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Take your royalty checks, SoundExchange begs

Money is piling up from digital music streams, and the nonprofit has to track down artists who don't know. Then it has to convince them it's not a scam.

March 12, 2010|By Alex Pham

When John Boydston got an e-mail from SoundExchange saying he had several thousand dollars in unclaimed royalties, he did what most sensible people would do. He ignored it.

To the rock musician from Atlanta, "money for nothing" meant a song by Dire Straits, not a stranger contacting him out of the blue promising to cut him big checks.

But then he got the message again six months later. Curious, he called SoundExchange.

"Sure enough, they had a sizable amount of money for me," said Boydston, 51, whose band Daddy a Go Go includes his two teenage sons. "It was several thousand dollars. That's not a ton of money. But for a guy who makes CDs in his basement, it was enough to finance my next album."

Boydston's money came from royalties that SoundExchange has squirreled away on his behalf since 2001, when Congress created the nonprofit to collect royalties from digital music streams on Internet, satellite radio and cable television. So far, the group has distributed about $360 million to more than 45,000 artists and copyright holders.

But at any given time, about 25% of the money SoundExchange gets from online music services such as Pandora, XM Radio and can't be distributed because the artists can't be tracked down. Currently, that amounts to about $50 million. And with the rising popularity of Internet radio, the cash pile has been growing, said John Simson, SoundExchange's executive director.

The problem stems from what Simson calls "bad data." Music services have been required by law since 2001 to send royalty payments to SoundExchange for the songs they stream online. But they often provide scant details. Stations routinely get promotional discs in the mail that aren't properly labeled, so the performers often go uncredited. Other times, music services keep sloppy records of the songs they play. Some tunes, for example, are titled "Unknown" and performed by "Various Artists."

"We have this inside joke that if you want to make millions in the music business, just form a record label called Unknown and a band called Various Artists, and before you've even recorded a track, you can collect millions of dollars," Simson said.

The problem primarily hits niche artists and older performers whose works are less widely recognized. Boydston, for instance, has self-published six children's rock albums over the last decade. He estimates that he's sold 30,000 discs in total.

"I'm a niche within a niche," he said. "People like me fall below the radar."

The "dirty data" phenomenon hampers the collection of royalties by other groups as well.

"This affects everyone," said Patrick Sullivan, chief of RightsFlow, which helps track a separate set of royalties. "Without proper data, we can't get the money out to the license holders. We have to do it better, because ultimately if we don't get paid, no one gets paid."

To fill in the blanks, SoundExchange has a campaign to scour social networks such as Facebook and MySpace Music, to work with companies that provide independent artists with services such as CD Baby and ReverbNation and to hit music festivals and events.

Next week at the South by Southwest music festival in Austin, four or five SoundExchange employees will fan out, armed with a list of 450 artists who collectively are owed about $250,000. The vast majority don't know about the money they are owed, so it will be up to SoundExchange to look for them by attending their shows or camping out at the registration desks.

If they are like Lexi Street, lead singer for the Lexi Street Band in Atlanta, they will be highly skeptical.

"Someone tracking you down and giving you money? It just doesn't exist," Street said, describing how she reacted when SoundExchange called her in April. "I was like, what do I need to do? Give them my soul? As an independent artist, you get so many pitches that try to nickel and dime you for one gimmick or another."

Street was eventually convinced by the voice at the other end of the line. She registered her songs with SoundExchange and received two checks totaling just over $500. She used the money toward the cost of recording her second album, "Champagne Promises."

Not everyone signs up. Some even flatly refuse to take the money, believing it to be a con, SoundExchange's Simson said.

Joyce Moore, the wife and manager of Sam Moore, a Grammy Award-winning soul singer, said she routinely encounters skeptical artists, even after she tells the story of how her husband's first check was enough to cover six months' worth of property taxes on their Scottsdale, Ariz., home, with some left over for "a couple of nice dinners."

"A lot of legacy artists don't understand what it is, and they think the money isn't real," Moore said. "I tell them it isn't charity. It isn't funky. It isn't a scam. It's the real deal."

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