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. icon
    PaulT (profile), 23 Mar 2009 @ 4:04pm

    Re: Re: Re: Re: Re:

    OK, here's 2 problems:

    "I looked over the list quickly (scanned as I scrolled) and I didn't see a whole bunch of name artists."

    Well, I scanned over it and saw Kraftwerk, Mica Paris, MC Ren (one of the founding members of N.W.A.), U.N.K.L.E, Biohazard, Pharcyde, Clint Mansell, Ugly Kid Joe, Type O Negative, RZA, Raekwon (both members of the Wu Tang Clan)... Not exactly unknowns, and that's not including the large number of house, rave, drum n' bass and hip-hop artists I recognise from being a fan of those genres during the 90s (like Acen, Age Of Love and LTJ Bukem - hardly household names, but well known within those genres).

    Anyway, whether or not they're known artists, there's a hell of a lot of them. Even if they were owed $10 each, that's a hell of a lot of artists losing out, and you can probably be sure that some of them are missing a lot more than that.

    As for registering, well maybe that's where some of them are coming unstuck. Many of the artists are not American, and therefore may not have any idea that there is money outstanding, let alone the process required to collect momey. Hell, it's possible that some of these artists have never had official US releases so may not have any representation there.

    However, that's hardly the point. If I'm given $100 that I need to hand to someone, you can be damn sure I'm going to find them to let them have their money. This organisation is pocketing millions because they claim they can't find the (easily located) artists or because the artists haven't followed a procedure they may not know about? Yet their entire supposed reason for existing is to pay artists? That's a problem.

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