SoundExchange CEO Addresses Lack of Payment for Pre-1972 Songs

Mike Huppe, the CEO of SoundExchange, did a recent interview with Nate Rau for the Tennessean where he addresses the inconsistency of payments between pre and post 1972 recordings. Sirius XM, Pandora and others claim they don’t have to pay royalties for broadcasting songs that were released before Congress extended federal copyright protections to cover sound recordings, which it did in 1972.

The Tennessean: Is it about fair rates that Pandora and others pay?

Huppe: We’ve been open and outspoken that it is not fair that certain digital radio services pay for post-1972 recordings and they don’t pay for pre-1972 recordings. As a policy matter, as a moral matter, as an ethical matter, that makes no sense.

I think this helps highlight the fact that tonight we’ll have some of the hottest new 2014 acts sitting in the round with influencers from pre-1972. When you think of value, part of the way we express value is paying for things. Does it really make sense that this old, seminal, influential figure in the industry doesn’t get compensated for this avenue? But this new, up-and-coming act, who by the way wouldn’t be here if it wasn’t for the music that inspired them, does get paid?

States including Tennessee have filed bills to pay for pre-’72 recordings on digital radio. It failed here, but has passed in other places. What does SoundExchange think needs to happen?

Huppe: We think the best long-term, simplest fix would be a federal law that extends all the rights for pre-’72 for digital radio that are there for post-’72 recordings.

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Royalties: A Simple Definition

The American English definition of the word ROYALTIES seems straight forward, but with the expanded the legal definition, it is easy to illustrate how the complexity grows as you drill down into the details. This complex system is the supportive structure on which many types of creativity rest.

The licensing of musical works and the subsequent royalties your company pays and receives is essential to your business. But the day to day management of these responsibilities and obligations can serve as a major distraction from the essence of your business, MAKING MUSIC.

Royalty Solutions Corp. was established to remove the burden of the complex and costly process of licensing and royalty processing. We see our service as an important piece to the puzzle, allowing our clients to focus on the creative side of their business.

Merrian-Webster: “a payment to an author or composer for each copy of a work sold or to an inventor for each item sold under a patent”

Oxford: “A sum of money paid to a patentee for the use of a patent or to an author or composer for each copy of a book sold or for each” public performance of a work.

Cambridge (Royalty – Payment): “a payment made esp. to writers and musicians every time their books or songs are bought or used by others.”

USLegal.com: “A royalty is a percentage of gross or net profit or a fixed amount per sale to which a creator of a work is entitled which is agreed upon in a contract between the creator and the manufacturer, publisher, agent and/or distributor. Inventors, authors, movie makers, scriptwriters, music composers, musicians and other creators contract with manufacturers, publishers, movie production companies, producers, and distributors to be paid royalties in exchange for a license to manufacture and/or sell the product.”

Law.com: “a percentage of gross or net profit or a fixed amount per sale to which a creator of a work is entitled which is determined by contract between the creator and the manufacturer, publisher, agent and/or distributor. Inventors, authors, movie makers, scriptwriters, music composers, musicians and other creators contract with the manufacturers, publishers, movie production companies and distributors, as well as producers and distributors for a license to manufacture and/or sell the product, who pay a royalty to the creator based on a percentage of funds received. Should someone use another person’s creation either purposely or by mistake, the user could be found liable to the creator for all profits on the basis of copyright or patent infringement, which usually is far more than a royalty. However, a creator does not have to license his/her creation to anyone.”