p2pnet news | music | radio:-“OK, I’ll jump into this,” said Dick Huey in an anonymous comment post responding to Fred Wilhelms‘ (right) most recent thoughts on the Net radio royalty hikes.

Huey is a board member of the infamous ex-RIAA SoundExchange who says on his Toolshed site, “the idea that compelling music content from independent labels and artists, bundled and creatively delivered, could compete strongly for online promotional and sales space”.

He goes on in his p2pnet comment, “Fred Wilhelm’s been getting a lot of ink lately, dipping into various parts of the webcaster issue, which he no doubt enjoys. I think it’s interesting that Fred rarely (at least in posts I’ve seen) acknowledges that he’s got a very vested interest in trashing Soundexchange, since he’s interested in establishing a competitive society, and the CRB told him ‘no’.

“Why is that, do you suppose?”

Before we go any further, we’d like to apologise to Fred for being tardy in the publication of his responses to Huey’s many and various accusations. We’d intended to run this yesterday, but it ended up on hold during the launch of the new p2pnet blog.

Sorry, Fred.

Now, here at length and in detail >>>>>>>>>>>

Dear Dick Huey,

I hope you don’t mind me using your full real name, since you neglected to mention it in your own post, the one in which you found it appropriate to lie about me.

You and I have never met or even conversed online, so I find your familiar use of my first name in addressing me to be inappropriate, especially given the outright falsehoods you spread. Under the circumstances, I will refer to you as “Mr. Huey.” When I do so, you may infer that the word “Liar” always appear immediately thereafter.

As to your fantasy-filled post . . .

You should have checked how deep the water was before you “jumped in.” It appears you have hit your pointed little head on the bottom of this particular pool. I reach this conclusion because brain damage is the only acceptable excuse for some of the things you said, and I find it impossible to believe you have lived this long being this wrong all the time. Because of that, I figure the loss of brain function has to be recent.

Let’s start by introducing you to reality, Mr. Huey. Maybe the two of you can be friends.

I am an attorney who represents recording artists. That’s it.

I don’t even represent a single webcaster, let alone a “competitive society.” I have been a critic of SoundExchange for the simple reason that they do a lousy job for artists, and I have grown weary of hearing them say otherwise. Despite your wild hallucinations to the contrary, I have no “vested interest” in anything to do with SoundExchange or Internet radio. I have never asked the CRB for anything, for myself or any client, and I am not in anyway formally affiliated with anyone who has.

You have invented my “very vested interest” out of thin air.

Putting it bluntly, Mr. Huey, you are a liar. That skill may serve you well as an artist manager and SoundExchange spokesman, but it doesn’t move this important debate forward one inch.

So that we can get the subject off of me and back on to SoundExchange, I challenge you, Mr. Huey, here and now, to post any information, and the source of that information, you have regarding my so-called “very vested interest.” I know you don’t have any proof, because there is no vested interest. It is my guess you haven’t got the guts or integrity to apologize, either.

Your conduct is reprehensible to me personally and irresponsible. I didn’t think it was possible that a single human being could perceptibly reduce the accuracy and integrity quotients of the Internet simultaneously. Congratulations, Mr. Huey, all by yourself you have lowered the bar for future discourse. You have made the world a dumber place. Your attempt to stifle discussion by casting blind aspersions about my character really doesn’t make SoundExchange look any better.

But enough about me.

Let’s look at some of the statements you made on behalf of SoundExchange.

You say that I am bashing SoundExchange on behalf of some imaginary “competitive society” and ask the question why I would do that:

“Could it have something to do with the perception that Soundexchange *is* paying artists, and doing a very effective job?”

As my work with that “competitive society” exists only in Mr. Huey’s fevered imagination, the question is clearly irrelevant.

It is very telling that you would rather deal with the “perception” that SoundExchange is paying artists, rather than the reality. It was a very strange choice of words, Mr. Huey, and I will leave it to the reader to determine why you want to focus on perception.

Nevertheless, let’s deal with the underlying point you raise.

