SX’s misinformation tactics corrected in today’s RAIN

A recent letter
from SoundExchange to its members falsely smears the SaveNetRadio coalition as a front for something it calls “BigNetRadio” and asks members for continued support as “artist’s”performance royalties are “attacked.”

With the letter, SoundExchange continues its campaign to misinform its members regarding the nature of the webcast royalty issue, misrepresent the Internet Radio Equality Act, and make unsubstantiated claims in an effort to portray webcasters as greedy operators of highly lucrative multi-billion dollar companies.

Congratulations, webcasters!
You’re captains of industry!
The letter reads, “We believe when Congress takes a hard look behind this curtain of misinformation being fostered by SaveNetRadio, their campaign for BigNetRadio will be fully revealed for what it is: a cash grab by BigNetRadio.”

Citing “facts” to support this portrayal of royalty relief efforts as a “cash grab,” SoundExchange claims, “14 of the 20 largest webcasters, some who comprise DiMA and SaveNetRadio, have market capitalization ranging from one billion to several hundred billion dollars,” and “The other large webcasters have significant venture capital backing.” Naturally, SoundExchange fails to mention the names of these 14 multi-billion-dollar public companies, or what it considers “significant venture capital backing” for the other six operations.

SoundExchange does cite CBS’ recent $280 million acquisition of, and bemoans the fact that “none of (this money) went to artists or copyright holders” (read: labels). What isn’t explained is why “vendors” would expect to receive a share of proceeds from the sale of “a customer” (or the fact that artists receive no share of the enormous sale prices of major label groups as they consolidate).

What would be the industry’s highest royalty “unspeakably low” to SoundExchange
Much of what the letter suggests has been previously (and repeatedly) refuted by webcasters. For instance, SoundExchange describes the IREA’s 7.5%-of-revenue provision as “unspeakably low,” and “an artist paid subsidy to multi-billion dollar corporations.” But as Radio Paradise founder Bill Goldsmith argues (in RAIN Reader Feedback, here), “The 7.5% of gross revenue rate that would be set by the legislation that the RIAA is so aghast about would bethe highest royalty paid by any class of broadcaster in the U.S., and among the highest anywhere in the world.”

On this note, webcasters facing an almost certain demise under a royalty structure that would require them to pay a huge proportion (in some cases, multiples) of their revenue might be interested in the letter’s note about satellite radio royalties. CRB hearings have started for sound recording royalties for XM/Sirius for 2007-2012, and the satellite operators are arguing for a royalty rate of “less than 1% of revenue” (which SoundExchange calls “not only laughable but downright insulting.”

RAIN’s RIAA “myths” vs. reality
As mentioned above, webcasters have heard much of this propaganda before. In letters like this, in media interviews, and in press releases, SoundExchange spokespeople  like John Simson purport to dispel the “myths” surrounding webcasters’ claims. (What actually, happens, of course, is that real facts get obscured, selectively cited, or altogether omitted as the label organization portrays itself as a guardian of artists’ interests.)

To bring some real clarity to the issues, we’ve created a list of alleged “myths” supposedly dispelled by SoundExchange/RIAA, the “facts” they cite in their arguments, and the real facts behind their posturing. We hope this table might be a helpful reference tool to webcasters who get the opportunity to communicate with lawmakers and the press.

Please see the table here (or, click the image), and feel free to bookmark it and direct journalists and legislative aides to it.

Read the entire unedited SoundExchange letter here.

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