SoundExchange Has A New Target In Its Sights

Maura / July 3, 2007

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]