You and I clearly have different standards of effectiveness. I say that not finding almost one in three artists SoundExchange has collected money for is not being effective. I say that finding fewer than 70 artists since April on the current forfeiture list of over 8,300 artists is not effective. I say that having to set up a reserve equal to 40% of the total royalty pool to cover claims by people SoundExchange can’t find is not being effective, except in the sense that it is a very effective way for SoundExchange to fatten its operational budget through periodic forfeitures.

You disagree. To Mr. Huey, all these numbers represent a “very effective job.” We are going to have to differ on what really is “effective.” You say 70% success is enough to be “very effective.” I don’t. Calling that level of competence “very effective” is like gilding an outhouse. No matter how much it shines, it’s still an outhouse.

If, as an artist manager, your clients got paid less than three out of four times, I guess you would call Mr. Huey’s performance “effective.” Your clients might think otherwise, and so would I, but your personal standards are clearly different, and much, much easier to achieve.

But at least Mr. Huey’s clients have the opportunity to find someone who can do a better job for them then “effectively” getting 70% of them paid 70% of their fees 70% of the time. Artists are stuck with SoundExchange. It’s the only game in town for Internet royalties (and no, Mr. Huey, recognizing that is not proof I am working for some phantom competitor). Because of that monopoly, the level of performance should be higher than 70%, not lower.

You go on:

“How do I know, you ask? Because I’m a Soundexchange board member. I don’t represent the RIAA – I hold the small independent seat on the board, which is one of 12 seats on an 18-seat board that belong to either independent labels or artists…NOT the RIAA .”

Well, I get the point you aren’t the RIAA because that’s important enough for you to say it twice in one sentence. I’m sure the Freudians among us would find that telling.

But let’s look at the other side of your math, Mr. Huey.

You say you are one of 12 seats that “belong” to independent labels or artists.

Bull. That is just factually incorrect. It is hard to believe you can sit in that Board room and see artists across the table.

There are no artists on your board, and all those nine artist “representatives” were invited to participate by the RIAA. The only artist representatives who can claim to actually represent a artist constituency are from AFM and AFTRA. The rest of the seats belong to the RIAA. The people sitting in them are the RIAA’s guests.

And the RIAA invited you, too. Do you really think the RIAA would let you participate if you weren’t willing and happy to jump when they say frog? Maybe they recognized you as someone who wasn’t the sharpest tack in the box. Maybe they realized you would be easily influenced by being allowed to sit at the adult table. It really doesn’t matter. You are there, and you are theirs. The blatant misrepresentation about the Board membership is proof of that.

By simple subtraction, we end up with the real answer about who runs the show – SIX of 18 seats on the board are controlled by FOUR record labels, the members of the RIAA. In one of his rare honest moments, John Simson has admitted that he pays a great deal of attention to what the RIAA says, because “they are his largest customer.” Thirty five cents of every net royalty dollar goes through SoundExchange to the RIAA. Why should anyone believe they aren’t controlling things when nothing SoundExchange does runs counter to the best interests of the RIAA?

And check the resumes of the executives who run the place day to day. They’ve all drawn checks from the RIAA. Have they forgotten how they got their jobs at SoundExchange, or who to please in order to keep them? I don’t think so.

On that subject, I see where Mr. Simson and Ms. Kessler both got 40% raises between 2004 and 2005, according to the IRS-990 forms on file. Imagine what they might have deserved if they had actually found more than 70% of the artists. Between them, they pulled down about a half million in 2005. That’s about 1,400 times the average artist payout. As their salaries are more than covered by the money the “unfound” artists have already forfeited, the horrendous disparity between the people served by the organization and the people running it doesn’t really matter, does it?

But maybe you’re right. Maybe you don’t do the RIAA’s bidding on the SoundExchange board. I’ll give you the benefit of the doubt on this if you can provide me with a single instance where you have successfully opposed something the RIAA wanted.

Otherwise, just telling me you aren’t the RIAA is meaningless. Lie down with RIAA dogs, get up with RIAA fleas.

You go on:

“I have seen the checks (my background is in artist management, and a long history working pretty much exclusively with independent artists and labels), and I know what the disbursements are. I have been part of the discussions to outreach to artists directly, looking for ways to tie in to various society and industry databases to match data and get more addresses, and I have called/written many of them myself to sign them up. Has anyone else here? “

Me.

But of course, I am working for some “competitive society,” right?

