmises, was “in the 175,000 range.” If you extrapolate from either figure, tallying songs on album and singles masters, the number of destroyed recordings stretches into the hundreds of thousands. In another confidential report, issued later in 2009, UMG asserted that “an estimated 500K song titles” were lost.

A lot of classic recordings went up in smoke:

Among the incinerated Decca masters were recordings by titanic figures in American music: Louis Armstrong, Duke Ellington, Al Jolson, Bing Crosby, Ella Fitzgerald, Judy Garland. The tape masters for Billie Holiday’s Decca catalog were most likely lost in total. The Decca masters also included recordings by such greats as Louis Jordan and His Tympany Five and Patsy Cline.

The fire most likely claimed most of Chuck Berry’s Chess masters and multitrack masters, a body of work that constitutes Berry’s greatest recordings. The destroyed Chess masters encompassed nearly everything else recorded for the label and its subsidiaries, including most of the Chess output of Muddy Waters, Howlin’ Wolf, Willie Dixon, Bo Diddley, Etta James, John Lee Hooker, Buddy Guy and Little Walter. Also very likely lost were master tapes of the first commercially released material by Aretha Franklin, recorded when she was a young teenager performing in the church services of her father, the Rev. C.L. Franklin, who made dozens of albums for Chess and its sublabels.

Virtually all of Buddy Holly’s masters were lost in the fire. Most of John Coltrane’s Impulse masters were lost, as were masters for treasured Impulse releases by Ellington, Count Basie, Coleman Hawkins, Dizzy Gillespie, Max Roach, Art Blakey, Sonny Rollins, Charles Mingus, Ornette Coleman, Alice Coltrane, Sun Ra, Albert Ayler, Pharoah Sanders and other jazz greats. Also apparently destroyed were the masters for dozens of canonical hit singles, including Bill Haley and His Comets’ “Rock Around the Clock,” Jackie Brenston and His Delta Cats’ “Rocket 88,” Bo Diddley’s “Bo Diddley/I’m A Man,” Etta James’s “At Last,” the Kingsmen’s “Louie Louie” and the Impressions’ “People Get Ready.”

And there's more. The NY Times lists many, many more, but that quote above should already give you a sense. And even as Universal was telling the public that nothing at all was lost, the internal assessment was quite different:

The vault fire was not, as UMG suggested, a minor mishap, a matter of a few tapes stuck in a musty warehouse. It was the biggest disaster in the history of the music business. UMG’s internal assessment of the event stands in contrast to its public statements. In a document prepared for a March 2009 “Vault Loss Meeting,” the company described the damage in apocalyptic terms. “The West Coast Vault perished, in its entirety,” the document read. “Lost in the fire was, undoubtedly, a huge musical heritage.”

And while some might argue that losing the masters is not losing the overall song, since other recordings exist -- losing the masters is, in fact, a big big deal that can have a huge impact. As the Times piece explains, the master is the key to the recording, especially in an era of lossy compressed copies zipping around the internet. If you ever want to do anything else with a song, you go back to the master.

The remedy is straightforward: You go back to the master. This is one reason that rereleases of classic albums are promoted as having been painstakingly remastered from the original tapes. It’s why consumers of new technologies, like CDs in the 1980s, are eager to hear familiar music properly recaptured for the format. Right now, sound-savvy consumers are taking the next leap forward into high-resolution audio, which can deliver streaming music of unprecedented depth and detail. But you can’t simply up-convert existing digital files to higher resolution. You have to return to the master and recapture it at a higher bit rate.

One person in the article quips that it's like the difference between an original painting and a photograph of that painting. They're not the same.

Separately, many of the destroyed tapes contained unreleased music, for which there was no backup. Those songs will never be heard again.

And Universal hid from the public that tons of these were completely wiped out. When I originally saw the story, I thought it might be worth writing up, to note the questions around archiving and preserving historical content (and whether or not the record labels are really the best custodians of our history). Because the NY Times piece touches on that a lot. But as the details have come out, the story is much more nefarious, and UMG looks worse and worse.

First, as evident in the quotes given to the news sources mentioned above, UMG deliberately tried to suppress the story:

In an email sent to UMG executives and P.R. staff members on June 3, 2008, Peter LoFrumento, the company’s spokesman, reported on efforts to downplay the story, attaching articles from The New York Times, The New York Daily News and The Los Angeles Times that reflected UMG’s account of events. The officials copied on the email included Zach Horowitz, UMG’s president and chief operating officer. Horowitz, who has since left the company, declined to comment for this article.

