thought no one would notice with all the furor over the Internet
Radio rates. And maybe they just don't care about artists as much
as they want you to believe.
folks at SoundExchange have apparently decided that they need
more ready cash to fund their publicity campaign in favor of the
universally despised CRB Internet Radio royalty rates. They've
decided to drain more money from the accounts of artists they
haven't been able to find.
There's another forfeiture scheduled, and this time they didn't
even bother to issue a press release about it.
On June 30,
2007, less than sixty days from now, artists who have managed
to evade that super-efficient SoundExchange dragnet up to now
will stand to lose all royalties collected on their behalf for
broadcasts between April 1, 2000 and October 31, 2002.
8,353 of them. This still represents better than 20 per cent of
all the artists they collected for during that period. About 6,000
are carryovers from the last forfeiture, when SoundExchange sucked
up the royalties for broadcasts up through March 30, 2000. That
forfeiture happened last December. Those artists probably had
performances broadcast in the new period, too, even though SoundExchange
now gets to spend the earlier money.
Or, as it
now appears, they get to spend 70 per cent of those royalties.
Buried on the SoundExchange website, right after the announcement
of the new forfeiture (you have to look hard, it's printed in
8-point type in the middle of a paragraph), is an announcement
that SoundExchange didn't completely rob those artists in the
to the statement, SoundExchange has established a reserve with
30 per cent of that money which is available on a first-come,
first-served basis to artists and labels that lost money in December.
I guess taking 70 per cent of a musician's money, and then holding
the rest to pay out to some artists, is so much more "artist-friendly"
than taking it all at once, especially as they are only able to
take the money because they couldn't find the musician in the
I don't see
how the percentages make much of a difference to the artists who
aren't getting any of the money. If you get mugged, it is cold
comfort to discover the thief left your shoes when he took your
wallet. Under this new arrangement, you're going to lose your
shoes eventually unless you figure out who the mugger was on your
print is the only formal announcement regarding the creation or
existence of the reserve. Of course, you only know about the reserve
if you read the fine print. You only read the fine print if you
go past the home screen on the SoundExchange website to get to
the list of artists they can't find. And, of course, you only
bother to go the SoundExchange website to check the list of artists
you can't find if you know it is there.
John Simson has explained that it really isn't SoundExchange's
job to find all these people, anyway. You see, according to Simson,
SoundExchange is like a bank, and it is up to the depositors to
inform the bank where they are, and the bank isn't obligated to
go looking for them. Of course, banks don't get to open accounts
for people who don't know the bank exists, and banks haven't promised
the government they would find the people they collect money for.
These are obviously minor details for Simson.
And we all
know how much effort SoundExchange has put into getting this news
out. SoundExchange very helpfully posts every one of its press
releases on its website. There isn't one hint that this money
is there. You might think that SoundExchange really doesn't want
to make much of an issue about their inability to find artists,
especially right now when they are trying to convince everyone
that driving thousands of Internet radio stations away (that play
a lot of the artists that SoundExchange can't find) is really
good news for artists.
SoundExchange would obviously rather focus their public relations
efforts on stuff that maximizes the money they get, like the new
royalty rates, rather than increasing the money they pay out.
The charm of this philosophy, of course, is the more money they
take in, and the fewer artists they actually find, the more money
they get to absorb into their own operational budget. From there,
it will go to such pro-artist activities as more press releases
saying how pro-artist they are, more lobbying efforts to counteract
the near universal outrage at the CRB rates, and more of that
brilliant "statistical analysis" by their own executives that
can't even establish how many paying Internet services there are.
might think that SoundExchange
really doesn't want to make much
of an issue about their inability
to find artists, especially right now
when they are trying to convince
everyone that driving thousands
of Internet radio stations away
(that play a lot of the artists
that SoundExchange can't find)
is really good news for artists.
One of the
strangest aspects of this whole "unfound" artist mess is what
SoundExchange hasn't tried as part of their campaign to locate
people who are owed money SoundExchange is holding. They say they
have 26,000 artists signed up. They have never asked them, in
any organized fashion, to help find their peers. I know that because
I have clients who send me every communication they get from SoundExchange.
all those royalties SoundExchange is holding are derived from
Internet broadcasts, it strikes me as odd that all the "outreach"
they say they are doing doesn't involve reaching out to those
communities on the Internet where musicians, and fans of musicians
can be found.
There are websites, forums and message boards that focus on every
conceivable creative niche. There are literally millions of people
who would love nothing more than to help the artists they love
get paid. I saw this happen in hundreds of cases last fall during
the first forfeiture, but SoundExchange has completely missed
the boat on this. Maybe that's just the way they want it. There
certainly isn't any evidence they are making a real effort. Those
8,353 names on the new list tells me they aren't.
And how much
are those "missing" artists owed?
COO Barrie Kessler, the author of that "statistical analysis,"
says the average annual payout to artists is $360. The period
subject to default is 30 months long, or two-and-a-half years.
8,353 x $360
x 2.5 = $7,517,700.00.
that number requires you to believe the average annual artist
payout is $360. As SoundExchange doesn't release any of that information,
and Kessler has proven herself capable of delivering conflicting
information within a single press release, you can believe that
total at your own risk. But even if SoundExchange, in another
artist-friendly frenzy, decides to take only 70 per cent of that
money, that will still come to more than $5 million taken from
artists and put in their own pocket.
for the fact that they are keeping everything a secret this time,
we're back exactly where we were last September, when SoundExchange
announced the first forfeiture for "unfound" artists. Thousands
of artists are going to be deprived of money they've earned because
SoundExchange hasn't been able to find them. SoundExchange gets
to keep the money they don't pay to the artists they can't find.
It has to
be fuel for great summer daydreams at SoundExchange. Thousands
of webcasters driven away. The unfettered ability to strike deals
with the surviving outlets so that the RIAA labels get paid directly
and even the artists that have registered won't get paid. Thousands
of other artists ignored. Millions of dollars in forfeited funds
available to spend as they want. The future looks bright for John
Simson and company.
It is time
to stop listening to what they say they are doing, and time to
start paying attention to what they are actually doing.
Fred Wilhelms is a lawyer who represents musicians and songwriters.
He can be reached at: [email protected].
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