June 1, 2000
The history of the American Music Industry is a disheartening one, which
largely details the exploitation of artists and musicians by opportunists and those without the musicians' best interests
For too long musicians have had too little voice in the manufacture, distribution
and promotion of their music on a national and international level and too little means to extract fair support and compensation
for their work.
Manufacturing and distribution monopolies concentrate the power of over
90% of music sold into the hands of five labels. With huge media mergers continuing to consolidate the decisions of what to
play and promote, it becomes more and more difficult for artists to gain exposure through the few remaining coveted radio
Historically, musicians have had one of two unattractive choices:
Align themselves with major label exploiters and agree to unfair compensation
in the hopes of one day reaching a national audience; or
Resign themselves to working with indies and a life in the shadows.
The Good News
Recent advances in digital music technology are loosening the stranglehold
of major label, major media, and chain-store monopolies. Digital download and online streaming technology offers musicians
a chance to distribute their music with minimal manufacturing and distribution costs, with immediate access to an international
audience. Songs that would never be programmed through currently-existing narrow commercial channels are slipping through
the radio industry programming stranglehold and gaining exposure, thanks to the new breed of file-sharing programs.
The Bad News
As these technologies advance, their very accessibility threatens many
of the traditional revenue streams (like mechanical royalties) which compensate musicians, often without substituting new
The Media and Policymakers
Most media attention to this issue polarizes discussion, focusing either
on the exploitation of artists by the major labels or on the exploitation of the artists by Internet applications that encourage
unauthorized copying. Artists are presented with a false and unnecessary choice, support traditional notions of artists' rights
and be called a money-grubbing luddite; or support new technology solutions and be accused of ignoring the plight of those
artists left behind. This rhetoric pretends to speak for the artists, but in effect just continues to promote the viewpoints
of moneyed interests like The Record Labels or The Technology Companies while it obscures some of the more promising new possibilities.
The Future of Music
We build this organization as an attempt both to address pressing music-technology
issues and to serve as a voice for musicians in Washington, DC, where critical decisions are being made regarding musicians'
intellectual property rights without a word from the artists themselves.
No longer will corporate media and big money be able to frame the discussion
of music solely in terms of their industries, as we draw together the strongest voices in the technology and independent music
communities to address questions of music in the marketplace with a clear-eyed focus on the interests of the artists.
No longer will business interests or lobby groups for business interests
drown out the voices of the musicians on whose art they have built an industry.
No longer will idealistic techies and idealistic musicians find themselves
locked into opposing sides of an issue that profoundly affects both of our communities.
We begin this organization with the intention of addressing three pressing
areas of concern.
Piracy / Technological Innovation
The Future of Music Organization is founded on the belief that creation
is valuable and should be compensated. Here we are speaking of both musical creation and technological creation. By drawing
together advocates for musicians' rights and innovators in Internet technology, we will work to move the discussion away from
the narrow privacy vs. piracy discussions that dominate the general media, toward practical solutions leveraging the strengths
of digital download technology on behalf of the artists. Our work will encourage the development of innovative Internet music
business models to guard the value of musicians' labor and ensure that artists will continue to be paid for their compositions
and performances despite drastic changes in methods of distribution.
The RIAA's Conflict of Interest
The Recording Industry Association of America is a special interest group
that claims from time to time to lobby on behalf of musicians, but it is funded by, and represents the interests of, the major
record companies - the same corporations traditionally known to be the primary exploiters of the musicians that the RIAA claims
to represent. The RIAA simply cannot be trusted to serve two distinct masters - the record companies and the artists. An important
example is the "work for hire" issue: the RIAA pushed legislation that gives major labels the right to own musicians' master
tapes in perpetuity, changing an existing law that allowed some artists to regain the rights to their masters after 35 years.
By advocating for this language, even while claiming to have the artists' interests at heart, the RIAA made it clear that
it is compromised, and cannot be left to its own devices in the policy-making arena.
In a more frightening development, the RIAA is attempting to step beyond
its traditional lobbying role in order to enter the music-licensing business by collecting and distributing royalties from
webcasts. While there is clearly a need for an organization to manage these royalties (webcasting royalties could result in
more money than currently collected by BMI and ASCAP combined), the Future of Music has no confidence in the RIAA's ability
to represent the voice of musicians or to collect and distribute artists' royalties from the major labels who fund the RIAA.
The Future of Music therefore advocates for an impartial and accountable
organization to guard the value of artists' webcasting royalties. By standing in opposition to the RIAA we hope to give voice
to the concerns of musicians who are simply not represented by an organization whose core mission is promotion and protection
of the record industry agenda.
The Secure Digital Music Initiative (SDMI), spearheaded by the RIAA, was
an attempt to pull together a limited group of powerful consumer electronics manufacturers; PC manufacturers, and record labels
to develop a copyright-enabled alternative to the MP3 format. It is viewed by many as a misguided and desperate scramble by
those in the existing music business monopoly to maintain their stranglehold on the channels of distribution through the application
of a standardized encryption or watermarking program.
