SoundExchange Caught Lobbying, Despite Strict Rules Against Using Its Money For Lobbying

from the somehow,-this-doesn't-come-as-a-surprise dept

SoundExchange, which is a "non-profit" spinoff of the RIAA is supposed to be a neutral party, simply in charge of collecting certain royalties and distributing it to the artists. Of course, things aren't always the way they're supposed to be. After all, SoundExchange is famous for having trouble finding many of the musicians it's supposed to pay -- which isn't all that surprising since it gets to keep the money that goes unclaimed. However, part of the law that governs SoundExchange's existence makes very clear that the organization may only use its money for three things: administration of collecting and distributing royalties, settling disputes about the royalties and licensing and enforcement. One thing clearly not on that list is building a PR campaign and lobbying Congress to expand its ability to collect royalties from other sources. However, Eliot Van Buskirk over at Wired has discovered that's exactly what SoundExchange is doing, and it appears to be breaking the law.

You'll recall the recent stories about the music industry claiming that radio stations are getting a free ride in not having to pay musicians' royalties, despite the fact that, for years, the record labels felt they needed to pay the radio stations just to get airtime. This came out as a new lobbying group and PR campaign kicked off -- including the ridiculous assertion that radio makes people buy less music. It turns out that the group behind this lobbying effort, musicFIRST, happens to be funded in part by SoundExchange. It makes sense why SoundExchange would do this. After all, it would be in charge of collecting those royalties. However, the law seems pretty clear that SoundExchange can't use its money for lobbying (especially lobbying to expand its own power). Van Buskirk got the run around from SoundExchange on this, with the executive director ignoring the question and simply repeating the laughable statement that radio stations (who are promoting the music for the record labels) are somehow getting "a free ride." A lawyer for SoundExchange then tries to explain the situation away by saying that the royalty money being used for lobbying was authorized to be used this way by SoundExchange members. That's like saying it's okay that they broke the law, because they gave themselves permission to break the law. Very convincing.

Filed Under: lobbying, music, radio
Companies: riaa, soundexchange

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  1. identicon
    Shane C, 6 Aug 2007 @ 10:27am

    Breaking the law

    If there is a law that governs their existence, and they are breaking that law, who is going to prosecute them - or am I being naive?


    Misappropriation of funds sure sounds like an appropriate legal course. If this is prosecutable under criminal law, I would think the Justice Dept. would have to file that motion. (good luck getting that to happen) Under civil status, I would think anyone due money from SoundExchange could file action against them.

    All of that aside, I would guess either the a) Copyright Royalties Board, or b) the Library of Congress would have to respond to this breach of (contract, or charter, I don't know which). Being that Marybeth Peters (Register of Copyrights in the U.S. Copyright office) just testified in favor of SoundExchange, I would guess that any action from congress would be moot.

    One last possibility, on the criminal side, would be the IRS. They usually take quite an interest in the whole concept of "misappropriation of funds."


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