SoundExchange Has A Beef With CBS-Last.fm’s Music Royalties

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SoundExchange, the body that collects music royalties for artists and which lobbied the Copyright Royalties Board for internet radio rate hikes due to take effect from July 15, reckons Last.fm is paying too little in royalties now that it is owned by CBS. In a recent edition of KCRW’s The Politics of Culture radio show and podcast, SoundExchange executive director John Simson said Last.fm was operating under a 2003 royalties rate, introduced after a request from Congress, that was designed to give web startups a chance by letting them pay royalties according to a percentage of revenue rather than number of streams served.

Simson: “A deal was struck back then which allowed them to pay 10 percent of revenue up to $250,000 and 12 percent above that. There are about 50 services that took advantage of that royalty deal and have been streaming on that basis since 2003. Interesting to note that one of those services, that paid us very low royalties last year, just was sold for $280 million to CBS. Here they are using our music to build a business at a subsidized rate and then they flip it to a big company for a lot of money and we don’t get a percentage of that, where’s the fairness to the performers whose music is being used to create value in these companies? We have a small webcaster who just sold for $280 million who had almost no revenue.”

That is interesting because Last.fm last week decided to take a principled stand against webcasters’ Day Of Silence designed to avert the new rates regime, arguing: “The only solution to this dilemma is commercial; make a commercial argument and see it through. People want to make money from their music. And we want to pay artists for the music we play. It

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Giant non-corporate private in

It has been some time since anyone commented on this thread. I just want to say: All these comments are all sensible comments. What is missing from them is, maybe, uh – fuzzy logic. Jon Simpson doesn't make sense. He operates in a manner derived from Ken Starr (maniacally seeking all the evidence for something that doesn't really exist) and Donald Trump. He seems to be running around trying his new 'give me money' trick on anyone in the biz with what he feels are 'deep pockets', but are really 'profits'.
My concern is that this company's business model is essentially designed to two things that I don't like: 1.) infringe on normal public use of the internet, and on public use rights, and 2.) wring money from some place where there's none.

Rusty Hodge

Last.fm's purchase prices largely reflected the social network side of the site, not the streaming audio service, which was just a small part of Last.fm. It's not even a viable comparison.

(Extra Credit question: Did Last.fm even pay SoundExchange ANYTHING? Did they even qualify under the Small Webcasters Act which limited participation to services with under $1.25 mil in annual revenues?)

The Boss

Better yet, ask how much money the artists saw of all the Mp3.com, Napster, etc settlement money the labels got.

Matter of fact, hang tight, rumblings are there's massive litigation forthcoming from some pretty stellar names out there who want their money.

When you hear about it, remember you read it hear first ;-)

michael harnett

I fully agree with the previous comment. Did websites that helped break Amy Winehouse, Lily Allen and Artic Monkeys get a piece of the sales that they create. No! It is a two way street and what the RIAA and Sound Exchange and the people they represent seem to forget is if you put all of the people promoting your music out of business than you'll have no business either.

Fred Wilhelms

This is a specious issue, and SoundExchange knows it. John Simson should ask the members of his Board of Directors about the history.

He should ask the representative from Universal how much was paid to the artists on the Polygram roster when Universal paid $16 billion for the catalog.

He should ask the representative from the Music Managers Forum how much artists got when TBA Entertainment bought Alliance Artist Management.

Last.fm's sale price is a smokescreen. Simson knows it.

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