a2f2a

Nashville entertainment lawyer Fred Wilhelms was one of the first people to sign up when a2f2a.com went online.

He’s a vociferous advocate of artist rights who for years has been doing battle with RIAA spin-off SoundExchange over artist royalty payments or, rather, the lack of them.

Not at all coincidentally, they’re also central to an ascerbic and long drawn-out debate between him and SoundExchange board member Dick Huey.

The storm first began to gather in July, 2007, when an unsigned p2pnet Reader’s Write accused Wilhelms of having a vested interest in criticizing SoundExchange for not paying artists.

“On June 26, net radio broadcasters across America launched a day of silence to protest increases in royalty rates,” said a p2pnet post.

“In the shadow of the Capitol, SaveNetRadio artists welcome Congressman Jay Inslee and Congressman Don Manzullo to speak to the crowd,” said the caption to the accompanying photo featured on the SaveNetRadio site, going on: “The Congressmen have introduced legislation in the House of Representatives that would save Internet Radio.”

Wilhelms “is among the most vocal opponents of the increases, and he’s been uncovering the inconsistencies and outright lies emanating from the corporate music industry and its adherents,” said the story.

In a Reader’s Write, “OK, I’ll jump into this,” said the anonymous poster, going on:

“Fred Wilhelm’s been getting a lot of ink lately, dipping into various parts of the webcaster issue, which he no doubt enjoys. I think it’s interesting that Fred rarely (at least in posts I’ve seen) acknowledges that he’s got a very vested interest in trashing Soundexchange, since he’s interested in establishing a competitive society, and the CRB told him ‘no’.

“Why is that, do you suppose?”

The accusation was intriguing because Wilhelms has for years been battling against a rock-solid SoundExchange wall of unresponsiveness on the question of artist royalties.

Many moons later, Huey later admitted he was the author and apologised for making the erroneous assertions.

Now Laura William steps in on behalf of SoundExchange itself >>>

Dear Fred and friends, Greetings from SoundExchange.

Firstly, with regards to outgoing communications, please understand that a small organization with a low administrative fee must prioritize. I agree that SoundExchange has not been particularly good at outbound communications, as our emphasis and effort has been in getting the word out to artists, copyright owners, and services about their rights and responsibilities, which are also still relatively young. This year, I hope you’ll agree, we’ve been moving toward the goal of opening ever broader and clearer lines of communication. The new SoundExchange.com is an exemplar: not only is the information arranged in a more intuitive, user-friendly way, but there’s more information available there than ever before. Our registrants and members, as well as the service providers who use music, will find more of what they need is at their fingertips. SX has also expanded the External Affairs department to include general outreach and media communications, in addition to the constant efforts to contact and register artists and ROs.

SX is committed to being available to answer questions, and much of what folks ask is publicly available. My phone number is up on the website, and I invite you to call and chat if there’s anything I can do to help. Also, I’d like to repeat John Simson’s open invitation – if you’d like to stop by the office and talk through, or see how things work around here, you’re always welcome. Just name the date – we’ll be here.

The “unpaid pool”

First of all, let me clarify that we’re actively working to reduce the size of our unpaid pool, and we’re not satisfied with the progress in getting money out to artists. That said, I submit to you that the existence of the pool is, at least in part, a credit to SoundExchange, reflective of a determination to do hard things the right way, not the easy way. Even though regulations permit us to release funds after 3 years, we’ve only done that once, long ago – we’re still holding a reserve of funds to cover claims all the way back to our first collection in 1996 (half that reserve remains). We are first and foremost artist advocates. If we sought only to minimize criticism, we would long ago have done a pool release or liquidated the funds, as other societies do. But having a balance of zero isn’t our only goal – our primary goal is to make sure that money makes it to those who rightfully earned and are owed it. A premature release of the funds just to show a lower balance is counterproductive.

But finding, registering, and properly paying artists and SRCOs means overcoming a massive industry data deficit – there is no no central registry of track data, and no registry of artists and rights holders. It means an unbelievable education campaign to inform and register artists, many of whom don’t register even after five and six contacts to tell them they’re owed money. We’ve been executing database matches with other organizations, and asking them to help us reach artists who don’t yet recognize SoundExchange’s name or purpose. Check out recent coverage of the ReverbNation, CDBaby, and iLike matches. More than 15,000 artists for whom SX currently has money have been notified this way in the past few months, and many more matches are coming (watch for SonicBids!).

Better yet, we are now able to post the entire current unregistered list public on the website – something we hadn’t been able to do since 2006.

