The Orchard: SoundExchange Payments Lacking
September 10, 2008 at 11:00 AM (PT)
Online music supplier THE ORCHARD has sent a letter to the COPYRIGHT ROYALTY BOARD alleging that SOUNDEXCHANGE has been delinquent and inaccurate in the collection and payment of Net radio royalties. The letter, written by Pres./CEO GREG SCHOLL, was also sent to Librarian of Congress DR. JAMES H. BILLINGTON, who oversees the Copyright Board; and Rep. JOHN CONYERS JR. and Sen. PATRICK J. LEAHY, who oversee the LIBRARY OF CONGRESS.
"SOUNDEXCHANGE is holding money owed to Orchard-represented artists, and we need your help," he wrote, asserting that SOUNDEXCHANGE's lack of accurate and prompt payment are due to "gross incompetence, or intentional neglect. Either merits a formal inquiry into SX accounting and business practices."
Despite collecting about $140 million in royalties last year, less then $40 million was distributed
Other segments of the letter are as follows:
SX's lack of transparency is shocking, considering it is a former division of the major-label-controlled RIAA that was designated by your board as the exclusive collection and distribution mechanism and turned into a quasi-government agency the year after Congress ratified [the] SARBANES-OXLEY [Act of 2002].
In MARCH 2008, we conducted a comprehensive analysis of SX accounting to us. Out of the mere $31,000 paid to us during the course of three years, a paltry $1,119.78 matched songs we had registered. The rest encompassed royalties for songs where we don't hold collection rights or songs we don't even sell digitally: just completely random songs! With that in mind, note that on JUNE 6th of this year, SX posted the following on its website:
"The check's in the mail is a statement that's music to everyone's ears. Such fantasy is reality for SHELLY ESPRE, widow of the late zydeco giant BEAU JOCQUE. ESPRE will soon receive an unexpected check for $2,000 from SOUNDEXCHANGE. The good news is more zydeco and Cajun musicians could have money on the way, too."
ESPRE has apparently received about twice as much for her husband's songs as we have for our half million-song catalog. No wonder, then (at least, as we can decipher the paucity of information provided in the draft SX annual report for 2007), that despite collecting about $140 million in royalties last year, less then $40 million was distributed.
Playing politics around policy positions might be more glamorous than the blue-collar work of administering royalties, but the latter is SX's mandate. One would expect more from an organization that spent more than $10 million of artists' monies in operating expenses in 2007, including close to $3 million on salaries. An expensive lobby organization . . . especially considering SX lobbies for positions not all of its clients -- like THE ORCHARD -- agree with.
If SX cannot fulfill its mandate, perhaps it is time to look elsewhere for an organization that can. SX should be held accountable. In the meantime, we respectfully await your counsel as to how our artists can get paid accurately, and in the future, on time.