The SoundExchange Billion Dollar Administrative Fee

palewook writes "On June 7th, Yahoo, RealNetworks, Pandora, and Live365 sent letters to US lawmakers emphasizing they owe SoundExchange 'administrative fees' of more than $1 billion dollars a year. These fees would be paid for the 'privilege' of collecting the increased CRB royalties effective July 15th, unless the Internet Radio Equality Act passes Congress. SoundExchange, the non-profit music industry entity, admits the levied charge of $500 per 'channel' is supposed to only cover their administrative costs. Last year, SoundExchange collected a total of $20 million dollars from the Internet radio industry. Under the new 'administrative fee' RealNetworks, which hosted 400,000 unique subscribed channels in 2006, would owe an annual administrative charge of 200 million dollars in addition to the retroactive 2006 rate hike per song played."

Comments

Non-profit spending accounts ?

[billcopc]

IANAA (i am not an American), but if SoundExchange is supposed to be a non-profit, doesn't that mean they have to actually spend a significant portion of those funds on whatever issue they're supporting ?

I know here in Canada, charitable organizations have to spend something like 80% of their income on the cause, with the remaining 20% expected to cover administrative expenses and salaries. I could be wrong on the numbers but it's in the ballpark. There is also a limit on how long an org can sit on their money, so for example they couldn't raise 1 million in a year and siphon off the 20% over five years. If that weren't the case, everyone and their mother would have their own non-profit company as a tax-free retirement account.

And don't start telling me they're actually paying the artists. They're paying the publishers, the agents, the producers, the "everything up to 11" pop mix "engineer", and of course the lobbyists. Besides, SoundExchange's information is such a market driver that it's in the industry's best interests to have doped and skimmed numbers depending on who they're pushing that particular week.