Legal Issues

by Mike Masnick


Filed Under:
lobbying, music, radio

Companies:
riaa, soundexchange



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.

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  1. identicon
    Shane C, 6 Aug 2007 @ 2:49pm

    Lobbying...who exactly?

    Again, IANAL...

    A thought just occurred to me. It would be interesting to find out who exactly has been "lobbied." Yes, we know several politicians apparently have felt the "urge to investigate radio royalty rates," but I wonder how far it extends beyond them?

    Specifically, I have to wonder if it extends to the judges on the Copyright Royalty Board? If they have received "special attention", is that illegal in and of itself? These are the people that decreed that SoundExchange should have a multi-billion (multi-million at least) dollar "administrative" allowance to "oversee the distribution of funds." Who better to lobby than the people that will make the decision?

    The Board, made up of three permanent copyright royalty judges, was created under the Copyright Royalty and Distribution Reform Act of 2004, which became effective on 31 May 2005, phasing out the Copyright Arbitration Royalty Panel system. These administrative judges are appointed by the Librarian of Congress. [wikipedia]

    This sounds like a political position, versus say a criminal judge. How this may differ in things like lobbing, I don't know.

    Shane


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