Tell me something, Mr. Huey. Back when SoundExchange offered me the unfound artist list, a year and a half before they posted it on the website, did you, as a Board member, vote for or against requiring me to sign a Non-Disclosure Agreement so that I couldn’t tell anyone they were actually on the list? If you voted for the Non-Disclosure Agreement, perhaps you could tell me why you thought it was a good idea.

Let’s look at the success of your glorious outreach program, shall we?

Last September, SoundExchange announced the first planned forfeiture of money from “unfound” artists. There were over 9,000 names on the list. Quite a bit of interest was sparked by the publication of the list, and pleas for help in finding people were widely circulated on the Internet. None of those pleas came from SoundExchange, oddly enough. They all came from people like me outside the organization who were outraged that SoundExchange wasn’t keeping its promise to pay artists. The public response was encouraging, even if we had to deal with posts from SoundExchange employees who wanted to tell everyone how great a job they actually were doing. By the December 15 deadline, nearly 1,900 names had been removed from the list. Now it is impossible to day how many of those names were “found” by SoundExchange itself, and how many were the result of outside individuals looking for people. I do know registered over a dozen myself, and provided assistance to several dozen more. I found and notified nearly three hundred others on the list, and as almost all of them are no longer listed, I guess many of them registered.

I do know that not one of the artists I contacted had been contacted by SoundExchange before. Maybe that was just the luck of the draw. In one case, however, an artist that John Simson told a journalist had been contacted by SoundExchange later called me to ask why Simson would lie about that. I assured him that it was the nature of SoundExchange to not be able to tell the difference between what they say they are going to do and what they actually get around to doing. Maybe Mr. Simson meant that SoundExchange intended to call him, and, for SoundExchange, that good intent should count as the same thing as calling him.

There was another forfeiture this past weekend. On June 30 to be exact. There hasn’t been any press releases from SoundExchange about it. In fact, the only SoundExchange generated reference to the date is on the website is on the page where the link is to the full unfound artist list. In essence, this means you have to already know about the list to know that there is a forfeiture. There has also been very little activity on the Internet to organize searches for artists on the list. I’ve done some work individually, but not as much as the first time. I’ve been busy trying to work for that “competitive society” you’ve dreamed up for me.

So, pretty much having the outreach field to itself, how many artists on the list have been found by SoundExchange’s professional staff? Fewer than 70 since mid-March, and that includes two I registered myself, and the removal of a couple obvious duplicates..

The real results speak louder than your claims of perceived effectiveness.

70 names (including the ones I registered and a couple obvious duplicates) in over 100 days.

Boy, that’s some outreach.

I think it is rather telling that SoundExchange’s “outreach” didn’t include any broadbased attempt to contact the 20,000 artists it knows about to find the 8,300 it can’t find, yet SoundExchange had no problem sending mass emails to everyone in the database to get them to write Congress against H.R. 2060. Perhaps you can explain why SoundExchange would do this in regard to getting more money in and not do it in regard to paying more money out?

One last point on that “outreach.” When is SoundExchange going to realize who AFKAP is? Let’s face it, if Prince went to the list to look himself up, he isn’t likely to see that one, is he? And still you claim SoundExchange is “very effective.” Dear me.

You go on -

“As an independent board member, do I want to see webcasters go out of business? No, I don’t, I have many friends who are independent webcasters. Independent webcasters are a very important part of the promotional mix for independent artists and labels.”

Careful, Mr. Huey. John Simson says there is no evidence that Internet radio promotes artists. Which of you is right?

“However, without independent artists and labels, the music business is a pretty thin place. There is a balance to be achieved, and as has been widely reported in the press, Soundexchange has offered to extend previous rates to small webcasters, despite the fact that this means that rates will be consistent for 12 years. Why is this so under-reported? “

Gee, you’re paying Richard Ades a lot of money to say these things in public. Maybe you should take up the lack of success with him. Of course, Mr. Ades doesn’t count very well. Otherwise, I would blame a massive conspiracy against SoundExchange by the press.

And maybe, just maybe, the people covering the story realize that an extension of the rates still comes with the instant death penalty of retroactive royalty increases if a webcaster goes one dollar over the revenue limits or one listener-hour over the usage limits. Maybe they realize, like the webcasters have, that the offers (which seem to have been made in press releases rather than actual negotiations) are just grandstand plays and not intended to be taken seriously.

