Daily KOS – April 24, 2007:

The Internet radio game is rigged and the Recording Industry Association of America (RIAA) has rigged it in their favor.

There has been an understandable public outcry against the RIAA’s attempts to more than triple the sound recording copyright royalties on Internet radio. One solution proposed by Webcasters is to just not play RIAA-member songs under the assumption that then they don’t have to pay the royalty to the RIAA’s collection body, SoundExchange; Webcasters would then just pay the independent artist the royalty.

This sounds fair and just because it is. However, the RIAA is not about being fair and just. The game is rigged and the RIAA has rigged it in their favor. The strategy of playing only non-RIAA songs won’t work though because the RIAA has secured the right to collect royalties on all songs regardless of who controls the copyright. RIAA operates under the assumption that they will collect the royalties for the “sound recording copyright” and that the artists who own their own copyright will go to SoundExchange to collect at a later date.

Look at the information on SoundExchange.com (RIAA created SoundExchange) and see how it works. The RIAA has secured legal authority to administer a compulsory license that covers all recorded music.

So how it works is that SoundExchange collects money through compulsory royalties from Webcasters and holds onto the money. If a label or artist wants their share of the money, they must become a member of SoundExchange and pay a fee to collect their royalties.

And what exactly is SoundExchange doing with the money they have collected for those hundreds of labels that must have thousands of songs???

  1. gquaglia says:

    Well folks, your Democrats are now in charge of congress. Lets see if they will do anything about this. My guess, RIAA hush money will now flow into their pockets instead of the Republicans. Status quo.

  2. doug says:

    #1. what makes you think this is a partisan political issue? I am sure (1) most people in congress don’t have an effing clue what’s going on with this, and (2) among the few that do, there are Democrats and Republicans on both sides.

  3. SN says:

    2. I agree. This is one of those problems because both sides get tons of money from the RIAA. The only people we can blame is ourselves for electing such money grubbing assholes into congress in the first place.

  4. Ben says:

    Sounds like the Mafia.

  5. JoaoPT says:

    Can you say racketeering?

  6. Danijel says:

    Every time I read something about RIAA I just feel sick to my stomach…

    Isn’t there anything redeeming in this organization, or is DU just biased that way….

  7. ArianeB says:

    Among the big recipients of RIAA money are Sen. Diane Feinstein and Sen. Joe Biden, both powerful democrats.

    There is now a bipartisan bill in Congress designed to reduce royalty fees so that internet radio stations pay the same as satellite radio stations, but this “you must pay Sound Exchange Only” business is anti-competitive.

    Why cant the big Internet Radio companies organize their own competing royalty collection company?

    Pandora founder Tim Westergren has his own theories as to RIAAs actions. “Half of the money we pay to SoundExchange each month goes to the labels, and half goes directly to the artists. If these new rates do stick, then the only way webcasters will stay alive is to start striking direct licensing deals, at lower rates, with the major record labels. If those deals are struck, then all of that money goes directly to the label, and goes under the umbrella of traditional record deals, where only a very small percent ends up going to artists.”

    So RIAA is really a shill for the record companies and has no interests in the artists themselves. No surprise. The internet has the potential of making stars of unsigned talent, completely undermining the record label system.

  8. Oil of Dog says:

    #6 NO, I mean Hell NO!!!


    Mafia, No. More like Lobbyists. Oh, That’s what they are!!

  9. Allan says:

    So wait. If I were to write a song and I tell an internet radio station that they can play it for free they still have to pay the RIAA? WTF! I made the music. If I make it and give it away who’s business of it is theirs?

  10. gquaglia says:

    #2 and #3 you missed my point. A majority of the posters here blame the Republicans for every single evil in the world while the regard the Dems as some kind of mythical saviors of humanity. It was just a shot at them to show that “their team” is no better, now that they are in charge.

  11. Stiffler says:

    I’m curious as to the “legal authority to administer a compulsory license that covers all recorded music.” Just where is the provision in US law for that?! Just switch to radio from Europe; it’s better anyways; they’ve never left the 80’s! 🙂

  12. KVolk says:

    I wonder if they guys ever heard the phrase ‘the tighter you squeeze the less you can hold’ or words to that effect.

  13. Lili says:

    You are all nuts. In the words of Mark Twain “First get your facts; then you can distort them at your leisure.”

