Small broadcasters live another day
p2pnet news | music:- “I think even the RIAA knows you shouldn’t sue people who are doing what you want.”
That’s entertainment lawyer Fred Wilhemlms’ reaction to the news that yesterday – Sunday, July 15 – wasn’t going to be D-for-Die day for small and independent webcasters after all.
They can keep broadcasting so long as they’re already negotiating with SoundExchange, spun off from Warner Music, EMI, Vivendi Universal and Sony BMG’s RIAA (Recording Industry Association of America) as an independent royalty collector, and now claiming separation from it and them.
In an interview with RAIN, SoundExchange executive director John Simson, asked what he’d tell webcasters who fear that streaming on July 16 might line them up for a lawsuit, said, “I think the message to them is: ‘Look, Monday’s not that magical a day. It’s going to be business as usual at SoundExchange – trying to process data, trying to get deals done. We’re not gonna be filing lawsuits’.”
Earlier, he said, “For the people who want to comply with the law and are in bona fide negotiations with us, we don’t want those people to be intimidated. And we don’t want them to stop streaming” —— “just so long as they’re continuing to pay under the license they had”.
On July 12, about a dozen Congressmen, various staffers, and representatives from both sides of the royalty dispute were at an invitation-only event in Washington, RAIN goes on. There, SoundExchange, “offered to accept DiMA’s suggestion of a cap on the ‘minimum fees’ of $50,000 per service – that’s $500 per channel up to a maximum of 100 channels”.
Of the cap, “SoundExchange blinked on the $500 per-channel rate, but except for the spokesman who said the CRB terms were ‘etched in stone’ before the meeting, no one really thought it was rational anyhow,” says Wilhelms. “Otherwise, the announcement is nowhere near the great news a lot of people are cheering about.
“Because SoundExchange had already offered to extend the terms of SWSA to small and noncommercial webcasters, the announcement that they weren’t going to start suing people who paid at those rates was no surprise.”
The $50,000 isn’t onerous as long as information demanded for record keeping is reasonable , says Wilhelms, going on,
“This puts even more of an onus on SoundExchange to finally get the payment side of things right.”
SE’s ‘last-ditch effort’
Royalty rates are theoretically split 50/50 between copyright owner and the artist. However,casting the best possible light on things, SoundExchange has been considerably, and consistently, less than diligent in fulfilling its end of the deal.
Last year it maintained it hadn’t paid some $500,000 to professional and amatuer artists because it couldn’t find them.
Said the Los Angeles Times, SoundExchange was now in a “last-ditch effort” to distribute the money for digital broadcasts dating from the late ’90s, and, the clock was ticking.
In other words, if the recipients weren’t found, SoundExchange got to keep the cash.
As far as we know, it’s never issued a report saying how many of the 9,000 people in question were ultimately found and paid, and how much of the half million dollars sound exchange was able to keep.
Then, this May, “Simpson says ’small webcasters’ only paid 2% of the royalties in 2006,” wrote Wilhelms, going on:
Extrapolating SoundExchange’s 1st Quarter 2006 royalty statistics, total 2006 royalties were approximately $56 million. Two percent of that is about $1.1 million. Live365 claims to have paid, just by itself, over $1 million to SoundExchange.
They can’t both be right. I know who I believe.
Simson says artists, on the average, received $360 in royalties last year?
Maybe he meant $360 was the median, or the mode, rather than the mean. Maybe he meant something else entirely. The number he’s quoting now just doesn’t match up with other numbers they’ve used in the past. It is impossible to tell which is accurate and which is made up unless they SHOW THE WORK.
p2pnet’s Jon Newton noticed something strange about the SoundExchange press release about distributions in the First Quarter, 2006. He saw the reserve for unregistered artists and labels was $5.7 million, which was more than ten time higher than the amount that SoundExchange claimed was at risk when it started that half-hearted attempt to find people before the royalties for webcasts before March 31, 2000 were forfeited on December 15, 2006.
