$101 million ’stuck to SoundExchange’s fingers’
p2pnet news view RIAA | P2P:- Robin Hood In Reverse is alive and well at SoundExchange — steal from the poor and give to the rich.
As of the end of 2007, SoundExchange had accumulated over $101 million in ‘investments’.
That’s $101 MILLION.
Don’t take my word for it. That’s what the SoundExchange IRS-990 for 2007 says.
The 990 is the informational tax return it filed last November, and it’s a public record. Eventually, this return will appear online at www.guidestar.org, a website where there’s a wealth of data from public records on non-profit organizations. As of now, the 2005 and 2006 returns are there, but the most recent one probably won’t appear there for several months.
The 2007 tax return has some other items of note.
In 2007, SoundExchange spent over $800,000 on ‘consultants.’
But who and what they consulted on isn’t revealed.
The return doesn’t require that kind of detail. One might suspect it went toward public relations and the musicFIRST campaign, because if it was spent on consultants for finding artists, it was a terrible waste of money.
Legal fees for 2007 were over $600,000, which was almost double what they had been the year before.
That $600,000 doesn’t count General Counsel Michael Huppe, who earned $240,000 after he was hired in March, 2007. Together with Executive Director John Simson and Chief Operating Officer Barrie Kessler, the three of them pulled down over $900,000 in salary and benefits for the year.
As the entire payroll was a bit north of $2.4 million, the three folks at the top took home 40% of that.
Some might think that a bit top-heavy, but when you consider these three are primarily responsible for doing the bidding of the RIAA, and everyone else who works there is just camouflage, you could argue they’re underpaid.
As it turns out, I think they could fire anyone who is supposed to working with artists and save all that money.
The 2008 tax return ought to be a real doozy, because all those expenses incurred for musicFIRST in lobbying for the terrestrial radio performance royalty will show up, together with the PR expenses incurred in the campaign of ‘negotiation by press release’ on the webcaster royalties. We probably won’t see that return until late this year, but there’s plenty to entertain us until then
In the center ring, that $101 million really should set off alarms. Sadly, the alarms will only go off outside the organization. Clearly, no one inside cares. or we would have heard something from them.
On its website, SoundExchange describes itself as ‘an independent, nonprofit performance rights organization that is designated by the U.S. Copyright Office to collect and distribute digital performance royalties for featured recording artists and sound recording copyright owners.’
Your attention is drawn to the words ‘collect and distribute.’ That’s what their job is. That’s all their job is.
Some of you may ask how paying for musicFIRST lobbying falls under that heading, but, as long as you aren’t a member of Congress, you aren’t going to get an answer from SoundExchange. They don’t have to explain what they do to ANYONE else, so they won’t even acknowledge the question.
The amount in ‘investments’ held by SoundExchange was about $33 million at the end of 2004, $55 million in 2005, and $74 million in 2006 before jumping to $101 million at the end of 2007. So, if your job is to go out and collect money for other people, and then pay those people, how do you end up holding onto $101 million, which is probably more than $130 million by now?
As far as the IRS is concerned, SoundExchange doesn’t have to tell them how much money it’s collected, or how much it’s paid out to the proper recipients, so that information doesn’t appear on the tax return. Those numbers would appear in SoundExchange’s annual report, but what’s in that report is a closely guarded secret.
You and I can’t be trusted with that information.
The only source of revenue SoundExchange has is performance royalties, so that’s where the money came from.
SoundExchange admits collecting the money is only half the job. In short, that $101 million belongs to artists, and only to artists.
So why has $101 million stuck to SoundExchange’s fingers?
By now, the answer should be obvious; SoundExchange can’t find the people it’s supposed to pay.
And even more painfully obvious, SoundExchange doesn’t care.
You see, if they don’t find those artists, or those artists somehow find SoundExchange on their own, SoundExchange will get to keep that $101 million all to itself and use it to pay its own expenses.
When SoundExchange reduces its expenses, half that saved money can be used to increase payments to artists they HAVE found, and the other half will go to the labels who have registered.
Seventy percent of the money which goes to the labels from SoundExchange goes to the four majors who run the RIAA. So the fact that SoundExchange has accumulated $101 million translates into a $35 million dollar windfall for the RIAA, a windfall created completely by SoundExchange’s indifference to its promises to artists.
In a rational world, I’d suggest any artist registered with SoundExchange should call his or her representatives on the Board of Directors and demand an explanation. But everybody knows those ‘representatives’ don’t give a damn about artists. They’re on the board simply because the RIAA appointed them and no amount of complaints from artists is going to make them do anything to upset the RIAA. Artists didn’t appoint them, artists can’t replace them. \
In a rational world, I might even suggest any artist registered with SoundExchange contact those artist-loving independent label representatives on the board, like Mr Dick Huey. But we know he’s far too busy working for improvement from within the organization (he said so when he broke his promise to explain what was going on when he was exposed as an anonymous Internet goon), to reply.
Maybe someone can go up to John Simson at SXSW this week and ask him directly why SoundExchange has $101 million of artist money and won’t do anything to pay it out.
If someone gets an answer, let me know.
And if he offers to buy you a drink, just remember who’s really paying.
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 dot com. ]
March, 2009
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March 20th, 2009 at 1:01 pm
“Robin Hood In Reverse is alive and well at SoundExchange — steal from the poor and give to the rich.”
Stupid Bitch!
Sorry, I just had to.
March 20th, 2009 at 3:06 pm
Somebody tell Barack.
March 22nd, 2009 at 1:10 pm
INTEREST RATE
The going rate and industry practice for late royalty payments is 1.5% per month.
Will the artists get paid this interest when finally paid?
They should… they are no lesser than ASCAP.
See ASCAP license here:
http://www.ascap.com/licensing/radio/Blanket_Radio_License.pdf
See page 4: Late Payments.
Someone should tell SoundExchanges that late payments are expensive.
Maybe their attitude will change.