You would think that if this offer was so good, webcasters would be rushing to agree to it. How many webcasters have signed up?

By the way, SoundExchange has never really announced what those usage limits are. Care to fill in the blanks?

You go on:

“It’s fine to bash Soundexchange all you want, but it seems to me that Fred is long on criticism, and short on suggestions, other than the labels – rights owners – should take less money, and so should the artists.”

Show me one place where I said artists should take less money. You appear to have a chronic problem telling the truth. It is put up or shut up time again, Mr. Huey.

Now, I admit that I recently did suggest that the labels take less. I did so because every SoundExchange spokesperson was only talking about how the artists are going to get hurt if IREA passes, and that they kept skipping over the part where the four RIAA members get to split THIRTY-FIVE cents of every royalty dollar received. I suggested that if SoundExchange was so concerned about the artists being compensated, maybe the labels would be willing to take less.

Let’s try to be honest, Mr. Huey, and I realize the burden this will be for you.. A high royalty rate won’t mean more money for artists if no one can afford to pay the high rate. That’s the REAL scenario that results in less money for artists.

History bears me out, even in the words of SoundExchange. Until the CRB rates were announced, SoundExchange was in the practice of issuing positively gleeful press releases exclaiming how much royalty money was coming in, and how much more was coming in each quarter. More money coming in, theoretically, should have resulted in more money going out to artists and labels. I say theoretically because SoundExchange has never really done a good job of givng details about what comes in or goes out. I understand the need for secrecy. Some “competitive society” might have secret agents like me looking for that data.

I see it like this, Mr. Huey.

I would rather have 10,000 Internet stations paying $100 a year in royalties than 100 stations paying $10,000 a year. The reason for this is simple, and it should be obvious to someone who claims to be “independent” of the RIAA.

With 10,000 stations, there can be 10,000 different artists heard at the same time. That means that 10,000 artists can be earning royalties at the same time. In a week of webcasting 16 songs an hour, there will be nearly 27 MILLION royalty earning events. With only 100 stations, there will be less than 270,000 songs played in the same amount of time. The 10,000 station environment will play more songs in one month than the 100 station environment will play all year.

You claim to have managed independent artists. I imagine that many of them would have found it impossible to fill a 10,000 seat arena, because there are really only a handful of acts that can do that regularly. I am sure a number of your acts could, however, fill a 100 seat club nearly every night of the week.

With your background, why would you be in favor of a system that is going to shut down the equivalent of every 100 seat club? You cannot seriously argue that it would be good to shut down 100 small clubs because a group could make more playing one 10,000 seat arena, yet that is the true effect of shutting down small webcasters and leaving the field to the deep pocket players.

First of all, if one group is playing the arena under those conditions, there are 99 groups not working at all. That’s not good for fans, that’s not good for the artists, and a manager can’t live on 20% of nothing, either.

Secondly, where are tomorrow’s arena headliners going to come from? The RIAA, whose members have recently given us Paris Hilton, Kevin Federline and the Pussycat Dolls? It has to be them, because no one will have heard of your independent artists, or be excited enough to pay arena prices to hear them.

If I am long on criticism, because there is a long list of things to criticize.

I have made suggestions. Ask Bill Holland how he learned where to look for unfound artists. Ask him who gave him dozens of free hours of advice and assistance, together with about five hundred contact points.

I have suggested that SoundExchange explain where all those numbers come from. If they are legitimate, they will inform the debate. If they aren’t, we can try to find ones that are.

I have suggested that SoundExchange explain the sampling metric they are using to allocate royalties to artists. (More on this below) I have suggested that the FAQ be amended to reflect reality.

I have suggested that SoundExchange step up the use of the Internet to find “unfound artists.

I suggested that SoundExchange actually publicize tomorrow’s forfeiture, rather than leave it for people to find

For two years after John Simson made a grandstand play publicly asking for my help in finding artists, he made promise after promise about using my help, which I continued to volunteer. He never followed through, and finally came up with that NDA crap I mentioned earlier.

The suggestions have been there, Mr. Huey. Just because your sources haven’t been honest with you, doesn’t mean I haven’t been trying to help. It’s not my fault if SoundExchange has turned a deaf ear.