    You can in fact negotiate a term directly with a sound recording copyright holder. The copyright law does allow it. But remember the person who owns the sound recording may not be the band who performed it or the person who wrote it.

    What sound exchange does is allow an entity to have a statutory license so they don’t have to negotiate with each copyright holder separately. They track what is played and hold funds for artists not belonging to any of the trade organizations and that are not easily found. They do post who is owed money by webcasters playing their music with a license.

    Webcasters not using a statutory license are not regulated to make sure any licensing fees are paid. And with the way people steal music with limewire and the former napster, I bet people not having a statutory license are not paying the copyright holders at all.

    “The RIAA has secured legal authority to administer a compulsory license that covers all recorded music.”

    from sound exchange:
    What is a statutory license?

    A statutory license is a license that is automatically granted by operation of law to all parties that meet the conditions of the license (which are set forth in the Copyright Act). A statutory license permits qualified parties to exercise one (or more) of a copyright owner’s exclusive rights without seeking permission from the copyright owner or negotiating rates and terms with the copyright owner. Statutory licenses may provide efficencies for statutory licensees as they do not require parties using multiple copyrighted works to obtain separate licenses from each copyright owner. Parties operating under a statutory license are required to pay royalties rates that are established by law or regulation and comply with reporting requirements, restrictions and various other terms established by law. The statutory licenses relevant to digital music services can be found in sections 112 and 114 of the Copyright Act, 17 U.S.C. §§ 112 and 114. The rates and terms applicable to the statutory licenses for digital music services can be found in Chapter 37 of the Code of Federal Regulations, Parts 260, 261, 262, 263 and 270.

    You can still negotiate a waiver or lesser fee.

    From the sound exchange website:

    How would I qualify for the statutory license and what is the performance complement?

    There are a number of conditions to meet in order to qualify for the statutory license. The performance complement is one part of the qualification and all webcasters must adhere to it unless they have received waivers from the owner of the sound recording copyright. For all the details please see section 114.

    Section 114 reference above:

    from the copyright law:

    (e) Transfer and Waiver. — (1) The rights conferred by subsection (a) may not be transferred, but those rights may be waived if the author expressly agrees to such waiver in a written instrument signed by the author. Such instrument shall specifically identify the work, and uses of that work, to which the waiver applies, and the waiver shall apply only to the work and uses so identified. In the case of a joint work prepared by two or more authors, a waiver of rights under this paragraph made by one such author waives such rights for all such authors.

    Knowledge is power, not reading misinformation on the internet. Actually go to the source and investigate.

    If you think fees are too high or not, the fact is you can negotiate around them.


  14. Brock says:

    I’m so sick of the RIAA. Anti-artist, Anti-music. Anti-common sense. Money grubbing a-holes complaining about stolen music when the truth is they promote crap. Suing anyone they can, acting as sound nazi’s, until a judge makes a rational choice about their storm trooper tactics. With all of the OTHER entertainment choices, I’ll let the rap promoting, scumbags drown in red ink before I buy anything that will contribute a cent to their bottom line. I don’t need them and can’t wait to see them collapse. Uggghhhhhh…..

  15. Jerk-Face says:

    Thanks Lil, it took you several hundred words to tell us the story was correct, the RIAA will collect license fees on music to which neither it nor its members hold copyrights to. Thanks!

  16. FRAGaLOT says:

    Okay so by this logic.. If I record my self farting, copyright it, and get that played on an any form of media (radio, net -radio, podcast, whatever) SoundExchange will collect money on my behalf, and I’ll make a quick buck? yay!!

  17. GaryM says:


    The thought is intriguing. Unfortunately, the RIAA would take a cut AND charge you for paying you what you’re owed. i’m sure in the long run, independently producing your own Fart soundtrack would cost you more than if you had gone through one of the major recording studios. So, even though you may already have the equipment, know how and ability to produce fartastick soundtracks, you really need the expertise of RIAA to do it correctly and keep your smelly fans in line.


  18. SN says:

    13. “You can in fact negotiate a term directly with a sound recording copyright holder. The copyright law does allow it. But remember the person who owns the sound recording may not be the band who performed it or the person who wrote it.”

    “If you think fees are too high or not, the fact is you can negotiate around them.”

