Forgot your password?
typodupeerror
Music Government Media The Internet The Almighty Buck Politics

The SoundExchange Billion Dollar Administrative Fee 127

Posted by Zonk
from the crushing-greed dept.
palewook writes "On June 7th, Yahoo, RealNetworks, Pandora, and Live365 sent letters to US lawmakers emphasizing they owe SoundExchange 'administrative fees' of more than $1 billion dollars a year. These fees would be paid for the 'privilege' of collecting the increased CRB royalties effective July 15th, unless the Internet Radio Equality Act passes Congress. SoundExchange, the non-profit music industry entity, admits the levied charge of $500 per 'channel' is supposed to only cover their administrative costs. Last year, SoundExchange collected a total of $20 million dollars from the Internet radio industry. Under the new 'administrative fee' RealNetworks, which hosted 400,000 unique subscribed channels in 2006, would owe an annual administrative charge of 200 million dollars in addition to the retroactive 2006 rate hike per song played."
This discussion has been archived. No new comments can be posted.

The SoundExchange Billion Dollar Administrative Fee

Comments Filter:
  • My heroes (Score:5, Funny)

    by Timesprout (579035) on Saturday June 09, 2007 @02:42PM (#19452073)
    They beat me to it. It's always been my dream to set up a non-profit (for everyone else except me of couse) that rakes in money by charging other companies fee levels that I just make up.
  • by 3seas (184403) on Saturday June 09, 2007 @02:47PM (#19452105) Journal
    .. I'd like to see the math and results of income to such organizations and businesses ... but prior to internet.

    In other words, who gets what without the internet?
  • As necessary as it seems, with all the snooping, the phishing, the scams, the logging, the data mining, the patent fights, and all the other crap that's going on these days, it is getting where the Internet is more necessary evil - with emphasis on the evil.

    I also agree with net neutrality. That's the problem. I just hate it that anyone thinks they have to resort what is tantamount to extortion. Or that anyone has to resort to extortion.

    People predicted long ago that once money got involved with the n
    • by _Sprocket_ (42527)

      People predicted long ago that once money got involved with the net, it would radically change. They were right. All of computing has.

      You act like the statement was prophetic and not just stating the obvious. Money is a common denominator for all interests. As such, wherever money is involved, it will bring in all manner of individuals... including those with very predatory motives.

      The Internet and computing in general have expanded to a point that it attracts a vast number of individuals. Some are dec

      • Re: (Score:1, Insightful)

        by Anonymous Coward
        Yeah - there's a lot of bad out there. I'm especially aware of it because that's what I do.

        Well then do us all a favor and stop doing it.
  • Which side am I supposed to choose here? The recording industry, or Real Networks. I hate them both.

    Wait a second here... that means whoever ends up getting screwed, I win. Rock On.
    • by LighterShadeOfBlack (1011407) on Saturday June 09, 2007 @03:37PM (#19452363) Homepage

      Wait a second here... that means whoever ends up getting screwed, I win. Rock On.
      No I think a more realistic way of looking at it is "Whoever wins... we lose". This situation is a lot like the AvP movie in other ways too: I can't bear to watch this either.
    • by jonbryce (703250)
      Real Networks. There are other internet radio services around which are equally affected by this.
    • by Ash Vince (602485)
      Which side am I supposed to choose here? The recording industry, or Real Networks. I hate them both.

      Why?

      The answer to the recording industry in can guess if you actually mean RIAA. But they are not the whole industry, they only represent the biggest companies.

      But why hate Real Networks? They have indulged in some dubious business practices in the past I thought they stopped those when they jumped on the Open Source bandwagon.
    • Well, let's see here:
      The recording industry wants gobs of money, is inherently evil, and hates the internet.
      RealNetworks wants gobs of money, is somewhat evil, but loves the internet, puts out a very good mostly OSS Linux media player, and is just as screwed as SomaFM and (insert station here) if this goes through.

      Hmmm....
      • by Evets (629327)
        Are you guys actually saying the RealPlayer for linux is less crappy than it's window's counterpart? As in - not constantly putting ads in front of you, not constantly trying to sell you something?

