Why Soundexchange are Extortion Masters

Fri, Feb 20, 2009, by Maneki Neko

Audio

A summary of the nasty tactics done by the RIAA, also known as SoundExchange, to kill competition.

America… the land of the free and the home of the brave, or so we were all led to believe by the texts we all read as children, but this land of the free has, in recent years, been strangled by people like the RIAA, also known as SoundExchange, who are extorting people who want to be heard on radio and can’t get on the radio other ways and have to rely on internet boards and word of mouth to be heard.

What is this all about? Well, Soundexchange in 2007 decided to cripple internet radio by jumping their rates, from 8/100ths of a cent per song as “Royalties” to 19/100ths of a cent over five years, but they also made the increase retroactive to 2006 — a full 15 months of these songs being played by millions of people over that time, and the increase could amount to tens of millions of dollars! Plus, SoundExchange tried to impose a $500 minimum fee per station, so if you wanted a customized station, you had to pay through the nose for it!

Soundexchange, much like a neutered dog, does not get it. They should be looking at it by the numbers:

Terrestrial Radio does not pay a fee at all for playing of their songs, but their playlists are horribly crippled and limited to usually between 300 to 500 songs. Well, anyone who owns an IPod nowadays probably has a bigger playlist than most terrestrial radio stations. This is horribly annoying as you’ll end up hearing “Tom Sawyer”, “Sweet Home Alabama” and “Stairway to Heaven” over and over again, until you burn out on them, for the most part. I was constantly hearing the same Green Day and Sublime songs ad infinitum on stations that claimed to be “independent”.

The one exception are the JACK stations, the most popular one being out here in California. They boast a playlist of four times the “Same 300 songs that radio stations play”, which is about 1,200 songs.

I recently heard Satellite Radio but to be honest, I was not impressed. Their playlist was also somewhat limited, I would hear the same songs repeatedly and the only big difference was a lack of commercials. Not really much of an improvement for the $12.95 a month that they charge. There probably was a bigger playlist, but even if it’s ten times the amount of terrestrial radio, that’s only 3,000 songs. Soundexchange made a deal with them that they could pay 7.5% of their revenue for royalties. Some are now saying the rate is as low as 6%.

Now for internet radio — Yahoo! had access to 1 MILLION songs in all genres. You literally could customize your station and rate songs on a 100-point scale for what was good and what isn’t, and create a station with that. The computer had an algorithm that knew what you liked based on the number ratings and actually recommended songs based on that.

Looking at these numbers are amazing. Even if only 5% of the songs are in a genre that you listen to, that is 50,000 songs!

Why are these numbers important? Well, it shows something amazing. Over 90% of songs played on internet radio are never played on any other format. The day I hear a song as awesome as “Daylight Dancer” by Lacuna Coil on my terrestrial station is the same day that all waterfalls flow upwards and all college cheerleaders cheer my name in the buff. ;)

Congress tried in 2007 to pass a measure that would lock in the rate that could be charged through 2010 at 7.5%, through two bill measures — H.R. 2060, and S. 1353 — also known as the Internet Radio Equality Act. In spite of having over 150 supporters, the bill does not appear to be going anywhere in either the House and Senate. This is actually part of the reason why Yahoo! turned over to CBS Radio — what was passed was an “Webcaster Settlement Act”, which allowed net radio companies to negotiate with Soundexchange, but that all expires on February 15th, 2009.

Sure, there are other ways to hear about bands that do not get play in the States — I stumbled on a great goth-metal band called Sirenia after trying to research the origin of a phrase called “At Sixes and Sevens”, which was a question on Millionaire, but that was a one in a million shot. For rockers, Guitar Hero is another great way, but the Guitar Hero franchise hasn’t even acquired 1,000 songs yet for you to play, and they mix older and newer songs, so it’s nice that people find out about bands this way, but for every band that is found because of Guitar Hero, there are at least 100 others that are just as talented that will remain undiscovered, bands like Eyes of Eden, Dream Evil, and Hibria.

In reality, internet radio is a must for any band that’s not part of the playlists of terrestrial and satellite radio for them to be heard. With Yahoo’s Launchcast! now a very boring station (after February 12), the only real choices are stations like Pandora and Last.fm. Let’s hope they keep the music playing.

What is SoundExchange doing by charging so much and making the fees retroactive? They’re not representing the artists at all! What they’re doing is destroying any shot at competition, and that’s the worst part. Thousands of hard-working artists are out there trying to make a living and they won’t ever be heard unless they’re played on internet radio. The reason it doesn’t work is simple: By forcing these stations to shut down, the artists who are struggling to be heard won’t be heard and won’t get any royalties at all.

Internet Radio is not like song swapping. There might be people that can copy these songs off the radio — but 99 out of 100 of us don’t even have an interest in that. We’re interested in hearing a wider variety of music and want this variety on our IPod — that’s more money for the artists you claim to love so much — they get royalties every time a song is bought!

So this is an open wake-up call. If the people of America take action, we can continue to have internet radio freedom. If they don’t, well, I hope you like those same Green Day and Sublime songs, because you’ll hear them so much you’ll be sick of them. Wake up, Soundexchange! We need real variety in music and the same 300 songs is not going to cut it! Let Internet Radio remain without bleeding it dry!

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