SoundExchange Caught Lobbying, Despite Strict Rules Against Using Its Money For Lobbying

from the somehow,-this-doesn't-come-as-a-surprise dept

Mon, Aug 6th 2007 7:50am — Mike Masnick

SoundExchange, which is a "non-profit" spinoff of the RIAA is supposed to be a neutral party, simply in charge of collecting certain royalties and distributing it to the artists. Of course, things aren't always the way they're supposed to be. After all, SoundExchange is famous for having trouble finding many of the musicians it's supposed to pay -- which isn't all that surprising since it gets to keep the money that goes unclaimed. However, part of the law that governs SoundExchange's existence makes very clear that the organization may only use its money for three things: administration of collecting and distributing royalties, settling disputes about the royalties and licensing and enforcement. One thing clearly not on that list is building a PR campaign and lobbying Congress to expand its ability to collect royalties from other sources. However, Eliot Van Buskirk over at Wired has discovered that's exactly what SoundExchange is doing, and it appears to be breaking the law.

You'll recall the recent stories about the music industry claiming that radio stations are getting a free ride in not having to pay musicians' royalties, despite the fact that, for years, the record labels felt they needed to pay the radio stations just to get airtime. This came out as a new lobbying group and PR campaign kicked off -- including the ridiculous assertion that radio makes people buy less music. It turns out that the group behind this lobbying effort, musicFIRST, happens to be funded in part by SoundExchange. It makes sense why SoundExchange would do this. After all, it would be in charge of collecting those royalties. However, the law seems pretty clear that SoundExchange can't use its money for lobbying (especially lobbying to expand its own power). Van Buskirk got the run around from SoundExchange on this, with the executive director ignoring the question and simply repeating the laughable statement that radio stations (who are promoting the music for the record labels) are somehow getting "a free ride." A lawyer for SoundExchange then tries to explain the situation away by saying that the royalty money being used for lobbying was authorized to be used this way by SoundExchange members. That's like saying it's okay that they broke the law, because they gave themselves permission to break the law. Very convincing.

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Filed Under: lobbying, music, radio
Companies: riaa, soundexchange

17 Comments

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Robert Hill, 6 Aug 2007 @ 8:23am

Money talks.
I wish this was a crime. Companies with money ALWAYS trample actual people. The government should be wary of an angry populace that they have sworn to listen to.
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Dan, 6 Aug 2007 @ 8:32am

And the group that is going to have uncollected royalties that SoundExchange then used for this unlawful activity will be mainly independent artists, as RIAA companies will not be the ones who have unpaid royalties.
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Dave, 6 Aug 2007 @ 9:06am

MusicFIRST home page
"For 80 years, Corporate Radio has refused to compensate artist when they play their songs on the radio..."

thats a quote from their homepage, which is a blatant lie and deceives visitors and the uninformed. The labels use to PAY stations for air time. The fact is that radio of all types is an advertising medium for their product. Why should the radio be expected to pay when they are advertising someone else's product.
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Botch, 6 Aug 2007 @ 9:24am

In this environment...
The sad part is... who would even *want* to be a professional musician these days, in this current environment?
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Anonymous Coward, 6 Aug 2007 @ 9:31am

the law that governs SoundExchange's existence
If there is a law that governs their existence, and they are breaking that law, who is going to prosecute them - or am I being naive?

We get punished worse for jay-walking than these guys are, for their many shady tactics.
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Mike4, 6 Aug 2007 @ 9:50am

Re: In this environment...
The sad part is... who would even *want* to be a professional musician these days, in this current environment?

Really? Was that a joke or do you really think artist's lives have changed even the slightest in the last 5 or 10 years? None of the nonsense going on nowadays has any real effect on artists - at least not to the extent where someone would not want to become a "professional musician."
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Shane C, 6 Aug 2007 @ 10:27am

Breaking the law
If there is a law that governs their existence, and they are breaking that law, who is going to prosecute them - or am I being naive?
IANAL
Misappropriation of funds sure sounds like an appropriate legal course. If this is prosecutable under criminal law, I would think the Justice Dept. would have to file that motion. (good luck getting that to happen) Under civil status, I would think anyone due money from SoundExchange could file action against them.
All of that aside, I would guess either the a) Copyright Royalties Board, or b) the Library of Congress would have to respond to this breach of (contract, or charter, I don't know which). Being that Marybeth Peters (Register of Copyrights in the U.S. Copyright office) just testified in favor of SoundExchange, I would guess that any action from congress would be moot.
One last possibility, on the criminal side, would be the IRS. They usually take quite an interest in the whole concept of "misappropriation of funds."
Shane
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CharlieHorse, 6 Aug 2007 @ 1:22pm

what about ....
indy musicians, producers, et al - releasing their work under different licenses ? i.e. a creative commons type or gpl'd type license ? that way there wouldn't need to be individual licenses between the broadcasters and each and every musician/producer/songwriter/etc.