As with most technologies that are conceived and developed in a no-feedback
vacuum, without the desires of potential consumers in mind (not to mention an understanding of the limits of encryption technology),
it was destined to fail. As much has been said by Executive Director Leonard Chiariglione, whose comments at the May 2000
SDMI meetings revealed a combination of infighting between competing business interests and fatal flaws in the group's structure,
which requires all decisions to be made by consensus. While SDMI members bicker and veto proposals based on the personal financial
interests of their multi-national corporations, consumers are presented with narrow, confusing options that alienate them
and thus do more to promote piracy, which becomes the only viable mode of digital transfer for the great majority of the world's
The Future of Music believes SDMI is a perfect example of what happens
when industry attempts to legislate technological advances without the crucial input of musicians and programmers.
SoundExchange®, Inc. is a dynamic, 501(c)(6) nonprofit
performance rights organization embodying hundreds of recording companies and thousands of artists united in receiving fair
compensation for the licensing of their music in the new and ever-expanding digital world. Modern technology makes all of
our lives a little bit simpler and SoundExchange takes full advantage of its accuracy and efficiency to license, collect and
distribute public performance revenues for sound recording copyright owners (SRCOs) and artists for noninteractive digital
transmissions on cable, satellite and webcast services.
Prior to 1995, SRCOs in the United States did not have a performance right.
This meant that, unlike their counterparts in most of Europe and other nations around the world, recording companies and artists
were not entitled to receive payment for the public performance of their works. Users of music, the digital music service
providers, freely performed these works at will, without a dime being paid to the rightful owners of those recordings or the
featured artists who performed the songs - the recordings which created the backbone of their business.
The Digital Performance in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998 changed that by granting a performance right in sound recordings. As a result,
copyright law now requires that users of music pay the copyright owner of the sound recording for the public performance of
that music via certain digital transmissions. The U.S. Copyright Office recognized the benefits of SoundExchange's administration
of these royalties, and so has designated SoundExchange as the administrative entity for subscription services' statutory
license fees. You may find SoundExchange's Notice of Designation as Collective Under Statutory License here.
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At SoundExchange we are dedicated to making the process of licensing music
and collecting royalties as accurate, efficient and fair as possible for everyone. Part of being accurate and fair is distributing
on a per performance or pay-per-play basis instead of sampling. At SoundExchange, there is parity in royalty distribution and in governance where everything is split evenly between artists and SRCOs.
Members of SoundExchange include major and independent record companies
from Sony BMG Music Entertainment and Warner Music Group to over 1,000 independents like Alligator Records, Beggars Group,
Benson Music Group, Koch International Sonido, Inc., The Mountain Apple Company and Tommy Boy Entertainment. These companies
understand the economic efficiencies and benefits of sharing the costs associated with the administration of statutory licenses.
We have assembled a unique and talented staff ranging from seasoned music
industry veterans to Internet strategists, technologists and royalty professionals. Our distribution operations staff processes
millions of performances a year, our membership and royalty departments ensure all artists and SRCOs receive the most accurate
payment possible. SoundExchange's licensing professionals strive to make the process of receiving a performance license an
uncomplicated task. Together our team has developed one of the most modern and groundbreaking music organizations ever.
SoundExchange is the principal administrator of the statutory licenses
under Sections 112 and 114 of the Copyright Act. SoundExchange participates in each periodic rate making proceeding under
the Section 112 and 114 licenses to establish rates that appropriately compensate copyright owners and performers for the
exploitation of copyrighted sound recordings. Such rate setting proceedings may be resolved through arbitration proceedings
or through voluntary multi-party settlements. SoundExchange also participates in Copyright Office rulemakings to establish
the terms governing how services operate under the two statutory licenses.
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Over the past few years, SoundExchange has successfully negotiated agreements
for foreign royalties with the following performance rights organizations:
- Mexico's SOMEXFON (reciprocal agreements for featured artists and labels)
- Netherlands' SENA (reciprocal agreement for featured artists)
- U.K.'s PPL (reciprocal agreements for featured artists)
In summary, SoundExchange handles the following:
- collects performance royalties from the statutory licensees;
- collects and processes all data associated with the performance of the
- allocates royalties for the performance of the sound recording based on
all of the data collected and processed;
- makes distribution of the featured artist's share directly to the artist;
- makes distribution of the SRCO's share directly to the copyright owner;
- makes distribution of the nonfeatured artist's share to AFTRA and AFM's
Intellectual Property Rights Distribution Fund; and
- provides detailed reports summarizing the titles, featured artists and
royalty amounts for each of the sound recordings performed by the statutory licensees.
If you want more detailed answers, please see the FAQ page. Please feel free to continue browsing our site or contact us directly.