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p2pnet news view P2P:- In July, 2007, an unsigned Reader’s Write accused Fred Wilhelms (right) of having a vested interest in criticizing SoundExchange for not paying artists.

The author later proved to be Dick Huey, one of the RIAA-appointed ‘label representatives’ on the SoundExchange board of directors.

An exchange of comments ended in Huey agreeing to answer questions put to him, partly in apology for what he acknowledged was an unjustified personal attack on Wilhelms

Wilhelms responded with 11 questions. But Huey didn’t answer them and when this failure was noted, he surfaced on p2pnet to confirm his intention to answer, but claimed he needed to do some research first.

Several months later, Huey posted a note on an email group in which he announced he wouldn’t, after all, follow through with his promise, instead saying he’d use his time and energy to work from ‘inside’ SoundExchange to improve it.

Time — a lot of it — went by and then in discussions on the upcoming launch a2f2a, a new website designed to put artists together with their fans, Wilhelms reminded p2pnet readers that all previous Internet discussions between industry representatives and fans on big issues had always ended the same; big promises and nothing else.

He cited the Huey incident as a prime example, inspiring Huey’s reappearance when he apologized to Wilhelms and p2pnet.

The apologies were accepted.  This led to Huey’s latest entry as a comment, to which Wilhelms replied in a Reader’s Write.

Both are reproduced below, starting with Huey. Under them are Wilhelms original 11 questions.

DICK HUEY »»»

So – to start the discussion, here’s my promised post. It’s good to start this conversation in a different place than we were last time, thank you Fred for accepting my apology. Fred Wilhelms is right – we may not always agree, but at least we’re working toward something. I’ll be as candid as I can be regarding questions, bearing in mind that I have a duty as a board member (as does any board member of an organization) to work in the interest of the organization (of course, that can also include accepting criticism and thinking about how I might change the course of the ship), and not to share information I shouldn’t.

First – philosophy. Everyone here likely knows something of the history of Soundexchange, knows that it was started as a collection mechanism by the Majors, and knows that it was spun off into a self-running entity with a board composed of nine artist reps and nine label reps. Of the label reps, three are independent (Rich Bengloff, myself, Tom Silverman) and the rest are major label.

Like any organization, there are battles to be fought, and battles to be left for another day – for any number of reasons, including structural issues of the organization – and it’s difficult to focus equally on everything. I focus where I feel I have the most expertise, and can contribute the most. My primary focuses in the last year or two have been in the following areas:

- small webcasters – I was determined to push through a pureplay definition that would result in a payment structure to keep the small commercial guys afloat, and was able to do it. That took a tremendous amount of time and energy. Don’t take my word for it though – I think if you ask around with some of the small guys, you’ll find I was deeply involved (as were others, both on the label side and the artist side, and crossing all bounds). Here’s one such link: http://textpattern.kurthanson.com/kurtsblog/720/behind-the-new-pureplay-webcaster-license

- communications – Many at SX agree that the SX corporate website has needed a massive overhaul. That’s in process – there’s now a blog, social elements are being integrated (facebook, twitter, etc.), online registration has appeared, and – importantly – the process of updating the unregistered artist list is being re-done so that the website differentiates between “not contacted” and “contacted, won’t respond”, or “contacted, haven’t responded for some other reason”, which right now skews the list unfairly to appear as though a lot of obvious, big bands haven’t been contacted. The website should differentiate between the two, it’s needed to forever, and that’s the only way that list will really be useful to people who really do want to help tick artists off the list.

- metadata – this is where I’m currently focused. Historically, album metadata gets into the SX web database via reported performances. If someone at a local radio station grabs a compilation CD from a movie, throws it on, and logs it as being put out by whichever artist or label put out the compilation, that’s not necessarily the same entity as the owner of the performance rights (since music for compilation CDs is often licensed, rather than owned, with the original music coming out on an album collection of songs, and only one or two tracks subsequently put on a compilation). While the SX database is set up to catch these situations as often as possible, I want to make sure that the current system is the best and most accurate one.

The above scenario at a local radio station also presumes that the radio station logs the plays at all, or submits the plays in the correct format. Some stations do…many do not. This has to change and improve now that a rate structure is set for the majority of the market. And personally, I’d like to see Soundexchange consider offering software to assist in the reporting of plays, something that’s linked in to the database in some fashion. To that end, I’m setting up an intra-SX working group to look into this issue, and I’d value anyone’s feedback here that cares to give it. I doubt the right answer will be black and white, there will be pros and cons to this solution.

As far as reducing the unregistered and unpaid artists list, I have a long history at SX of being actively involved on this issue. I was instrumentally involved, as a new board member many years ago, in pushing for SX to pay artists their share directly and not have it be paid to a label where it might become part of a recoupable balance, a fact that any number of board members at the time would confirm. I started in the music biz as a manager (after performing in bars), which should explain why this is an important issue for me.

