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Music Industry & Government Scam the Public

August 19, 2008

second of a series on the public and music copyright abuse by E. Manning

graphic equalizerRoyalty money no longer belongs to the artists and copyright holders that earned it per federal law. It now belongs to the organization which collected it on their behalf. This is the world’s greatest royalties scam ever. The scam is operated for the profit of the music industry through the RIAA by a nonprofit organization that lobbies for the music industry, implements pseudo-government policies and collects royalties for artists and copyright holders from broadcasters. The U.S. has a new Federal Reserve for music and music copyright policy with the approval of lawmakers. If this problem hits you as stupid or unimportant, you can stop reading now or read yesterday’s article that WILL concern you on “losing free music.”

By the end of 2006, SoundExchange became the de facto organization for collecting royalties and administering them to those entitled to those royalties. Back in 1999, the RIAA set up an independent nonprofit performance rights organization called SoundExchange. In a very governmental and official sounding letter, the fledgling organization invited all music copyright owners along with musicians and artists that held performance rights to enroll in their “non-exclusive” program. Who knows how many artists even knew of the availability or need for the organization back then. Over time, the music industry built more and more authority into their fledgling organization, virtually guaranteeing the industry an uninterrupted supply of royalty cash from broadcasters as authority was added by Congress and the music industry lobby.

How could this be? Over the years, the federal government has been releasing more and more authority to corporate bodies willing to benefit from taking various responsibilities from their hands. As a result more and more work is passed from the hands of government while taxation continues to increase. The corporate oligarchy continues to be empowered through the federal government as more and more government functions are privatized or “nationalized”. The history of the SoundExchange organization has been one of relieving the the U.S. Government and the U.S. Copyright Office of more and more responsibility while doing less work. The U.S. Copyright Office has handed the keys over to the RIAA by proving themselves totally incapable of administering and sustaining an effective national copyright system: the stated purpose of the Copyright office.

The Copyright Royalty Board was set up to “determine rates and terms for copyright statutory licenses and make determinations on distribution of statutory license royalties collected by the Copyright Office.” This was theoretically an improvement on the copyright royalty arbitration panel authorities employed called the Copyright Arbitration Royalty Panel. The RIAA bought out the game because of the sheer cost of negotiating rates every year. The permanent panel of judges no longer functions as such. The RIAA now ignores the board completely and negotiates individually with broadcasters through SoundExchange, the debacle that the Copyright Royalty Board was designed to eliminate. Why? The RIAA now can work like the old mob did, garnering more cash and favors from individual transactions in the business world, even on a global basis.

Naturally the government continues to fill it’s coffers, collecting at least the same amount of monies and government funding while keeping federal employees and specialists. Because artists authorize membership and sign the required documents to receive their royalties entitled by law, SoundExchange has the right to deduct any costs that the SoundExchange board authorizes before the distribution of any monies to the artist or copyright owner. SoundExchange points out that this membership extends use of the royalty money for lobbying expenses.

Since December 15, 2006 the RIAA’s SoundExchange was put in charge of collecting royalties by Congressional legislation. SoundExchange has the job of collecting royalty fees from the broadcasters and paying copyright owners and artists. Due diligence rewards them for collecting royalties. They haven’t done as good a job of finding the artists they are supposed to be paying. The reality is that they aren’t required to find any recording artist. It is up to the recipient of that “big royalty money” to keep in touch and file w-9s yearly by mail allowing for processing time. When SoundExchange doesn’t find the artist, they are gracefully allowed to keep the money they are required to pay out despite the supposed purpose of their existence.

Anyone that holds a music copyright or performance right is subject to losing the right to that personal royalties if they don’t enroll in the SoundExchange member program. This information is still unknown to many independent artists, especially if they aren’t following the worldly wisdom and expense of retaining an attorney. Even then, there is no guarantee artists know because no information distribution system exists to notify royalty recipients of the change in law and legal requirements to collect monies as an artist or copyright owner. SoundExchange by contract is held harmless from any activity that works against the artist and naturally includes a nice obligatory arbitration clause. After all is said and done, the artist pays taxes on all that big royalty money which hopefully amounts to more than the cost of an envelope and stamp to send in a yearly W-9 statement and the additional cost of filing taxes on the long form.