        (this is an sarcasm free question)
        • Yes, it is. It's open-source (Helix player), very streamlined, and I'd go as far out as to say it's better than Totem, GNOME's built-in player (which personally doesnt mean much). It is also 100% ad free, and I think the non-Open version even handles DRM'd RealMedia (which is sometimes a necessary evil). If only they'd use the profits from the ads in the Windows version to put a CSS decoder and DVD support in the Linux version so we can finally have legit (in US) DVDs in Linux. I'd even pay for that.

          I h
          • by Xiaran (836924)
            I hear the Mac version's pretty decent too.

            Interesting that this comes up when I just finished discusssing this with a friend not ten mins ago. I use the linux and os x real client fairly regularly. Id say the linux version is better... but the os x version is bad. It just seems to have the occasional visit to needing a visit from Mr SIGKILL every now and then. Thats said the real player is about a gazillion times better than the os x version of windows media player. I swear that microsoft write software
  • Just like a cancer (Score:5, Insightful)

    by WrongSizeGlass (838941) on Saturday June 09, 2007 @02:51PM (#19452141)
    The RIAA will kill off internet radio, then another piece of the 'music pie', and then another and another until it has nothing left.
    • Re: (Score:3, Insightful)

      by KKlaus (1012919)
      Except... selling albums. Or are you implying that people will stop listening to music? Destroying markets that aren't profitable for you or that you don't control is evil, and our freaking congress of all groups shouldn't be the ones giving these guys cart blanche to do so, but it isn't exactly bad business.
      • by rodentia (102779)
        Or are you implying that people will stop listening to music?

        I've stopped listening to recorded music entirely, as a matter of principle.

    • by GreatBunzinni (642500) on Saturday June 09, 2007 @04:53PM (#19452833)
      Correction: the RIAA will kill off internet radio FROM THE US of A. The RIAA is an american business association which lobbies the US government institutions to implement policies in order for their associates' business to thrive. It's influence outside of the US isn't felt, specially in countries where fair use rights are acknowledged and respected. So the only thing that the RIAA's antics will produce is effectively strangling the US market.
    • by mmarlett (520340)
      If it kills (U.S.) Internet radio then we can all laugh, say "I told you so," then pressure our government officials to prosecute the RIAA. And that will probably be the end of the RIAA as we know it. Then, when it's gone, (U.S.) Internet radio can come back. And almost everything about the music industry will change.
    • by innerweb (721995)

      For years, local performances have all but dried up due to unfair competition from big labels. I see them coming back now as people are more willing to part with money at these venues. Let the RIAA kill off the rest of the music world. What will be left is truly the best part anyway. What bothers me about this deal, is breadth and the reach of the internet radio fees. What about a station that plays nothing but non-label music with knowledge and permission from the artist(s)? Are these stations then t

      • by Pikoro (844299)
        "Are these stations then taxed the same way even though they are playing music that is not part of the umbrella?"

        Yes. It is exactly like that. The RIAA will collect royalties for indie music as well. They keep those royalties until such time as the indie artist joins the RIAA. Granted, those pre-collected royalties would probablly not even cover the sign-up fee to join the RIAA.
        • Re: (Score:3, Interesting)

          by innerweb (721995)

          Wow! That smells illegal. I have not followed in as much detail as I need to, but I had a feeling that what was going on was cartelish. For an organization to be allowed to have fiduciary powers over any or all of a non-granting principal's monies and then be allowed to force that principal to pay a fee (extortion?) to collect those monies does not seem even plausibly legal. (IANAL)

          At the very least the RIAA ought to be forced to surrender whatever fees they collect to the parties that have not signed o

    • by Wayne247 (183933)
      You just made a very minor error in your statement.

      The internet will kill the RIAA.

      Now that I have this post in my slashdot history, I can now count the time until I am eventually right. RIAA can absolutely not win, not now, not never. No amounts of lobbying, government attempts at control and regulation will ever stop people from doing what they want to do: listen to broadcasts.
  • ...the sound of someone laughing - all the way to the bank.
  • by creimer (824291) on Saturday June 09, 2007 @03:01PM (#19452195) Homepage
    Is that the politicians want their share of shakedown. Has anyone noticed that Microsoft had zero lobbyists in Washington before the anti-trust lawsuit, and they now spend $200 million a year on Washington lobbyists? Internet radio will have to pay the piper.
    • by _Sprocket_ (42527) on Saturday June 09, 2007 @03:41PM (#19452389)

      Has anyone noticed that Microsoft had zero lobbyists in Washington before the anti-trust lawsuit, and they now spend $200 million a year on Washington lobbyists?