You go on -

“First off – if Fred did *his* homework, he’d see that as recently as last week (in a panel I did with Kurt Hanson, Mike Huppe, David Oxenford, and others), it was made very clear that Soundexchange is not the one who “defined” the $1B administrative fee – Soundexchange has not come out and said they need $1B in administrative fees, this stance was “defined” by the “army” of paid mouthpieces on the webcaster side (and if you don’t believe that the NAB, one of the largest lobbies in America, is part of this process, I have a bridge to sell you). “

Wow.

Let’s break this down.

“First off,” if you had done your homework, you would see that I never claimed SoundExchange was demanding that one billion, and I don’t think you would have found anyone else who said SoundExchange was demanding it. There were plenty of people who said that SoundExchange had the power to ask for it under the CRB rulings, and nobody denied that.

See if you can stop playing with strawmen long enough to deal with facts. The $500 minimum WAS SoundExchange’s proposal. It WAS approved by the CRB. Until the $1 billion figure came up, SoundExchange never suggested it was not going to be charged per channel. Try to stick closer to the facts, Mr. Huey.

And please don’t raise the NAB boogie man. You’re on the same side as the RIAA on this. The RIAA and SoundExchange held joint strategy meetings before and during the CRB hearings. You’re as big a hypocrite as you are a liar if you think you can decry someone having their strings pulled while ignoring those tugs on your own.

Ah, but you’re NOT the RIAA.

Right.

You say:

“At the CRB hearing, Soundexchange did propose a $500/channel minimum to address primarily small services that have 10-20 channels (under the theory that these services should be paying somewhat more than services with one channel)… “

A good start back toward honesty, Mr. Huey.

“… this was UNCONTESTED by any of the webcaster groups (read the record!), but very quickly “defined” by certain webcasters as putting them out of business. Hmm. Yet it’s Soundexchange that is guilty, once again, despite the fact that they did not define what a channel is (nor did the CRB panel, for that matter).”

Ah! So the fact that a $500 per-channel charge would put many webcasters out of business is not as important as who says it would put webcasters out of business. Why is who said it first that important?

So as to cut the idiocy of this argument short, I will concede the point. SoundExchange asked for the $500 per channel administrative fee and they got it, but they were not the ones who pointed out that it could cost the webcasting industry more than a billion dollars a year if it was uniformly enforced.

“A $1B administrative fee is a soundbyte created by elements of a large industry (not everyone – but some) with a big vested interest in getting fees paid to musicians and labels to the lowest amount possible.”

Please, Mr. Huey, don’t try to claim that the CRB ruling didn’t mean the aggregate per channel charge could be one billion dollars just because SoundExchange wasn’t the first to say so. I’m afraid you’ve been hung out to dry by your buddies at SoundExchange on this one, Mr. Huey. They’ve already “offered” a $2,500 cap on the per channel charge, which appears to be an acknowledgement that the CRB got it wrong. SoundExchange admitted, after letting misleading testimony Thursday stand, that the $2,500 cap offer is for 2007 and 2008 only.

Even Michael Huppe, SoundExchange General Counsel, conceded today that the CRB obviously never considered the real impact of this decision. Somehow I suspect SoundExchange knew this the day the decision was released. Instead of being upfront about it, your organization waited until it became a public issue before “offering” the cap. Blaming webcasters, large or small, for pointing out the real world ramifications is simply silly, Mr. Huey, especially since making it public forced SoundExchange to do what was right. Now, tell me more about how serious SoundExchange is about actually negotiating a reasonable correction here.

And, just in passing, Mr. Huey, it is a good goal for every business to try to minimize costs. Show me a record label that increases royalty payments to artists out of the goodness of its heart. Has Matador every forgiven a royalty balance because the artist simply wanted it?

“Just ask Last.FM, who just had a $280M payday, while paying under heavily subsidized Small Webcaster rates. Sound fair to you? Would it sound fair if it was your music?”

Let’s start with the semantic issue in that statement.

There is no “subsidy,” although I know it is SoundExchange’s favorite term to explain the rates in effect under SWSA.

