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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Filed Under: collections, money
Companies: choruss, soundexchange
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Radio
Why, nobody's paying for it!!! In fact, how the radio stations have stayed in business all these years is an economic mystery.
You can't have people getting free music over the air-waves; that just plain god-damn unpatriotic!! This country is all about taking as much money from other people as you can.
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where is..
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But hey, carry on.
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It places special emphasis on freedom of speech, P2P and sharing."
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Weird Harold's #3 Fan
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Wired Harold's #4 Fan
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Example: If they collected 1 billion in a year (I have no idea), then their payout rate is 90% - but if their typical year end unclaimed amounts are 100 million, then potentially their payout rate is near 100%. Not explained.
Example: The 101 million is in investments, how long did it take for that amount to accumulate? Example, if they have been investing for 20 years, using the left over amounts of raise additional capital, how much is actually current and due to artists, and how much is income earned through investments rolled over? Not explained.
Example: $800,000 for consultants sounds high - but high compared to what? If they transfered 1 billion in a year, that is drop in the bucket money (or 0.0008% of cash flow). Not explained.
That's why I say it's funny, they claim no slant, but there is enough missing information to create massive slant.
I am also wondering why this article needs 10 links to other techdirt articles. Perhaps it was to make us less curious to read the actual posting on p2pnet? Certainly SEO overkill.
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Those would be your posts, Harold.
Please don't waste our time trying to analyze this -- your bias shows.
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http://whogivesashitchannel.com/
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You've been making trolltastic posts this long and you never noticed that Mike usually links to previous Techdirt articles? Really? (He usually claims that it's easier for him to find the previous TD article than dig up the primary link - usually on the original article anyway).
Anyway, as ever you have yet to refute the major point in the article, which is that SoundExchange are well known to be withholding "unclaimed" revenue from artists they claim they can't find. The list of unpaid artists is here:
http://63.236.111.137/jsp/unpaidArtistList.jsp
There's a lot of unknowns there of course, but I remember running a little experiment with this list a few months ago. Within a few minutes of Google searches, I managed to get the business addresses and/or management details of the first 3 unclaimed artists I recognised off the list, 2 of them pointing to their current projects. Meaning those "poor, starving" artists who are usually brought up as being the victims of "piracy" are not being paid the money they're already owed by the industry.
A quick glance at the list tells me that the artists I managed to find haven't been paid yet.
The basic point raised here is that here we have a supposed non-profit organisation that seems to have problems finding artists to pay, for no good reason. Coincidentally, the same organisation gets to keep any money it can't pay out. Yet, a similar service is supposed to be a good thing "for the sake of the artists"..? Forgive me for being cynical.
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Re: Weird Harold's #3 Fan
It's easy to show with real world numbers that artists make significantly more with concert tickets than they ever do on record sales, even the well known artists.
$25+ per ticket * 100,000 concert goers = $2.5 million
(your previous example used Madonna and $300/ticket so you can start eating that crow right now for giving out that number...thanks for the chuckle)
1 platinum album = 1,000,000 sales * $1 per CD(at most for a WELL known artist) = $1 million.
So, Madonna could do 2-3 shows and make more money in less time than it took for her to make the album in the first place.
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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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TV is piracy, too?
If so, then will the music biz sue the TV biz? I'd like to the arguments back and forth on that.
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> compared to what? If they transfered 1 billion in a year,
> that is drop in the bucket money (or 0.0008% of cash flow).
> Not explained.
0.0008% = 0.000008
$1,000,000,000 * 0.000008 = $,8000.
I think you mean that $800,000 is 0.08%
of $1,000,000,000.
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Re: Re: Weird Harold's #3 Fan
last time I looked, albums don't sell for $1. I see what you are doing there, but in the end, concerts have just as many middle men and the artists don't get tons of that money either.
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I also understand that the artists must register with them to get paid. Basically release something that can get played on the air or whatever, and go register.
Also, the list indicated that perhaps only part of the bands or artists listed didn't register - so you might have the management details for Band X, but a member left last year and never registered with them, so they cannot get paid.
There is still no explaination if this 101 million is specifically owed to this list of artists, or if it is a fund that has built up over years. There is also no indication what the current balance is.
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Still a really, really small number.
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Harold Does Not Understand Taxes
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"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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So when the artist does not pay to have a search done to see if he is entitled to any money from the soundstage collections.
Sooundstage gets to keep it.
This is of course done to protect the artist.
Not to shore up the coke and whore money for the Recording company execs.
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Stop acting like you know everything about everything. At the end of the day, it doesn't matter. Complain about piracy as much as you want, do you really think there is any effective way to stop it, without becoming a complete police state? Even if we take it to an extreme like the Great Firewall of China (which, yes, has more to do with censorship than piracy) people find a way through. Whether you like it or not, piracy happens; the best response is to figure out a way to benefit from it. But, hey, bitching about it on Techdirt works, too.
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Quite simply, you cannot make more Madonna, and if Madonna wants to make her herself and all her middlemen the same money they were making before, she would have to raise her ticket prices significantly (and some would say already has). It's actually a fatal business model, but they are welcome to it.
But in the end, a discussion of ticket prices isn't really related to the topic at hand.
