p2pnet news view | Music:- Showing remarkable consistency, SoundExchange has again demonstrated that it doesn’t really want to engage anyone in constructive dialog. As I’ve noted previously, they aren’t interested in justifying actions that appear to violate Federal law, and they clearly can’t be bothered telling the artists they say they love how they divide up the money they collect.

Now they’ve announced so-called “offers” to a couple classes of webcasters that are equivalent to the same “offers” they made in May that SoundExchange already knows are unacceptable to almost all of those webcasters who qualify.

The same retroactive death penalty for webcaster success is included in those offers.
People might ask why they’d repeat themselves in this way. In what has to be their most cynical move yet, SoundExchange is speaking right past the webcasters to the only audience that really matters to them; Congress. And what really frosts the cake is that Congress knows exactly what SoundExchange is doing.
Because perception is far more important than substance on both ends of that communication, if our elected representatives can say with a straight face that SoundExchange is being reasonable, then SoundExchange IS being reasonable, regardless of how transparent SoundExchange’s real motives are.

Howard Berman doesn’t care that the SoundExchange “offer” is empty. The important thing to him is that SoundExchange made an “offer” at all. Now he can stand in the well of the House and say that webcasters are not being reasonable.
You only have to look to two “conditions” on those offers to see what SoundExchange really wants out of these offers..
The first is the exclusion of “non-member” recordings from the royalty rate they are offering to small and very small webcasters.

While it’s very true that SoundExchange cannot negotiate rates for non-members away from the ones the CRB set, there is nothing to keep them from going back to the CRB, or to Congress, and approving new rates across the board for members and non-members alike. That’s exactly what the SWSA did in 2002. SoundExchange needs everyone to forget that could be done again so it can suggest a complicated and burdensome dual royalty system on small and very small webcasters. And as many of the target webcasters focus on non-mainstream music, there’s an excellent chance most of them will have to keep that second set of books that SoundExchange is demanding.
It’s a win-win-win for SoundExchange and the RIAA.

Either the webcaster runs up a big bill playing non-member music and quits broadcasting, OR the broadcaster shifts to playing RIAA music exclusively, OR the webcaster goes quietly crazy trying to keep the member sheep and non-member goats apart.
I do hope at least one webcaster takes them up on this deal, only because it should expose some of the operational shortcomings that SoundExchange doesn’t want you to know about. First of all, for a webcaster to comply with the dual reporting requirement, in all fairness, SoundExchange is going to have to publish a full list of artist and label members, and keep it continually updated. A webcaster who agrees to this new offer has a right to know who he or she can play at any given time. Such lists would be, at the minimum, what the webcaster would need.
Whether or not SoundExchange can provide those lists is highly dubious. They can’t find 30% of the artists, and nearly 20% of the labels they’ve money for (which, remember, they collected at the same royalty rate as the members who did sign up.) Now we expect them to do that job better AND keep track of which webcaster is playing the approved playlist AND not getting too big at the same time. This should make the Titanic look like the Love Boat.
I can’t wait until SoundExchange says a webcaster will have to pay a higher royalty on “non-member” music, but then claims that their membership rolls are “proprietary information.”

At that point, John Simson should step down in favor of Lewis Carroll.
I also want someone to take SoundExchange up on this because the dual payments coming in may very well cause the SoundExchange bookkeeping system to implode.

SoundExchange has yet to prove that it can adequately handle the simple single percentage-of-revenue royalty model that has been in place for five years, and now, all of a sudden, they expect everyone to believe they can deal with the complexities. Mr. Simson and Ms. Kessler are going to earn the quarter-million a year they each earn if they can pull that charade off.
The second critical condition is that requirement that every webcaster use SoundExchange’s own not-yet-invented software to track playlists. Of course, this software will be an effective bar against any competitive agency challenging SoundExchange’s monopoly. Some commentators have worried about a Big Brother aspect to the idea, and that cannot be totally discounted. This is emphatically not the same as simply requiring a specific form be used to report data.

This idea, as it has been presented so far, actually collects the data from the webcaster’s system.

That prospect is scary.
But even more importantly, SoundExchange would be paying for the installation of software and conducting the collection of airplay data worth untold millions of dollars to the label members of the Board, who wouldn’t have to pay a dime to get the information from SoundExchange. In essence, SoundExchange becomes the unquestioned, and unquestionable, “Nielsen of the Net,” and the RIAA labels will get the information for free.
I’ve got to admit it’s a brilliant maneuver by the RIAA. As its members lose more and more money every year, it only makes sense to outsource as much as possible.

Turning SoundExchange into their captive mutual market research department is a great leap forward.
It would also be, in my opinion, a violation of SoundExchange’s tax-exempt status if they were to turn the data over to the labels because that function is outside SoundExchange’s specific charter to collect and distribute royalties from Internet and satellite broadcasts. But, as we have learned with the musicFIRST embarrassment, violating the charter and the favorable tax treatment the charter provides is not considered a problem for SoundExchange and the RIAA if they get in the way of what the RIAA really wants. Nielsen provides an equivalent service for a fee. Nielsen pays taxes on those fees. They are placed at an insurmountable disadvantage when their competition doesn’t have to pay taxes.

That’s why a tax exempt organization is precluded from providing a service like that.
I can’t wait until the “independent label” and “artist” representatives on the Board get wind of this gambit. They’ve been so good at keeping the RIAA in check to this point that I am certain they, like they’ve time and time again, rise to the challenge and . . .and . . .and . . . give the RIAA exactly what they want.

Forgive me for my wishful thinking that those folks would actually do something to contradict the RIAA.

Fred Wilhelms – p2pnet

[If the corporate music industry had any ethics, Wilhelms would be its 'ethicist-in-chief,' wrote CounterPunch's Dave Marsh. Wilhelms is an entertainment attorney based in Nashville, Tennessee. You can contact him at fred.wilhelms @ gmail.com. ]

.Slashdot it!

Also See:

so-called “offers” – DiMA, SoundExchange Agree To Cap On Per Channel Fees For Major Streamers, August 23, 2007

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This entry was posted on Friday, August 24th, 2007 at 8:55 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.

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