“We stuck to the script about physical backups and digital copies,” LoFrumento wrote in the email. The company, he claimed, had steered Jon Healey, a Los Angeles Times writer, toward a more favorable view: “We were able to turn Healey around on his L.A. Times editorial so it’s not a reprimand on what we didn’t do, but more of a pat on the back for what we did.” That editorial, published in the paper’s June 3 edition, offered comforting news: “At this point, it appears that the fire consumed no irreplaceable master recordings, just copies.”

While some other reports mentioned masters that were lost, they highlighted "obscure artists from the 1940s and 1950s." A key source for the NY Times piece, who was in charge of UMG's archives for many years, says that the day after the fire, a top UMG exec asked him specifically for names of artists "nobody would recognize." This was a coverup from day one.

The company also lied through its teeth to claim that it had backups of nearly everything. It did not.

The claim about digital backups, which was reported by other news outlets, also seems to have been misleading. It is true that UMG’s vault-operations department had begun a digitization initiative, known as the Preservation Project, in late 2004. But company documents, and testimony given by UMG officials in legal proceedings, make clear that the project was modest; records show that at the time of the fire approximately 12,000 tapes, mostly analog multitracks visibly at risk of deterioration, had been transferred to digital storage formats. All of those originals and digital copies were stored in a separate facility in Pennsylvania; they were not the items at issue in the fire. The company’s sweeping assurance that “the music” had been digitized appears to have been pure spin. “The company knew that there would be shock and outrage if people found out the real story,” Aronson says. “They did an outstanding job of keeping it quiet. It’s a secret I’m ashamed to have been a part of.”

Why was UMG so deliberately misleading? First, as the article goes into detail to explain, these recordings were potentially worth a ton to artists themselves. They would be the basis for any future re-issues and re-mastered works, which can be big moneymakers for some artists. Second, tons of the artists signed to UMG would be fucking pissed off to find out that their masters had been lost. Third, and most importantly, UMG decided to cash in on the loss -- and not tell the artists about it.

First, it sued its landlord and former partner company, Universal Studios. The two companies settled for an undisclosed sum. None of that went to artists. Then, there was the insurance. All in all, according to the lawsuit filed on Friday, Universal Music in its fight with Universal Studios and various insurance companies valued the losses at $150 million. Remember the "nothing was lost" quotes above? Behind the scenes, UMG was saying it lost $150 million, and asking others to pay for it. And you know who got none of that and likely didn't even know their masters had been destroyed? The artists. From the complaint:

UMG did not speak up immediately or even ever inform its recording artists that the Master Recordings embodying their musical works were destroyed. In fact, UMG concealed the loss with false public statements such as that “we only lost a small number of tapes and other material by obscure artists from the 1940s and 50s.” To this day, UMG has failed to inform Plaintiffs that their Master Recordings were destroyed in the Fire.

Yet, even as it kept Plaintiffs in the dark and misrepresented the extent of the losses, UMG successfully pursued litigation and insurance claims which it reportedly valued at $150 million to recoup the value of the Master Recordings. UMG concealed its massive recovery from Plaintiffs, apparently hoping it could keep it all to itself by burying the truth in sealed court filings and a confidential settlement agreement. Most importantly, UMG did not share any of its recovery with Plaintiffs, the artists whose life works were destroyed in the Fire—even though, by the terms of their recording contracts, Plaintiffs are entitled to 50% of those proceeds and payments.

The lawsuit was officially filed on behalf of Soundgarden, the Tupac Shakur estate, the Tom Petty estate, Hole, and Steve Earle -- and they're seeking to turn it into a class action lawsuit.

And while UMG's response to the NYT's article was a promise to be transparent, the lawsuit claims the company has been anything but:

In fact, to this day, UMG has not informed Plaintiffs that any Master Recordings embodying musical works owned by them were destroyed in the fire, and has refused to disclose or account to Plaintiffs for settlement proceeds and insurance payments received by UMG for the loss of the Master Recordings. UMG’s provided pretextual, incomplete or materially false and misleading explanations for the damages caused by the Fire and money received by it thereafter served only to cover up its misconduct. UMG’s breaches are also continuing violations in which UMG repeatedly issues royalty statements that do not identify any revenues shared or payments made to Plaintiffs or members of the class as a result of funds received by UMG as a result of its monetization of the Master Recordings.

So, once again, whenever the RIAA, its employees and friends put themselves out there as supporting "artists" maybe bring up this one example, of where it destroyed important works of art and deliberately lied about it publicly for years, while secretly collecting millions of dollars and not giving the artists their share.

Filed Under: archives, artists, copyright, fire, hole, insurance, master recordings, payments, soundgarden, tom petty, tupac shakur
Companies: umg, universal music group, universal studios