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Re: Harold Does Not Understand Taxes
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Nice try though.
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Remember, this isn't a question of what just the artist gets, but of all the hangers on, all the middle men, all the song writers, all "that" - remembering that if you aren't feeding the song writers over THERE, you have to feed them over HERE.
$14 out of $15 on concerts, no. But you ignored what I put up as well - music sales and concerts have the same GROSS income, and to generate the same GROSS income, ticket prices would have to double.
Simple math, nothing complex.
The breakdowns on each side today are different, but the breakdown on the concert side would likely change dramatically if there was no music sales side income.
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The overarching problem is that SE gets to keep the money. There should be an expiry period and after that period any unclaimed money is returned directly to the original payee. Or better yet they should only collect for those who have given them a right to collect for them. What is happening right now, collecting for any and all music, should be illegal. They collect for everything and get to keep the money that is unclaimed. In other words they are making a living off the backs of artists who have no say in the matter, much like WH claims p2p companies are doing.
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You can't take the artist take $1 NET and then try to compare it to gross ticket sales at a concert. It isn't logical. More importantly (and more my point) is that if the values of music sales and concert sales are the same today, and you want the same total GROSS sales in the future, concert tickets have to double in price (assuming all possible concert dates are played already). Alternately, you could double the number of concerts, or double the number of seats to have the same gross.
If records sales disappeared, the artist net on the concert side would change dramatically, as the vast majority of people on the recording site right now would have to make their money on the concert side instead. They aren't going away for the most part. So rather than get into a lengthy (and meaningless) discussion about artist nets, I just went with the simple math.
Sorry if it doesn't meet up to the standards of the board.
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Radiohead
Nine Inch Nails
Jill Sobule
None of the poster children forgot to pick up their checks.
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The 101 million isn't an expense or a write-off. It's a fund , sitting waiting to be claimed.
At no time am I saying "the expenses (like the 800k) is justified solely on the basis of it being a small number, rather just suggesting that taking numbers that appear big to the average person and peppering them around without reference to the overall flowthru of the organization in a year is misleading. There is no detail presented in the article to say what the consultants fees are for (but there is a ton on innuendo and speculation). Without knowing what they are for, we cannot pass judgement. My only point was that if they turn 1 billion a year, 800k is a very small amount, and perhaps may be in line with other organizations on ratio. I don't know - but I would want to know more before throwing crap around.
So there you go, point by point. Enjoy.
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Re: Re: Harold Does Not Understand Taxes
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They collect your money no matter what you want, no matter who you are...PS....Harold, you have absolutely no idea what the fuck you are talking about.
bbb
wheatus.com
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Yes, indeed 'famous' artists generally aren't on that list, because most of them are signed to labels, and the label will make sure that they extract the money from SoundExchange. But SE refuses to do its job in finding the artists it is collecting royalties for (that includes indy-artists and in some cases even creative common artists.)
SE has shown it can't be arsed to do its job. If a simple Google search gives you the name and address of most of these artists, and they still claim they can't find them. Then they are clueless numbskulls who are unfit to run a business.
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100 million is a big number, to be sure, but may be a very small portion of the actual total money that flows through the system.
I'm no fan of the royalty organizations, but this p2pnet article is still crap.
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If it costs $50 to process and mail a $10 cheque, you're not going to mail that cheque, are you. Basic business
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The p2pnet article is slanted as heck because the numbers aren't presented in context - and I think done so on purpose to create panic and outrage. It's a cheap sort of trick used by crappy politicians and fear mongering groups for the most part.
Then again, rumor has it that the author is also not exactly an "attorney" even though he attempts to represent himself as such. I could find no entry for this guy in the Tennessee state bar association.
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Predictably, you avoid the point. Yet again, I raise several points and you decide to mock a totally irrelevant point rather than answer. Are you going to address anything I said in my previous post, or just avoid it? I'm still interested in how you can possibly defend such a clearly biased organisation that is so obviously withholding money from artists.
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Ignore feature
As a child, I had a toy robot. It didn't do much except run around and run into stuff. When it ran into anything, it turned around 180 degrees and went the other direction. Put it in a hallway facing one wall, and it would just go back and forth, banging its head into the same two walls until the batteries ran out. Reading a Weird Harold thread is a lot like that.
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Historical context
Here's some context: below is SoundExchange's reported "investments/Securities schedule" for 2005-2007:
2005: $55,124,892
2006: $74,607,778
2007: $101,327,262
The point being that it's pretty fishy for a supposedly 'nonprofit' organization to sack away almost $50m of 'investments' in just two years.
This organization is supposed to be collecting and *distributing* these funds to the thousands of artists it supposedly represents - not sitting on the cash and investing it.
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the 100 million
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Re: Radio
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The Numbers in The songs are the pages to Readers Digest Condensed books. On those pages are the Clues I wrote them. 90 percent of the money is mine. I wrote the The Rap Game. All of It. I also wrote many other songs in all genres. I am the writer. Period.
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The Numbers in The songs are the pages to Readers Digest Condensed books. On those pages are the Clues I wrote them. 90 percent of the money is mine. I wrote the The Rap Game. All of It. I also wrote many other songs in all genres. I am the writer. Period.this is dom. Stfu liars.
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