      This is always touted as one of Microsoft's lessons learned - be involved in the government. Part of this is probably due to a belief that the anti-trust lawsuit was a vendetta brought on by more politically savvy sour-grapes competitors. I don't agree. But I do think it was only a matter of time for Microsoft to get involved anyway.

      Microsoft is a large entity with a vested interest in how the market behaves. And the market itself is large enough to touch on almost every aspect of our lives (its what "we" always knew would happen back in the '80s with our little hobbiest microcomputers waxing poetic about the future). With the market so important, Congress is going to get involved eventually... mainly at the prodding of lobbyists from other industries touched by the expanding IT market. It makes sense that Microsoft would decide to have its views put in the ears of Congress as well.

      Does this mean Congress-critters are demanding payouts? I'm not so sure its exactly that (although I would expect it is accurate in some cases). But I am positive you're not going to be well represented if those that would represent your view are unaware of what that view is. Or even worse... people with an opposing view have managed to convince your favorite Congress-critter that reality lines up with their viewpoint (queue this post's theme song [youtube.com]).
  • by d3ity (800597) on Saturday June 09, 2007 @03:06PM (#19452213)
    I wonder what Real Networks will do if they can't come up with the $200 million dollars they apparently owe... They'll probably stall for time... Buffering...
  • by Cafe Alpha (891670) on Saturday June 09, 2007 @03:17PM (#19452249) Journal
    Cheer up, the rest of the world will still have freedom on the internet. It's just us Americans who will be regulated out of having any expression.

    We'll still be able to listen to Russian stations.

    Where's you're "In Soviet Russia..." joke now, bitches?
  • Government to SoundExchange: What is this?! Where did you learn to charge these outrageous administrative fees? Was it from all those lawyers I see you hanging around with?

    SoundExchange to Government: I learned it from YOU OK! I learned it by watching you *sob*

    SoundExchange runs out of the room while Government stares into the distance meaningfully.
  • by Ralph Spoilsport (673134) on Saturday June 09, 2007 @03:27PM (#19452317) Journal
    the RIAA is simply evil beyond all bounds of reason. I'm surprised that some nutjob asshat hasn't yet barged into their offices and raked 'em all down with machine gun fire. Everything they are doing is so bad and so dangerous to the legacy of the late 20th and early 21st century, it really is criminal.

    While I don't advocate someone blowing their office to flinders with a bomb or some other evil terroristic act, I am surprised that it hasn't happened yet (one would think that with all the loosely bound people in the USA, one of them would have freaked out by now and targeted them...)

    What I DO advocate is that the RIAA and the MPAA and their associated organisations be banned and eliminated and the music and film artists and industry re-organise itself along more open and egalitarian lines.

    RS

    • If you want to watch the RIAA start having real problems, you simply have to publicly and repeatedly associate them with abortion, or cute, furry animals, or any hot-button issue that has a militant wing. Maybe a bunch of wackos in pirate outfits would storm the place. Serve them right.
    • I'm surprised that some nutjob asshat hasn't yet barged into their offices and raked 'em all down with machine gun fire

      Perhaps you have lost your perspective from too much time on the net. When all is said and done it's just music were talking about. People go nuts for lesser reasons, sure, but I question if the issues surrounding the RIAA has had anywhere NEAR the exposure it would take to have the statistical nutjob appear. Ask 100 people about the RIAA and 95 will have no idea what you're going on ab

      • Oh, those strong moral issues exist. It's just that those who know and are affected most crazily usually just post here, or are trying to making a living signed to one of the labels creating these problems.
        Now, if SoundExchange continues on its quest for a billion dollars in administrative fees, some of the moral issues will become known. Thousands of people would be annoyed or distressed if Yahoo! Launchcast (all zillion stations--Yahoo! personalizes them for their users) was taken off the air. Many of
    • by BeerCat (685972)

      I'm surprised that some nutjob asshat hasn't yet barged into their offices and raked 'em all down with machine gun fire.


      Probably because even the nutjob asshats reckon it's not worth the cost of the bullets
    • by suv4x4 (956391) on Saturday June 09, 2007 @08:48PM (#19454407)
      I'm surprised that some nutjob asshat hasn't yet barged into their offices and raked 'em all down with machine gun fire.

      You're going to jail for this!