To help illustrate the scope of the challenge, let me quote liberally from John Simson’s recent letter in our quarterly newsletter, which reaches out 43,000+ registered artists and 5,000+ copyright holders:

” … Many services remain non-compliant, or provide us such incomplete data that we cannot rely on it to send out money. When reports arrive at SoundExchange, we’re too often faced with artist listings like ‘Various Artists’ or ‘Beethoven’ (we’re pretty sure Beethoven hasn’t ever made recordings). For copyright owners, we get a lot of label fields reported as “unavailable” or “white label” or “promo.” Sometimes, it’s “self-produced” or “self-released.” While some of these inaccuracies, and even misspellings, can be adjusted by software, many must be corrected by hand. Multiply that by millions of tracks, and you start to get an idea of the project we’re facing.

In addition to our full-time team, we’ve hired temporary staff this year to attack this volume of data. We are working to “fix” what is poorly reported to us and ensure that all royalties are going to the people who earned them. Bit by bit, we can resolve much of this data, but the inevitable result is a delay in getting payments out the door.”

We’re growing fast – our registrant rolls, performances processed, our incoming funds, our outgoing funds, too. In 2001, we distributed $3.1 million. This year, we’re on track to pay out $145.9 million. That’s astronomical growth, for any business, and it’s come with some growing pains. Likewise, while we take 20 to 100 artists off the unpaid list every week, online music services are proliferating, and more and more artists are getting played. Unfortunately, some of them don’t register with SoundExchange, and their names replace those coming off the list. But in time, we’ll get in touch with them too. That’s our commitment to paying artists and copyright owners.

We’re advocates, committed to doing a job which is much bigger than we are. Our board (including those who stand to benefeit from a pool release) continue to defer that release and support our efforts to find the rightful recipients of those funds. The layers to this problem – non-compliant services resulting in a lack of data, artists we haven’t yet registered, rapid growth, etc – are being addressed. We are not happy about the size of the unpaid pool, and we’re aggressively working to bring the number of unregistered artists, and the amount of money yet to be distributed, down. With more compliant services and more sophisticated in-house technologies, with a better industry knowledge of what SX is and does, we expect that trend to continue – and that’s good for everyone.

Service providers, Internet radio, and WSA agreements

You’re quite right in saying that a “one size fits all” approach is rarely the most effective. SX agrees entirely. That’s part of the rationale behind the Webcaster Settlement Act agreements. In 2009 alone, we negotiated 8 different agreements, to ensure that their business needs were being addressed in a way which also ensured fair compensation to artists. Bakers want to pay less for flour, dressmakers want to pay less for cloth, streaming services want to pay less for tracks. That’s understandable. But it doesn’t mean that the flour mill, the weaver, and the artists/copyright owners don’t have the right to be paid fairly for the product they supply. Given our core mission, the SX legal team has been amazingly flexible in accommodating the specific needs of services. A group of college webcasters, for example, were concerned that they couldn’t meet reporting requirements during the summer months, when they’re un- or under-staffed. We made an agreement just for them to meet those needs. Public radio, under the stewardship of the Corporation for Public Broadcasting, also had certain unique business considerations we were able to accommodate. All of these agreements are “opt-in” – meaning that webcasters aren’t bound by them unless they choose to make the agreement with SoundExchange. If webcasters choose not to opt in, they’ll simply pay the standard annual rate set by the Copyright Royalty Board (CRB). SoundExchange is committed to finding solutions which are fair for everyone – agreements which allow webcasters of all types and sizes to continue growing their businesses and distributing music, and which provide the artists and owners of the music to share appropriately in that success.

You also may have noticed that SoundExchange staff were out at a number of events this year, including the Future of Music Coalition conference, the National Association of Broadcasters annual show, Association of Music Personnel in Public Radio and the RAIN Summit East. In these venues, and every day on the phones, we answer questions for our service provider licensees, with the goal of helping them meet their compliance obligations. Thanks to the agreements, we are able to work with service providers as business partners, rather than adversaries in litigation. It’s a win-win.

In conclusion

Since this is my first foray into P2Pnet, instead of leaving you with wishes for a happy holiday, let me instead leave you with a New Year’s resolution from all of us at SoundExchange. We’ll do better keeping the lines of communication open, and as always we’ll continue to keep the money ($300 million and counting) flowing out the doors to those who’ve earned it.

Best Regards,

Laura Williams

Communications, New Media & External Affairs
SoundExchange

Stay tuned.

Below are the p2pnet posts to date »»»

• Fred Wilhelms to Dick Huey -  November 18, 2009
• Dick Huey to Fred Wilhelms -  November 17, 2009
• Wilhelms, Huey, SoundExchange exchange -  October 19, 2009
• Dear Dick Huey -  October 8, 2009
• Has SE’s Dick Huey gone missing? – July 12, 2007
• SoundExchange’s Huey to Wilhelms – July 5, 2007
• SoundExchange’s Huey v Fred Wilhelms – July 3, 2007
• SoundExchange: making up numbers – June 28, 2007

Jon Newton