Legal Issues

by Mike Masnick


Filed Under:
collections, money

Companies:
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. identicon
    Ryan, 23 Mar 2009 @ 3:11pm

    Re: Re: Re:

    So if I'm the head of a large multi-billion dollar company and I see that a single employee has written off $100 million in expenses for things like travelling, do I just say, "eh, that's a drop in the bucket compared to the company's revenue..." Or do I think, "there is no reason whatsoever why he should be writing off $100 million in expenses, regardless of the revenue of the company"?

    Clearly, if a supposedly nonprofit collection society for the benefit of artists has $100 million on its hands waiting to do something with it, they are not concentrating on paying out to the people they are supposedly representing, no matter what their annual revenue is. But of course you know this, because you cannot be so uncomprehendingly stupid as to believe that $100 million is marginal for a collections agency with very little overhead.

    Additionally, I've been going back through the site and looking at comments and noticed that you almost always seem to fail to respond to particularly good responses. Anytime a flaw in your logic is pointed out, or evidence provided contrary to your assertions, etc. you are nowhere to be seen. Frankly, you are one of the most pathetic and cowardly commenters I have ever seen on the internet, since you not only act like a troll, but do so with an air of superiority when you are anything but.

    If you disagree with the articles or fellow commenters, respond point-by-point with evidence, and keep with the thread instead of abandoning it everytime you are called on to a sufficient degree of competence.

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