SoundExchange Pt.3: Marsh, Wilhelms, Etc. Respond

Letters from the mailbag reveal that the controversy surrounding SoundExchange is an ongoing one.

By Fred Mills

Last week when we published our editorial on SoundExchange and the RIAA-funded organization's efforts (or "lack thereof," as one of our readers put it) to distribute royalties to artists ("Digital Dollars Due"), we didn't know we were poking a hornets' nest - or, more accurately, giving a nest that had already been poked numerous times an additional shaking.

First came SoundExchange Executive Director John L. Simson's reply/rebuttal to the original editorial along with some additional comments on our part in which we suggested a few means by which SE could more efficiently do its job.

Then the emails started coming in from readers, all of whom hold opinions (strong, it seems). Some folks didn't want to be identified if we reported further on the matter but encouraged us to include the info they provided, while others - noted rock critic Dave Marsh in particular - indicated we could treat his email as a letter to the editor. I've posted Marsh's letter in full below, along with excerpts from others.

One common theme running through the correspondence is that whenever this matter surfaces in the media, SoundExchange (usually through Simson) restates the same arguments and the same defenses, but that one central fact remains: SE doesn't do the job it's being funded to do, doesn't live up to its own mandate.

So I encourage everyone  to research this on their own and educate yourselves on a hugely important issue. Then if you're not satisfied with the situation raise a stink - or at least let your concerns be known, in the interests of getting some of these artists paid and paid on a timely basis. (Like, NOW, rather than later.) Because all controversy and finger pointing aside, that's the bottom line.

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From Dave Marsh:

I really admire what you wrote in response to John Simson's misleading statements in defense of Sound Exchange's incompetent malfeasance as representative of artists due digital royalties, as well as appreciating the Rev. Keith Gordon article that incited those statements.

There was one flaw, which is the idea that Sound Exchange's efforts to find artists ought to be done by volunteers and interns. In fact,  using interns and entry level employees is probably most of the problem with what scant effort SE does make. The idea that people should volunteer to do one of the only two important tasks SoundExchange has is preposterous, even though it's also true that a large percentage of the "obscure" artists identified and signed up over the past few years are entirely due to volunteer effort. John Simson is paid a six figure salary, which entirely comes out of creators and copyright-owners pockets and if he won't go out and find every last one, the very damned least he can do is pay someone a living wage for tackling the task. Although he likes to make it sound that way, this is not an incidental part of the business he's in. It's one of its foundations.

As far as I can see, almost everything that needs to be done after SE has the names (sign-up is so much bullshit, it certainly does NOT "need" doing at all-they need name, address and a fair amount of confidence that the Bootsy Collins they're in touch with is not the imposter) can be done by machines, with minimal oversight at this point. I mean, what the hell does John Simson do if he's not up on the Hill lobbying for more control, more money, et cetera? Why should there be more than him and a lawyer and a couple people to answer the phones, in case it turns out that Lloyd Price's actual existence is not just a rumor?  Unless they're trying to service their clientele, which starts with knowing who that clientele is. If Sound Exchange is paying anyone for anything, this work ought to be their highest priority.

And if it's not their highest priority, then everything else Sound Exchange claims to be true ought to be called into question until the company's priorities change.

Dave Marsh

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From name/address withheld:

You can see the obvious problem here when $100+ /million/ is going "unfound" and SE gets to absorb the missing monies -- and then blow that cash on lobbying via MusicFIRST and whatever other front group they're backing lately. Actions speak louder than words here.

This link may interest you: http://www.p2pnet.net/story/15761 [Ed. note: links to "Project Unfound Artist" by Jon Newton, of P2PNet, who writes about entertainment lawyer Fred Wilhelms' efforts at chronicling the "efforts" of SoundExchange.]

This other link also may interest you even more: http://www.p2pnet.net/story/18864 [Ed. note: links to "$101 Million ‘stuck to SoundExchange's fingers'" by Fred Wilhelms, who examines the finances of SoundExchange.]

If you or your magazine follow up with Mr. Simpson @ SoundExchange, the latter link may certainly be of more interest than the former, and worthy of more attention

***

From Fred Wilhelms:

I have been forwarded Rev. Keith Gordon's original note and your exchange with John Simson in response.  As someone who has been hearing the exact same answers from Simson for four years, it is a shame to know he still thinks he can get away with that stuff. 

 If you feel like taking up his invitation to talk, you might want to focus on actual numbers.

Here are the numbers he cannot dispute:

Since July, 2008, when the last grassroots campaign to locate artists ended, SoundExchange, left to its own devices, has removed FIVE artists from the list of over 7,500.  That's all.

In June, 2008, in a speech at Harvard Law School, John Simson admitted that SoundExchange had received royalties for over 40,000 artists who had not registered.  At that time, SoundExchange was claiming to represent 32,000 artists, so they had failed to register over half the artists they were supposed to be serving, even after six years.

According to their own filings with the Copyright Royalty Board, as of March, 2009, SoundExchange still hadn't distributed one-third of the artist royalties for the year of 2006 because the artists were not registered.  Those unpaid royalties rise to over half for the first quarter of 2008. 

According to the reports filed with the IRS, at the end of 2007, SoundExchange had accumulated over $101 MILLION dollars in undistributed royalties.  I have information that leads me to believe the current balance in that account has risen to over $180 MILLION since that report.

The problem with these numbers is if you mention them to Simson, he will ignore them, and you.... [To summarize], if you do take up Simson on his offer for more discussion, have him explain these numbers:

Five.  The number of artists taken off that published list on their website since July, 2008.

32,000.  The number of artists John Simson said were registered at SoundExchange in June 2008 in a speech at Harvard.

40,000.  The number of unregistered artists Simson admitted to in the same speech.

One-third.  The fraction of artist royalties collected for the year 2006 that were still undistributed in March, 2009, according to documents SoundExchange filed at the Copyright Royalty Board.

One-half.  The fraction of undistributed artist royalties for the first quarter of 2008 as of March, 2009 from the same filings.

$101,000,000.  The total amount or undistributed artist royalties that SoundExchange was holding as of the end of 2007 (according to their IRS filings.)  I am told that Simson has recently stated the current amount is over $180,000,000.

Substantiation for these numbers can be found in various pieces I have posted at p2pnet.net.  Just go there and search SoundExchange. 

Thanks for picking up the good fight.

Fred Wilhelms