SoundExchange Has A New Target In Its Sights

lastfm.gifLast week, the social-networking service declined to participate in the Day Of Silence protesting higher royalty rates for streaming stations; in the post explaining their decision,’s Felix Miller said that the site was already paying higher royalty rates because of its UK location, and that “If a commercial challenge comes up, [they] have to deal with it” without “punishing” listeners. Well, it looks like they’ll have a brand-new challenge on their hands soon, as the company’s recent purchase by CBS has resulted in SoundExchange director John Simson making noise that they should pay up:

In a recent edition of KCRW’s The Politics of Culture radio show and podcast, SoundExchange executive director John Simson said was operating under a 2003 royalties rate, introduced after a request from Congress, that was designed to give web startups a chance by letting them pay royalties according to a percentage of revenue rather than number of streams served.

Simson: “A deal was struck back then which allowed them to pay 10 percent of revenue up to $250,000 and 12 percent above that. There are about 50 services that took advantage of that royalty deal and have been streaming on that basis since 2003. Interesting to note that one of those services, that paid us very low royalties last year, just was sold for $280 million to CBS. Here they are using our music to build a business at a subsidized rate and then they flip it to a big company for a lot of money and we don’t get a percentage of that, where’s the fairness to the performers whose music is being used to create value in these companies? We have a small webcaster who just sold for $280 million who had almost no revenue.”

Oh, those “be careful what you wish for” scenarios. They really do crop up fast, don’t they? (We do have to wonder, though, if the promotional value that gives to those SoundExchange artists is worth anything in Simson’s estimation–probably not, since they don’t result in “administrative costs” being fed into his organization’s coffers.) There’s no response to Simson’s volley yet on the blog, perhaps because the first few drafts were just the words “Aw, dammit to hell” repeated over and over again.

SoundExchange Has A Beef With’s Music Royalties [paidContent]

  • Dan Gibson

    At this point, I’d give up on listening to music on the internet if it would mean SoundExchange would go away.

  • binaryan already pays SoundExchange. They’ll be subject to the rate increase that all the big corporate webcasters are already bitching about.

  • loudersoft

    Everywhere you turn, SoundExchange is there to create another roadblock to progress where one did not exist before. If his theory were accurate, then during all those mergers & acquisitions of record stores in the brick & mortar era, every artist whose CD was carried by the store who just got sold to the bigger conglomerate would be entitled to a cut from the sale of that store.

    Totally ignorant.

  • masterdave

    Not that I feel sorry for SoundExchange, but they’re an American company. There’s a totally different world outside of the confines of the USA where crazy things like “laws” and such don’t follow the same rules.

    The UK has their own laws. SoundExchange is set up by the US Copyright board, which doesn’t really have any jurisdiction over UK companies.

    Sorry, I don’t see how this is anything but a simple case of “fuck you RIAA, we’re not in the US ” from CBS.

    Eventually these comapanies will go the way of the real mafia, and start realizing their uselessness in terms of trying to bully people around and extorting money that’s not theirs. Unfortunately most of the music business will have to die off before everyone will be free of the music cartel.

  • loudersoft

    But here’s the crazy part — when SoundExchange was pitched to me initially, I was told they would collect royalties from places and countries that you probably didn’t know owed you money.

    The catch: this opportunity to collect expires after a certain amount of time, then SoundExchange keeps what you don’t get.

    Nice one.

  • MJ

    See, my disquiet was justified.

    Another reason why might not have participated in the “Day of Silence”: they’ve got subscribers, like me, and I don’t know how they’d react if didn’t serve them what they were paying for, even for just a day.

  • FunkyJ

    @MJ: I concur.

    My biggest gripe against those demanding join the day of silence was they weren’t paying subscribers.

    They can quit and never listen again, but I’ve paid money for Last.FM and I don’t want it silent.