A subsidy requires a high rate to actually be in effect which is then discounted. That never happened here, and pretending otherwise is simply fraudulent speech, Mr. Huey.

The Small Webcaster rates were negotiated in 2002, with SoundExchange as a party. The fact that the negotiated settlement was less than SoundExchange wanted does not mean that SoundExchange was granting a special boon to the webcasters. It just means the negotiated rates they got were less than SoundExchange wanted. That doesn’t me the rates were subsidized, because the old rates were negotiated away in favor of a completely different rate structure.

If we can cut the semantic bull, it should be noted, appropriately, that last.fm paid every cent it was required to by law. Nobody gave last.fm a discount or a subsidy.

And if we cut that semantic bull, maybe we can also cut through the same stuff regarding the artist deserving something from the sale of last.fm

Did the PolyGram artists share in the $16 billion Universal paid for PolyGram? Maybe you should ask the Universal representative who sits with you on the SoundExchange board how much money the artists got when Universal bought eMusic, or the Motown catalog.

Closer perhaps to your own home, because you are a manager, when TBA Entertainment acquired Alliance Artist Management several years ago, how much do you think Charlie Brusco of Alliance passed along to his artist clients? Under your reasoning here, he should have given them all the sale proceeds, because, without his musical clients, he had no business to sell, right? Was Alliance as “fair” to its clients as you now believe last.fm is supposed to be?

Even closer to home, ask your buddies at Matador how much money went to the artists from the “partnership” with Atlantic, and was it as much as the artists got when Beggars Group purchased the label? After all, wasn’t the value of the label built entirely on the work of the artists? Wouldn’t “fairness” have demanded they get a cut? Was Matador as “fair” to the artists as you now expect last.fm to be?

You know very well that the artists never share in the proceeds of a sale like this, and it is disingenuous to suggest they are entitled to. If you quit building false arguments, maybe we can get down to the real issues.

“As far as the various wild claims that Soundexchange a) doesn’t pay anyone, b) keeps all the money, c) is a shadow organization of the RIAA, d) eats its children for breakfast, come on folks .”

Well, I apparently spoke too soon in hoping for a real discussion of the issues.

Nobody says SoundExchange “doesn’t pay anyone.” What I said is that they are doing a lousy job of paying everyone they’ve promised to. There’s a difference.

Nobody says they “keep all the money.” They do get to spend money they forfeit from artist accounts, or are you denying that.

When an organization appears to serve the interests of the RIAA, and the “independent” Board members fail to demonstrate the first sign of actual independence, the conclusion about being an RIAA front is justified.

If SoundExchange had children, the record indicates they wouldn’t be able to find 30% them, let alone eat them. In all likelihood, some Child Protection Board would have intervened on charges of neglect by now, if only because SoundExchange appears intent on throwing the Internet radio baby out with the big broadcaster bathwater. If that was to happen, I am sure SoundExchange would undoubtedly have Uncle Dick Huey speak to he public and extol the virtues of an organization that didn’t really abuse three out of four of its children.

“Seriously. First off, this organization pays 55% of income DIRECTLY to artists,”

Seriously?

55%?

Well, this explains why you think SoundExchange is doing such a great job. You’ve got them paying out 105% of what they take in. The artists get 55% and the labels get the “other 50%.”

Pure genius, Dick Huey. If your clients have never audited you, this ought to set off alarms. Do you take your 20% based on 100% or 105% of what your clients make?

” not via the label where it might be recouped, etc.”

Funny you should mention that, Mr. Huey.

That direct payment (and the 50% the artists do get) only apply to cases where the webcaster agrees to pay the statutory license rate. Privately negotiated deals are exempt.

By “exempt,” I mean that labels and webcasters are free to enter into licenses under which payment goes directly to the labels, and the labels can decide how much, if anything, the artist sees.

But we really don’t want to get into that, do we, Mr. Huey? Let’s not talk about how easy it is to get around those direct payments you’re so proud of. It will destroy the pretense that SoundExchange can actually promote the interests of artists when it comes down to sharing money with labels.

“If you are an artist, and you have registered with a verified address, you receive money. THAT’S IT.”

And if you are an artist, and SoundExchange says it can’t find you, you don’t get the money. And, as John Simson has said, it is the artist’s own fault if that happens.