      While I don't advocate someone blowing their office to flinders

      Fine, you're off the hook...

      with a bomb or some other evil terroristic act

      That's is: jail time!

      I am surprised that it hasn't happened yet

      Oh ok, you're a fine fella.

      (one would think that with all the loosely bound people in the USA, one of them would have freaked out by now and targeted them...)

      Effin terrorist! JAIL!

      What I DO advocate is that the RIAA and the MPAA and their associated organisations be banned

      Oh, banned. That's cool I guess. ... and eliminated

      Screw it, I'm calling the FBI on ya!!
    • The ratio of nut jobs in the US currently willing to go serial killer on something vs other people seems to be a lot less than 1:10,000,000. It might seem like there are a lot of violent nut jobs, but to suggest that is fallacy of misleading vividness, for one thing. One nut job killing two or three dozen can be the subject of news for several weeks, enough of them and it seems like it happens everywhere and all the time. In reality, it's a very rare and unpredictable event such that wholesale shifts in
      • NO... The real truth to "why someone hasn't..." is because all of the likely suspects are camping outside of Jack Thompson's house/place of work... It's just plain poor luck that a fair portion of the Internet Radio listening community are video game players... And in that arena, there is currently more at stake, and bigger fish to fry.
  • At first I thought SoundExchange was billing the CongressCritters for [pinky-to-mouth]ONE BILLION DOLLARS[/pinky-to-mouth].

    Then I reread it, and realized Real, Yahoo! and the others were pointing out the consequences of the CRB decision.
  • by billcopc (196330) <vrillco@yahoo.com> on Saturday June 09, 2007 @04:29PM (#19452657) Homepage
    IANAA (i am not an American), but if SoundExchange is supposed to be a non-profit, doesn't that mean they have to actually spend a significant portion of those funds on whatever issue they're supporting ?

    I know here in Canada, charitable organizations have to spend something like 80% of their income on the cause, with the remaining 20% expected to cover administrative expenses and salaries. I could be wrong on the numbers but it's in the ballpark. There is also a limit on how long an org can sit on their money, so for example they couldn't raise 1 million in a year and siphon off the 20% over five years. If that weren't the case, everyone and their mother would have their own non-profit company as a tax-free retirement account.

    And don't start telling me they're actually paying the artists. They're paying the publishers, the agents, the producers, the "everything up to 11" pop mix "engineer", and of course the lobbyists. Besides, SoundExchange's information is such a market driver that it's in the industry's best interests to have doped and skimmed numbers depending on who they're pushing that particular week.
    • You've confused "nonprofit" with "charitable organization"

      From the wiki for nonprofit:
      Most experts consider the legal and ethical restrictions on the distribution of profits to owners or shareholders as what fundamentally distinguishes nonprofits from commercial enterprises.

      • by Intheway (1089499)
        The IRS does keep an eye on non-profits who must file informational returns. While they keep the criteria secret, a general rule of thumb is that expenses in excess of 20% of annual revenue raises a red flag to the auditors. There are exceptions; small non-profits can have higher expenses, and at start up, large ones are generally given some time to bring expenses down to an allowable level. In a press interview two years ago, John Simson said that SoundExchange operational expenses were still above 25%
        • by billcopc (196330)
          This raises the question: If all these "acceptable" webcasters can afford the inflated fees, wouldn't those monies be better spent viciously attacking SoundExchange and its political backers ? If the MAFIAA can play the frivolous lawsuit game, maybe we should play it right back to them.

          If you're in the business of online music distribution, and this extortion organization is threatening your bottom line, it is your duty to protect the livelihood of your business, by suing the enemy.
          • by Intheway (1089499)
            The great thing about this "administrative fee" fiasco is that it really gives no place to stand to the Congressional supporters of the RIAA/SoundExchange. They're stuck with it. Representatives Berman and Coble, both unabashed industry apologists have already "written" to SoundExchange asking them to make accomodations for small commercial and non-commercial webcasters. (I say "written" because it is pretty obvious all they did was sign a letter SoundExchange drafted which was intended to give them poli
  • What ever happened to America being the land of freedom and opportunity?
    • Re: (Score:3, Interesting)

      by jstomel (985001)

      What ever happened to America being the land of freedom and opportunity?
      The last hundred years.
    • by dryeo (100693)
      About 500 years ago white people showed up and it became the land of slavery, genocide and marketing. You have to admit those marketers were good. Know any other countries who had genocide as an official policy who convinced most everyone they were the land of freedom and opportunity?
    • That is, and only ever was, bullshit made up to sell things to people. Which is what America is the land of.