It just don’t add up. By Simson’s ‘average,’ that $5.7 million reserve would be sufficient to cover over 13,000 ‘average artists’ or over 4,000 more than SoundExchange admitted they couldn’t find in October, 2006.
Furthermore, that $5.7 million is a full 40% of the entire royalty pool.
In other words, SoundExchange is admitting it can’t pay out 40% of the money it’s collected because it hasn’t found the people who earned it.
Simson is fond of saying SoundExchange is just like a bank when it comes to dealing with artists. I suspect that there’d be a major run on any real bank that admitted it couldn’t find 40% of its depositors.
Meanwhile, still to be addressed in negotiations between SoundExchange and the larger commercial webcasters are (A) the option of a percentage-of-revenues royalty rate for those classes of webcasters, and (B) a reduction in the CRB’s per-performance rates in 2008-10, which get increasingly difficult for any ad-supported webcaster to pay as the decade progresses, says RAIN.
Stay tuned.
Also See:
RAIN – SoundExchange tells Congress webcasters may keep streaming, July 13, 2007
couldn’t find them – Big Music Owes You Money !!!, September 29, 2006
Los Angeles Times – Music Royalty Checks Languish for Unreachable Stars, September 29, 2006
only paid 2% – SoundExchange: Show us your work, May 1, 2007
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July 16th, 2007 at 6:00 am
So mass outlets like Pandora now don’t have to pay the $500 per “channel”. But where does that leave noncommercial stations that don’t make a cent in revenues? It sounds like they still have to pay the $500 even if they only broadcast enough music to enough listeners to pay a small fraction of that on the per-song basis.
And these unpaid royalties are one of the most grotesque scams of all time. Imagine letting entrusting the “distributing” agency keep the money of those it mysteriously fails to find. There should at least be a wholly separate body that gets paid by monies distributed.
And what of performers who wouldn’t go anywhere near a crooked anti-music monopoly outfit like the RIAA? What of non-US musicians whose music gets played on US-based webcasts? Presumably royalties for their music goes straight into SoundExchange’s corrupt pockets.
The only answer is not to play RIAA crap, and not to pay a cent. Get a non-US hosting, and starve these grasping parasites of money they’ve done nothing to earn. To hell with SoundExchange and their crooked pals in government. Free the music.
July 16th, 2007 at 8:17 am
According to the “clarifications” SoundExchange made after the Thursday meeting, if a webcaster qualifies under the definition of “small webcaster,” they do not have to pay the $500 minimum. The trick here is to define “small webcaster,” as no one has made public the usage limits (listener hours) that SoundExchange wants to apply.
Non-US artists can register with SoundExchange for payment. It is a little more difficult because they need a tax ID number in order to avoid 30% withholding, but that’s the IRS’s fault, not SoundExchange’s. For groups that have never toured the US and are unlikely to, it is a bit of a hassle to get the number. SoundExchange has done a particularly lousy job of finding non-US artists, especially Latin acts, even those who are actively recording for the Latin divisions of the RIAA. Their outreach to Asian and African musicians is equally bad, based on the names on the “unfound artist” list, but the problem with Spanish language acts (check the list for hundreds of groups beginning with “Las” or “Los”) should be a major embarrassment. SoundExchange, however, appears embarrassment-proof in all things.
Going offshore or underground would permit stations to continue to stream music, but it won’t pay artists. The fairest solution is still IREA. Stations will pay a reasonable royalty and artists can get paid. The public attention that this situation brought to Internet radio will have to stay focused on SoundExchange’s performance if they are to be shamed into getting things right, but we have tens of thousands, maybe hundreds of thousands, of people who are now aware of what SoundExchange really is and really does, and can stay on their case.
The fairest solution remains IREA, and everyone should continue to stay in contact with their Representatives and Senators to keep the pressure on for support and passage. Rest assured that the continuation of negotiations doesn’t mean the RIAA has stopped lobbying.
Fred