LAWSUIT AGAINST DEF JAM: Ex music exec claims foul play in record sales.


Kevin Liles
(Jan. 30, 2004) *A former music executive is accusing a unit of Universal Music Group and a promotion company of persuading independent retailers to falsify album sales, which distorted the pop charts.

Veteran sales executive Theressa Rossi said in a lawsuit that she was to become the "front man" for a company hired by Universal's Def Jam label to falsify sales figures reported to the tracking firm Nielsen SoundScan, which compiles the industry's sales charts.

Details of the suit state that independent retail stores were provided with free CDs of Def Jam artists by Giaco Entertainment, a New York marketing firm retained by the label.

Giaco had merchants repeatedly swipe the CDs across scanning machines to boost sales figures to distort Nielsen SoundScan's computerized reports, according to the suit. It is not known which albums were involved. The suit also states that Giaco threatened retailers with delays of regular album shipments if they did not falsify sales data.

The complaint, filed Monday in New York state court, names Universal, Def Jam, Giaco President Joe Giaco and Def Jam executives Kevin Liles and Mignon Espy as defendants.

In the past, representatives of the five major record companies have denied knowledge of any attempt by their labels to manipulate the data.

Giaco's attorney, Steven K. Meier, called the claims "patently untrue," according to a report by Bloomberg News.
Previously, executives with the New York-based market research company have said they have installed safeguards to uncover and remove false CD sales reported by record stores.

According to the complaint, Universal had moved to sever ties with Giaco in 2001 after a Los Angeles Times article described a possible inflation of music sales data by independent promoters.

The suit also alleges that in attempt to conceal from Universal executives that Def Jam and Giaco had not severed their relationship, Liles and Giaco got together to create a new marketing company, Entertainment Marketing Services with Rossi as the principal.

But later, Giaco refused to open his financial books to Rossi and forced her out while withholding her share of the profits.

For the music industry, Rossi's allegations could have a catastrophic effect that will touch every area of the industry. Nielsen SoundScan's figures, used to compile Billboard magazine's sales chart, are widely considered the most trustworthy measurement of consumer tastes.

Before SoundScan's arrival in 1991, the industry's charts were based on verbal reports made by retailers.
The suit seeks $22 million in damages.

*cough* Ashanti *cough*