The scam continues unabated as SoundExchange continues to cut out royalties owed to artists and legally relieving themselves of paying royalties to unpaid artists. The retroactive date of no return keeps marching forward as time progresses. The government continues to do less and less, looking on as the music industry scams consumers, broadcasters, artists and copyright holders. If they can’t scam in large volume, they play the scam pennies at a time, diverting untold millions to their corporate coffers in the name of protecting artists. It’s a perfect game that has been carefully orchestrated with the help of the U.S. government.

SoundExchange lobbies Washington politicians and the public through the Music First Coalition in violation of its charter and Congressional law. When asked about the legality of lobbying expenditures, SoundExchange Executive Director John Simson wrote in an email, “Clearly the broadcasters will do or say anything so as not to pay artists for their work. We welcome a full and open debate before Congress on ending the unfair free ride given over-the-air radio and the granting to artists the long overdue right to be paid for their recordings when they are played.” So far, Mr. Simson’s statement is right on all counts as all parties involved seek to avoid paying artists and copyright holders anything for the use of their intellectual property.

This avoidance of federal law is perpetrated in the name of protecting the membership of SoundExchange (which is supposed to any artist or copyright holder that wants to collect royalties on a global basis), now a mandatory distribution arm of the music industry with the blessing of the U.S. Government. The huge conflict of interest is simply ignored and justified as best for all involved. ~ E. Manning

5 Comments leave one →
  1. Fredro Perry permalink
    February 3, 2011 3:39 pm

    “My research indicates that you must be a member of both (SoundExchange + ASCAP/BMI) in order to have any hope of getting a dime. However, your chances are almost zero of receiving any royalties. Why? SoundExchange “manages” all tracking of royalties and is allowed to keep them in recognition for “administrative fees”.

    Remind me to never hire you as a researcher. Your “research” on this matter and everything else in this piece is completely bogus. Jes’ sayin’!

  2. Fredro Perry permalink
    February 3, 2011 2:44 pm

    Check out this article.

  3. March 19, 2010 4:58 pm

    Does an artist have to become a member of Soundexchange in order for their music royalties to be recognized? What about ASCAP and BMI? Couldn’t an artist simply register with them and not Soundexchange? Would they be insured to collect royalites then? Can an artist sign up with both ASCAP and BMI or can you only sign up with either or?


    My research indicates that you must be a member of both (SoundExchange + ASCAP/BMI) in order to have any hope of getting a dime. However, your chances are almost zero of receiving any royalties. Why? SoundExchange “manages” all tracking of royalties and is allowed to keep them in recognition for “administrative fees”. This is courtesy of the U.S. Congress in 2005. When they decide they have enough of your money, they can elect to send earned royalties. Otherwise, the royalties for most unrecognized talent goes to the RIAA, of which SoundExchange is a front. There are more details that SoundExchange manages as well. Either way, your royalties are funding the crooked music mafia. The world is being defrauded by the RIAA and those that are shareholders. – E.M.

  4. Andrea permalink
    December 18, 2009 5:05 pm

    How does this effect musicians who are members of ASCAP, BMI, etc? Do those organizations have to turn over all information of their members? Can musicians who belong to one of the above mentioned organizations feel secure that their music/rights are protected?

    I downloaded the forms for Sound Exchange but never filled them out & sent them. Something never felt right…

    My experience is that it probably doesn’t matter what you do unless you are a “big dog”. They (Sound Exchange) has the right to keep your royalties unless you somehow make it big OR they decide to relish a few pennies on you. Otherwise, your royalties are THEIRS. That is the law endorsed by Congress back in 1999. It just took a number of years to bring it into full circle.

  5. webjock1 permalink
    August 22, 2008 10:47 am

    Have you or anyone dealt with Sound Exchange lately? The inefficiency of this organization should be considered an embarrassment to any regulatory model. This in itself will lead to it’s own demise (I pray).

    As a webcaster, I’m livid that my honest effort of reporting and to pay royalties are not making it to the copyright holders that it was intended.

    Unfortunately, the family of this writer has been continually victimized by the music industry since we are musicians, recording artists and copyright holders, like millions of other Americans. SoundExchange appears to be simply another excuse for rampant abuse to keep money earned that belongs to others. The music industry benefits from collective intellectual property rights more than owners do. That is the fault of Washington and we are standing by in collective ignorance and tacit approval. ~ E.M.

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