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Royalty Logic, Inc. (RLI) has been actively (but quietly) expanding its role in statutory license collections by signing artists and indy labels who feel disinfranchised and are seeking an alternative to the RIAA. It has been a daunting task to try to create a level playing field and resolve the ambiguities and inconsisitancies contained in section 112 and 114 and the accompanying regulations that favor the major labels and their industry trade association.
The most recent webcasting CARP and LOC decisions tried to deal with the potential for monopolistic abuse by RIAA/Soundexchange by creating a two collective solution. Royalty Logic, Inc. (RLI) was created specifically to counterbalance RIAA/Soundexchange domination over indy labels and artists.
After that shock to RIAA/Soundexchange hedgemony, the RIAA tried to put RLI's lights out by inserting into the Small Webcasters Settlement Act (over the objection of the copyright office) a provision that would have allowed them to deduct litigation and other costs going back to 1995 before royalties were divided between the collectives. Congress would have none of that, since it would have effectively put RLI out of business by forcing RLI members to pay RIAA/Soundexchange expenses that they neither approved nor authorized. The stautue, as enacted, allows RIAA/Soundexchange to deduct these costs but specifically prohibits RIAA/Soundexchange from deducting any costs from royalties due to artist and copyright owner affiliates of an alternative collective (i.e., RLI).
After that defeat, RIAA/Soundexchange modified its tactics and has attempted to eliminate RLI as the only authorized alternative by refusing to agree to any rate settlement with music users that contained the two collective solution. Since fairness issues among copyright owners and artists is of less concern to music users than a settlement that avoids another expensive CARP, music users have aqcuiesed.
As a result, RLI is attempting on behalf of its copyright owner and artist affiliates, to assert their right to force a CARP in each instance by formally objecting to proposed settlements that do not include the two collective solution. Any "interested" party can object to a settlement and force a CARP by filing objections and a notice of intent to participate within 30 days of the posting of a settlement in the federal register.
The issue is now in the hands of the copyright office which will either convene a CARP on the limited issue of continuing the existing two collective solution or disallow the RLI objection and allow RIAA/Soundexchange to become the monolopy that they dream about.
Ron Gertz Royalty Logic. Inc. [818] 955-8900 ronnie@musicreports.com
At its inception, Soundexchange was created by the RIAA and several artist representatives were given seats on the board. This was perceived as a positive step in repairing the injured relationship between artists and labels. The unions were also on board.
Now it is a few years later. The industry is suffering on many fronts. And I am afraid, given the negotiated "settlements" and CARP's to date on the STATUTORY license front, that the artists point of view is out of focus and that the artists have missed the forest trees.
The first CARP begrudgingly included Royalty Logic as a legislated alternative to Sound Exchange, a result I applauded because of the obvious need for competition in what is likely to become a mega million dollar business soon. Since that first CARP though it seems that Royalty Logic has been left out of the mix. Deliberately? Yesterday's "settlement", which is subject to a round of objections at the Copyright Office before it is made into law, was announced without one artist quote. Nor was there any mention of an alternative collective. The recent "settlements" with the subscription services also did not mention an alternative collective and this appears to be an emerging pattern.
Right now, the RIAA is making deals with various users of music allegedly on behalf of itself AND the artists. There is no established pattern for the distribution of the money nor is there any guarantee that once established, it will remain the same. I for one am very concerned about the conflicts that appear to be obvious on the horizon:
1. Recently Soundex won the right to recoup all of its historical expenses back to 1995 including the RIAA's litigation expenses. Does this mean all expenses that supposedly protect their digital terrain (i.e. Napster, etc.?). Regardless, it will be a long time until any significant money is distributed artist side. I have heard estimates that these expenses are approaching $20 million dollars. Can anybody confirm?
The small webcasters act stated that artists could avoid these costs by signing up with an alternative - the only one so far on the table is Royalty Logic. Then why is Soundex trying to write them out of statutory licensing
2. Artist's audit rights against Soundex are very weak to practically being non-existent. The regs say a royalty recipient can audit SE but first have to file a notice in the federal register and that the audit is applicable to all recipients which means that artist needs to audit for everyone. This expense will deter any meaningful audits.
3. Competition is a good thing. There is competition in the publishing arena(ASCAP/BMI). It seems logical that there should be competition in this arena as well especially when the first service was birthed from the RIAA itself.
For artists, this ascension to power of one monopolistic collective with unilateral power to make deals, worries me. This soon will be a very robust marketplace and if an alternative(s) is not allowed to develop from the get go on the same basis and under the same rules as the RIAA collective, it is going to take a much longer time to get an alternative in place after the inevitable conflicts render Soundex unworkable.
leflaw
flamingpyro
finally something besides the riaa...... 