And THAT’S IT, TOO.

“Now you would probably receive quite a bit more money if many of the webcasters who are complaining loudest were actually filling out their webcasting forms and reporting their plays .”

Why is that, Mr. Huey?

SoundExchange’s FAQ says that you receive all the data you need. Neeta Ragoowansi was quoted by the Future of Music Coalition as saying that if you get only one spin, you still get credit with SoundExchange.

Who’s lying here?

“Soundexchange isn’t some rinky-dink business – it’s an accounting company, with extremely stringent reporting requirements to the federal government .”

Bull.

SoundExchange is accountable to no one. The only Federal reporting requirements are annual IRS-990s, which only include the most general information. SoundExchange doesn’t have to show any numbers to anyone else.

Are you making this stuff up as you go along, or is someone feeding you these bad answers?

“Should Soundexchange make its overall public payout information more easily accessible? You bet it should, and this is very much in process and you can hold me to that.”

What are you going to do? Quit if they don’t do what you ask? How can anyone “hold you to this?” How long do we have to hold our breath waiting for you to succeed? Put Up, Mr. Huey, or this is just another grandstand act. SoundExchange has proven very good at telling people what they are going to do, and less successful at actually doing it.

“Should it report on every single payment to every single artist? Of course not. Would you like it if you were an entertainment personality, and someone published your private payment information in a public fashion? I doubt it.”

Nobody is actually demanding that all the payment detail be made public. (Jesus, do they have classes on building straw men at SoundExchange? There really should be a limit on the fake arguments one man can make in a single email, because I think you’ve exceeded it.)

However, all the payment information should be available for a truly independent audit undertaken under the usual rules of confidentiality. It isn’t.

The formulae and method by which SoundExchange allocates royalties should be made public. It isn’t, and SoundExchange even refuses to discuss it. (Ask them if they have responded to my questions on this, Mr. Huey).

“Soundexchange is made up of a lot of people who care, deeply, about creating a future revenue stream for both artists and labels in the face of seriously declining record sales, not just for the majors, but also for independents and individual artists. It is not in SX’s vested interest to shut down webcasting, and it’s certainly not in the vested interest of the artists and independents on the board to do so.”

Let’s get some things straight. I certainly hope you are not suggesting that Internet radio is responsible for declining CD sales. If you are, you’re deluding yourself. I know that John Simson has made that claim, but I am hoping that reality hasn’t completely left SoundExchange behind. I am also certainly hoping that the majors and the independent labels aren’t pinning their hopes for future financial security on Internet radio royalties.

Some smart guy said, it is the job of new technology to provide the music business with new opportunities, and it is the job of the music business to seek injunctive relief against the new technologies. Internet radio is an opportunity to make money, not just from royalties, but from promotion of live performances and sales of physical product and merchandise and downloads.

Which makes your insistence that the CRB rates are reasonable all the more puzzling. Many webcasters tell you they cannot survive under those rates, and if they close down, there go all those opportunities for promotion and sales and downloads.

And you are willing to risk this because you think big broadcasters may get away cheaply?

“Which is why negotiations are in process, at the behest of the Judicial Committee, to come up with a solution everyone can live with. “

Having any luck? Webcaster witnesses at the Small Business Committee seemed to indicate that the “negotations” to date have taken place via press release.

“Fred’s suggestions that an entire industry is going to shut down on the 15th July are not only unlikely, I believe they’re flat wrong. “

Predictions are cheap. We’ll see in two weeks unless something happens. Has anyone not affiliated with SoundExchange actually agreed with you about this, Mr. Huey?

“Small webcasters have been able to survive on rates up to now, and they’ve been offered the same rates through 2010 in order to develop better business models and let the advertising market catch up with them.”

And the “offer” on the table now just means everyone gets to do this dance again in a couple years, as long as the small webcasters don’t exceed the revenue and usage limits SoundExchange has offered and get hammered into dust during the interim.

“There’s a lot of jockeying for public opinion going on here. Hey, I’m all about being able to consume music in cool new ways – I’ve been doing new media for over ten years for various independent labels and artists – but it’s got to be a fair equation. The Inslee Bill is not a fair solution for artists and labels. Soundexchange is working to respond to the Judicial Committee and resolve the issues we all know in a fair manner. Be careful what you read.”

