Legal Issues

by Mike Masnick

Filed Under:
collections, money

choruss, soundexchange

How Come SoundExchange Is Holding Onto Over $100 Million?

from the questions,-questions,-questions dept

We've talked about the ridiculousness of the various music collections societies being involved in the discussions on new music business models. To them, the answer is always the same: add another license and let us collect it. They're middlemen and they take in tons of money and would only be all too happy to take in more. Some got upset with us in the comments, by noting that some of these collections societies are non-profits. In fact, the new Choruss offering, which we've already explained why it's a bad idea that's more of a bait-and-switch than anything useful, has been described as a similar "non-profit" collections group.

But, as we've noted in the past, supposedly nonprofit collections groups such as SoundExchange (a spinoff of the RIAA) are notorious for not finding artists to pay -- even some of the biggest names in the business. Oh, and did we mention that if the royalties go "unclaimed" the recording industry (via SoundExchange) often gets to keep the money? Given that bit of info, it's perhaps no surprise at all that P2Pnet is noticing that SoundExchange's own tax returns note that the nonprofit was sitting on over $100 million at the end of 2007, a pretty significant leap over previous years, and a somewhat startling sum for a supposed "nonprofit" in charge of both collecting and distributing funds.

It seems like those musicians sure are difficult to find.

The P2Pnet report also points out that it will be interesting to see how much SoundExchange has spent on lobbying efforts. SoundExchange is actually barred from lobbying the government, but has been ignoring that for years by funding musicFIRST, a recording industry lobbying group that's trying to add a new license for radio stations to pay (collected by SoundExchange, of course) by claiming that radio is actually a form of piracy.

So, even if Choruss or these other collections societies seem to be designed with the best intentions in mind (and I'm sure they are), it seems that they're wide open to abuse -- which is yet another reason to be quite worried about simply handing over the entire industry's business model to such an operation.

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  1. icon
    PaulT (profile), 23 Mar 2009 @ 3:07pm

    Re: Re: Re:

    "I am also wondering why this article needs 10 links to other techdirt articles."

    You've been making trolltastic posts this long and you never noticed that Mike usually links to previous Techdirt articles? Really? (He usually claims that it's easier for him to find the previous TD article than dig up the primary link - usually on the original article anyway).

    Anyway, as ever you have yet to refute the major point in the article, which is that SoundExchange are well known to be withholding "unclaimed" revenue from artists they claim they can't find. The list of unpaid artists is here:

    There's a lot of unknowns there of course, but I remember running a little experiment with this list a few months ago. Within a few minutes of Google searches, I managed to get the business addresses and/or management details of the first 3 unclaimed artists I recognised off the list, 2 of them pointing to their current projects. Meaning those "poor, starving" artists who are usually brought up as being the victims of "piracy" are not being paid the money they're already owed by the industry.

    A quick glance at the list tells me that the artists I managed to find haven't been paid yet.

    The basic point raised here is that here we have a supposed non-profit organisation that seems to have problems finding artists to pay, for no good reason. Coincidentally, the same organisation gets to keep any money it can't pay out. Yet, a similar service is supposed to be a good thing "for the sake of the artists"..? Forgive me for being cynical.

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