MCA, one of the six large record conglomerates that dominate the American music industry, has announced that it will pay significant royalties to veteran blues and rhythm and blues artists who recorded for the Chess and Checker labels in the '50s and '60s. MCA acquired those labels' catalogues and master recordings in 1985 and has subsequently embarked on an ambitious reissue program, including boxed sets on the careers of Chuck Berry, Willie Dixon and Howlin' Wolf. Though it is under no legal obligation to do so, MCA will pay these artists royalties for all Chess and Checker products sold since it acquired those labels and, additionally, will wipe out production debts that Chess levied against artists to preclude royalty payments. In the late '40s and '50s, artists like Muddy Waters, Wolf, Buddy Guy, Bo Diddley and the Soul Stirrers were paid flat fees for their recordings and received no royalty payments from Chess on the sales of those records. In fact, most were saddled with artificially inflated debt accounts: As recently as 1986, Muddy Waters's account showed a negative balance of $56,000. The same year, sales from Waters's catalogue earned more than $25,000 in royalties -- money that wasn't paid out at the time but now will be. The estates of both Waters and Wolf are expected to receive significant checks from MCA. "It's wonderful that all these Chess artists who, to my knowledge, never received a royalty check in their lives, are finally getting paid," says artists-rights activist Scott Cameron, who represents some 70 artists, including Dixon and the estates of Waters and Wolf. Part of the problem was that the Chess catalogue went through various owners in the '70s: One, GRT, went bankrupt; subsequently, the All Platinum/Sugar Hill company owned Chess from 1974 until MCA acquired it in 1985, but, says Cameron, "In discussions with them about royalty recovery, we never got anywhere. {When Chess was sold} Sugar Hill gave MCA the same unrecouped balance figures, as if {these artists} hadn't sold anything between 1974 and 1985." Over the last few years, Cameron and other artists-rights activists have been meeting with different labels to address royalty inequities. "We have been meeting {about} problems they had in the past, including some artists who never received accountings or were told they were never entitled to any," says Bruce Resnikoff, MCA vice president for special markets and products. "When we purchased the Chess catalogue, one of the most disturbing things was that virtually all the accounts showed substantial unrecouped balances, which are difficult to verify because ... we didn't have the records." But, says Resnikoff, "from an ethical, moral and historical standpoint, everybody at MCA believes that these artists -- because of their importance to the history of rock-and-roll, to blues and in general to the history of music -- deserve to be recognized. One of the things we wanted to do, aside from putting out quality material that would be critically and commercially successful, was make sure they were properly compensated for their work." MCA decided that the royalties it pays to the artists will be at a 10 percent rate, comparable to contemporary levels. "That will bring these artists into the mainstream of royalty payments because MCA is not just adhering to the contracts, but reforming them," says Howell Begle, chairman of the Washington-based Rhythm and Blues Foundation, which has been championing monetary payback to pioneering R&B artists. "No one in the '50s had a 10 percent royalty rate." In the '50s the highest rate, when paid, would have been 4 1/2 percent of 90 percent of sales -- this in the era where singles were the dominant format. "By doubling {the royalties}, we're also compensating them for money that they may not have received in the past to which they may have been entitled," says Resnikoff. "We've also issued them new contracts directly with MCA, which obligate us to pay them semiannual royalties. From a legal standpoint, by entering into a new contract directly with these artists, it gives them security and governs the terms of how their masters can be exploited, which most never had before." Other artists benefiting from the MCA move include Etta James, Harvey Fuqua, Eddie Boyd, Memphis Slim, Lowell Fulsom, John Lee Hooker, J B Lenoir, Percy Mayfield, Otis Rush, Koko Taylor and Jimmy Witherspoon. "The artists that I've talked to have given me the impression they're ecstatic, and there's been nothing but positive feedback," says Resnikoff. "We are not talking about recording artists who made the millions of dollars that are made by today's superstars," he adds. "In many respects, these artists are just as great, and if it weren't for them, you wouldn't have a lot of the superstars today. So anything we can do to help them from an industry standpoint is just wonderful." According to Cameron, conditions at the time made it relatively easy for record labels to take advantage of such artists. Some of them couldn't read or write, much less deal with the complex legal documentation of recording contracts. And, he adds, blues and R&B artists "didn't comprehend the idea of royalties back then. The whole purpose and thought at that time was they needed a record out to get steady work in the finer clubs. They weren't concerned about anything except having that regular release of new product. I don't think anybody recording back then could predict how valuable those recordings would be in 1989." The MCA move is the second important step by a major label in recent years. Atlantic Records announced last year that it was refiguring royalties paid to the R&B artists whose success provided the foundation for the label in the '50s and '60s; the new royalties take into consideration questionable billing practices prevalent in the industry at the time, and so far about $750,000 has been paid out. Atlantic also made a multimillion-dollar donation to the Rhythm and Blues Foundation to establish a fund for annual grants to pioneering artists; $125,000 was awarded to eight artists or groups last month in ceremonies at the Smithsonian's Museum of American History. However, it should be noted that for years Atlantic benefited from the lower royalties that were paid out to the artists. MCA, by contrast, did not figure into that earlier exploitation of the catalogue, which makes its move a more far-reaching one. Whether the rest of the industry follows suit remains to be seen. The masters and catalogues of most of the small independent blues and R&B labels are now controlled by major labels like CBS, PolyGram and RCA. Says Cameron, "Hopefully this is going to send a message out, because MCA didn't cause the problem, they bought it. You can't go back and recreate 1955, but you can make it be 1989." "Each label will have to do what's right, but I hope this has an impact," says MCA's Resnikoff. "While everyone recognizes that this is a business, there are certain moral obligations as well as legal ones. I just hope every label recognizes its obligations to its own history."