I agree fully. You never know when someone is going to start lying. But here’s a rule of thumb: If they say they’re from SoundExchange, that is probably the last truthful thing you’ll hear from them.

More importantly, be careful what you write. You have attempted to smear me by alleging I have something professionally to gain from making trouble for SoundExchange. You are either a deliberate liar or a fool for doing so, and everything you say in this post has to be considered in light of that.

“Please feel free to ask any questions you like, I will do my best to answer them.”

Let’s start with these:

1. Please explain what you know about the usage limits that are supposedly part of the SoundExchange offers to small webcasters. There has been no public disclosure of what they are, or how they are supposed to work.

2. Richard Ades says that the 7.5% royalty rate called for in IREA is a 75% decrease from the old rate. Please show how he came to that result.

3. Numerous SoundExchange spokespeople have consistently referred to a “fact” that large webcasters pay 95% of SoundExchange royalties. Of course, SoundExchange has never disclosed anything that actually supports this contention, including the criteria for inclusion as a “large webcaster.” Can you, as a SoundExchange Board member, get the organization to release the information necessary to verify the 95% number? At the very least, I believe it would require the identities of the “large webcaster” class, the amount of royalties paid by each and the total amount of royalties received from all Webcasters.

4. What is the current SoundExchange operational budget, and what percentage of royalty receipts does it represent?

5. How much of the SoundExchange operational budget is dedicated to public relations and legal counsel in regard to the Webcaster rates?

6. There have been repeated claims by SoundExchange that artists who received royalties for 2006 are going to have to write substantial refund checks if IREA passes. Please explain how much money is involved in this and how SoundExchange came to the conclusion that refund checks will be required.

7. Explain the sampling metric used by SoundExchange to allocate royalties to artists where census data is not available.

8. Explain why the SoundExchange FAQ doesn’t mention sampling but does include a contradictory statement that SoundExchange can “accurately match unique performances with record companies and artists, and pay exactly what has been earned.”

9. Explain why SoundExchange chose not to announce publicly that it was going to absorb millions of dollars from “unfound” artist accounts on June 30.

10. Explain why SoundExchange’s “outreach” has only resulted in the reduction of the “unfound artist” list by fewer than 70 names in over three months.

11. According to recent news reports, two new wireless streaming services, Slacker and nuTsie, have both signed direct licenses for performance royalties with major copyright holders.

a. Please explain if SoundExchange is going to be the collection and distribution agency for these agreements, and if so, how SoundExchange justifies participating in any private arrangement regarding terms that do not comply with the statutory requirements.

b. Please also explain how artists who are covered by the statutory licenses will be assured that they will not be defraying any costs related to these privately negotiated agreements, and what steps SoundExchange has taken to insure that all costs related to the privately negotiated agreements are borne by the parties to those agreements alone.

c.If SoundEchange is not involved, please explain how artists can be sure they will be compensated fairly by the labels, and if the possibility that artists are not going to be compensated fairly is of concern to SoundExchange.

Over to you, Mr. Huey.

Fred Wilhelms - p2pnet

[Wilhelms is an entertainment attorney based in Nashville, Tennessee. You can contact him at fred.wilhelms @ gmail.com.]
Slashdot it!

Also See:

Fred Wilhelms – SoundExchange: making up numbers, June 28, 2007
If your Net access is blocked by government restrictions, try Psiphon from the Citizen Lab at the University of Toronto’s Munk Centre for International Studies. Go here for the official download, here for the p2pnet download, and here for details. And if you’re Chinese and you’re looking for a way to access independent Internet news sources, try Freegate, the DIT program written to help Chinese citizens circumvent web site blocking outside of China. Download it here.

---

Use free p2pnet newsfeeds for your site. It’s really easy!
Subscribe to p2pnet.net | | rss feed: http://p2pnet.net/p2p.rss | | Mobile – http://p2pnet.net/index-wml.php

---

Net access blocked by government restrictions? Use Psiphon from the Citizen Lab at the University of Toronto. Go here for details. Download here.

This entry was posted on Tuesday, July 3rd, 2007 at 8:23 am and is filed under Music. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

HOME

Viewed 3441 times