SoundExchange draws fire from NAB, Nashville attorney


The National Association of Broadcasters is attempting to forge an agreement with royalty disburser SoundExchange to "resolve a rate dispute related to radio stations that stream music online." The lack of a promised response after two months has resulted in a new graphic on NAB's website. Meanwhile, a prominent attorney is questioning the organization's reported lobbying efforts.

For the NAB's part, it is trying to protect the ability of radio stations to operate on-line, a prospect put in doubt by the threat of drastically-increased royalty requirements despite the fact that the artists in question are receiving free promotion by the very act of being streamed. NAB says it made a "good-faith" offer 6/6/07, and it's new home-page shot clock pegs the lack-of-response time at 68 days and counting.

"The sounds of silence from SoundExchange are deafening," said NAB EVP Dennis Wharton. "SoundExchange's callous refusal to respond to our reasonable offer threatens not only the recording artists they purport to represent, but also a fledgling technology that benefits listeners."

Meanwhile, Wired reports that Nashville lawyer Fred Wilhelms is questioning SoundExchnage's reported lobbying practices, apparently paid for on its clients' dime without permission, and further in defiance of the organization's charter. Wilhelms said that all licensing fees collected by SoundExchange less administrative costs should go to artists and labels. he said spending it on anything else is "impermissible by law and a breach of trust." Wilhelms questioned the organization's transparency, noting an earlier unrelated incident – the search for artists owed money but whose whereabouts were unknown – in which it failed to make information available to properly pay those who were entitled.

SmartMedia observation: Cox Radio's Bob Neil is already suggesting that each spin heard on radio or a radio website be changed from an entertainment segment into a paid commercial. Seriously, do recording companies think they can dip into broadcast wallets just like that? If they really want to, they can eliminate music from the Internet and the airwaves, or make it a programming choice that only the richest stations in the biggest markets can afford. If the Neil suggestion becomes widely used, recording companies will have turned broadcast music from a free promotional vehicle to just one more profit-draining expenditure that will further weaken their internet/Napster ravaged business. If they are looking at broadcast wallets as a quick fix for their problems, they're delusional – the broadcasting industry is not stupid enough to just sit there and let that happen. Continuing down this unproductive path will not be good for any involved parties – not broadcasters, not recording companies and certainly not the artists themselves. Let's hope people come to their senses soon and start negotiating something that will actually be workable and beneficial for all.