I’ll also confirm that I was initially one of the skeptics about putting out the unpaid artist list for anyone to review and use to contact “uncontacted” bands directly. While this may seem counterintuitive given my support as outlined below, my concern initially was that individuals or companies would try to earn money off signing up bands to SX, and that those individuals or companies might represent themselves as being the only route through which an artist could sign up, without the artist knowing any better. Several years down the road, and many press releases and magazine articles, data matchings with major organizations, and phone calls and e-mails later, I’ve voted consistently to provide additional SX funding to bring on the necessary resources to reduce the unpaid artist pool (as well as for funding to report, via the website, more effectively on outreach efforts – see my above “communication” bullet), and I’ve voted consistently to hold the distribution of unpaid artist money until more artists were able to be registered. And I’ve revised my thinking on publishing the unpaid artist list, which of course happened a number of years ago.

Let’s start there? I’m curious for your input, and will do my best to answer questions, just bear in mind that massive lists of questions that require a lot of study/followup on my part often wind up by necessity at the bottom of my priority list, after everything that has to be done that particular day. Please remember that CMJ is up this week, so my responses may be slow.

_________________

FRED WILHELMS »»»

You’ve raised some interesting issues, and I hope you continue to speak frankly in dealing with my take on what you’ve said. You’ll forgive me by starting out pessimistic when you begin by explaining there is information that you “shouldn’t” share. I’ve already been a couple rounds with SoundExchange people on trying to find out how much artist money was spent on musicFIRST and being told that was “proprietary,” as if it was SoundExchange’s own money they were spending, and not my clients. It makes sense when you are dealing with trade secrets, or ongoing litigation, or other matters normally covered by confidentiality agreements. It doesn’t make sense when the one withholding information is a non-profit organization that claims to represent all artists, but won’t tell them how it is spending their money. You are going to have to work hard to overcome this, and, to be completely honest, you’re not off to a good start. I’ll break down my response by the same headings you did.

Philosophy – Let’s do away with the fiction you repeat that there are nine “artist reps” on the SoundExchange Board. Those nine were not appointed by artists, they are not answerable to artists and they cannot be replaced by artists. They hold their seats by invitation of the RIAA, andThe ones I know are are nice people, but none of them have any honest claim to represent the interests of artists as a whole. As far as I can tell, not one of them has contributed anything of value to artists via the website, and there isn’t even any contact information for them. You’ll have to convince me this is an accident.

Small webcasters – You are to be commended for being part of the negotiation and settlement process. Whether or not you’ve accomplished anything remains to be seen. The first signs aren’t promising, given that Pandora is going to require payment from anyone using it more than 40 hours a month.

Communications – The overhaul of the website is good news and long overdue.

I’ll believe the overhaul of the unregistered artist list when I see it. Dick, you’re going to have to admit that, in the past, SoundExchange has often confused the act of announcing it was going to do something with the act of actually doing it, so I am going to hold off on celebrating a new list until it is posted. There have been no names added to the existing list since early 2007, despite it being impossible that no artists have qualified for inclusion. Even worse than that, fewer than a dozen names removed in the last 14 months since the last “Unfound Artist Project” ended. That record doesn’t really indicated much positive has been done.

Furthermore, SoundExchange has got to be honest about those “artists who have been contacted but haven’t responded.” You and I know that this has been a standard excuse from John Simson and others to cover the reason why so few artists on the list ever get removed. Over the past three years I have been in touch with hundreds of artists on the list, and I have NEVER had one tell me they had already been contacted by SoundExchange. Those artists always seem to register after being contacted by outsiders, too, so that excuse just won’t wash.

Frankly, SoundExchange is a dismal failure at communication with the public, and I think it is for a very good reason. The public means nothing to SoundExchange. This is where the RIAA genes really come into play; it is the same “public be damned” attitude that has marked that association’s dealings with the public for decades. You’re going to have to work very hard to convince people that this isn’t so, and I wish you luck, but you had better appreciate you’ve taken on an uphill battle. SoundExchange has had seven years to convince people they are sincere, and they have failed dismally with everyone who has taken a close look at the outfit.

Metadata – This is important work, but I am going to voice a very loud and long objection to SX providing software to webcasters. The playlist information being provided to SoundExchange is, as I am sure you realize, incredibly valuable marketing data for the record labels. Especially those labels that comprise the majority of the label reps on the Board, and who named everyone else. At this time, if they want that information, they pay for it. If it is sitting at SoundExchange, it is going to be very easy for them to pick up the phone and ask for it, for free. SoundExchange, in essence, will be working as the marketing research arm of the record industry, and will have used money that could have been distributed to artists to defray the costs of writing that software. Unless SoundExchange is willing to commit to keeping that information behind a Chinese wall and away from the labels, and unless the Board has the guts to defend that wall, SoundExchange has no business standardizing data at artists’s expense. As it is, SoundExchange allows “members” to review playlist data (and we know that artists aren’t “members,” so that limits availability to labels), giving it up on a silver platter (half) paid for by artists who can’t see it is a violation of the Board’s obligation to the artists it claims to serve. You may see my skepticism as cynical, but I think we both know it isn’t entirely misplaced here.

