LOS ANGELES (REUTERS) — Rock-music star Courtney Love and Universal Music Group settled a long-running lawsuit Monday, with each side claiming victory in the dispute that highlighted a battle over contracts between musicians and record labels.

Love, who leads the band Hole and is the widow of Nirvana’s late lead singer Kurt Cobain, had vowed not to settle her suit, which was set to be heard in a Los Angeles courtroom this week, and music stars had hoped it would become a test case through which to air their grievances.

Musicians like the Eagles’ Don Henley, through the Recording Artists Coalition, believe record labels routinely fail to pay them millions of dollars in royalties due to flawed accounting and arcane contract language. Love’s case also questioned a California law that says record companies may bind a musician to a contract for more than the seven-year maximum under current California statutes.

Los Angeles attorney Jay Cooper, who chairs the entertainment practice of Greenberg, Traurig and represents many top musicians, called the settlement a “difficult” one for the artists’ cause because key complaints remain open.

“We were certainly hoping some of these issues would have been resolved,” Cooper said.

Love, however, said she would fight on by lobbying legislatures and advocating collective-bargaining agreements between musicians and record companies.

“I plan to continue my advocacy of artists in Sacramento (California’s state capital) and Washington, where this belongs,” she said in a statement.

Smells like teen spirit. . . money, too

Financial details of the settlement were not disclosed, but Universal Music Group, the world’s No. 1 record company and part of Vivendi Universal, waived rights to Love’s future records — a key concession sought by the singer.

Love and members of the Cobain estate granted Universal Music Group, or UMG, permission to release new Nirvana records featuring previously unreleased songs and compilations of the group’s old hits — a major victory for the music company.

Cobain was the lead singer of alternative rock band Nirvana before he committed suicide in 1994. In the years since, he has become a rock icon, which has made songs from the band’s CDs like 1991’s smash Nevermind highly valuable for Universal.

Universal already is compiling a CD of the band’s songs and Monday, Love and Nirvana co-founders Dave Grohl and Krist Novoselic announced a separate legal settlement among the three that also paves the way for the new CD.

The trio said the CD will be a “history of the band,” with a single, “You Know You’re Right,” that was the last recording Cobain made with Grohl and Novoselic before his death.

Universal will release the as-yet-unnamed CD on Nov. 12, along with a music video for “You Know You’re Right.”

The three said several new Nirvana releases will come out “over the next few years,” including a boxed set of CDs.

Winners and losers

Along with winning rights to future records, Love gained ownership of several past Hole songs, and UMG agreed to waive re-recording restrictions on some earlier Hole songs. Hole CDs include Live Through This and Celebrity Skin.

But, as part of the deal, UMG received a “royalty override” on some of Love’s future records, meaning it will get a small percentage of their revenue.

Love is making a new album, and the first single is set for a January release in the United Kingdom by Poptones Records.

A Universal spokesman declined comment beyond the release, and Love’s attorney Barry Cappello, was not available.

The deal prompts a big question for the industry, however, which is whether the complaining artists have the musicians’ interests at heart or just their own. Love is not the first outspoken recording star to settle with the labels.

In June, country music trio the Dixie Chicks settled a dispute with Sony Corp.’s Sony Music Entertainment that dealt with similar issues.

Musicians seem to have little choice than to cut a deal, industry sources said, because a lawsuit can tie up years of time in an industry where new stars are created overnight.

Absent Love’s and the Dixie Chicks’ suits, there are currently no cases in courts to challenge industry practices.