Tuesday, August 07, 2007

SoundExchange In Possible Legal Trouble

SoundExchange is a non-profit organization created to collect royalties for artists whose music is played on internet and satellite radio. SoundExchange is not allowed to engage in lobbying.

In an open letter to SoundExchange, entertainment lawyer Fred Wilhelms takes SoundExchange to task for attempting to extend its reach while not even being able to handle is current workload:
To be blunt, SoundExchange already has a job it promised to do. It isn't doing it well.

"Reserving" tens of millions of dollars a year, then absorbing that money when you "can't find" the proper recipients is not doing a good job.

Setting a schedule for forfeitures of millions of dollars, and then not making any effort to publicize the forfeitures, is not doing a good job.

Being unable to explain how and why you rely on sampling to allocate royalties, and not even formally admitting you do, is not doing a good job.

Claiming that the amount of money you spend on something clearly outside the limited function you have been granted by law is "proprietary" information, is not only not doing a good job, it is a slap in the fact of the people you are supposed to work for.

Attacking the people who point out that you might be violating the law is not doing a good job.

Deducting the cost of violating the law from the money of your registered members, in open and direct contradiction to the law, is not doing a good job, no matter how many of your Directors approved.
This p2pnet piece, which includes the full text of Wilhelms' letter, is a must-read for those unsure of why SoundExchange is not to be trusted. Wilhelms asks SX where it got the authority to spend royalties collected on a lobbying front group called musicFIRST. musicFIRST, you'll recall, is the guise that SoundExchange Executive Director John Simson and others from SX wore at the terrestrial radio performance royalty hearing I attended last week.

Also, interesting reading from Eliot von Buskirk in WIRED and more coverage of the Senate co-sponsors' threat to bring The Internet Radio Equality Act to the floor if great strides are not made in negotiations this month.

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