      Captcha: dollar. How appropriate.

    • by StikyPad (445176)
      That was just a marketing ploy.
    • by kalirion (728907)
      It gave some people the freedom and opportunity to rob others of theirs.
  • Are they a non-profit organization? Who gets the money? What are their admin costs?
  • Apparently, the way this works is that each session between a client (that would be me and thee) and a server counts as a "channel".

    If this actually becomes law, I think the proper thing to do is to sue on behalf of the "not for profit" SoundExchange (a.k.a. a front man for the RIAA) all the radio stations, counting each listener as an individual channel.

    Then sue all the record stores, counting each customer as a unique individual channel. At the end of all this, no industry recorded music would be sold, a
    • Then sue all the record stores, counting each customer as a unique individual channel. At the end of all this, no industry recorded music would be sold, and the recording industry would collapse.

      As mentioned previously - this is ONLY the U.S. of A ;) . The world's recording industry wouldn't collapse, and I'm tempted to say let 'em do it. Cripple themselves. Go on, guys, kill your own industry. I won't cry.
  • by Anonymous Coward
    I think that every company that the CRB says owes them money should simply refuse to pay and force the CRB and Sound Exchange to thereby spend every penny in their coffers litigating against these companies indefinitely. It will not strengthen the resolve of the CRB or SoundExchange to behave in a manner consistent with their decisions, but will force Congress to mediate an action that will be amicable for everyone. Worst case scenario for SoundExchange and CRB: nobody pays them a single penny and they ru
  • Is this a prime example of a GetRich Quick scam?
    It really looks that way.
  • If nothing else, the revelation of these so called "administrative fees" proves beyond a shadow of a doubt that SoundExchange is not in place to benefit the artists. They are attempting to line their pockets as thick as they can now that they have been given the opportunity. They are trying to get paid for song plays for artists that they do not represent and pay no money out to.

    What prevents me from creating my own organization and start billing radio stations and internet sites for song plays, because I
  • As the USA and RIAA, etc continue to crush the USA, isn't the most direct remedy
    for the American media consumer to listen to internet radio from provider outside the USA?

    The US GOV and commercial media can certainly herd the mass, though for the computer literate
    it is possible that they go outside USA while sitting at home in USA?

    Either way, the USA is turning into terrible place with much economic stagnation, not to
    mention that general intellect is simply absent there.
    • isn't the most direct remedy for the American media consumer to listen to internet radio from provider outside the USA?

      This isn't practical in an Internet without pervasive global multicast services. Do you think ISPs are really going to let their extraordinarily expensive trans-continental pipes be clogged with Internet radio?

      And don't assume BitTorrent-like schemes solve the problem, as your friends and neighbors participating in a swarm would have the RIAA beating on their door for redistributing Inter

  • by Benedick (737361) on Saturday June 09, 2007 @11:45PM (#19455225)
    The fact that the fee is per channel gets me thinking. At Pandora, I have two defined channels. Those channels introduce me to new music, new artists, perhaps artists not represented by the RIAA. Think about that.

    If Pandora has ten thousand listeners like me, that's twenty thousand stations times $500 per station is ten million dollars. That's probably enough to kill Pandora and any other customizable channel internet radio site. But if the internet radio site only had say five channels, that's only $2,500, easily affordable by a commercial site.

    My conclusion from this little exercise is that the RIAA is out to kill customizable channels. They don't want you to learn about music on your own. They only want you to listen to whatever the latest pop sensation is. They want to eliminate choice and the extra expense of having so many artists. If they can make it so all you ever hear is the generic artist of the moment, that's all you'll know and all you'll buy.

    This is all about control. RIAA wants to make sure they control not just your access to their artists but your ability to discover new artists not under their contracts. Internet radio is a growing force and a growing threat to their ability to pick what music you buy.

    I can only hope that they have overreached; that the huge amount of money involved here makes their motives visible to Congress. And that Congress cares. That sure makes it sound like a lost cause, doesn't it?

  • 1. Set up royalties collecting company 2. ???? 3. Profit!

Programmers do it bit by bit.

Working...