in my understanding - that was the reason for soundexchange - i.e. to "standardize" or eliminate the necessity for broadcasters to make contracts for broadcast with each individual artist ... (although, we know in reality it was/is nothing more than a money-grab, control-grab by riaa members).

so, if this was the *reason* for soundexchange - how 'bout artists simply release their stuff under a general license - that eliminates the need for a**clowns like soundexchange and/or riaa. broadcasters simply then need to themselves ascribe to the *generalized* license ...

any artists not wanting to do so, but wanting their stuff broadcast simply make separate agreement with the broadcaster - or join soundexchange and get extremely limited airtime - their choice. because the reality is - soundexchange WILL die. the riaa model WILL die. yeah, they're going to sue and scream and holler and make every effort to get congress to pass asinine legislation designed to prop them up - but in the long run - it's game over. they know it. we know it. it's all over but the shouting ...

... my question is: does such a license exist for artists/musicians/producers/et al to release under ?
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uncledeercamp.com, 6 Aug 2007 @ 1:41pm

Let the perjury began.
We can only pray that this goes before some kind of inquiry and these morons who think they are above the law start perjuring them selves. I want them to do jail time for this as do allot of other people. I am a independent artist and these Bastards have ripped me off long enough. Then taken the money they stole from me to buy Hookers and Booze for some politicians in Washington. WTF! What did I get???
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Shane C, 6 Aug 2007 @ 2:49pm

Lobbying...who exactly?
Again, IANAL...
A thought just occurred to me. It would be interesting to find out who exactly has been "lobbied." Yes, we know several politicians apparently have felt the "urge to investigate radio royalty rates," but I wonder how far it extends beyond them?
Specifically, I have to wonder if it extends to the judges on the Copyright Royalty Board? If they have received "special attention", is that illegal in and of itself? These are the people that decreed that SoundExchange should have a multi-billion (multi-million at least) dollar "administrative" allowance to "oversee the distribution of funds." Who better to lobby than the people that will make the decision?
The Board, made up of three permanent copyright royalty judges, was created under the Copyright Royalty and Distribution Reform Act of 2004, which became effective on 31 May 2005, phasing out the Copyright Arbitration Royalty Panel system. These administrative judges are appointed by the Librarian of Congress. [wikipedia]

This sounds like a political position, versus say a criminal judge. How this may differ in things like lobbing, I don't know.
Shane
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Charles Griswold, 6 Aug 2007 @ 6:50pm

Re: Money talks.
I wish this was a crime.
It would seem that it is. Whether or not anything is done about it is another matter entirely.
The government should be wary of an angry populace that they have sworn to listen to.
It would be nice if they did. I'm not going to asphyxiate myself by holding my breath waiting for it, though.
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vargas, 6 Aug 2007 @ 10:35pm

I can't imagine why any up and coming musician these days would ever allow themselves to have anything to do with these organizations.
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AlexC, 9 Aug 2007 @ 2:32pm

Re: MusicFIRST home page
That's because the majority of those 80 years, the "performance right" didn't exist under copyright law for the labels or their indentured artists. The broadcasters got grandfathered-in when Congress created the performance right and it's the following distributions mechanisms--like webcasting and satellite radio--that have had to pay the labels.

In the end, there are two big questions that legislators haven't answered: 1. are the artists getting paid and would they if RIAA / SoundExchange got their way?; 2. how would this impact consumers?
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Charles Moser, 11 Aug 2007 @ 2:45pm

Proof
I'd like to see proof that these artists are actually being paid.
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Debbie, 27 Sep 2007 @ 7:49pm

Abolish Soundexchange
how do we get our money back? Do all humans in America have to incorporate to truly be free? Free to play the game of lies.
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Josh, 25 May 2010 @ 8:35pm

I lit John Simson's long-beach vacation home on fire last week at around midnight. FYI John is the Executive Director of SoundExchange.

You wouldn't believe how fast the fire department showed up--and the police. I got lucky and got away.

I encourage each and every one of you to go out and burn down the home or trash the car of a major executive or representative of the RIAA (or any branch thereof) and report back here with the details.
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anonymous (profile), 28 Apr 2014 @ 1:20pm

IRS rules for 501 c6
http://www.irs.gov/pub/irs-drop/rr-04-6.pdf
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