    That’s a great idea. For every song you want to play on your net radio station you can have your lawyer track down the copyright holder of the sound recording, then have him meet with that copyright holder’s lawyer, and then they can negotiate a lower fee. And then you can do it all over again for the next song. Wow, after a few years you’d probably have 10, maybe, 12 songs you could play.

    And if you think about it, you really don’t need to register your car, get a license plate for it, or get a driver’s license. You can avoid driving on public roads by simply negotiating with all of the land owners for right of passage between where you are now and where you want to be. Who needs roads when you can negotiation yourself to anywhere in North America!

  19. Appropriate quotes for Lily(#13), from the SoundExchange FAQ:

    How the rights are beeing stolen:
    “…recording artists were not entitled to license and collect royalties for the public performance of their sound recordings. SoundExchange administers the compulsory licenses…”

    Who is Sound Exchange:
    “…SoundExchange was originally created in 2000 as an unincorporated division of the RIAA….”

    Who benefits from Sound Exchange:
    “Who governs SoundExchange?
    The SoundExchange Board of Directors oversees all operations of SoundExchange. “!!!”This board approves such things as the distribution methodology and administrative expenses.”!!!” It is comprised of one representative from each of the major label groups (EMI Music Group, SONY BMG Music Entertainment, Universal Music Group and Warner Music Group);…”

    And the most important one, clearly stating that Sound Exchange is imposed on everyone webcasting whether they want to use it or not:
    ” The recent U.S. Copyright Office ruling regarding webcasting designated SoundExchange to collect and distribute to all nonmembers as well as its members….”

    And there are more gems there (ex. they are tax exempt as non-profit, but they decide on administrative fees themself… wolfs guarding the sheep and eating just as much as they must… while sheep are not allowed to hire their own guard dogs for their own good…).

  20. Major Jizz says:

    Or… They could just not play along with the kids at the government office and pretend this silly government isn’t there at all. Let’s see what happens next.

    Just wipe your ass with that court order…

  21. ChrisMac says:

    they are the worst assholes on the block…
    no wonder they are yelling so loud…

  22. TheGlobalWarmer says:

    #16 & #17 – You guys made me laugh so hard I farted. Do I owe somebody royalties now? 🙂

  23. jbellies says:

    #16. There was a ’78’ album from Britain, produced I guess in the 1930s, called “The Crepitation Contest”. Crepitation=farting. I’ve heard the album (well, I didn’t play the whole thing). The title is accurate.

    So… there is no “public domain” in music? Even if I gift the song and my performance of it? Should the EFF be involved? Institutional theft starts with music, ends up with software?

    I wonder if the law is different in other countries. If so, seems logical for pirate internet radio station servers (a la 1960s Britain) to be set up offshore. How closely they could be affiliated with US-based internet radio stations (the ones, one presumes, who choose the playlists), would be up to lawyers to figure out.

    I’m just guessing that Russia will have different rules. And they love “djazz” (which encompasses rock). Where is Radio Moscow? You don’t know how lucky you are, boys.

    Is the situation the same in Canada?

  24. TJGeezer says:

    Despicable outfit. I wish there were some legal way to rein them in – what they do certainly qualifies as racketeering in my IANAL opinion.

    There’s a law now proposed by a pair of congressmen – Democrat Jay Inslee and Republican Don Manzullo, who seem not to be in the pocket of the entertainment industry, unlike most bought-and-paid-for California pols like Diane Feinstein. The proposed law would knock back the royalties quite a lot, but would presumably leave SoundExchange in place as the protection racket collector.

    It might be that the proposed law falls under the standard corrupto strategy of “take a lot, give a little back, and let the suckers feel triumphant.” But it’s still worth supporting the partial correction, because the RIAA is bound ot put up at least token resistance.

    Maybe SN or someone who knows the law can tell us whether an independent artists’ suit against the RIAA for engineering this racket would have any chance to succeed.

  25. Greg Allen says:

    Can the the web radio guys move offshore in the tradition of the old pirate radio stations in the 60s?

  26. Ninja says:

    I have written a 10-page report about the RIAA’s schemes as a research project for college. I predicted several methods in which the RIAA may destroy itself.

    This was not one of them.

    They just keep surprising me with their ridicule. Nobody in the world would be more stupidly destroying theirselves…except Jack Thompson, but I’ll reserve my opinion about him until I see a post about him in this blog.


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