The unpaid artist list – SoundExchange’s conduct here remains completely unjustifiable. Despite what you portray as all that positive effort being expended, none of it has worked. Forgive my lawyer’s take on things, but when you say that you have “voted consistently to provide additional SX funding to bring on the necessary resources to reduce the unpaid artist pool,” I have to suspect this phraseology means you’re voting in the minority, because if SoundExchange is actually spending more money on this function, it appears to have been entirely wasted. You know as well as I do that the great majority of names that have come off the published list since it went up three years ago have been removed through the efforts of people outside SoundExchange. You also know as well as I do that these efforts have not cost SoundExchange a dime, and you know as well as I do that SoundExchange’s only response to these private, and completely voluntary and uncompensated, efforts has been to tell people that they really weren’t necessary. (In 2006-2007, Neeta Ragoowansi appeared to spend an inordinate amount of time going to music message boards where I had asked for help in finding people and explaining that SoundExchange was really doing a good job all by itself, despite the existence of the 9,000 names already on the list at that time.) If your votes meant SoundExchange were actually accomplishing something here, the list would have gotten measurably shorter in the last year, and it hasn’t.

And how do I know your personal efforts to correct this haven’t paid off?

SoundExchange’s 2007 IRS-990 form showed it had accumulated over $101 MILLION dollars in undistributed royalty money. I understand that number has, at the least, almost doubled in the 22 months since then, but I’ll wait for the return to be posted online to start quoting that as a fact. To be blunt, if SoundExchange had anything to be proud of in regard to finding artists, that number would be going DOWN, not up, and it definitely wouldn’t be counted in the nine digits. You cannot say SoundExchange is serving artists when you have not yet paid them over $100,000,000 that SoundExchange has collected for them and promised to pay.

If you want me to believe one word of what you say about the good things happening at SoundExchange, you are going to have face this fact, and explain it, and justify it.

_________________

11 QUESTIONS TO HUEY FROM WILHELMS

1. Please explain what you know about the usage limits that are supposedly part of the SoundExchange offers to small webcasters. There has been no public disclosure of what they are, or how they are supposed to work.

2. Richard Ades says that the 7.5% royalty rate called for in IREA is a 75% decrease from the old rate. Please show how he came to that result.

3. Numerous SoundExchange spokespeople have consistently referred to a “fact” that large webcasters pay 95% of SoundExchange royalties. Of course, SoundExchange has never disclosed anything that actually supports this contention, including the criteria for inclusion as a “large webcaster.” Can you, as a SoundExchange Board member, get the organization to release the information necessary to verify the 95% number? At the very least, I believe it would require the identities of the “large webcaster” class, the amount of royalties paid by each and the total amount of royalties received from all Webcasters.

4. What is the current SoundExchange operational budget, and what percentage of royalty receipts does it represent?

5. How much of the SoundExchange operational budget is dedicated to public relations and legal counsel in regard to the Webcaster rates?

6. There have been repeated claims by SoundExchange that artists who received royalties for 2006 are going to have to write substantial refund checks if IREA passes. Please explain how much money is involved in this and how SoundExchange came to the conclusion that refund checks will be required.

7. Explain the sampling metric used by SoundExchange to allocate royalties to artists where census data is not available.

8. Explain why the SoundExchange FAQ doesn’t mention sampling but does include a contradictory statement that SoundExchange can “accurately match unique performances with record companies and artists, and pay exactly what has been earned.”

9. Explain why SoundExchange chose not to announce publicly that it was going to absorb millions of dollars from “unfound” artist accounts on June 30.

10. Explain why SoundExchange’s “outreach” has only resulted in the reduction of the “unfound artist” list by fewer than 70 names in over three months.

11. According to recent news reports, two new wireless streaming services, Slacker and nuTsie, have both signed direct licenses for performance royalties with major copyright holders.

a. Please explain if SoundExchange is going to be the collection and distribution agency for these agreements, and if so, how SoundExchange justifies participating in any private arrangement regarding terms that do not comply with the statutory requirements.

b. Please also explain how artists who are covered by the statutory licenses will be assured that they will not be defraying any costs related to these privately negotiated agreements, and what steps SoundExchange has taken to insure that all costs related to the privately negotiated agreements are borne by the parties to those agreements alone.

c.If SoundEchange is not involved, please explain how artists can be sure they will be compensated fairly by the labels, and if the possibility that artists are not going to be compensated fairly is of concern to SoundExchange.

Stay tuned.

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unjustified personal attack - SoundExchange’s Huey to Wilhelms …,  July 5, 2007
11 questions – SoundExchange’s Huey v Fred Wilhelms,  July 3, 2007
a2f2a – Dear Dick Huey …, October 8, 2009

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